Topic: why can't bitcoin be based on something that has value? - page 2. (Read 1949 times)

Well I don't know about that. Gold is a big business. In every town all over the world there is going to be pawn shops that will buy your gold. they not might not be interested in your bitcoin though.

Gold for some people serves as a status symbol. you can wear it and display it if you have enough money to buy a gold chain. or you can buy a gold bar and admire its beauty. you can't do that with a bitcoin. so no, i don't think people of this age all prefer bitcoin. there will always be gold collectors and people that wear gold as a status symbol. they won't care about btc at all. just how it is.

You've said it yourself. Bitcoin is backed by the energy spent mining it using specialized hardware (called ASICs). It's not really made out of thin air, as some would say. Most people don't understand how Bitcoin can have value on its own, because they've never taken the time to do their own research. They're just following someone else's opinion about it (what wealthy people and big banks say against Bitcoin).

There's no need to back Bitcoin's value with Gold or any other precious metal, because it can do well on its own. With no central authority, people like you and me are the ones who dictate how much a Bitcoin is worth on the market. It's all based on the rules of supply and demand. Bitcoin is portable, censorship-resistant, decentralized, scarce, and pseudonymous. What more would you want? Fiat is losing its value anyways (it's only backed by debt), so investing into Bitcoin would be the wisest decision you'll ever make. Who knows if someday Bitcoin becomes the standard unit of account? Just my thoughts

Gold is a metallic substance that has shape ‍and existence which can also be seen in use. Gold and Bitcoin cannot be compared in real terms. There are two different things. One exists and the other has no existence in reality. But if I compare the potential and the price as well as the asset, then the value of bitcoin is definitely higher than gold. It must be accepted that people of this age prefer the digital form of their wealth. Bitcoin has quite a few advantages in this aspect.

Bitcoin is based on something that has value -- energy, or the energy that proof-of-work requires.

All currencies are based on the value of energy production more than anything else. All civilizations develop according to the energy that they have available.

There is one thing. Bitcoin is a blockchain based secure programe that allows you to securely share data over internet. It is a smart contract. Blockchain is a secure tech that can be used for different purposes, like saving users data. Etc. In Bitcoin case it is being used for as an advanced financial tool, for transactions. Thus it  becomes equivalent to money. So you can never back it up by anything, because it is a computer program and will remain that always. Yes it is super secure shareable and thus can be used as transaction token.

although bitcoin is really just software and only works when there is an internet connection, but look back 13 years, many altcoins have been created and have you seen one that is similar to bitcoin or is there any better than bitcoin that you have seen?

whatever it is, their value will be determined by people's beliefs, once we lose faith in it, they will become useless
gold is no exception, its value is also determined by people's beliefs

I am so tired of people claiming that Bitcoin has no intrinsic value.

Some people seem to think that things like electricity, rented room, mining rigs, internet costs and so on are provided for free by some socialist government entity or something? All those things cost money. You can't mine Bitcoin for free. If you want to mine Bitcoin, it will cost you money.

That potential cost of mining Bitcoin is what gives Bitcoin its minimal, base value.

Unless you steal your neighbors electricity. But in that case your neighbor would be paying for your Bitcoin mining.

But thats a short term solution.

in that situation. a currency that does that would have a 'zero-bottom-value'

thankfully bitcoin doesnt give away coin which is why people know and trust bitcoin cant just fall to zero via a market sell, which is why people deem it a good store of value because its value isnt zero



not all miners are below..
there is a speculative range.. a window that is recently between $13k-$75k
where different people in different places have different price points in between

but in all economics. the VALUE is at the bottom of all that stuff
(its where the mindset if when something is really cheap its good value)

your using "average" cost!! (facepalm)


now hopefully you get the concept that there are some lucky people on the planet that can mine real cheap and some unlucky people ~(hawaii/japan) that have really high mining costs
and then there are people inbetween

maybe this will explain it better.. and yes there are pictures
https://bitcointalksearch.org/topic/m.59075174

its basically when the price moves above or below a certain regions cost that region change their speculative minset about the price. where by if the price goes up they realsie they can mine locally thus stop buying and instead acquire coin via mining or off market . and then become sellers on market.
and if the price is below their regional cost then they become on market buyers

where as because no one can acquire coin via any means below the planetary lowest cost.. EVERYONE  is then a buyer
which protects the price from falling below the value line because no one wants to sell at a loss and everyone wants to buy coins cheaper then they can mine for.

