Topic: Why is bitcoin (crypto) worth anything at all?? (Read 700 times)

People have different fields of knowledge, I may know about technology and economics but if I were to try to do a surgery then my incompetence will soon become obvious to anyone that has any knowledge about the subject.

And the same is true here, the problem is why are people so ignorant about how the economy works? And to me it is clear that this is exactly the way governments like it, after all it is way easier to make people part with their money and all the effort they needed to acquire it if they do not know anything about it, while for the people that know what is up like us not only have the tendency to save but to do so in hard assets like bitcoin that they cannot inflate away.

There are about 7.9 billion people in the world.  Giving everyone 1 million dollars would take 7.9 quadrillion dollars.  There is not more than 7.9 quadrillion dollars in the world, therefore your assumption that there is enough to redistribute $1 million to everyone in the world is wrong.

There is an estimated 360 trillion dollars of wealth in the entire world, which is nowhere near 7.9 quadrillion.

Any person who disregards inflation while calculating, even on default and off the top of their head without thinking through, like even on the surface, is an idiot. However, know the fact that there are enough money in the world to redistribute and give everyone a million dollars, that part is very true. So why should we do it?

Well I don't have a million dollars and some other guy have a lot, top 400 of the world has 3.2 trillion dollars, distribute that alone and you got yourself over 3 million people covered, just with the richest 400 people, think about all the nations and governments and treasury and every single person who has more than one million dollars and take that and give it to everyone who has less than a million dollars. I am not saying doing this is a good idea, it is not, but it is possible and suddenly you literally created equality.

Bitcoin represented by blockchain technology has brought tremendous changes to the world. Bitcoin has great value due to its scarcity, ang many institutions now use Bitcoin, which has greatly increased the price of Bitcoin. Bitcoin brings a lot of profits to investors and allows people to achieve wealth freedom. As people's consensus on cryptocurrency increases, the development of cryptocurrency will be better.

I would be interested to see these "smart" people who believe that just mechanical printing of empty money will make everyone rich and well-off It's just that such thoughts are usually inherent in people who do not understand the essence of the issue or do not want to understand it for some reason. People who are fans of simple solutions and simply do not represent the consequences of such simple decisions. People who believe that the experience of previous generations is worthless and everything is done and done wrong. Money is not such a simple thing and does not forgive a frivolous attitude towards oneself.

The OP eventually learned that this was not possible but you have no idea how many times I have heard people that I consider to be smart say things like ‘if the government printed one million dollars for each person then everyone will be a millionaire and no one will be poor again’.

Those people do not understand that money is not the issue here, money is nothing more but a representation of value, if you give so much of that monopoly money away but the production of goods and services does not increase then you have a lot more money chasing for the same products and services increasing the price you need to pay for them and ending their utopia of fake millionaires.

The printing of fiat I think is sanctioned by the state before being printed and introduced to circulation, the reason that we are like that is because we don't see how big the scale of money that is destroyed and removed out of circulation. I think that it's a bit different than bitcoin because bitcoin has a worth because it's being traded.

That's too ridiculous and just imagine if any country did that I think it would actually cause a bigger problem,
of course it will be inflation other than that currency has no value anymore

We can't solve any problem if never find a solution to it but never think that all the possible solutions could work, no, sometimes it won't. Just like OP said, we have to print millions of paper money to give to the poor people, that actually it never works coz it only makes people become lazy as they know the government will provide them, unlike if you are going to work hard and earn some money, you can appreciate the value of it.
Just like seeing Bitcoin, it reaches that price because it was important to the people. You can never change the system, even digital currencies are just the representation of something, they still become valuable assets.

I do not know how you think about all this . Too simple thinking like that. How is it possible for the state to print cash at will and then distribute it for free by the public. LOL If so, there will be no more people who want to try. Maybe now there is no bitcoin because if that were the case, it would happen

Just to answer some of your questions, printing money would result to hyperinflation. This would render the value of the currency almost as worthless due to the supply of money in circulation while having little demand. Like what happened to Zimbabwe, their currencies are denominated at 'one hundred trillion dollars' but its value is relatively low due to its ongoing over supply in the market.

The value of cryptocurrencies depend on how much money people are willing to pay for it. Although it may sound easier than it looks, the potential of cryptocurrencies as the future of transactions is starting. People are taking into consideration the value of the blockchain technology and its modern usage in shaping the future of all the transactions made.

It is weird that you say this because in fact it is kind of ironic, the current financial system is based on trust, there is just one small little problem, governments and central banks break that trust all the time and this is a historical fact.

Bitcoin derives some of its value precisely because trust is not necessary and instead uses math to verify everything, and ironically this generates trust in people, for example we do not really know how much money is printed by a government, we are told that it was a certain amount but they could have printed more and there is no way to know if this is true or not, but in the case of bitcoin we know exactly how many coins are created daily, we also know the amount of those coins that will ever exist, which before bitcoin it was something that no currency around the world ever had.

OP, I'm not sure that it's you not understanding the nature of money that's the problem.  The issue is that we're living in a very weird time when things like you described above can happen, and to me it indicates that there's way too much money floating around and people are playing with it instead of using it for essentials or saving it.  Doge going to $1 is similar to Game Stop stock going to whatever its recent high was; both are completely irrational happenings, but they happened because there's this kind of gambling fever hitting the world--except it's not at the casinos but in the stock and crypto markets.

Also, if you're interested in actually learning about money there are tons of books you can read on the subject.  I'm still finishing Digital Gold by Nathaniel Popper, and it gives a good account of how bitcoin got to be thought of as a real currency (and it gives a great history of the early days of bitcoin as well). 

