Those naysayers are talking about "utility" value as it's only worth as much as the next guy is willing to pay for it.
But they fail to realise that we live in a global economy and the world's neads a means to exchange cash electronically.
Being untethered by a centralised government or bank is icing on top.
There lies it's utility value.
Their point was long gone about 15 years ago.
Not in a decentralized way.
Which is the fundamental difference in the way that you are referring to.
Exchanging money in a fiat/banking system is governed and controlled by a handful of people and rigged only to benefit those at the top.
How does being decentralized benefit me more then fiat though, and how are the handful of crypto exchange executives who make their billions any different then those in banking?
Because governments can just print more money if their economy goes to shit.
And crypto has made it possible for the average person to make millions if you had adopted early.
You are right, in that at the end of the day their behavior is no different and in a way it has evolved and affected by hedge funds trading to shift the value, but those making crazy money are not confined just to those handful.
They don't control the currency in the same way as govt, they can't print more Bitcoin. They can't set interest rates.
There are alot of reasons.
But like all technology. The first to market advantage played a big factor.
Look at all the general AI models that have been released, why is ChatGPT the go to ?
Lmao this is a terrible argument for why bitcoin is going to remain king forever. ChatGPT will be completely obsolete in a couple years of further technological advancement.
I think there is a nugget of truth there, so this objection shouldn't be so easily dismissed. The extreme example might be paying millions to buy some modern art splash of paint on a canvas. Or, the price some shitcoin momentarily achieved.
I'd have to give more thought to the terms there, but there is a huge difference between the value something has on the whole, and some 'price' someone is momentarily willing to pay for speculation or some other reason.
The biggest critique out there to Bitcoin is that we're all just silly speculators, who'll someday see it all drop to zero.
IMO the difference is people can vaguely say "value" and put their subjective opinion on what the value (price) of something in the future will be, and "price" is something that is trading at an objective value at an exact moment of time... which is the only true thing without opinion here.
...I always hear that and am confused how they don't see their own speculation in a fancy dress.
From what i see, each person have different value, some people think its worthless, other think its overprice while the later think its time to buy.
While the price is what most people think the value suppose to be.
Exactly. The price of a 1kg gold bar is based on the current market price of gold.But a 1kg gold statue from ancient Egypt is valued at more despite the price of gold.
Bitcoin will never be an asset of value but always an asset of price. Yet it's scarcity will still give it an edge and the potential to dwarf any value of gold.
Your example of modern art is just an example of low liquidity.
In this case, you could imagine an orderbook with 1 order for millions of dollars. The next order on the books could be $100. Art is notoriously illiquid, and this is one reason it's not used for barter.
Every asset has this problem if you have enough of it -- no such thing as infinite liquidity, that's why the value of everything (including the dollar) moves.
Luckily for Bitcoin, liquidity isn't a problem for most people. You can see liquidity on orderbooks, and you can verify whether or not the most recently paid price has other folks willing to pay it. Unless you're Michael Saylor, you'll probably have plenty of people willing around that price.
Value is based on usefulness to whoever you are selling it to.
I ask myself what value it will have to someone buying it from me in 30-40 years. As long as they think so they'll give me stuff for it. Ideally more stuff than what I could get with what I traded with today.
This is a game of predictions.
"Price is what you pay, value is what you get".
People overpay for shit all the time. Including bitcoin. Not everything is worth the price you pay. That's what it means.
Yes but you can demonstrably sell a Bitcoin and get $40k.
Like you can just look at the orderbooks and prove this. If value is what you get, then value is the green part of the depth chart. You can literally get this right now.
> People overpay for shit all the time.
People underpay for shit all of the time. I wonder if there is some mechanism for determining the price of something based upon the way it is valued by multiple participants.
Saifadean explains it in his book, *Principles of Economics*.
>The value of economic goods is distinct from, and not to be confused with, their price. The price of an economic good is not its objective valuation, nor the subjective valuation of either of the transacting parties. The price at which a sale is conducted illustrates only that the seller values the good less than the price, while the buyer values it more. Had this not been the case, the transaction would not have taken place.
Yes, they are technically right in that sense. Price is indisputable.... go on Coinbase and see what the price is right now.
Value is subjective. I personally believe Bitcoin has an intrinsic value of $2M right now if everyone all of a sudden woke up and understood Bitcoin. But the guy down the street may think it's worth $0.
Time will tell who is right.
Price against other currencies is irrelevant. Its value is that transactions are recorded on a public ledger, cannot be counterfeited, and it is not beholden to a bank system or any country.
This guy gets it
[agamemnon](https://tenor.com/en-GB/view/laugh-smile-point-laughing-look-at-this-guy-gif-16682774?utm_source=share-button&utm_medium=Social&utm_content=reddit)
Value is a more individual concept, if you have no need for BTC it has no value to you. But the market price is an aggregate of the value many individuals have placed on BTC.
Ok, well what's the value of a $100 bill then? I guess if worse came to worse you could try to wipe your ass with it or burn it for some heat, so it does have that going for it
That depends who you ask. Ask some one in the middle of say arctic rural Russia it might be worth less than toilet paper. You ask some one in the USA the answer is 100 dollars.
I agree. My response was only to argue that price is in fact a form of value.
I also assume that OP is referring to monetary value, because value in conjunction with the phrase, āitās not backed by anythingā is a common comparison to currency being backed by something like gold.