again protecting the value from going to zero. thus ensuring bitcoin has a non-zero value

so if only a few lucky people can acquire bitcoin for that then it's not really the true value of bitcoin. say part of the bitcoin protocol was to send 1 bitcoin every block to some random person's bitcoin address. so they acquired it for free. would the value of bitcoin then be zero since one lucky person got to acquire bitcoin for free?

so i asked this question previously but no one answered so i'll ask it again. once the block reward goes to 0, and all bitcoins have been mined, what's the value of bitcoin going to be based on then? how will you determine the "value line"?

i do understand all the things you're saying but i don't necessarily know that the miner's cost to acquire bitcoin is always below the market price. for example:

The market price has only fallen below the average mining cost on three occasions — in 2016 to 2017, end 2018 to May 2019, and early 2020, each for less than half a year at a time. Each time, the Bitcoin price rallied strongly, sending it to a temporary peak where market price is several multiples of the mining cost.

can you explain why this happens?

you keep on trying to push the thought of the value being the price to explain the price..

please separate them as 2 different numbers

forget the price for one moment.

the value is the bottomline. the underpinning. the base. the number no one can get any lower than..
so on the whole planet right now the cheapest someone can acquire bitcoin for .. is the value line
and only a few lucky people get to acquire bitcoin for that.

no one can get bitcoin for less right now. and thus thats the value line right now..
emphasising the underlined words above. they are important and the point

the point of the lack of people able to get bitcoin for less. becomes the very thing that sets the line that no one can get for less. thus becomes the safety zone.the security blanket,  the lock. the bottom. the deadend. the wall.. the metal fence. that keeps all other users above and thus. its the thing that people see as the security assurance and backing bitcoin value because if no one can get it for less. then the risk of it going less is negligible

above that is all the random speculations, the volatility. where different people have different costs of acquiring coin. where by in japan if they wanted to mine. it would be about $90k a coin. so they prefer to buy at anything below $90k..
some lucky people with good contacts with miners at the cheap end dont have to mine themselves to get btc nearer to $13k they just buy asic farms daily/weekly allotment of reward at a agreed/negotiated amount close to $13k that they can both accept off-market. and others buy at the whims of the volatile market depending on the speculative circumstance of whatever the price is (right now between 13k to $9k window) the price is ~$24k

in short the current price is in that speculative area above value. and below the premium

now when you look at the 4 year cycle of bitcoin. where the price moves crazy up and down in random zig-zag
you will see that the value(not seen on a market price graph) has a more steady incremental rise
..
as for the whole 'circulation is 90% complete..
bitcoins price and value is not based on all coins in circulation.
bitcoins price is not based on the 19m coin.
its not even based on 5m coins
the price is based on a small subset of coins that are deposited into an exchange. where by even the deposited coins are not all attributing to the market price because some coins are just balance in a custodian..
a smaller subset of the deposited coins that actually sit on the market order book of active orders attribute to the market price. not the entire 19m circulation

as for the value
i personally have coins from 2012 acquired for about $6 each.
yet as time goes on and i shift coins around or spend them . due to the price and value changes over time. i no longer consider my old coins valued at $6 still. because as i spend or move them i am seeing the current values along the time change, and the price change where i can get more for my coin or it costs me more to acquire more coin which changes the value of them

there are many charts around not based on the cost at mining where it keeps the value at the mining cost of the coins creation throughout. but instead it alters the 'realised value' each time a utxo is spent because logic and economics shows and proves that when funds are moved peoples valuation of that spend/receipt move. as time passes value and price change

EG
imagine you(if old enough or your parent earned $10 for 3 hours work in 1981 (min wage $3.35/hour)
and it could buy them 377 loaves of bread at that time..
now imagine its 2022 and he found that same bank note under a sofa cushion. that exact same physical bank note

is that bank note still valued as 3 hours of labour, if they were to pay some landscaper to mow his lawn.. nope
they might only get 10minutes of freelance professional lawn mowed or a hour of minimum wage guy

can they still buy 37 loaves of bread with it if they went to a grocery store, nope

and so although that physical bank note was worth 3hours labour/37 loaves.. today its not

we both know that's not really true though. most bitcoin that is acquired today is acquired by purchasing it at the market price. It's not like if I want to acquire 40 bitcoins I can do that by setting up a mining rig and just pay $13,000 per bitcoin. There's no way of knowing how long it would take for me to accumulate that many bitcoin and it might not ever happen. Fast forward to the next block halving and it just makes it even harder to do any "acquiring" as you define it.


So 90% of the bitcoins that can be mined are already mined. But you want to base bitcoins value on the other remaining unminded 10%. Good luck.
Are you gonna say the same thing when we get to 99% already mined that the value of bitcoin is what it costs to get ahold of the unmined 1% ? does that really make any sense?

If only we had such an asset that could be moved trustlessly and cheaply across borders, that is, in a peer-to-peer manner without having to have intermediaries or trusted third parties, an asset that would have a provably limited and completely auditable supply, that asset perhaps could be said to be an ideal backing tool to provide some value to a cryptocurrency such as Bitcoin. But. On the other hand, we wouldn't need cryptocurrencies at all since all financial transactions and exchanges could be made using this magical asset. The fact that we obviously have no such asset, let alone that we can't even conceive of a physical commodity that would behave like a digital one, makes "unbacked" bitcoin an important and inevitable thing. In the information age, data or information itself should be used to transfer value between individuals and businesses. The information that is scarce by design is a special class and should be used as money since this kind of information has credible monetary characteristics that will provide efficient and comprehensive economic relations.

firstly your again mixing words

i said CHEAPEST..  but you then say "average"
i said value is the lowest cost(cheapest) and YOU then use a stat that says the PRICE(july15ths $20k) being again wrongly called "value"

stop thinking of the market PRICE as "value"

here is the thing..

if you work out the cheapest mining on the planet. the most efficient asic using the cheapest available electric cost that alot can use. and calculate the cheapest mining cost on the planet..
thats the ultimate bottom of TODAYS cost of mining bitcoin today (no need to distract with the costs of last year or 2009)
its todays best acquisition cost anyone can find of getting bitcoin today..
thus bitcoins underlying value

this is not PRICE.. this is the underlying value

you can also do the same for the most expensive of the recent gen asics and expensive regional cost. and find the top amount. that line where if the price reached it. then everyone on the planet could acquire bitcoin via other means cheaper then the price and thus people give up wanting to buy at the market price if everyone can mine or buy form miners off-market cheaper then the market price

yes you can play games with "average" and mis represent words. but if you understand that there are true costs of acquiring todays allotment of bitcoin. then you can work out the underlying value of todays allotment.
which then shows what todays value is.. and then see that its different to the PRICE

but what if the asset is able to move along with the cryptocurrency? unlike gold.

That type of situation created a bit trust wave where you have to trust a nation that the money has some value, and that means we will have a ton of nations that will fail. At the end of the day if you can't trust that nation then the price will go bonkers. We haven't seen that with USD just yet, even though it did lose a lot of value, it didn't lose that much of a value, and that means we are seeing something that is risky with other fiats instead.

Look at south America, Africa, middle east and even in Asia where fiat currencies became so much less valuable. That’s the risk you take when you base it on nothing at all. But crypto is not the same, because it's limited, not printable.

ok yes, maybe i didn't understand the distinction you're trying to make.



i have thought about it and come to the conclusion that "bitcoin mining" is not an appropriate terminology if we are going to try and equate that in anyway with "mining gold".


I don't know how you are coming up with this $13,000 estimate of the cost to mine one bitcoin but presumably you're taking the total hash rate of the entire network, figuring out what the power consumption of that is in kilowatt-hours, then seeing how much that costs for doing 10 minutes of hashing based on some average cost of electricity per kilowatt-hour. i don't have a problem with that type of estimate procedure but you have to realize something. you can't just mine as many bitcoins as you want to. there are artificial limitations in place that prevent you from doing that. there's no artificial limitations on mining gold out of the ground.

over 90% of the bitcoins that will ever exist have already been mined. so mining isn't really a viable way to obtain bitcoins anymore. you have to buy them on the open market. now with gold, i doubt that's the case. there will always be gold mining. not so with bitcoin.