Anyway, the things that are likely in bubbles right now (doge, stocks, whatever) aren't all forms of money but assets.  Even doge is considered an asset and not money by the US government, though we tend to think of it as a currency. 

For some people, yes.  I'd argue that majoring in economics in college is easier than, say, physics, chemistry, mathematics, pharmacy, or engineering.  It depends on how smart you are and--probably more importantly--how interested you are in the subject.

Knowing that what you say is correct but on the government list, bitcoin is becoming an unused product, maybe some countries are accepting it but compared with many countries denying, it is not a significant number and can reverse this denial, so bitcoin's value didn't come from recognition when the government didn't consider it legal. Maybe some belief brainwashing created such values, regardless of the characteristics and origin of bitcoin, we are still buying without paying attention to the basic information of the product

simple like this.
why is there food? because to survive
why are there clothes? because to cover the body
why are there drinks? because to quench thirst
why is there money? because to exchange it for need
why are there bitcoins? because someone wants it
why is it worth it? as demand increases
what happens when the demand for Bitcoin decreases? then the price of Bitcoin will automatically fall.

Isn't YIN - Yang the concept of what exists in this world?
everything must have a partner. good or bad, negative and positive impact.

Isn't everything designed so beautifully?

Trust. That is the main reason why people accepts and holding BTC knowing it could be more scarce that ever. Just like trusting your government, any currency are backed by governments assurance that it has its value and also backed by countries economic status. Meanwhile, some crypto have their own price due to its utility.

Because bitcoin is recognized as a kind of digital gold, allowing money transfers, cross-border transactions and settlement of valuable exchanges quickly. In some countries, bitcoin provides an “escape” for citizens concerned about financial instability.

Elonmusk only posts about BTC and makes memes, but it's easy for people to be led to what Elonmusk wants.  Elon was the one who created prices by hypnotizing market trends, he earned the public's name and trust because of the doge pump incident.  so all can have a price if anyone wants it.  including bitcoin can have such a high price because there are those who want to buy it

Correct, this is nothing more than the labor theory of value which is a Marxist theory about value which says that the worth of something is derived from the labor necessary to produce it and this is false, as you say just because we put a lot of effort into something that does not mean that it has value.

Whatever we do it must have a market, just as there is supply there is demand as well and just because we supply something to the market that does not mean there is demand for our product, and even if there is at the end it is the demand that decides the final value of what we do.

Mechanical engineering student here, So I would like to know, which area in car is the one you fear for you not to consider driving. Cause if it is in the car specs specially, maybe I can do a thesis about it (secretly looking for thesis ideas).

The frightening part of driving is the amount of flexibility, awareness, and reflex while in the highway where accidents may occur, or even incidents.

And yeah, I agree that you don't need to "DO" things you don't want to, ESPECIALLY when you know how things works in that area.

I know exactly how a car works and that is exactly why I do not drive one . The car working has absolutely nothing with safety at all, safety comes from driver and I do not trust myself to operate such a complex machine.

I know it is just pedals and wheel these days but that doesn't change the fact that I will not be doing anything at all that would be stupid, I will still do something idiotic and crash, I know myself hence I never got a license at all, I was tested before twice and drove a car at supervision of a teacher and I got perfect score twice, both of the times teacher told me I would be one of the good ones driving and that scared me even more.

Long story short, applying that to crypto, just because you know how it works or why it worths something doesn't mean that you should like something, or not knowing doesn't mean you should hate it, you could know and love or hate, or you could have no idea why it worths and still love or hate, knowing is irrelevant.

To your first question the answer is yes.  Though this dose not prove I know the answer to 'why'.  I do not know the answer to 'why' a car works, but i still choose to drive one. It is not necessary to know the answer to 'why' to use try something new.

As for your second question, sure why not?, pm me, a signed address that you own and post over to the signature signing thread and have it quoted (https://bitcointalksearch.org/topic/m.57198327)  and I will send some amount of my crypto to it. (This offer only applies to paxmao, all other pm's will be ignored).

FTFY

The real problem you're facing boils down to this: economics is hard.
On the face of it, there are several layers of "applied economics" where you find a buch of equations to explain common effects of certain behaviors, e.g. "what happens if I print more banknotes?".

But there's also an underlying "philosophy" of economics, which is a lot harder to grasp.
What does it mean for something to "have" "value"?
What does it mean for someone to "own" something?

There's a common thought experiment of the first Neanderthal who ever pointed at the ground and told his fellow Neanderthals "this is mine".
Oh, they laughed so hard.
Ugrulug, what you mean "this is yours"?

There is no natural law to claim ownership of something you simply have.
OTOH, there is a natural law to claim ownership of something you made.
But in practically all real-world examples, something you made also contains something you simply had before.
So, you created a bow and arrow out of a few sticks and stones?
Great for you, the bow and arrow are yours, but the sticks and stones that are part of the bow and arrow, why are they yours?
Now, Ugrulug will claim that the sticks and stones are his, because they were found on "his" land.
But why was it Ugrulugs land in the first place?

And that's where basically everything breaks down.
There is no natural order of things that would define the concept of ownership.
But that concept is the basics for a popular understanding of economics.


Now, there's another approach, and that is the concept of ownership as a social contract.
I.e. society (whoever that is) agrees on a set of rules to define ownership.
Why would they do that?
Because it's useful.

If someone can lay a claim on land, he can be certain that no-one will take away the grain he seeded on this land.
If someone can lay a claim on a hut he built, he can be certain that no-one will simply sleep in it without asking him first.
And that certainty incentivizes people to actually produce more.
A society where everyone produces more is more productive.
A more productive society will outcompete other societies.
In a kind of evolutionary arms race, societies with a higher level of organization and laws will become dominant over others.
Those societies with less rules and laws will become extinct.
But I digress.