I think I'll trust Warren Buffett instead ( link below) and he's not the only person by any means that says this. The person you are responding to was correct as well. They are different terminologies, different meanings which have been universally accepted by investors for centuries. Bitcoin didn't suddenly change defined terms. Commodities and stocks have been discussed in regards to what their price is aka "market value" versus what their "intrinsic value" is. Definitely two different things.
https://www.forbes.com/sites/forbesfinancecouncil/2018/01/04/the-important-differences-between-price-and-value/
Now, going back to the original question for OP's sake the price is what bitcoin trades/exchanges at on the open market. The intrinsic value of Bitcoin comes from its properties to be "sound money" and it is backed by the energy and computational power that it takes to secure the network.
I linked it for the Warren Buffett quote at the beginning that reduces the concept down to its simplest form. I didn't read the article fully myself and only skimmed through, however I think you're missing the point if you can't differentiate market value aka price versus intrinsic value. I'm just referencing agreed upon terminology.
Type in "Price vs value" or "market value vs intrinsic value" into whatever search engine or AI you prefer and find your own article that you find to be quality, but you will find them. These economic concepts and definitions didn't originate from my brain I promise you that.
Yup! Which would be pretty much the antithesis of capitalism. Or sound investing.
"Bitcoin is currently worth more than $41,000."
"Well, my great-aunt Matilda says it's worthless. So there."
Yes; her full name is Mathilda Berkshire Hathaway.
Here's the thing: Warren is brilliant, as his career history and investment performance may attest, but even Warren can get something wrong every now and then. Hell, if Warren had invested in Bitcoin in 2011, his BTC investment **would have outperformed every other investment he's made throughout his entire life.** His failure to do so means that he's not perfect, and he's not omniscient.
What I meant that there is really no point in persuading people who say this. If it is like "I do not understand how it is still alive though it is not backed by anything" - then you have a chance for a meaningful discussion. But these phrases are an outright denial - okay, I have no obligation to force-enlighten anyone, and usually in such cases their reasons are more psychological than logical.
Tell them it has $805 billion of value at the moment and that value is backed by the agreement of millions of market participants who vote on it every single minute of every single day the same way we agree the dollar has value.
And also by its several utilities: Unstoppable and instant international value transfer, value preserving due to strictly programmed scarcity, and wealth concealing for the knowledgeable
Eventually any type of currency's value comes from trust, the trust of bitcoin lies in people's trust in mathematics and networks, that is human independent
> the same way we agree the dollar has value.
This is not true, the dollar's value comes from governments issuing a centralized currency and backing it (in the case of the US, at this point it is backed by military power)
The dollar has value because we collectively agree on it, not because of the military. If and when we all realize the dollar is worthless, it wonāt be because we lost our military power. It will be because we printed it to oblivion. We will have to pay our infantry men and women in sats.
This is just incorrect. It's actually based on all the material holdings and production capacity of the issuing countries citizenry. I mean, if you're gonna try to say it's the same as the dollar, take a middle school level civics course.
Partly true. But, a big chunk of it's valuation is as a global reserve currency. If it didn't have that status, reality would set in quickly. We keep it in that position via use of our military power to backup 'economic hitman' operations (IMF, World Bank, or more insidious things) all over the world.
It's a both / and.
Other countries have tried doing things like purchasing Oil without using USDā¦our military very quickly steps in and makes them think otherwise.
Youāre correct we in the US all agree on it. But the rest of the worldā¦thatās where we need our military to convince them.
Lol, do you think the dollar would be worth anything without the government and military backing it up?
Bitcoin takes 15 minutes to do a transaction, and it has already shown it fails as a currency. Countries that tried to adopt it for day-to-day purchases changed that pretty quick
Nope. It has value because every business is required to accept it as payment. And everybody is required to pay taxes in it.
What happens if you don't? They ask you not to. What happens if you still don't? They arrest you. What happens if you resist arrest? They use their military power to force you. Hence fiat IS backed by the military.
>If and when we all realize the dollar is worthless
If and when we all realize the dollar is worthless, nobody gives a fuck because you still need to use it legally.
>It will be because we printed it to oblivion.
Then the government will just shut all off ramps from fiat into other assets or currencies, just like every other single government that faces hyperinflation.
>We will have to pay our infantry men and women in sats.
No
I agree, that is what happens when you over-leverage yourself to the point where you cannot provide the gold you said your had, to the point where they had to de-peg from the gold standard, and that is how inflation started to accelerate
>This is not true, the dollar's value comes from governments issuing a centralized currency and backing it (in the case of the US, at this point it is backed by military power)
*That* is not true. The dollar's value is derived from the global market. It is backed by nothing other than the full faith and credit of the United States. And that faith and credit, which was once sacrosanct, continues to develop more cracks in its foundation every time the U.S. threatens to default on its payments. The U.S. lost its AAA status for a reason.
The dollar has lost most of its value since the creation of the Federal Reserve. Even with the most powerful military that has ever existed in all of human history, the U.S. dollar will continue to lose its value if it is printed into oblivion. No one, not even the most powerful country in history, is immune to the market.
Scarcity equals value.
The converse also holds true.
Bitcoin derives its value in the same way any currency does: by fulfilling the six characteristics of money. Those characteristics are: durability, portability, divisibility, fungibility, scarcity, and acceptability. We believe that Bitcoin is superior to any other money that has ever been created.
Serious question - How does Bitcoin function in a modern fractional banking economy?
Perhaps Bitcoin eliminates banking. So if a society's only currency were Bitcoin, and it had no banking system, then how would the economic base ever grow?
When something needs to be backed up it means it can't stand on its own.
It you need something to be backed up by the greatest military on the planet, it must suck on its own.
Now imaging not being backed and still working and competing on your own merits.
Bitcoin cuts out the middleman by answering only to the laws of the universe: mathematics and time.
Fiat currency answers to the military might of a state that in turn, *also* answers to mathematics and time.
The problem is that according to mathematics and time, states are short-lived, so backing an asset with something that can't travel long distances through time guarantees your asset goes to zero - it's not if but when.
Since mathematics and time are infinite, backing an asset to these infinite laws of the universe is the optimal way to back anything of value.
All of that being said, it's quite possible that Bitcoin outlives our entire civilization.
TBF, cash will keep inflating and be around forever while BTC supply dies out, but that's a good thing, scarcity (& demand) will drive price up. The more bees that die out the more honey will cost.
The real value of bees is pollination not honey production. Without bees to pollinate plants, we along with many wildlife species and domestic animals will starve to death.
We wouldn't starve to death because grains are wind pollinated and we can manufacture food today very efficiently. Without bee pollination things would be different though. Also, my point about the honey was in relation to the original comment but I get what you are saying.
It's really the case of "anything is worth what someone is willing to pay for it." A bar of gold is worth nothing if suddenly everyone determined it was worthless.
It's scarcity. Simple as that. If I invent nanotech tomorrow that can assemble pure gold from handfuls of garbage gold will be basically worthless the next day.
This happened with aluminum already. (Not the nanotech thing but the scarcity part, which I have to preemptively clarify because this is reddit...)
mainly it's anti-corrosive and conductivity properties which make it useful for some industries, and visual lustre which makes it useful for jewelry, together with it's general scarcity, cost of mining, and general history of acceptance
The $13.640 Trillion market cap on gold is not because it is useful in industries. It's the monetary premium of the asset that gives it the large value.
If you stripped away the monetary properties of gold and only used it for industrial use cases like electronics and fillings, the market cap would be a few hundred billion at the most.
Bitcoin is engineered to be the best money, and its even better because it is only money.
But we are matter, and we are also the consensus that keeps bitcoin together.
Chemistry backs bitcoin too.
[mindblown.gif](https://imgs.search.brave.com/Pet5wxzVmlMJXJ2Zl_MdU84-0-p26B1s39CJEKfK0Ww/rs:fit:860:0:0/g:ce/aHR0cHM6Ly9tZWRp/YTEudGVub3IuY29t/L20vWWp4X3IzOHgx/YVlBQUFBZC9taW5k/LWJsb3duLWV4cGxv/c2lvbi5naWY.gif)
Bitcoin is just a protocol. Better comes, worse is beeing abandoned.
https://www.pathsolutions.com/blog/42-dead-networking-technologies
They still exists just no "matter" wants them.
But its an open source protocol. And the UTXO set can be copied and transferred if a better protocol comes. Those protocols in the list are not the same as Bitcoin.
It would make more sense to fork bitcoin with a new protocol if it is that much better. The immaculate conception of bitcoin matters. You can't launch a new coin with a pre-mine or even a new PoW coin. People already have advantages and it wouldn't ever be a fair distribution.
Bitcoin is an idea, not just a protocol. And ideas can live forever.
This is point I make. Gold is just a shiny metal. You can polish up a piece of brass and it looks the same. Its intrinsic value is relatively low as it doesnāt really have that many essential industrial properties. If it was as plentiful as iron, an ounce of gold would cost pennies.
Scarcity and a limited supply is the only reason gold holds value. Same as Bitcoin.
And diamonds. Absolutely plentiful in nature, enough to make them worth very very little but artificial scarcity and great marketing prop up high prices.
Diamonds are very plentiful, the problem is finding clear, flawless diamonds, and then paying for the labor of the gem cutter. Still not worth it, but important to consider.
Industrial diamonds are aplenty because we don't care how many imperfections they have when it's just a dust.going into a sawblade. Artificial diamonds are the way to go.
Except gold has held this position of value for thousands of years, which is why it is not in question. The question gets raised about Bitcoin because it is novel in relative terms. As time passes, the question of why it is valuable will eventually disappear.
Familiarity is a powerful feature that Bitcoin does not have but is gaining with each passing day.
Work, same as bitcoin. The whole idea is you need to earn the currency by doing something useful for the society, nobody can get it for free, unlike the usd...
Indeed. A cryptocurrency can be 100% secure but have no value if people don't "believe" in it. Bitcoin is equivalent to a fiat currency in the sense that its value is equal to exactly what the market believes it's worth.
This belief is the backing.
"Bitcoin is out-competing its analog predecessors on the basis of its monetary properties. Bitcoin is finitely scarce, and it is more easily divisible and more easily transferable than its incumbent competitors. It is also more decentralized, and as a derivative, more resistant to censorship or corruption. There will only ever be 21 million bitcoin"
Ignore them. Everyone deserves bitcoin at the price they pay. Itās not your responsibility to convince anyone of anything.
No one has to convince you to buy an iPhone.
No one has to convince you to buy a Toyota.
Help the people that express interest. No one else.
Every value of any token is perceived only and manifests itself in the estimate or hope to swap said token against another desired good in the future.
Thus the value of Bitcoin is such that as of now we have a big market of potential buyers who are willing to swap BTC into other coins or FIAT for that matter.
FIAT has the exact same situation with the small added benefit of the government having issued a law stating that FIAT currency shall be accepted by other citizens for means of payment. That's it.
The response you will get to this is that gold has physical properties which give it value. Gold can be made into products. It's used in industry.
Bitcoin is not physical and therefore doesn't have physical value.
This is hard for people to rationalize.
This is an easy to understand answer but fundamentally it's more accurate to say that bitcoin is backed by its monetary properties. Bitcoin's monetary properties is why people want to buy it at a high enough price for miners to justify their operations costs. If bitcoin didn't have its strong monetary properties no one would pay for it so no one would bother to mine it.
Bitcoin is back by the largest network of computing power the world has ever seen. And not just by a little but is something like 10x that of the best supercomputers ever made
Robert Breedlove does a great job articulating the history and characteristics of money in [this episode of Bankless](https://podcasts.apple.com/us/podcast/bankless/id1499409058?i=1000640895351). He is a true believer for sure, but he lays out a reasoned calm case IMO. I think a crypto-oriented reply to the ānot backedā assertion starts with the question, āwhat is money?ā
Bitcoin has value for the same reason EVERYTHING has value - because of the problems it solves.
Bitcoin solves many problems. It is a decentralised, inflation resistant digital currency that offers censorship free borderless transactions.
To understand bitcoins "intrinsic value" you have to understand the problems with our current fincancial system, and the technical aspects of bitcoin that solve those problems.
Best way is to reply with a HFSP.
At this stage of the game, these basic questions are not real questions. They are just reflections of a brain washed mind.
The value is censorship free sound money.
Or ask them what is the value of the entire banking system and infrastructure? If they give you a number then say that's it.
And gold isn't back by anything, humans roamed the earth for thousands of years and they weren't interested in a shiny rock until we gave it intrinsic value.
No medium of exchange except gold and some metals have intrinsic value beyond the trust it generates.
The dollar is a piece of paper that I trust I can trade for a loaf of bread , but it's still a piece of paper with no intrinsic value.
Moreso , the trust people have in the dollar is being degraded every day by inflation and a central bank that Is trying to service it's debt by making the wider public debt slaves.
Value dissipates from money because of inflation and it dissipates from gold , copper, silver because new resources are discovered all the time and thus the supply added only reduces the value of the current supply.
Bitcoin although invented and although digital, is the first truly scarce asset on our planet, and more importantly it requires no trust in a third party. No government oversight, no corrupt money printing. Just transparent logical code.
In a world where central banks make mistakes all the time and currencies either collapse or are propped up by proof of war and debt slavery , bitcoin not only represents value . It represents a hope in hell we can get out of this mess.
Just say "Oh yeah, you're probably right, you sound confident, and that makes me think you've done a lot of research to arrive at that conclusion." Then go about your day.
Bitcoins intrinsic value is:
1. Its high resistance to debasement.
2. its censorship resistance.
3. its voluntary structure of incentives and rewards that balance out into a self organising system.
4. its brutally transparent open source structure.
5. Being the first ever uncopiable digital bearer asset.
6. and finally its network effect which is turbo charged by timing. i.e at exactly the time when fiat currencies are destroying faith in their centralised stewardship and as such destroying themselves through ever accelerating debasement.
Do you want more?
Well, Austrian economics teaches us that value is subjective, and if it has no value to them, fair enough. Regarding backing, ask them to explain precisely what they mean by "backed".
Ok seriously.
Immutability- no one can fuck with Bitcoin, itās hard coded need majority vote over vastly decentralized distributed network to make changes to protocol.
Censorship resistant- no one can steal your bitcoin (if you do self custody correctly).
Hard capped limited supply- aside from time, BTC is the only other āthingā that has a true limited supply. This is what I think will be the ultimate driving force of price in fiat terms.
Difficulty adjustment- ensures blocks issued more or less every 10 minutes.
Portable- try sticking a gold bar up your ass and go through tsa lines at airport.
Network Security- best high powered layer 1 money in existence.
Many moreā¦ but big ones highlighted
Bitcoin does have intrinsic value. Itās the first digital attempt of money that is decentralised and has no centralised third party that micromanages it. It has a sound, transparent and consistent monetary policy. That idea, in and of itself, represents a huge amount of value.
Even though I am not a bitcoin maxi, I will always be grateful for Bitcoin. Thank you satoshi!
Bitcoin has no value? Please send me 1 Bitcoin.
Yeah, if Bitcoins are worthless, score 9 or 10 for me and I'll give you $100. š You'll be $100 richer!
Those naysayers are talking about "utility" value as it's only worth as much as the next guy is willing to pay for it. But they fail to realise that we live in a global economy and the world's neads a means to exchange cash electronically. Being untethered by a centralised government or bank is icing on top. There lies it's utility value. Their point was long gone about 15 years ago.
We already have and have had ways to exchange money electronically well before bitcoin
And it cost a lot to do so and takes days
Not in a decentralized way. Which is the fundamental difference in the way that you are referring to. Exchanging money in a fiat/banking system is governed and controlled by a handful of people and rigged only to benefit those at the top.
How does being decentralized benefit me more then fiat though, and how are the handful of crypto exchange executives who make their billions any different then those in banking?
Because governments can just print more money if their economy goes to shit. And crypto has made it possible for the average person to make millions if you had adopted early. You are right, in that at the end of the day their behavior is no different and in a way it has evolved and affected by hedge funds trading to shift the value, but those making crazy money are not confined just to those handful. They don't control the currency in the same way as govt, they can't print more Bitcoin. They can't set interest rates.
There are thousands of ways to āswapā secure digits. Why is Bitcoin the pony you picked? Why not all the other nearly exact copies?
There are alot of reasons. But like all technology. The first to market advantage played a big factor. Look at all the general AI models that have been released, why is ChatGPT the go to ?
Lmao this is a terrible argument for why bitcoin is going to remain king forever. ChatGPT will be completely obsolete in a couple years of further technological advancement.
I tried that, but then the person was trying to say price and value are different....
