Topic: why can't bitcoin be based on something that has value? - page 6. (Read 1949 times)

Limited supply of Bitcoin derives the value of bitcoin and nothing else.

BTC is used based on value with UG organizations - the underworld. I think so

gold has existed long before bitcoin ever came around and will exist longer after bitcoin is over and done with for whatever reason. i think we can all agree on that. bitcoin is not a precious metal but gold is. if you have a gold bar, it is something you can take out and look at and touch and appreciate its beauty.

I would guess that if the "true nature" of bitcoin gets priced in, I would guess that it would be at least as valuable as gold, and would have about the same marketcap as that. I know that it is a bit difficult because gold has been around for thousands and thousands of years and humanity has used that after barter was done and money was printed, but that is still something that should be considered as a risky thing to just let bitcoin be there already.

I believe that the best thing we could do right now would be to not give up on bitcoin but also do not expect the worlds from it right away, just be patient and it will come around and it will get to a high price, but until then, do not get hyped every time it goes up, and do not lose faith every time it drops.

yes similar to the opendime yet not digital/electronic. what's so bad about wanting that?


no, we're talking about something digital (similar to bitcoin) that's backed up by something physical. not sure where you got this idea of backing up something physical with another thing that is physical.


one of the main concepts of a cryptocurrency, and you should know this, is fungability. that means every coin is the same. you can't discriminate one vs the other based on their transaction history. bitcoin itself does not meet the strict requirements of fungability. neither does your kind of strange example above. i think monero is an example of a fungible currency. the us dollar is fungible since when someone hands you $1, you can't know what it's history is of who owned it before you. all $1 bills are the same. in that sense.

in the sense that you could burn 1 ust token (no matter what it was worth) and get $1 worth of luna we can say that luna was backed up by ust which was backed up by nothing. and we all saw how that played out. when something is backed up by nothing it can easily go to 0, as is what happenend to the ust token. The current price is $0.01272 per UST. that's pretty close to 0, right? so i'd say ust is about as "dead" as the item it was backing up which was luna.

so what was the purpose of luna in the first place? why not just have ust and that's it? why introduce something else based on ust because that thing can never be better or stronger than the thing that backs it, which would be ust in this case. and as i had said, the real issue was that the ust was not legitimate. it was a scam all along. it was not backed 1:1 with the us dollar. so anything that it backed was also a scam. on the other hand for the sake of argument, lets say you took usdc and used it to back luna. well that would be a different story right? then luna would not have any issues. because usdc really is backed 1:1 with us dollar (i know some people would disagree with that statement but just for the sake of argument, lets assume it to be the case).

but here's the thing: no one would ever create a luna and back it with usdc. why? because what sense would it make? you would just be creating another "stablecoin". you already have usdc. how is this luna going to be any different. it can't be any better than usdc. so why not just use usdc in the first place?

the reason it takes alot of effort is because there's alot of people trying to "create" it. creation is a byproduct of mining though. at some point bitcoin will no longer be created. so if you're basing bitcoin's value on the cost to create it then you won't be able to assign a value to it once all the bitcoins have been mined.

Well gold and bitcoin are different. gold is fungible for instance. since it can be melted down and reused. bitcoins can become tainted.
another thing about gold. lets say it was only located very deep down in the ground so much so that it costed $90,000 per ounce to extract it instead of $900. what do you think would happen then? would that make gold worth $90,000 to me automatically? no it wouldn't. i wouldn't pay to put it on a chain around my neck in that case. few people would. so it's not going to be worth its mining costs in that scenario.
 

so larry not only wants bitcoin to be backed by gold. because he doesnt understand bitcoin is backed by its own cost and utility..
but now he also wants bitcoin to lose its digital utility and be something physical he can physically pass to someone..
..
ok larry does not understand the purpose function, utility, supply, creation,cost features of bitcoin so wants to take it all away.
..
if you want something physical thats backed by something physical that you can physically give away.. then get off your computer and go find physical things.
maybe have a kid where the kids nationality is backed up by your own as parents. and with your backing pass him off to someone else as payment for rent..
after all it fits all your idea parameters.. right?
.. but maybe your kid is lazy, ugly an an unachiever. so no one wants him.. now how good are you as his backup thats legally registered on his birth certificate. .. not much

how about you then have another kid. but this one has utility. he can do something worthwhile. people wont care about his nationality or who his parents are, they just see his work effort and hardworking ability and think he is worthy of becoming something..
is who his parents are as important? or is his value of his own work effort worth more
..
anyway lets continue about digital stuff that larry wanted backed by something else..
here is one for you larry..
imagine we called bitcoin "luna" and backed luna by something.. ... .. wait for it....... the peg breaks. and boom luna is dead
the item its backed by didnt die. but the peg to it did..