Because now there's a new kid on the block.
It's called "intellectual property".
It does not (necessarily) contain something that existed before.
In a way, there actually is a natural law to claim ownership of intellectual property.
But there's a catch:
Intellectual property is not unique.
It may be copied.
Again, there's no natural law against copying.
And again, it may be useful for a society to protect intellectual property nonetheless.
But still, we're left with a social contract that has to protect it.


Now there's a corollary to that concept of a social contract:
Contracts may be breached.
Or, since they have to be accepted by society as a whole, they may be changed or replaced, if and when society decides so.


Fast forward to 2008.
Again, there's a new kid on the block.
Bitcoin.
It is something.
But what exactly is it?
Is it property?
Is it intellectual property?
Is it some kind of thing simply protected by a social contract?
Yes, it is, it's protected by a social contract set in code and enforced by the computers of numerous users.
So is it really special?
Well, that depends.
"A" Bitcoin is a kind of intellectual property, but it's also one that cannot simply be copied in any meaningful way.
It is protected automatically and there's no simple way to change the rules of this specific society.

And that's what makes Bitcoin kind of special.
It's still something like intellectual property (which is being used as "money") protected by a kind of social contract, but unlike others, this contract is practically a lot more secure.
Think of so-called "socialist" countries where the general social contract to protect property rights is being unilaterally breached.
Something like that is impossible, or at the very least highly unlikely for Bitcoin.
A more "social contract-secure" property is more useful than "regular" property.

And that, in a nutshell, is why Bitcoin has value.
It's more useful than other kinds of property.

My quick answer to your question is: Do you have any crypto? and if so, would you give it to me for free?

My guess is that yes, and no, so you know perfectly well that it has a value to you, and that applies to many other people, so yes, it has a value because a group has agreed that this is a resource valuable to them and they are only willing to trade it for a value in other asset, thus the answer is served.

Bitcoin is valuable because many projects use it.  Like Tesla uses a lot of bitcoins.  And many other projects that use bitcoin.  And also many miners are carried out by mining projects.  When a large project wants to release btcoin, then bitcoin will decrease in price, such as the issue of Tesla wanting to release bitcoin which was tweeted by Elon Musk through his Twitter.  Automatically greatly affects the price of bitcoin.  With the bad news from Tesla, bitcoin automatically decreased and also the number of mining projects in China increased again, the price of bitcoin fell again.

In this world anything depends on demands and supply. Bitcoin has limited supply, when limited supply adopted by so many countries and traders then price can go at any point. limted supply and more adoption by worldwide makes bitcoin worth anything at all. earlier there was big investors only but now bitcoin has almost every class money at their marketcap. So not easy to manipulate bitcoin price now.

While I admit to having certain knowledge in certain domains, specifically in technological circles. I must profess I am no expert in economics, and the only reason I passed it in University was because the professor graded my exam by saying "well that's not right - but I know what you were thinking" and gave me an 80%. Thank god for mind reading professors.

I think the value of bitcoin or any other crypto starts within you. With how you percieve it, with how you give importance to it and with how you provide time and effort for it. No matter what type of currency, the worth of it is decided on how much people are demanding and using it. The law of supply and demand would always apply on how a certain currency becomes more valuable and that can also be one of the reason why banks are not allowed to make too much paper money other than the detrimental effect it may cause for a country's economy.

Oh, a smurf account starts a topic in economics, this must be entertaining

"Pleasing people" may not be a suitable term for "fulfilling needs/wants" of people but yeah, hard work alone without satisfying any demand would be meaningless.
About the worth of goods/services, it's all subjective and created from collective subjective valuations from people. In the beginning there was no price, but enough users think that BTC is valuable. After there is an initial price, there is price memory, and snowballed until forever or not enough people think that BTC is valuable.

If you are working in a company or even a daily waging professional their average salary increases every year on most of the country but countries with the high inflation rates are actually losing the purchase value so people are actually making less money than previous year which they never understand because they don't know what is called inflation.

Venezuela over-created its national currency, destroying their economy.  Because of the infinity of printing money, their money has no value. Different from bitcoin,  Bitcoin is printed with a certain supply.  When people start to trust and use bitcoin, the price also goes up.  And vice versa if there are many people who don't use the price, the price will go down, even to Zero Price like you said.  I totally agree with what you said.

I think the topic of 'hard work', 'value' and 'pleasing others'  warrants an interesting topic on their own, and I, myself, started going off in this thread, which as I reflect now is off topic from my original question.  If someone wants to start a topic on that an applicable forum, i would be happy to comment further.

I think the best shortest explanation that satisfied my query was from odolvlobo


Other key take-aways for me include

• Bitcoin (and altcoins in general) are worth what they are worth simply because that's what people are willing to pay for them.
• Bitcoin like paper money may have no intrinsic value on its own, but to its utility to provide /purchase other tangible things
• If Bitcoin does have intrinsic value it is the fact that it is de-centralized, and yet still can be governed by things like digital signatures, and is unique in the respect that as more is created, more is secured, unlike all other digital assets where copying decreases the value.
• If someone buys a 1000 meme coins at $0.001. and a few days later that meme coin becomes worth $1.00 on exchanges. This does not imply the person made $999.00. This  is only true if the person can convince others to buy their coin for the $1.00.  Some will be able to do this at first, but it will get harder as more people sell, the value will decrease.  Therefore, you can't simply give 1000 meme coins to a bunch of people and then a 'tweet' suddenly makes them oodles of money. It will make a certain percentage of people that value, but it will be small and not last for very long.

