Op is missing on a fact that bitcoin as a production cost as well. The mining rigs are expensive. Electricity requirement is real and maintenance requirements are there! We are not living in 2009 anymore where our laptops are able to produce bitcoins. So when OP is saying perceived value - it's fundamentally incorrect!
Also bitcoin doesn't need to be backed up by some commodity. Not everything on earth need to follow a traditional method. Sometime out-of-the-box assets are far more sustainable than others.
Topic: why can't bitcoin be based on something that has value? - page 9. (Read 1988 times)
i dont understand why bitcoin has to be just base on people perceive value of it. and for someone to just artrarily fix the supply of them at 21 million doesn't make any sense. it should be able to contract and expand the # of bitcoins in existence. but because bitcoin is design very simplistically it is kind of like monopoly money. not backed up by anything.
If you can figure out how to trustlessly back a coin with some physical entity, you will have accomplished something that nobody else has ever been able to do.
But, let's suppose you figure out how to trustlessly back bitcoin with something. Now, the question becomes, "what is that something backed by?" In the end, you can be backed by nothing but economic utility. So, just make it simple and let the value of a bitcoin be backed by its economic utility -- which it is.
Think about it — how can you have bitcoin backed by literally anything physical, but still remain decentralized and trustless? Being backed by something physical automatically invites counterparty risk.
Bitcoin is not imaginary. It's real.
It's information.
Would you say a photo encoded in a computer is not real? Bitcoin is even better than that because you cannot duplicate it, like you can with the digital photo.
What's the value of that photo?, well, it depends on many factors, but it can have a value if it's useful or desirable by people. Also scarcity increases the value. An exclusive photograph that no one else has can have a great value. A common photo has less value. And so on.
Bitcoin is way better than gold because it has similar properties without having to have all the negatives like difficulty to transport, verification, divisibility, etc.
It's information.
Would you say a photo encoded in a computer is not real? Bitcoin is even better than that because you cannot duplicate it, like you can with the digital photo.
What's the value of that photo?, well, it depends on many factors, but it can have a value if it's useful or desirable by people. Also scarcity increases the value. An exclusive photograph that no one else has can have a great value. A common photo has less value. And so on.
Bitcoin is way better than gold because it has similar properties without having to have all the negatives like difficulty to transport, verification, divisibility, etc.
Money does not need to be "backed up" by something. In fact no money in the world is backed up by anything. Take US dollar for example, it is not backed up by anything except a stupid faith 70 years ago. So the real question you need to be answering first is why should bitcoin be different from other currencies?
i dont understand why bitcoin has to be just base on people perceive value of it. and for someone to just artrarily fix the supply of them at 21 million doesn't make any sense. it should be able to contract and expand the # of bitcoins in existence. but because bitcoin is design very simplistically it is kind of like monopoly money. not backed up by anything.
Quote from: death_wish
It's a common myth. Bitcoin’s price is not directly caused by subjective perceptions: It is a result of the market, based on supply and demand. Perceptions are one factor in the “demand” side of that. There are other factors to demand; and perceptions do not alter supply.
Ultimately, Bitcoin’s fundamental value derives from its facilitation of productive economic activity, which would be costlier, infeasible, or impossible without Bitcoin. I know that I have done productive non-Bitcoin, non-market business with Bitcoin, which I could not have done without Bitcoin. That’s not extraordinary: It is being an ordinary Bitcoiner who uses Bitcoin as money, rather than a purely speculative buyer who just wants “number go up”. The more such people they are, the higher the organic, non-speculative demand for BTC.
i'm not saying bitcoin doesn't do that. but bitcoin has weaknesses. you can't deny that. the main weakness being that it is not backed up by something like gold. gold could then be used to measure the value of bitcoin. and gold has real world use. people wear it. it gets used in all kinds of electronics. bitcoin doesn't get used anywhere for any purpose. it's just imaginary.Ultimately, Bitcoin’s fundamental value derives from its facilitation of productive economic activity, which would be costlier, infeasible, or impossible without Bitcoin. I know that I have done productive non-Bitcoin, non-market business with Bitcoin, which I could not have done without Bitcoin. That’s not extraordinary: It is being an ordinary Bitcoiner who uses Bitcoin as money, rather than a purely speculative buyer who just wants “number go up”. The more such people they are, the higher the organic, non-speculative demand for BTC.
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This discussion of economics is far off-topic for the development forum. I feel obliged to answer something that is more usually nocoiner FUD or newbie confusion. If you have further questions about this, I refer you to Bitcoin Discussion or Economics.
ok well, the topic belongs somewhere. Jump to: