Asklemmy

Crypto is as valuable as you want it to be because it is not real. Not being real is a big problem for a currency.

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.

There is a limited amount of Bitcoin, and some of it is lost in forgotten wallets, so the total volume is constantly falling. This may partially increase the price.

But in reality, as in any speculative market, the price of bitcoin depends mainly on faith in it and speculation about world events (some kind of cataclysms, regular statements of this or that person about cryptocurrency, etc.)

The main real value can only be found in countries that are disconnected from SWIFT. However, almost no one appreciates this because there are only 5 officially disconnected countries. However, if this list continues to grow, cryptocurrencies (including Bitcoin) will become more prevalent in international transactions.

More than dollars.

So you know how fiat currency is backed by nothing more than the fact the government says it's valuable and we all agree to that? Crypto is sort of like that except without the government bit

My point is, beyond speculation, what do crypto coins represent?

Nothing.

At its core, it represents an irreversible proof of digital existance. Blockchain is the only technology that can do this, and it makes it more valuable than you’d think.

Bitcoin itself has first mover advantage, and that keeps it on top. It’s hard to point to any particular feature of bitcoin that warrants this first place position, aside from pure decentralization of holdings.

The irreversibility of blockchain transactions is very underrated to most of us, but think about it… no bank or government, even with military involvement, can reverse a transaction or seize assets. For most of us in nations with sophisticated financial infrastructure and govt, this doesn’t sound like a big deal, but for the majority of the world, this is a huge deal.

It also represents freedom from fiat. Since the beginning of currency govts have used it as a means to extract wealth from the populace. Printing, confiscating, and controlling as it pleases them. We’ve historically used gold to hedge against this, and there’s even instances in history where govts have devalued and confiscated gold as a means of supporting itself. Bitcoin brings all the freedom of gold, with all the benefits of the digital world.

I was shooting heroin and reading “The Fountainhead” in the front seat of my privately owned police cruiser when a call came in. I put a quarter in the radio to activate it. It was the chief.

“Bad news, detective. We got a situation.”

“What? Is the mayor trying to ban trans fats again?”

“Worse. Somebody just stole four hundred and forty-seven million dollars’ worth of bitcoins.”

The heroin needle practically fell out of my arm. “What kind of monster would do something like that? Bitcoins are the ultimate currency: virtual, anonymous, stateless. They represent true economic freedom, not subject to arbitrary manipulation by any government. Do we have any leads?”

“Not yet. But mark my words: we’re going to figure out who did this and we’re going to take them down … provided someone pays us a fair market rate to do so.”

“Easy, chief,” I said. “Any rate the market offers is, by definition, fair.” He laughed. “That’s why you’re the best I got, Lisowski. Now you get out there and find those bitcoins.”

“Don’t worry,” I said. “I’m on it.”

I put a quarter in the siren. Ten minutes later, I was on the scene. It was a normal office building, strangled on all sides by public sidewalks. I hopped over them and went inside.

“Home Depot™ Presents the Police!®” I said, flashing my badge and my gun and a small picture of Ron Paul. “Nobody move unless you want to!” They didn’t.

“Now, which one of you punks is going to pay me to investigate this crime?” No one spoke up.

“Come on,” I said. “Don’t you all understand that the protection of private property is the foundation of all personal liberty?”

It didn’t seem like they did.

“Seriously, guys. Without a strong economic motivator, I’m just going to stand here and not solve this case. Cash is fine, but I prefer being paid in gold bullion or autographed Penn Jillette posters.”

Nothing. These people were stonewalling me. It almost seemed like they didn’t care that a fortune in computer money invented to buy drugs was missing.

I figured I could wait them out. I lit several cigarettes indoors. A pregnant lady coughed, and I told her that secondhand smoke is a myth. Just then, a man in glasses made a break for it.

“Subway™ Eat Fresh and Freeze, Scumbag!®” I yelled.

Too late. He was already out the front door. I went after him.

“Stop right there!” I yelled as I ran. He was faster than me because I always try to avoid stepping on public sidewalks. Our country needs a private-sidewalk voucher system, but, thanks to the incestuous interplay between our corrupt federal government and the public-sidewalk lobby, it will never happen.

I was losing him. “Listen, I’ll pay you to stop!” I yelled. “What would you consider an appropriate price point for stopping? I’ll offer you a thirteenth of an ounce of gold and a gently worn ‘Bob Barr ‘08’ extra-large long-sleeved men’s T-shirt!”

He turned. In his hand was a revolver that the Constitution said he had every right to own. He fired at me and missed. I pulled my own gun, put a quarter in it, and fired back. The bullet lodged in a U.S.P.S. mailbox less than a foot from his head. I shot the mailbox again, on purpose.

“All right, all right!” the man yelled, throwing down his weapon. “I give up, cop! I confess: I took the bitcoins.”

“Why’d you do it?” I asked, as I slapped a pair of Oikos™ Greek Yogurt Presents Handcuffs® on the guy.

“Because I was afraid.”

“Afraid?”

“Afraid of an economic future free from the pernicious meddling of central bankers,” he said. “I’m a central banker.”

I wanted to coldcock the guy. Years ago, a central banker killed my partner. Instead, I shook my head.

“Let this be a message to all your central-banker friends out on the street,” I said. “No matter how many bitcoins you steal, you’ll never take away the dream of an open society based on the principles of personal and economic freedom.”

He nodded, because he knew I was right. Then he swiped his credit card to pay me for arresting him.

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.

When it was first released, I was interested in the decentralized nature of it as a currency. I liked - well, I still like - the idea of a currency that isn't controlled by a government. At the time (2009-ish?), I also thought it was anonymous, which also appealed to me; cash is mostly anonymous, but it can't be used online, and even then the fact that society was increasingly moving toward cashless - and very traceable, and usary-heavy - credit cards was clear. Stripping privacy is critical to control.

Bitcoin isn't anonymous, but other cryptocurrencies are, and bitcoin laid the groundwork. To your question, I, and many other people, paid some money to get some bitcoin - I think I spent $120? Mainly so I had enough to explore the space and play with it, because even then mining seemed painfully slow. Once money was spent on it, by whomever and for whatever reason, it acquired value: the value that, if you had some, you could sell it to someone else, or trade it for goods. In that way, it has the same value as an IOU on which I've scribbled "Good for $10 from Ruairidh Featherstonehaugh" and signed my name. Flawed metaphor, but you get there idea - the paper itself has no intrinsic value.

Despite that mining is so horrible for the environment, the concept that motivated Bitcoin still IMHO has value. An entirely digital, cashless system, not controlled by any one organization but rather by the community of participants. If Bitcoin didn't have the environmental cost - if it has been proof-of-stake rather than proof-of-work, or if the computational work was actually something useful to society like gridcoin.us, it wouldn't be so controversial. Sure, people are still going to be bitter about not buying into it early, but as long as people are willing to trade goods and services for it, it'll have real value based on market rates.

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.

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.

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.

Besides gambling hype I think regular people are into it for a couple reasons:

-don’t have to trust the whims of your state government (who could devalue their currency at any time)

-deflationary by design so your earnings maintain value (no one could discover a btc meteor to mine)

-Requires broad miner consensus to change the rules

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.

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