This is the biggest trouble in human history. How do you know if something is a very valuable hard work and something is a useless hard work.

I am 100% sure that someone who works at mcdonalds works much much harder than Elon Musk and Jeff Bezos combined, why? Because those people are actually working and doing something whereas the other two just tells others what they want done and that's it, and for some reason they are richer, not because they are better than anyone else, they did something that eventually worth money by abusing others by using their parents money, sure anyone with low ethics and parent money could have but only these two achieved, yet both Elon and Jeff took money from parents, couldn't fail because they were kept paid by their parents, and then they abused others work tirelessly without chance of union so that they could basically allow tax payers to pay whatever their own workers needed, how is that fair hard work that made them worth so much?

Here is an example.

a) I create an online game, I spend hundreds of thousands of hours working on it, tweaking it, making it work exactly like I envisioned in my mind, giving no consideration to what others may want, how they want it to look, or what elements they may like (or not like to see).  That was hard work

b) I invite people to play the game, they try it, a few kind of like it but most find it un-interesting, or boring, or 'lacking' in some way.  It did not please them, it did not fulfill a need for entertainment, enjoyment, or give them back something they otherwise felt lacking in (or perhaps didn't even know they were lacking only until after they played it. They were not pleased


Let us assume that 'success = making money' (at least for the purposes of this thread)

Making money requires they be pleased (ie: the opposite of 'b') .  People will not buy things unless they believe it is giving something they want. People buy on the emotion and later justify with rationalizations.  It does not necessarily require 'a' (though most people seem to think that 'hard work' = 'success' it simply is not true.

All 'rich' people had to figure out how to please 'someone' else to be rich, not necessarily 'everyone'.

Also - You can still be 'selfish' and please other 'selfish' people. ie: invest in my idea and it will make YOU a million dollars! (and also happens to make me $10 million).

Your comment completely misses the point. What does “pleasing people” have to do with “working hard”? Sure, some jobs require both, but not always. Many professional activities lack a social or humanistic component.

People can be selfish bastards (many rich people are), without "pleasing" anyone their entire lives, while achieving tremendous success in their business and earning incredible amounts of money.

I think you are confusing 'working hard' with 'pleasing people'  If you dig a whole in the ground all day long, perhaps this may please you, but does it please others?  If the hard work you do does not please others, does not benefit others in society in some way, then it is unlikely to make you any money...but it was still hard work that went into it.

If I worked for a company for 10 years, just made enough to live on, and the company never made a profit (and eventually went out of business because it failed to sufficiently please others). I still worked hard.

There is a gamble, when you start a task their are no guarantee who or how many will benefit or be pleased by it. You can research and do statistics, and try and 'hedge your bets' that your hard work will pay off, but in the end if your work pleases no one, it does not diminish how hard your worked, it was just a bad gamble.

It's just that the author shows a typical mistake of a typical inventor of the perpetual motion machine, but only in the field of economics It's just that the author shows a typical mistake of a typical inventor of the perpetual motion machine, but only in the field of economics He is well aware of some illogicality of his reasoning, but puts it down to the strangeness of the world. However, some modern methods of responding to supply and demand do sometimes take exotic forms, but still eventually come down to long-known norms and schemes; D

There are some people who never learn. And they never will...

like I said, Elon will be Elon, his money speaks on this, It's only natural that there would be a some groups that would follow him as it's business and as they think Elon will bring them up on the ladders. If Elon decides to FUD then shit happens, but still if there would be any other large groups out there to contradict this shitty event then he won't be likely affect the market.

The world isn't strange, it's rational. Economics is essentially understanding how individuals or groups of people respond to incentives, and the rest of it is just understanding supply and demand.  The anecdote about bottled water is just a failure to understand that markets develop and new products develop to satisfy new demand.

The irony is that OP ends the post with the same basic misunderstanding he starts the post with. The post starts with "if everyone was given $1m then there would be no poverty" and ends with "if all poor people were just given meme coins and then we pumped them all there would be no poverty."  It seems OP never learned anything from his "naive" days afterall.

I was so satisfied to read the print more money syndrome because when I was a kid, I used to think the governments don't have equipment enough to print enough money. But like you mentioned, I too realized with time that it only brings inflation and doesn't actually solve the problem.

I cannot answer all you have asked but I will answer a few questions that I am capable of answering.

Moving in the future everything will be digital and not everything you can touch has value. Your thoughts for example are not tangible but controls your entire life, so they have value.

Criminals also use money, drink water, breathe air and perform a lot of activities we do, we cannot forfeit everything because criminals have them in common.

all can not be separated from a background. when ellon bought bitcoin in bulk, he announced it, which means the tesla company legalized bitcoin, and at that time the effect was seen until bitcoin reached the peak, and finally he made a statement that was the opposite, so bitcoin reached an anti-climax the second time ellon's statement seemed to be followed by the trading community. but after this whether his words can still have a big influence.....

That's literally the only reason? I feel like he has a bit more influence over other billionaires. I mean sure if Jeff Bezos said something that would have an impact as well but it changes from person to person. Warren Buffet is one of the richest people alive and that dude has so much money yet when he said bitcoin is not something he would invest and it has no value, nobody cared at all? Which means just being rich doesn't mean anything, if being rich was the only thing that mattered Warren Buffet would have dropped the price of bitcoin by now when he said that.

It means there is more to it than just being rich, Elon is both rich, famous outside of business world, and also avid user of twitter, when you combine these things all together that makes a person very influential over other people, there are not that many people who are better than him in all those three things.

Yes indeed, without his background his tweets are nothing, Elon Musk is Elon Musk, a celebrity and a billionaire, every people whose life is lukely under him will believe anything he says and they'll ride on it. This is just a proof that Money=Power, it defines your capabilities, it severes the market IMO, it is deeply a shit.