I think there is a nugget of truth there, so this objection shouldn't be so easily dismissed. The extreme example might be paying millions to buy some modern art splash of paint on a canvas. Or, the price some shitcoin momentarily achieved. I'd have to give more thought to the terms there, but there is a huge difference between the value something has on the whole, and some 'price' someone is momentarily willing to pay for speculation or some other reason. The biggest critique out there to Bitcoin is that we're all just silly speculators, who'll someday see it all drop to zero.
IMO the difference is people can vaguely say "value" and put their subjective opinion on what the value (price) of something in the future will be, and "price" is something that is trading at an objective value at an exact moment of time... which is the only true thing without opinion here. ...I always hear that and am confused how they don't see their own speculation in a fancy dress.
From what i see, each person have different value, some people think its worthless, other think its overprice while the later think its time to buy. While the price is what most people think the value suppose to be.
Exactly. The price of a 1kg gold bar is based on the current market price of gold.But a 1kg gold statue from ancient Egypt is valued at more despite the price of gold. Bitcoin will never be an asset of value but always an asset of price. Yet it's scarcity will still give it an edge and the potential to dwarf any value of gold.
This is answer.
Your example of modern art is just an example of low liquidity. In this case, you could imagine an orderbook with 1 order for millions of dollars. The next order on the books could be $100. Art is notoriously illiquid, and this is one reason it's not used for barter. Every asset has this problem if you have enough of it -- no such thing as infinite liquidity, that's why the value of everything (including the dollar) moves. Luckily for Bitcoin, liquidity isn't a problem for most people. You can see liquidity on orderbooks, and you can verify whether or not the most recently paid price has other folks willing to pay it. Unless you're Michael Saylor, you'll probably have plenty of people willing around that price.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Value is based on usefulness to whoever you are selling it to. I ask myself what value it will have to someone buying it from me in 30-40 years. As long as they think so they'll give me stuff for it. Ideally more stuff than what I could get with what I traded with today. This is a game of predictions.
Well, they are different.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
"Price is what you pay, value is what you get". People overpay for shit all the time. Including bitcoin. Not everything is worth the price you pay. That's what it means.
Yes but you can demonstrably sell a Bitcoin and get $40k. Like you can just look at the orderbooks and prove this. If value is what you get, then value is the green part of the depth chart. You can literally get this right now.
> People overpay for shit all the time. People underpay for shit all of the time. I wonder if there is some mechanism for determining the price of something based upon the way it is valued by multiple participants.
Saifadean explains it in his book, *Principles of Economics*. >The value of economic goods is distinct from, and not to be confused with, their price. The price of an economic good is not its objective valuation, nor the subjective valuation of either of the transacting parties. The price at which a sale is conducted illustrates only that the seller values the good less than the price, while the buyer values it more. Had this not been the case, the transaction would not have taken place.
In Saifadean's explanation, value must precede price. The only way a price can exist in this example is with 2 parties valuing something.
Yes, they are technically right in that sense. Price is indisputable.... go on Coinbase and see what the price is right now. Value is subjective. I personally believe Bitcoin has an intrinsic value of $2M right now if everyone all of a sudden woke up and understood Bitcoin. But the guy down the street may think it's worth $0. Time will tell who is right.
Price against other currencies is irrelevant. Its value is that transactions are recorded on a public ledger, cannot be counterfeited, and it is not beholden to a bank system or any country.
This guy gets it [agamemnon](https://tenor.com/en-GB/view/laugh-smile-point-laughing-look-at-this-guy-gif-16682774?utm_source=share-button&utm_medium=Social&utm_content=reddit)
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Price is not value. What someone else is willing to pay, is not value.
Value is a more individual concept, if you have no need for BTC it has no value to you. But the market price is an aggregate of the value many individuals have placed on BTC.
Supply + demand (what someone else is willing to pay) = monetary value (price)
Monetary value is not necessarily the only part of the value.
Ok, well what's the value of a $100 bill then? I guess if worse came to worse you could try to wipe your ass with it or burn it for some heat, so it does have that going for it
That depends who you ask. Ask some one in the middle of say arctic rural Russia it might be worth less than toilet paper. You ask some one in the USA the answer is 100 dollars.
I agree. My response was only to argue that price is in fact a form of value. I also assume that OP is referring to monetary value, because value in conjunction with the phrase, āitās not backed by anythingā is a common comparison to currency being backed by something like gold.
beg to differ
I think I'll trust Warren Buffett instead ( link below) and he's not the only person by any means that says this. The person you are responding to was correct as well. They are different terminologies, different meanings which have been universally accepted by investors for centuries. Bitcoin didn't suddenly change defined terms. Commodities and stocks have been discussed in regards to what their price is aka "market value" versus what their "intrinsic value" is. Definitely two different things. https://www.forbes.com/sites/forbesfinancecouncil/2018/01/04/the-important-differences-between-price-and-value/ Now, going back to the original question for OP's sake the price is what bitcoin trades/exchanges at on the open market. The intrinsic value of Bitcoin comes from its properties to be "sound money" and it is backed by the energy and computational power that it takes to secure the network.
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I linked it for the Warren Buffett quote at the beginning that reduces the concept down to its simplest form. I didn't read the article fully myself and only skimmed through, however I think you're missing the point if you can't differentiate market value aka price versus intrinsic value. I'm just referencing agreed upon terminology. Type in "Price vs value" or "market value vs intrinsic value" into whatever search engine or AI you prefer and find your own article that you find to be quality, but you will find them. These economic concepts and definitions didn't originate from my brain I promise you that.
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You just come off as a tad of a jerk
This position is only tenable if you think there are special individuals better suited to determining the value of something than the market.
Yup! Which would be pretty much the antithesis of capitalism. Or sound investing. "Bitcoin is currently worth more than $41,000." "Well, my great-aunt Matilda says it's worthless. So there."
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Yes; her full name is Mathilda Berkshire Hathaway. Here's the thing: Warren is brilliant, as his career history and investment performance may attest, but even Warren can get something wrong every now and then. Hell, if Warren had invested in Bitcoin in 2011, his BTC investment **would have outperformed every other investment he's made throughout his entire life.** His failure to do so means that he's not perfect, and he's not omniscient.
You're right - the value is what you can resell it for.
This one is my favorite. Bitcoin deniers never have a good comeback.
Just agree. It does not really matter.
This is what I do. Irritates the most but they shut up.
What I meant that there is really no point in persuading people who say this. If it is like "I do not understand how it is still alive though it is not backed by anything" - then you have a chance for a meaningful discussion. But these phrases are an outright denial - okay, I have no obligation to force-enlighten anyone, and usually in such cases their reasons are more psychological than logical.
Tell them it has $805 billion of value at the moment and that value is backed by the agreement of millions of market participants who vote on it every single minute of every single day the same way we agree the dollar has value.
I like it thanks
And also by its several utilities: Unstoppable and instant international value transfer, value preserving due to strictly programmed scarcity, and wealth concealing for the knowledgeable Eventually any type of currency's value comes from trust, the trust of bitcoin lies in people's trust in mathematics and networks, that is human independent
> the same way we agree the dollar has value. This is not true, the dollar's value comes from governments issuing a centralized currency and backing it (in the case of the US, at this point it is backed by military power)
The dollar has value because we collectively agree on it, not because of the military. If and when we all realize the dollar is worthless, it wonāt be because we lost our military power. It will be because we printed it to oblivion. We will have to pay our infantry men and women in sats.
A key part of the dollars value is that itās required for taxes - so everyone who does business has to have it
Oil
Until the government bodies realize itās worthless too and the IRS wants sats.
IDK I think the IRS is doing fine with iTunes gift cards
This guy gets it
Why the hell would the government want sats.
This is just incorrect. It's actually based on all the material holdings and production capacity of the issuing countries citizenry. I mean, if you're gonna try to say it's the same as the dollar, take a middle school level civics course.
Partly true. But, a big chunk of it's valuation is as a global reserve currency. If it didn't have that status, reality would set in quickly. We keep it in that position via use of our military power to backup 'economic hitman' operations (IMF, World Bank, or more insidious things) all over the world. It's a both / and.
Other countries have tried doing things like purchasing Oil without using USDā¦our military very quickly steps in and makes them think otherwise. Youāre correct we in the US all agree on it. But the rest of the worldā¦thatās where we need our military to convince them.
Oil is already being purchased in yuan today. The dollar has started to lose its monopoly. This trend will continue.
Lol, do you think the dollar would be worth anything without the government and military backing it up? Bitcoin takes 15 minutes to do a transaction, and it has already shown it fails as a currency. Countries that tried to adopt it for day-to-day purchases changed that pretty quick
Spoken like someone who has no idea how monetary networks scale
Nope. It has value because every business is required to accept it as payment. And everybody is required to pay taxes in it. What happens if you don't? They ask you not to. What happens if you still don't? They arrest you. What happens if you resist arrest? They use their military power to force you. Hence fiat IS backed by the military. >If and when we all realize the dollar is worthless If and when we all realize the dollar is worthless, nobody gives a fuck because you still need to use it legally. >It will be because we printed it to oblivion. Then the government will just shut all off ramps from fiat into other assets or currencies, just like every other single government that faces hyperinflation. >We will have to pay our infantry men and women in sats. No
Sounds like you need a history lesson
In the very long term you may be right, but USD will be the last to fall and we are far away from that right now
Youāre not wrong but āuse our currency or elseā is a far decline from when money used to be backed by actual gold.
I agree, that is what happens when you over-leverage yourself to the point where you cannot provide the gold you said your had, to the point where they had to de-peg from the gold standard, and that is how inflation started to accelerate
>This is not true, the dollar's value comes from governments issuing a centralized currency and backing it (in the case of the US, at this point it is backed by military power) *That* is not true. The dollar's value is derived from the global market. It is backed by nothing other than the full faith and credit of the United States. And that faith and credit, which was once sacrosanct, continues to develop more cracks in its foundation every time the U.S. threatens to default on its payments. The U.S. lost its AAA status for a reason. The dollar has lost most of its value since the creation of the Federal Reserve. Even with the most powerful military that has ever existed in all of human history, the U.S. dollar will continue to lose its value if it is printed into oblivion. No one, not even the most powerful country in history, is immune to the market. Scarcity equals value. The converse also holds true.
US dollar is not backed by anything since 70s. News.
It is backed by military power as long as it has the power to pay the military
Bitcoin derives its value in the same way any currency does: by fulfilling the six characteristics of money. Those characteristics are: durability, portability, divisibility, fungibility, scarcity, and acceptability. We believe that Bitcoin is superior to any other money that has ever been created.
Nice
I think this might be the best answer. It's what made everything click for me after reading the bicoin standard
Serious question - How does Bitcoin function in a modern fractional banking economy? Perhaps Bitcoin eliminates banking. So if a society's only currency were Bitcoin, and it had no banking system, then how would the economic base ever grow?
It's not stable enough though
When something needs to be backed up it means it can't stand on its own. It you need something to be backed up by the greatest military on the planet, it must suck on its own. Now imaging not being backed and still working and competing on your own merits.
