I get that anything is worth whatever someone is willing to pay for it. That’s besides the point. My point is, beyond speculation, what do crypto coins represent?
I also understand that the value of the US dollar is being questioned almost as much without the backing of gold.
But what I really want to know is what is at the foundation level of Bitcoin that people are buying into?
I have a basic understanding of the blockchain, etc. I sold 1BTC in 2017 for $1200 when I thought that was as high as it would go. At this point, at over $100kUSD and rising steadily, what is the $ limit and what is that limit based upon? I thought it was based on the value of mining to check transactions but this seems… not worth $100k to me.
I’ve been thinking, the only tangible value I personally see in Bitcoin, because it’s not really being used as legitimate currency, is for criminals. By now, there must be trillions of dollars in BTC acquired by criminals holding corporations hostage. When you’ve got people like Trump involved (either explicitly or by way of manipulation) with an executive order to establish a crypto czar, this suggests to me that he’s creating pathways for bad actors to more effectively gain more wealth. These are the people who are most excited in Bitcoin, beyond speculation.
I mean, there’s little to nothing on the up and up with crypto, right? It’s a scam. Right?
Please, factual answers only. I’m looking for someone to dispel my speculation with genuine economics of the matter.
Beanie babies 2.0.
This is not the same for all crypto currency, but a bitcoin represents a “proof of work”. When people “mine” bitcoins, they are consuming computational resources, and when they find a bitcoin, it is a certification of the work that was done to find it that becomes the value of the coin. And then, as others as mentioned, people just agree that that work has a certain amount of monetary value. But the proof of work is what limits the supply and allows that value to exist. 3Blue1Brown has a really good video that goes into the technical details if you’re interested.
Thank you for being one of the few to take me seriously and offer a thoughtful response.
I can understand now the value of a token that represent some amount of effort that is limited in its supply. As “promised”, no other bitcoins will ever be made. So this alone makes it worth something. The fact that it represents some amount of effort achieved does seem to give it some validity. Although, IMO, certainly not $100k worth.
I’ll need to think this over some more and maybe update this post with some more thoughts on the future of the coin.
the only tangible value I personally see in Bitcoin, because it’s not really being used as legitimate currency, is for criminals.
Please, factual answers only.
In 2021, 0.15% of known cryptocurrency transactions conducted were involved in illicit activities like cybercrime, money laundering and terrorism financing
sounds like the word “known” is doing some heavy lifting there
The assumption that bitcoin is only used by criminals is much less accurate.
You’re gonna have to give me a source for that buddy.
It came from here but this source has more detail.
Is that by total number of transactions or by bitcoin volume?
I copied that from Wikipedia which got their reference from through NY times.
For specific details, this is probably a better source https://www.trmlabs.com/resources/reports/the-illicit-crypto-ecosystem-report-2022
Bitcoin has massive value as a tool to transfer money, anonymously, and through borders effortlessly. Its extremely valuable for money laundering, scamming, stealing, and dodging tariffs or raising money (see how much crypto is stolen by north Korea)
In this world anything can have value as long as there are other stupid ppl who’d believe you. Any form of money is just a piece of paper. Gold, silver and all those are just rocks. Even food once was cherished as the ultimate wealth but now we waste food by Metric F*ck tonnes.
No one on this earth or beyond can predict what will be the value of anything. If someone says this is going to make you a millions they are either trying to sell you their course/books/etc. Or they think you are the next idiot to whom they can sell garbage.
Just like anything else, it’s worth what people are willing to pay for it vs what people are willing to buy it for.
Currently bitcoin is just a digital commodity with a finite supply which makes it a good store of value if people continue to use it.
The thing is, there’s nothing preventing bitcoin from tanking and becoming essentially worthless besides people buying it because the price is low.
If in a hypothetical future the bitcoin price becomes stable then it will become a valuable commodity. It’s value is wholly derived from it’s users and nothing else.
It’s not very convinent for governments or large institutions to hold it in it’s current form since it’s too easy to steal without leaving a trace. For government use there is going to be needed some development to allow for government or Central banks to have complete control over the currency without giving that control away which I think might be possible. In that case settling international transactions in bitcoin as opposed to the dollar for BRICS countries might be an option which doesn’t use the US dollar.
All the other uses IMO are pretty much fluff such as paying in bitcoin.
What is a first edition holographic charizard worth? What is the utility of that card?
Things are worth what people are willing to pay for them.
You can’t eat a Bitcoin for sustainance. Or hammer a nail with it. You can’t do either of those things with a pokemon card either.
I feel like you get this, based on your post… But you still are hung up by it.
Bitcoin’s attractive utility for many is that you can transfer them pretty much unimpeded by any external entity. Like a government for example.
Like, hypothetically, what if you wanted to send a million dollars to your family back in, I dunno, Hong Kong. Do you think you can put that in a suitcase and hop on a plane? Do you think your bank will just send that wire? No. Government needs to know about it.
You can send a million dollars worth of Bitcoin, though. No problem.
What about if the government decides to seize your assets, for whatever reason? Maybe you were a little too loud about your support of Palestine and a man child president decided to make an example of you? They can raid your home. They can seize your bank accounts. Can they get your Bitcoin? Nope (if you’re actually holding it yourself)
What sets Bitcoin apart from other currencies is that it’s very government resistant. You CAN hold it yourself. Not digitally in a bank. Not as bills under your mattress. It cant be seized.
How much SHOULD Bitcoin be worth, given the utility it provides? No idea. But it’s something.
Paper money isn’t worth anything innately. Gold isn’t either. Not diamonds. Nothing has innate worth except food, air, drinking water, and possibly shelter.
Gold and diamonds have intrinsic value
Gold is needed for computer parts, and diamonds are used for cutting
They are more than just shiny
Their value will “never” hit 0 (Bitcoin would be worthless without gold for computers)
Yes, we could find substitutes in the future, but for the substances to not be useful somehow is so low and would have to be an apocalyptic scenario. And in an apocalypse, gold could even be worth more.
…Except that gold, like the dollar, and like bitcoin, has the value it does because people believe it does. Sure, gold’s a great semiconductor. But if that was all we used it for, the price of gold would be a tine fraction of what it is. Diamonds are great as abrasives and in certain cutting applications, but that’s all synthetic now. Natural diamonds only have high value because of artificial scarcity and advertising.
But if that was all we used it for, the price of gold would be a tine fraction of what it is
That’s intrinsic value.
Yes.
But many people–and I’m not saying you do this–but many people get gold, silver, and diamonds confused, and think that their intrinsic value is linked to their perceived value. does that make sense?
I get that
I wouldn’t buy diamonds or gold hoping they increase in price just as much as I wouldn’t buy bitcoin to do the same.
If you offered me 1USD in Gold, Diamond, or Bitcoin.
I would take the gold. It has the most intrinsic value.
The probably that gold hits 0USD is less than bitcoin hitting 0USD.
The only reason you’d take bitcoin is if you think that it has a higher ceiling. Intrinsic value is the floor. But that is gambling
I opt for bitcoin because it has more utility value for me.
My bank makes it an enormous pain in my ass to buy things from overseas vendors; they won’t process any payments that are going outside of the US border. The rationale is ‘fraud’, even when you’re dealing with well-known and trusted vendors. Even when I try calling my banks and telling them to pre-authorize the charges, they won’t go through. The only way I can get around that within the established financial system is by using a 3rd party payment service; those 3rd party services make their money by lopping off a percentage of that purchase. E.g., if I’m buying something for $1000 from China (and we’re going to ignore tariffs, duties, taxes, and shipping costs for the moment), then I may have to pay $1040 for it, because of the fees that are taken out. On the other hand, if I’m buying from a trusted vendor, and I use bitcoin, I can just send it to them. Bitcoin doesn’t care where it’s going, and–assuming you don’t care about speed of confirmations–transaction fees can be quite a bit lower than using any other payment system. (And, BTW, transaction fees are built into all payment processing systems; it’s just not apparent to individuals on the purchasing end. That means that if something costs .001btc, then I have to send, say, .0010001btc to the vendor, but then the)
Speculation doesn’t play a role in it for me.
I have no direct use for gold; I can’t plate connectors.
Money is an IOU. Bitcoin is an IOU but the ledger is decentralized rather than in control of banks.
Once you start seeing the value of any currency as one of itself rather than trying to express it in a different value system, a Bitcoin needs nothing but its inherent worth as payment.
That said, because we all still use traditional forms of currency, a Bitcoin is now worth, say, 112000 breads. It’s worth two new mid-sized cars.
Value is based on scarcity and demand. If something is hard to come by, like bitcoin currently is, the price is hardly affected. But if demand is higher than the supply, prices skyrocket. Demand dies down the moment people feel like crypto is a scam. Supply will stop since Bitcoin has a physical limit (of the top of my head 21 billion). It is no longer realistic to start mining the stuff and receiving it for payment is just silly at this point.
But to flip it around, what is the value of a US dollar, without expressing it in terms of another currency? It used to be tied to gold. You can’t really state one dollar is equal to, say, one bread. The price of bread has fluctuated. Or, has the value of a dollar fluctuated and has a bread always been worth one pair of socks?
Baseline: everything is worth one of itself and trying to express it in another value system is just a snapshot, a moment in time which will have changed soon after.
Thank you for a real answer like I specifically asked for.
The fact that Bitcoin does represent some amount of effort and that there’s a limited supply does seem to give it some value. While there is a theoretical finite resource of gold, it’s still being discovered. Which, theoretically, makes it less valuable than a predetermined finite resource. And, the US dollar continues to decline - almost by design during this administration.
How BTC is used today and in the future can continue to be debated but I’m satisfied in understanding it’s a limited supply of something that represents some amount of effort.
If you haven’t yet, I can really recommend reading Satoshi’s whitepaper on what Bitcoin is really for. The fact that crypto is now used as an asset to trade in order to gain ‘old’ money really spits in the face of the ideology of a decentralized ledger. And the fact that a dollar value is assigned to it means it becomes the target of a lot of scams. The fact that a decentralized ledger also means greater anonymity has made it a popular target for illicit activity as well.
But by design, it really only wants to take power away from banks in order to stop devaluation, make it impossible to charge people for transactions and to put control of assets into the hands of individuals. The amount of money currently in circulation is way more than the actual physical amount available, because banks can lend you money they don’t even have. Bitcoin would make this impossible.
Bitcoin is a ponzi scheme with a really long time horizon. In a way, any fiat currency kinda is as well. The difference is that a government backed fiat currency like the US Dollar is backed by the US Government saying “you will accept the USD, or else”. That backing keeps the game running. Bitcoin has nothing like that. The only reason it keeps going is because of speculation, money laundering and the purchase of black market goods.
So, as long as you can go buy drugs or move money across borders with Bitcoin, it will have value. As long as it has value, some folks will speculate on it. That can keep prices up, right up until it doesn’t. So, as is always the case for speculative assets, caveat emptor.
not even fiat (heh) is worth anything if we don’t accept it as store of value, let alone an electronic register on a digital ledger.
It’s value is in remittance if nothing else. It’s cheaper than western union. But the network is only “cheaper” in that way because it has distributed the costs of running the network to the speculating miners who solve pointless puzzles with monsterously greedy processing farms hoping to win the lottery and get back more than they put in. It’s a ponzi scheme, it takes more from everyone who came later and gives the value to early adopters who were there when you could solo mine coins with whatever hardware and a bitcoin was worth 7 dollars in exchange. Look up how many coins Satoshi is supposedly holding. If they were to cash out even a small fraction the whole market would crash. So use it as a remittance service but not an asset if you must. This from someone who mined 27k worth of it back when it was 7$ and spent it all on illicit medical cannabis before it inflated to 50k
I believe I’ve seen recent cost analysis of using crypto exchanges to transfer money across international borders instead of doing direct conversion through whatever “classical” money transfer service and it showed that due to exchange rates, price fluctuations between crypto exchanges, gas fees, and fiat exchange rates into and out of crypto from usd to whatever currency of the recipient its actually tangibly cheaper to just use a direct wire transfer and currency exchange.
I’ll have to see if I saved the post with the price breakdowns to send you but I just wanted to share that in case you hadn’t heard about it yet. If you had seen that and did find it cheaper somewhere else I’d also be interested to hear where it is actually cheaper. That’s just the most recent analysis I had seen of the costs to exchange from fiat to crypto, send internationally, and then withdraw it in the native currency.
Rip to the millions you smoked away btw lol I would’ve done the exact same honestly
USD FX pairs are currently cheaper using traditional transfers.
However going from a non G20 currency to another non G20 currency can be much cheaper using crypto.
Ah thats interesting, yeah the study i saw was specifically looking at usd to pesos. Good to know!
No
Bitcoin doesn’t even attract criminals as it’s traceable. You can easily tell who bought what and traded what. Since all the exchanges are KYC, no criminal worth their salt would use Bitcoin. Instead, they would rather use Monero. The only people buying and selling Bitcoin are people who want to gamble on it getting higher
The US dollar actually is tied to something of value: it’s the format the us government will take their taxes in or else they will increasingly use their powers as a monopoly on fhe legitimate use of force until you give them what you owe
Crypto is only worth what others will pay for it. Which is why I don’t own it