luna is a token created at no cost in of itself and is only given value by being pegged to something. and when that peg breaks the value breaks
much like how the dollar has lost 95% of all its value it had last century when it broke its gold peg.
yep it does not actually cost $10 to make $10 bank note. and more and more people are realising that $10 doesnt buy them what it used to buy them..
..
like having a spoiled brat kid who thinks he is worth alot because his parents are rich. he does nothing himself and earned nothing himself. .. and then his parents dis-own him and cut him off from his inheritance.. how much is that kid worth now..
..

bitcoins value is its own cost. its not free to create bitcoin. its not printed for a penny worth of labour and sold for multiple hours of labour.. it actually takes alot of work effort to make bitcoin

bitcoins value is actually much higher then you think. it doesnt need something else to give it value, because it already has value by itself.

what you need to realise as a stepping stone into backed value, firstly its not the market price being the value. but its ultimate bottom line cost of acquisition where no one can make/mine/print/acquire/buy/swap it for any less, that is the value.

that bottom line amount is the backed value that is in-of-itself.

take gold.. the market price is $1.7k but this is just temporary it can go up and down unpredictably in the short term. yes its function, features etc push the underlying value below the market price upwards which then push the market price up in the long term.. but thats another aspect you need to learn about

golds value, the underlying bottom amount no one can buy acquire make or mine gold for is actually around $900 right now.
golds store of value (remember not the price) the value is $900 not $1700
gold does not need to be backed by something else worth $900+ because its own mining costs back it by that.

get it yet?

dont confuse the market price with a backed value/intrinsic value.
even houses have a different measure for house value vs house price.

get it yet?

It's actually not. You were debating if Bitcoin's "value" should be based on something backing it, "that has value". If you got the context why I was bringing up the history of money, it's because the properties that Bitcoin already has is in fact of value, with censorship-resistance as one of Bitcoin's main value propositions. But we also have to acknowledge that the true nature of Bitcoin might not be priced in yet, and it might be illustrated by a sanctioned-Russia.

Bitcoin is a currency for crypto, for blockchain mining industry. It is backed by blockchains. The value it derives is from the expanding applications and  its potential in future tech industry. However it has found application in many conventional markets as well. Thus it gained value against FIAT. In 10 years from now every industry in one way or other will be using blockchains and bitcoin will most probably become the default cryptocurrency for these organizations.

Well maybe a better title to my posting would be "why can't a cryptocurrency be backed 1:1 by a physical asset?" that's really what I'm getting at, not that I expect bitcoin to change into something like that. but i do want to see something backed 1:1 by a physical asset similar to bitcoin except that it has that feature. the problem is i think it would be a much more complicated thing than bitcoin. we've seen that doing it with assets like oil or gold is somewhat problematic and awkward but if you could quantify some electronic thing of value then you could maybe base the asset on that. it could be a certain amount of disc space or a certain amount of cpu processing. As long as it can be quantified and has value then it could serve as a potential asset to back up the crypto 1:1.


you maybe right that it doesn't need to be backed up by anything to hold its value indefinitely but how do you really know? i think that all depends on what else is out there competing with bitcoin. also keep in mind there's probably only a limited supply of bored apes but they could go to 0 one day too. limited supply doesn't guarantee demand. it depends on the marketplace and what else is out there and what the competition is. i don't want bitcoin to go to 0 but i don't think 21 million has anything to do with that. look at eth. it doesn't have a limited supply and its price seems to mirror bitcoin's as far as ups and downs.

oh and as long as people are in control of bitcoin then nothing is really set in stone guaranteed. to do that you have to have a smart contract.

Some things have value because people trust in them as a medium of exchange or store of value. Even though Bitcoin is often described as "Magic Internet Money", its value is based on the rules of supply and demand. That, and also the fact that Bitcoin is the most decentralized and censorship-resistant kind of money in the world, makes it an extremely valuable cryptocurrency. If the OP is asking why Bitcoin can't be based on something that has value, then he/she doesn't understand Bitcoin is all about. It's something commonly expressed by people who either hate Bitcoin or lack knowledge of it.

Bitcoin's been doing well on its own (despite the ups and downs in Fiat terms), so I'd say it doesn't need to be backed by anything to hold its value for a very long time. 21 million coins will ever be mined, making the pioneer cryptocurrency a truly scarce digital asset. If you believe in Bitcoin, then I'd suggest you "hodl" it no matter what. Otherwise, Bitcoin is not for you. With how far Bitcoin has gone since day one, it's unlikely it'll disappear (or go to zero) anytime soon. Just my thoughts

i'm actually a big fan of the history of money and one of my big ideas is if bitcoin could have a physical representation without needing verification digitally. so you could just hand a bitcoin to someone as a payment without any government or central entity backing. but that's a separate topic for another thread sometime. perhaps if you know so much about money and how it evolved over human history you could contribute to this idea of mine. we need to keep this thread on topic though...