---

I remembered some tweets being sold, and I'm like " wtf?"
Good waste of money from degens

The wages in your country increases every year? That's actually pretty good because the minimum wage workers can keep up with the inflation. That's what people do with things that they see everyday, they take it for granted and that's normal because not everyone has a curious mind. The reason why bitcoin has a worth is the same as fiat money, we the people put value in it.

The weird thing is, we could say this for all currencies in it is reality. Sure we are not saying it because there are federal banks and governments provide some sort of "promise" that it worths something, but really do they? I mean think about it, at the end of the day dollar is something USA government tells us to use and that's it, that is the only thing that makes sense for people to use it, if everyone got together and said that "we no longer believe dollar has any value" we could do that, it would become zero over night, we are not doing that just because one government promises us, that's it.

This is why I believe bitcoin has a value and will always have a value because people say so, there is nobody that promises a value to it, we put that value in bitcoin and we promise each other and we see the value change every day constantly as well.

well "working hard" means doing something useful that pays otherwise you can dig a hole in the ground in the middle of the desert all day long and then complain about not making any money while "working hard".
thats the problem with your painting example, if there is no market for it or if the painter is not good at it then it is not "working hard" it is waste of time.

also "working hard" does guarantee money but what it doesn't guarantee is getting rich or living well. what you do with that money (waste it, spend it, invest it to grow) determines your future.

Government never let a common man to understand about how money system works, the people keep running behind the money everyday but they never stopped and realized how it was created and why we can't become rich even though our wages increased a lot every year.

Almost everyone has that kind of thought when they were growing, and I did have this same and always wondered why they never did this until I started growing up and understood how money (or economics in general) works. And as for bitcoin, sometimes you have to take the risk, because when you don’t, you might be missing an opportunity of a lifetime.

The value of bitcoin comes from its scarcity,divisibility, utility, and transferability. These are not what I am going to be explaining one by one, I think it’s up to you to do your serious research and get full understanding on this.

And moreover another thing is the belief that we have for Bitcoin, when people believes in something, that means it is going to stay literally forever.

well i think if we ask most people why they can't forget that name: " bitcoin " or if we ask people when someone talks about bitcoin what's on their minds, i think the answer to both questions is: " an investment of 10X or 1000X profit they can have in a few years". the name bitcoin became very popular because it managed to make many people have a lot of profit quickly, it managed to create many jobs and ways to earn money, see how many people will get rich with creating altcoins, with creating exchanges and creating many and many companies and all thanks to bitcoin.


no doubt this is a name that hundreds of people remember very easily 


True, the problem with most altcoins is centralization, creators stay on twitter giving news that make the price of altcoin increase in price and when there is no good news the price does not increase, and competition is very high for altcoins

That's precisely the point. 

Your first reference is literally a central bank, isn't that kind of the colloquial drinking of the cool aid :-)

Your second reference is fascinating! -  I had no idea so many countries had so many different definitions of what 'money is'...that's more crazy then this entire thread :-)

Nope. Contrary to popular belief, it is the other way around; cash (banknotes and coins) is a physical representation of modern monetary units (currencies) and money can (and does) exist independently of physical representations.

references:
What is money? (European Central Bank)
Money supply (Wikipedia)


Tell that to the people of Venezuela.

Yes very strange, but at least the person with Britney's napkin can display it, show it off to others, and bask in the glory of touching something that Britney herself also touched  .  I do not know how to bask in the glory of my coin, or show it off to anyone, because ..it is just "data"


Yes, I think I'm beginning to get this now it seem the characteristics of the coin, the security, the immutability of the blockchain, this is something crypto has that no other digital media has, the fact that it can be copied millions of times, and still increase in value.

Isn't it the other way around? As supply decreases, prices rise.
At least that's what my teachers taught me.

Nope the bits and bytes n your bank account has no value at all. It is a virtual representation of the cash (liquid assets) you hold. In fact if those bits and bytes (or in the old days ledgers on books) were the ACTUAL value, then there would never be a "RUN ON THE BANK", the bank would simply update the bits and bytes to show whatever value they wanted...of course if your bank account today was $100,000 and tomorrow become $10, it is unlikely you would just 'accept' this and say 'well i guess the value just changed, oh well' 

I think it important to be careful of the word "value" in this context as well. I still keep photos of my loved ones in my wallet, and they have value to me, but it is not  really a "tradable value". It sentimental value.

And perhaps a patent does have the potential for value, but it also has the potential to be worthless, until someone actually makes it, or tries it, or sells it, there is no established monetary value (though again I assume it holds a lot of value to the person who created it, just as the software i create holds a lot of value to me, even if no one else buys it)

It feels like though that Crypto actually has worth on it's own. It is not simply a representation  of money it is something you OWN like a house - special - , it's not like 'currency', or 'bits /bytes'.

It is something people want to have, and more interestingly, as I learn about it, those bits and bytes cannot simply be 'changed' they become immutable. A person can hack a bank account and modify those bits to whatever they want, but a person cannot hack everyone's copy of the blockchain and reverse out the transactions signed with thousands (millions) of public keys..maybe that is what gives crypto it's 'worth'

As simple as that, I remember that back then when Britney Spears was incredibly popular there were people paying thousands of dollars for a used napkin or a partial burger she did not finish, even if this seems ridiculous to us as long as people are willing to pay for it then it has value.

Bitcoin is a currency that no one can print at will, which can move freely and that you truly own, characteristics that fiat does not have so people find value in it and are willing to pay good money to have some bitcoin and get access to the network.

There are numerous intangible assets that have value. As an example, money in a bank account doesn't exist in a tangible form, but only as data within some database (bits and bytes arranged in a specific manner). Similarly, consider brand recognition or intellectual property, such as patents, trademarks, and copyrights. None of these have tangible value, but have potential to be used for something of tangible value.

Bitcoin word on it's own is a very catchy and easy to remember word and people who don't even know anything about crypto are aware of this word like me in 2014.

Take Ethereum for example, it's a lil bit hard to remember for the first timers. 

Lastly, we can't forget, it's the first ever cryptocurrency so it deserves the attention imo.

People are comparing new coins to a coin which was released in 2009, that's pretty obvious the newer ones would be better than Bitcoin, so you can ask why only bitcoin still, but again it was the first ever cryptocurrency and every new comer buys It atleast for once, which is not same case for other coins. It will take a long time for any coin to beat it.

Try reading about supply and demand OP, that's like the basic of Economics, when people are advertised with things, they will buy hence they are the demand and when they buy, the supply goes down and as long as the supply isn't replenished and it gets lower, the prices go down. Another reason why bitcoin has a value is because it has a utility.

Only Elon can make that meme coin holder richer. But once they understand that it has no use case at all but just for gambling like Doge, they will see that holding just 100 of it won't make them rich. The max supply and its allocation are just for the corrupt teams meant to just grab the BTC of the users who are buying these meme coins. They are not going to succeed eventually. 

This is indeed a strange world, very strange. But not only strange, it is also a mad world. But what is actually strange and mad is humanity. When I was a kid, and until now, I cannot really understand how people buy a family's few years' worth of food for just a piece of shoulder bag. Until now, I'm still baffled at how one man goes to sleep hungry while a neighbor feasts on unbelievably expensive food, how a father losses a child only for not having that small piece of paper they call money, and so on.

Why is Bitcoin or even a mere meme coin worth something? Because we are a strange species.

I think what makes people give value (and that's pretty much the reason why it grows in price) is that it's a currency open to everyone as you said, both in code terms and in its transaction terms. Not to mention that not one group could really control it, and even if they tried, it'd use up a LOT of resources. It's worth something because people give worth to it, not just because it's a ponzi scheme, but because it truly has worth. Just like how the development of space exploration wasn't really realistic waaaay back then, people still invested in it since they think it has its worth.

The wrong idea that may seem why Bitcoin is worthless here is that you look at Bitcoin as Bitcoin only, not as a cryptocurrency to be used. It's like looking at a coin as metal, paper as well, paper. When coin can be used to transact, while paper can be used to store info, communicate, etc.

I think there's an unwritten requirement for states mining fiat currency in a stable and reliable format. The public must be educated and informed for good money printing standards to remain standardized. That day people forget what happened the last time excessive amounts of fiat were overprinted. Is the day the history of hyperinflation repeats itself.

We see it throughout history where people are angry and upset over economies and financial markets crashing. Eventually people forget the conditions and policies which led to the big collapse. And it happens again. In the current era most don't know or remember what caused the 2008 economic collapse. Which leaves them powerless. The state could mandate whatever it wanted and few would know whether it paralleled past policy that led to severe economic downturn.

Education and information are the critical components that are hardest to come by in the discussion of maintaining stable markets and economies.

Bitcoin is the "so easy a caveman could do it" solution to these issues. Deflation is built in. People don't have to be educated or informed. The currency is fundamentally designed to be as stable, cost effective and reliable as it could be. Its everything car insurance commercials promise to be, except it delivers on every level.

In short, bitcoins have value because Bitcoin is useful.

Bitcoin facilitates ownership of an intangible thing in a way that conforms to social norms dictating ownership of tangible things. That is one of the breakthroughs of Bitcoin, and also why it is a difficult concept to grasp.

Furthermore, Bitcoin is difficult to grasp because it is based not on the laws of physics or mathematics (though they are an integral part), but on an innate notion of value shared by everyone. It works in a way that does not require artificial constructs -- just basic economic incentives.

Okay fair enough, knowledge of how a car works is not necessary to drive the car, and I will pay a mechanic to fix it because that has value to me. It just seems a strange world that people find bits and bytes so valuable (but as I said bottled water in the 80's seemed foolish to me too)


If I were being nitpicky, I would say "bitcoin" in this context, I am referring to the actual amounts stored and signed in the ledger. This is technically what I 'own', that which I have signed (I think anyway? still a newbie).  I understand bitcoin can also refer to the protocol which transfers those bits across a decentralized network, but I do not 'own' the protocol just the portion of data in the ledger that belongs to me. ..but again that's just being nitpicky.

None of that matters. Tangible or not, Bitcoin ultimately has value because it is useful. For example, knowledge of economics is not tangible, yet you would pay someone for that knowledge.

Bitcoin is not "nothing but 'data', bits and bytes arranged in a specific manner". Bitcoin is a protocol and you can do something with it. In order to use Bitcoin, you must have bitcoins. And if Bitcoin is useful to you, you will be willing to pay for those bitcoins.

But you don't "own" anything. That's my point. If you buy a piece of art with a banana taped to a wall, at least you have something tangible. You can invite your friends over and say Look everyone at this picture I purchased for a ridiculously amount of money to hang on my wall. You can touch it, smell it, eat it maybe?

Bitcoin is nothing but 'data', bits and bytes arranged in a specific manner, you can't do anything with it. Well, I suppose you could make image in Microsoft Paint, and sign it with your wallet private key, print it and put public address and hang it on the wall in my living room?  (hmm, now that I've written that, kind of sounds like a fun idea to try

All of that message could be summed up as "because we are willing to pay to own it" and that's it.

If people want to own a certain thing that means it has value and that is the end of it. There was a funny thing about an art showing having a banana basically taped to wall and it was sold for god knows how many thousands of dollars and some guy just took it and ate it as a fun thing, he was jailed for like a day or two, went to court and something happened, I didn't follow the story after that.

Basically we all know that banana didn't worth that much but people called it art and gave that much valuation. It is not the same in bitcoin, we actually have a reason to use it, but at the end of the day the only thing that makes something valuable is the fact that people are willing to pay for it and that's it. Which is why bitcoin worths something, because we find it valuable.

I think you're wrong about that.

A simple tweet doesn't give value to some meme coin, at least not directly.
There is a saying I read somewhere: "If people value something, it has value." Therefore, it makes no difference what someone tweets, what matters is whether anyone wants to buy (exchange for a generally recognized medium of exchange) the said meme coin.

Bitcoins have value because they can be a store of value and can be used for exchange of services or products. Same principle as fiat currency, they have a value and they can be used for services and products.

"Working hard"  does not guarantee any money at all. People pay you what they think you deserve for the work you provided, if they thought the service was useful to them.

I have no artistic (drawing/painting) talent , and I could spend years of my life practicing, taking courses, drawing, painting, doing art sculptures and never make enough money to survive off it, not because I didn't work hard enough, but because enough people simply did not want to buy my work.

On the flip side, I could make just one painting in a million and possibility become a huge star, it would spread like the doge meme, people could come from all around the world just to admire it. It would be auctioned to charity and help millions of starving children.   [not that I'm holding my breath for that day]

And I would further argue the purpose of  my work was never to 'earn money'. It was to earn a living, the ability to buy other foods and products. As noted in the other thread, the money is not the end goal, it is not 'the thing of value', it is merely the exchange mechanism.

I am sure Elon Musk worked hard to make his billions of dollars, but no way would I believe he work hard to send a tweet that created a surge in the value of dogecoin.

There is a story of Picasso doodling while having a coffee, as he was about to throw it away,  a man walks up and asks if he could have his doodles, Picasso responds, Sure, for $25,000' ..the man was like, 'but you only doodled for a few minutes, and were about to throw it away ??', to which Picasso responds... "No, those doodles took me over 40 years!"

Read this to understand money better, and why they have value. https://bitcointalksearch.org/topic/m.54987665


Where I am from, people work hard to earn money. They have to work to solve problems, customers pay the amount of money the solutions to the problems deserve. In my place, it's actually unheard of to depend on government for handout like you see mainly in advanced societies and  they manage to build standard homes, eat sufficiently etc. It's actually a shameful/strange thing to depend on government or others for handout as a able-bodied person.

A real money (hard money or money based on hardwork) is a representation of solutions to problems and that can be exchanged in a community/communities that value and accept it as good money.
When you print money out of thin air just make sure it paid to people who deserve it, don't use it to pay for things that aren't safe/useful to people, and try not to overpay or underpay.


Bitcoin or true cryptocurrency increases in price because of its deflationary feature that is aimed to help preserve values/assets/money stored in the system. It's actually a hard money because you can't over print and hand it out to people who don't deserve it. It a better financial system due to its Decentralizion, Transparency immutablity, public consensus-driven, permissionless/trustlessness, censorship resistant, privacy-friendliness/anonymity-friendliness. Fiat system or system that tries to copy it can't be trusted as they are centralized and secretive/opaque.

Price for money comes from the demand and need of that stuff in the market. Thats what demand and supply formula tells us.

Since you cleared that why we can't just print money and give it away to everyone, the inflation would be disastrous and nothing else. We will literally have to rest the whole economy if that ever happens. God knows how that day would be for every government in the globe.

Tweet is part of social dilemma that causes people to think about the investments in different way.

Everyone wants money, everyone want to be millionaire so they do not leave a chance behind to invest whenever the opportunity is right. Tweets or News on the CNBC does not matter, what matters is how people consider that news for themselves - Profitable or Non-profitable.

But the tweet won't work if no one will believed it. Somehow it only came out good because he has the background of a billionaire which also defines what he does and people will try to do the same.
Bitcoin didn't start with that, that's what I love about it.
It crawled its way to being the top cryptocurrencies by letting people decide if it will be good for them.
No one is forcing, no popular personality actually tweet about it before. It got ups and downs.
But when a meme coin was tweeted by a billionaire it reacts so fast but it also went down in a rush. What I am saying is, trust was built in bitcoin and became the backbone of crytocurrencies. Without it, who would know what will happen to this industry. That's it's worth now.

If Bitcoin is just bunch of code then fiat money are just a bunch of paper.
Bitcoin is being used by criminals and fiat money are being used by criminals as well.
The price of every financial asset is determined by supply and demand.If the people trust an asset,they will buy it.If nobody trusts Bitcoin,the Bitcoin price would be zero.
The same thing applies to fiat money.The government forces the people to trust the national currency,but sometimes the governments fail(uncontrolled money printing,budget deficits,etc.)and the people lose their trust in the value of the currency.
Do you think that anyone in Venezuela trusts the national currency of Venezuela?

You are thinking the wrong way.

A tweet from elon musk saying he is going to accept bitcoin as a payment method has an impact on price because it may change the future of bitcoin

Price doesn't generate new free money. It is more like a wealth distribution. Price reflects the  future of an asset. Stocks and cruptocurrency are very volatile because the sentiment about the future is always changing.

People do not price stocks based only in past revenue, but in future revenue and sells as well.


When tesla says it will accept bitcoin, it changes the short term future of bitcoin. When a tweet changes it  , bitcoin loses value because its short term future is not so bright as it was an hour before.