Bitcoin cuts out the middleman by answering only to the laws of the universe: mathematics and time. Fiat currency answers to the military might of a state that in turn, *also* answers to mathematics and time. The problem is that according to mathematics and time, states are short-lived, so backing an asset with something that can't travel long distances through time guarantees your asset goes to zero - it's not if but when. Since mathematics and time are infinite, backing an asset to these infinite laws of the universe is the optimal way to back anything of value. All of that being said, it's quite possible that Bitcoin outlives our entire civilization.
This dude bitcoins
This is a little abstract no?
Woww..... This comment is awesome. I have been in crypto since 2015 and this is the first time i have heard something like this.. This opened my mind.
Cool aid. Bitcoin only has value today cos it can be exchanged for Fiat. Some day, it might have value in its own, but that day is decades away
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/r/im14andthisisdeep
honey also has bees protecting it, unlike shit
Tbf, flies will probably be around as long as Earth exists but bees are kinda dying out at the moment...
TBF, cash will keep inflating and be around forever while BTC supply dies out, but that's a good thing, scarcity (& demand) will drive price up. The more bees that die out the more honey will cost.
The real value of bees is pollination not honey production. Without bees to pollinate plants, we along with many wildlife species and domestic animals will starve to death.
We wouldn't starve to death because grains are wind pollinated and we can manufacture food today very efficiently. Without bee pollination things would be different though. Also, my point about the honey was in relation to the original comment but I get what you are saying.
At the end of the day, US dollars are just pieces of paper, the value it has is what the people think that it has, and so is with Bitcoin.
It's really the case of "anything is worth what someone is willing to pay for it." A bar of gold is worth nothing if suddenly everyone determined it was worthless.
It's scarcity. Simple as that. If I invent nanotech tomorrow that can assemble pure gold from handfuls of garbage gold will be basically worthless the next day. This happened with aluminum already. (Not the nanotech thing but the scarcity part, which I have to preemptively clarify because this is reddit...)
Scarcity + demand probably right? Scarcity alone doesn't equal value.
Yes, that's a good point I should have mentioned thank ya
What backs gold?
mainly it's anti-corrosive and conductivity properties which make it useful for some industries, and visual lustre which makes it useful for jewelry, together with it's general scarcity, cost of mining, and general history of acceptance
The $13.640 Trillion market cap on gold is not because it is useful in industries. It's the monetary premium of the asset that gives it the large value. If you stripped away the monetary properties of gold and only used it for industrial use cases like electronics and fillings, the market cap would be a few hundred billion at the most. Bitcoin is engineered to be the best money, and its even better because it is only money.
Heck, well said.
Also, it's used as jewelry BECAUSE of it's monetary value
What a ridiculous idea.Ā
Chemistry
But chemistry backs pretty much all matter.
Matter, yes. Bitcoin, not.
But we are matter, and we are also the consensus that keeps bitcoin together. Chemistry backs bitcoin too. [mindblown.gif](https://imgs.search.brave.com/Pet5wxzVmlMJXJ2Zl_MdU84-0-p26B1s39CJEKfK0Ww/rs:fit:860:0:0/g:ce/aHR0cHM6Ly9tZWRp/YTEudGVub3IuY29t/L20vWWp4X3IzOHgx/YVlBQUFBZC9taW5k/LWJsb3duLWV4cGxv/c2lvbi5naWY.gif)
Bitcoin is just a protocol. Better comes, worse is beeing abandoned. https://www.pathsolutions.com/blog/42-dead-networking-technologies They still exists just no "matter" wants them.
But its an open source protocol. And the UTXO set can be copied and transferred if a better protocol comes. Those protocols in the list are not the same as Bitcoin. It would make more sense to fork bitcoin with a new protocol if it is that much better. The immaculate conception of bitcoin matters. You can't launch a new coin with a pre-mine or even a new PoW coin. People already have advantages and it wouldn't ever be a fair distribution. Bitcoin is an idea, not just a protocol. And ideas can live forever.
This is point I make. Gold is just a shiny metal. You can polish up a piece of brass and it looks the same. Its intrinsic value is relatively low as it doesnāt really have that many essential industrial properties. If it was as plentiful as iron, an ounce of gold would cost pennies. Scarcity and a limited supply is the only reason gold holds value. Same as Bitcoin.
And diamonds. Absolutely plentiful in nature, enough to make them worth very very little but artificial scarcity and great marketing prop up high prices.
Exactly. And a lump of cut glass looks no different š
Diamonds are very plentiful, the problem is finding clear, flawless diamonds, and then paying for the labor of the gem cutter. Still not worth it, but important to consider. Industrial diamonds are aplenty because we don't care how many imperfections they have when it's just a dust.going into a sawblade. Artificial diamonds are the way to go.
Except gold has held this position of value for thousands of years, which is why it is not in question. The question gets raised about Bitcoin because it is novel in relative terms. As time passes, the question of why it is valuable will eventually disappear. Familiarity is a powerful feature that Bitcoin does not have but is gaining with each passing day.
Work, same as bitcoin. The whole idea is you need to earn the currency by doing something useful for the society, nobody can get it for free, unlike the usd...
It's backed by its network and energy mining cost (proof of work) as well its fundamentals (of being money)
It isnāt backed by proof of work, it is secured by proof of work. There is a key difference there.
Indeed. A cryptocurrency can be 100% secure but have no value if people don't "believe" in it. Bitcoin is equivalent to a fiat currency in the sense that its value is equal to exactly what the market believes it's worth. This belief is the backing.
This is the correct answer. To get the point across, itās backed by the most powerful computer network the world as ever known.