Maybe we got things slightly mixed up bringing the us dollar into this hypothetical 1 btc backed by 1 liter of oil example In reality, the us dollar should not be in the discussion whatsoever. it is meaningless. the only thing that matters is people agree to 1btc=1 L oil. now you might say that's a very arbitrary thing to agree on but if it's set up so that bitcoin is backed 1:1 with oil then it is stable with respect to oil. now oil prices can go up and down yeah but that's a different story. you can't control that so much. but oil price dictates what the bitcoin is worth in us dollars not the other way around.

now before anyone points out what they think are the issues with this scenario, I'll tell you what it is. when someone consumes 1 L of oil, what happens to the 1btc that was backing it? what's supposed to happen to it? how do you ensure that's what actually happens to it?


That's why i decided it's not the best investment for me. that doesn't mean i don't like it or dont want to own some someday just not right now.

The price that derives the value of BTC is the law of demand and supply. In addition, with its inflationary and limited supply, the price is something that increases as more supply is being mined. Though many investors have frowned upon the lack of intrinsic value BTC has compared to gold (which is considered as a precious and non-renewable resource), the price of BTC is what many have took advantage in order to invest either for long-term or short-term.

Though I do understand where you are coming from OP, I guess it's better if you just focus on the investment aspect of it.

The problem becomes the reserves, the worth will be based on how much oil Bitcoin would have in its possession, not on how much oil there is. The problem starts in this example, when Bitcoin falls under 1$, then the oil reserves would start to deplete, making it go to 0. And this would happen in this scenario, because it would be easy to start an attack like this for big capital holders.

Backed currencies always had this problem, they start to fall apart when the reserves start to get depleted.

Backed currencies value = amount of reserves in possession

Now you outed yourself as biased larry, because you obviously didn’t try or ever wanted to. You don’t have to get Bitcoin first. You can send money with ur bank, by mail, by giftcards, in person. You choose, and there’s probably even more ways.

Nah, there’s decentralized exchanges, that make this process easy and online, with protection against scams. Some require security deposits from both sides, for example. The process is similar to Coinbase, a little less convenient, but you’re gaining privacy and control in return. This will become relevant in the future.


Idk how this works in the us, here it’s sufficient to just archive everything in a simple way, and you don’t gotta report anything, until asked.

For this the trick is to open ur own offer, you choose your buying price, someone will accept it, if you choose an markup similar to a fee on Coinbase. 1-2% for example.

Too much comfort got us into this situation in the first place. Jk.

I get that larry and it’s completely fine to want this. There might be a day where Bitcoin will be stable, but this depends on too many variables, right now and in the near future it won’t fit this requirement. And there probably won’t be any trustworthy backed-digital asset in the near future. If you want stability i wouldn’t even recommend you Bitcoin at the moment. It might be hard to find anything for this purpose at the moment.

There’s no fix for not going down, this should always be considered before going into Bitcoin with any amount. To be able to afford to be down for months or even years, both mentally and financially. There’s no shame for anyone to say, that they can’t do or want it right now, or that Bitcoin isn’t for them. Bitcoin means signing up for a fight, it can’t get more uncomfortable than this.

I believe you're giving OP too much credit. His post-history is very revealing that he likes trolling in the forum. Probably because the crash made him lose money in trading, OR he's holding coins bought near ATH and he trolls to relieve him from the stress of HODLing.

BUT to take the topic seriously, OP is asking the WRONG question. He didn't consider the actual history of Money, and how things without value, became items of value, https://nakamotoinstitute.org/shelling-out/

Yes, so that would mean each bitcoin is secured by 1 liter of oil.

What exactly about it doesn't work? You've just illustrated how there is a built in corrective feeback loop to keep the price of bitcoin no higher than that of oil because if it goes above oil's price, profit takers come in and fix that. so that entire scenario of bitcoin selling for $2 while 1 liter of oil was $1 is not going to happen.

if bitcoin fell under $1 and oil was $1 then bitcoin holders would certainly consider redeeming it for oil and then selling that oil for $1. that can't go on forever though because at some point the market price of oil is going to be affected. and bring it into alignment with the price of bitcoin.

when it comes to asset-backed crypto though, this is what you want though. a corrective feedback mechanism that keeps things pegged to each other and not artificially. an artificial peg could be attempted with something like oil but that would have larger ramifications than just on the crypto that it was backing. the world in general won't let some oil producer just set an arbitrary price on oil.


That's easy. You store your own oil. When you want to sell it, you put the word out and buyers come and inspect it and if it meet their quality guidelines they pay you in bitcoin. And they take possession of the oil and responsibility for its storage.

There is but you aren't paying attention. I already gave oil as an example. Now not everyone can put up their own oil drilling well but if they wanted to they could. It just might cost money. Same as bitcoin mining. not everyone can do that since it costs alot but if they really wanted to, they could.

I don't look at it that way at all. I look at it as a guarantee of success. When something is backed up by a valuable asset which is a commodity in the world useful to its operation, you can't go wrong. You don't even know if bitcoin might go to zero one day and yet you're talking about placing limits on high high up it can go. smh.


According to a recent report from IBISWorld, the global oil and gas industry generates over US$2 trillion in revenue a year


How much revenue are people making in bitcoin right now? I bet not more than that. Bitcoin's entire marketcap isn't even $1 trillion.


it's
not
as
easy
as you
make it
out
to be

how do you get money onto decentralized exchanges? oh right, you have to first get bitcoin somehow. and so you have to use something like coinbase. meeting in dark alleys aint my thing. plus, then you have to try and sell it to someone p2p which requires meeting up in a dark alley again. and then reporting the entire thing to the irs. plus buying things p2p is probably like a 30% markup over somewhere like coinbase. so while it may be completely legal its probably completely dumb too. but if someone doesn't have any other choice so be it. you also have to either hide your money under your mattress once you sell it p2p or explain to your bank where the money came from and they might file a SAR against you or close your account. Then you WILL be storing your money under your mattress but don't forget to check the box that says you sold crypto on your irs tax return anyway.


Those type of abuses of bitcoin are kind of surprising. But just like the banking system can loan out money created out of thin air, I guess we shouldn't be surprised that industries try and mimic that type of behavior with bitcoin.

I don't want to make a profit. I just want a stable store of value which is decentralized and trustless. something where I put in $1 and 10 years later I know it will be worth the same exact amount. No more no less. But I want it to be digital cryptocurrency, not fiat. The problem is, you can't have that. Not exactly but maybe you can come close. that's the whole idea behind backing up a cryptocurrency with a physical asset. You're pretty confident the price will be somewhat stable. There is the risk the value of the asset can go down but it's a risk you have to take.

Bitcoin as an investment does not make sense to me. Even at $20,000 say someone put in $500. Bitcoin would have to go up to $40,000 for them to double their money. For bitcoin to double its marketcap is not easy and takes time. To go up by 5x, it would have to increase higher than it ever has before. the higher bitcoin's price is, the less attractive it is to me from an investment standpoint. what i cannot accept is putting money in and just watching it go down and down. if bitcoin is supposed to be valuable and has value then that should not be happening but i think it does happen. i understand why it goes up but they should fix it so it doesn't go down. and only goes up or stays at the same price. then it would be a better store of value for someone like me.

The value itself is created on the premise of decentralization and putting the financial power back in the hands of ordinary people. Isn't that value? I mean, it can be based on gold, but what's gold's value based on? Value is not something universal nor is it one thing. The beauty of it is that the social interactions and the promise of a different financial future are of value.

If you don't understand why the limit is fixed at 21 million, then maybe you should step away from Bitcoin because it is part of the foundation and contributes massively to the price. People who hold it are more comfortable because the supply is restricted and rather low. It also helps that it is a relatively low number, because it helps to beat inflation and there is a natural attrition rate of lost coins which will help. Why does anything have value in life? Because people have agreed to trade a good or service, in return for another good or service - it is how currency works. Instead of finding someone who wants your good or service, you convert it into a unit which can be traded in a general market.

Why should bitcoin be backed up? why should gold or any other valuable form of investments stand in for bitcoin? There are somethings that were better left unsaid than saying falasy, the fact remains that bitcoin stands on it own and that's one of the reasons why it remains decentralized, other form of assets are centralized while bitcoin is self dependent on its own, when we go by using another asset to back bitcoin is as saying its value isn't worth it and can't stand without being dependent, this is one of the reasons why bitcoin is a good source of an investment asset and store of value that is incomparable to other digital currency or physical assets.

What is the worlds reserve currency, the United States Dollar backed by? Absolutely nothing! (Well other than the “full faith and credit” of the United States government).  It’s no longer backed by gold.

You also don’t seem to understand the importance of having a finite amount ever made. If you keep allowing something to be printed (or minted) it dilutes the other dollars/coins and makes them less valuable. Bitcoin can be broken down to a very small amount, which allows for this to work and work long term.

I think that the reason for this is the very essence of bitcoin. It should be understood that the bitcoin model is completely different and the price of this cryptocurrency does not depend on anything specific.