Alternate Title: why I will never understand economics

Back in my younger days I had a brilliant idea to solve world poverty it went something like this:

a) Countries 'print' money. The money in my wallet is just paper printed by the government
b) Countries can simply 'print' as much as they want.
c) If every country simply printed and gave out $1 million dollars to everyone in their country (and all countries did this) no one would any longer be poor

..Seemed simple enough for me right?
--

Of course I was naïve in my thinking and it has since been pointed out to me hundreds (thousands?) of times, this idea simply doesn't work. If you give everyone 1 million dollars, then due to  supply/demand and inflation your $1.25 can of coke will now cost $25,000. All that happens is being a 'millionaire' no longer makes you 'rich' it takes $100,000 million to be 'rich' and those with only 1 million become the 'poor class' in society.

I only started getting really interested in bitcoin (and concurrency in general) about 2 years ago. A work colleague had "a lot" of it and was trying to get me to buy into it. Actually he was looking to start a local trading exchange of sorts in my local community.

Now at this point I heard of bitcoin before (since I do not live under a rock), but I never really paid any attention to it for a few reasons:

1) It's not tangible - it's just data, it's not like I am collecting rare stamps or set pieces from a Sci-Fi movie

2) It is used by criminals (to hire hit men, extortion, etc) why would I want to be part of that?

3) There was not a lot of ways to 'buy' and 'sell it' (at least not 10+ years ago compared to today)

When I looked into it a little deeper, this 'data' which I saw as 'worthless' and as little $0.1 grew to an absolute ridiculous number ! and is still growing !!!
No wonder, that colleague wanted me to buy his 'data', His original $200.00 investment was now worth millions! (okay well actually more like $35,000 at the time)

So after cursing myself for not buying into the craze earlier, I spent some time learning about the technology and how it works, I still remain confused of why it is 'worth' anything at all?

Back in the 80's if someone came up to me and tried to sell me a bottle of water, I would have told them they were foolish!. Today bottle water is worth then gasoline (per volume) !!

My point is the world is a strange, strange place, and continues to grow stranger everyday.

In my opinion data cannot be a commodity it is not tangible, it is not something you can "own". At least bottled water is something I can use.

From my rudimentary understanding of economics, my work colleague "the seller" wants me to buy his bitcoin because the price is so high (law of supply)
but because the price he wants to trade at is so high, I don't really want to buy it (law of demand)

Back to the simple example of gasoline. If the seller demands too high of a price for gas, people won't pay and will look for alternative solutions, if the buyer demands too much gasoline for too little $$ the seller will likely won’t accept the deal and sell to others who are willing to pay more.

The 'value' of Gasoline (or any product) is relative to a) its usefulness (utility) b) its scarcity (harder to come by items have more value) and c) what someone is willing to pay for it.

So the same house in one area may cost $250,000 maybe worth $1million if in another more 'high end' community.

Money, however, is not the 'thing' of value, it is the 'promissory note' that if you give me $$ to buy my house, I can later reuse those $$ to buy something else, it is simply a convenience to the trade. (Because paying a house with sheep would just be silly)

I find myself struggling to understand the role of bitcoin / altcoins in this equation.

Now I realize people will likely point out a couple of obvious flaws in my reasoning.

a) Money (hard cash) has value, and really isn't tangible either, It's just a piece of paper (or coin)
b) People sell software (Microsoft), and software is data, as is the movies. TV Shows on DVD's, e-books, etc. So data has been a commodity long before bitcoin/crypto.

Any my responses

a) Money - doesn't actually have 'value'. It is a promise. It represents convenience of a trade. This is why my belief that just printing more would make people rich cannot work. The ‘value’ of money is relative to it’s ‘value’ across other currencies.  As a simple thought experiment, trying to give cash to an alien from another planet would not make any sense - they would look at you strangely and say - ⍙⊑⏃⏁ ⏃⋔ ⟟ ⌇⎍⌿⌿⍜⌇⟒⎅ ⏁⍜ ⎅⍜ ⍙⟟⏁⊑ ⏁⊑⏃⏁? (Translation: What am I supposed to do with that?)

b) Software, DVD, Movies, technically you do not 'own' the data, your buy a 'license to use the data' under specific contexts, the data is protected by copyright to try and prevent you from 'copying it'. I would argue the value is not actually within the data but within the work that went into producing the data (programmers, actors, etc) who would otherwise not preform their jobs if they were not able to trade them for other commodities. (using money as the exchange mechanism)

What makes bitcoin/crypto particularly fascinating is that unlike closed source software, the bitcoin software is COMPLETELY OPEN SOURCE for anyone to view and copy. The bitcoin chain (ledger),in fact, is constantly copied to all the participating nodes. It literally 'works' by copying it across the network (which seems pretty ironic, since generally value is related to scarcity). If a million people copy 'star wars episode 1' and share it will all their friends, no one will need to buy it and its value will decrease. Thousands of people 'copy bitcoin transactions every single minute, and as they do so, the VALUE INCREASES!

And here is the kicker that really 'blows my mind'

People spend hundreds of hours doing fundraising to help the homeless, fund disease research, provide fresh water to third world countries

But If everyone in the world had just 1 'meme' coin at $0.01, and then one tech celebrity/business person sends 1 tweet about ‘WOW SUCH AMAZING CURRENCY’. That $0.01 suddenly increases by 10 (or 100, or 1000) times its worth, people literally become millionaires without any fundraising at all ..just a TWEET.

So countries can’t print more money that solves nothing.... but somehow one person can make hundreds of people rich simply by a tweet?? I don't get it..like I said a strange, strange world indeed.