After looking into it a bit, i came across some information that said this:

"Across the 198 countries included in the dataset, the average cost to mine bitcoin sat at $35,404.03, more than bitcoin’s value of $20,863.69 on July 15, 2022."

So if that statement is true then it kind of casts your theory into doubt.

that's how tangible goods work like gold and milk. physical things.

that's definitely how it works for physical things. but bitcoin is different. they're not really making much bitcoin anymore. and oneday they won't be making anymore of it. none. nada zilch. but they'll still be making milk and gold.



well it's not like we NEED more bitcoin. we would perfectly fine to not mine anymore bitcoin since over 90% of the total supply is already in existence. once 100% of it is in existence, what's there going to be to back up the price then? because there won't be any "mining cost" for bitcoin because you won't be able to mine it then.


i would imagine that the price to "mine bitcoin" varies throghout different parts of the world due to electricity costs, hardware costs, maybe even human labor costs, real estate costs, the list is endless. but as i said already, somewhere around 2037 none of that is going to matter at all because there won't be anymore bitcoins being "mined". and then what will people use to base bitcoin's price on? their feelings?

Yes, Bitcoin and fiat are two different currencies. Fiat is regulative while Bitcoin is decentralized. They have different characteristics as well. Fiat is stable while Bitcoin is volatile. The only thing that connects them is when we convert our Bitcoin into fiat when we're withdrawing our funds or purchasing something. Both have different roles and functions but both are important.

You question presupposes that bitcoin exists. How did you even came to an idea that bitcoin is real? Have you ever saw bitcoin? I never did. When I ask people where are bitcoins that they supposedly bought, they show me just their applications that say: "xx BTC". Then I say back: if I send you, electronically, via some communication system that I came up with,  the following text: "5 Porsche", does that mean that you own 5 spot cars made by German automobile manufacturer? They respond: no. I conclude with this question: so, why do you think that you own xx bitcoins, just because someone electronically send you this text: "xx BTC", via communication system of an anonymous Nakamoto person or group?  They say nothing back.

Bitcoin is not real , It is imaginary. You cannot touch it because it is digitally located somewhere but u can see it ... Bitcoin is like assets of future like lots of money you have in your hand.

larry
you are now PUREPOSEFULLY
mixing up the word PRICE with value

people have their own individual decisions about the PRICE. correct(both agree)

but the underlying VALUE is where you are getting confused and purposefully ignoring and not understanding

take some time to read the gold example i made in previous post. actually sit back and understand it. like probably step back from the keyboard, have a cup of coffee and truly think about it.
and you will understand better

if everyone could mine gold in their back yard for under $2.. no one would be buying gold on the market for $1.7k
truly think about that


bitcoins bottomline(cheapest mining on planet) cost of 2022 is 13k mining costs which is the underlying VALUE. the lowest people can get bitcoin for any source on the planet.
yes in previous years like in 2009 the costs were under 1 cent.
but understand that the costs have gone up over the decade

now separate that..

and ABOVE that. is the speculative PRICE(dont confuse with value)
the speculative PRICE is more variant and volatile ABOVE value. because of speculation

get it yet

it may only cost a farmer 40cents to produce milk and thats the good value.
however super markets sell milk for $1-$3
thats the speculative PRICE

notice the difference
milk would be free if there were no costs to produce it. .. like oxygen
but its the costs that become the bases of then forming a market price above the underlying value cost

get it yet

once you understand there is a real life cost in creating bitcoin. you might start to see the other layers and umber at play that build up and back the price.
where yes sometimes the price is overly priced way way way above value. where its at such a premium. all the buyers dry up and stop buying which causes the price to max out and then correct down.

understand the real life costs from the cheapest on the planet to the most expensive mining costs of the planet and you start to see the window in which the PRICE plays around inbetween