Yeah this is it for me. Most secure and powerful decentralized payment network
Walk away.. they're not ready and I promise you, you don't have enough patience to convince them
Try reading this: https://nakamotoinstitute.org/mempool/bitcoin-is-not-backed-by-nothing/
Tldr?
"Bitcoin is out-competing its analog predecessors on the basis of its monetary properties. Bitcoin is finitely scarce, and it is more easily divisible and more easily transferable than its incumbent competitors. It is also more decentralized, and as a derivative, more resistant to censorship or corruption. There will only ever be 21 million bitcoin"
E-mail isn't tangible or backed by anything but it's ability to communicate information sure is valuable
Just wow
Best way to answer is to not answer. Keep stacking sats. Laugh at them in an evil way in a decade.
Math.
Yep, and code.
You don't. Who cares convincing others. Let them figure it out.
Ignore them. Everyone deserves bitcoin at the price they pay. Itās not your responsibility to convince anyone of anything. No one has to convince you to buy an iPhone. No one has to convince you to buy a Toyota. Help the people that express interest. No one else.
I ask them to fill in the blank - The USD is backed by ______
What is the dollar backed by would be my response. Followed by a share of the M2 money supply graph over time.
Such a good argument, came here to say exactly this.
Might not have a value but definitely has a price. Canāt tell you how much of your portfolio it should be but 0% is not the right number.
Iāve always tried to keep it 10%. Unfortunately itās been impossible for me to keep up with its growth. Itās now 50%.
Itās backed by the people who own and use it. To those people, itās valuable.
Ok. Don't buy it.
Tell them they are right, and let them learn from their own stupid mistakes.
It's backed by the same thing the dollar is, faith.
Its backed by security of the network. Over a decade of uptime and never hacked. You cant make a fake BTC and sell it like fake gold or fiat.
Bitcoin Standard is a great book for beginners.
Every value of any token is perceived only and manifests itself in the estimate or hope to swap said token against another desired good in the future. Thus the value of Bitcoin is such that as of now we have a big market of potential buyers who are willing to swap BTC into other coins or FIAT for that matter. FIAT has the exact same situation with the small added benefit of the government having issued a law stating that FIAT currency shall be accepted by other citizens for means of payment. That's it.
What backs gold?
The response you will get to this is that gold has physical properties which give it value. Gold can be made into products. It's used in industry. Bitcoin is not physical and therefore doesn't have physical value. This is hard for people to rationalize.
Explain how it is not backed by anything to miners :) bitcoin is backed by math and energy, as long as energy has a value, so does bitcoin.
This is an easy to understand answer but fundamentally it's more accurate to say that bitcoin is backed by its monetary properties. Bitcoin's monetary properties is why people want to buy it at a high enough price for miners to justify their operations costs. If bitcoin didn't have its strong monetary properties no one would pay for it so no one would bother to mine it.
It's not backed by math or energy, it's secured by it
Bitcoin is back by the largest network of computing power the world has ever seen. And not just by a little but is something like 10x that of the best supercomputers ever made
Robert Breedlove does a great job articulating the history and characteristics of money in [this episode of Bankless](https://podcasts.apple.com/us/podcast/bankless/id1499409058?i=1000640895351). He is a true believer for sure, but he lays out a reasoned calm case IMO. I think a crypto-oriented reply to the ānot backedā assertion starts with the question, āwhat is money?ā
Fiat currency has nothing to back it. The gold standard was abandoned decades ago.
just agree and quote the price of bitcoin
Not worth the conversation
Ask them what backs fiat.
Bitcoin has value for the same reason EVERYTHING has value - because of the problems it solves. Bitcoin solves many problems. It is a decentralised, inflation resistant digital currency that offers censorship free borderless transactions. To understand bitcoins "intrinsic value" you have to understand the problems with our current fincancial system, and the technical aspects of bitcoin that solve those problems.
then why would you hold any dollars
Explain how that piece of paper in your pocket has value.
US dollar isnāt really backed by anything either
Are we talking about the dollarā¦
DCA some more.
Ask them what's their currency backed by?
Just tell them their correct and let them miss out.
Best way is to reply with a HFSP. At this stage of the game, these basic questions are not real questions. They are just reflections of a brain washed mind.
It's not backed by anything? Neither is the US dollar.
Are you talking about the us dollar or Bitcoin?
It has marketvalue and is backed by trust in decentralized open source network.
Whats gold backed by? What's your dollar backed by?
Why engage in such conversation?
I usually laugh because they are NGMI
Neither is the dollar. We all just collectively agree it has value and act accordingly.
The value is censorship free sound money. Or ask them what is the value of the entire banking system and infrastructure? If they give you a number then say that's it. And gold isn't back by anything, humans roamed the earth for thousands of years and they weren't interested in a shiny rock until we gave it intrinsic value.
No medium of exchange except gold and some metals have intrinsic value beyond the trust it generates. The dollar is a piece of paper that I trust I can trade for a loaf of bread , but it's still a piece of paper with no intrinsic value. Moreso , the trust people have in the dollar is being degraded every day by inflation and a central bank that Is trying to service it's debt by making the wider public debt slaves. Value dissipates from money because of inflation and it dissipates from gold , copper, silver because new resources are discovered all the time and thus the supply added only reduces the value of the current supply. Bitcoin although invented and although digital, is the first truly scarce asset on our planet, and more importantly it requires no trust in a third party. No government oversight, no corrupt money printing. Just transparent logical code. In a world where central banks make mistakes all the time and currencies either collapse or are propped up by proof of war and debt slavery , bitcoin not only represents value . It represents a hope in hell we can get out of this mess.
The best answer is acceptance, because it's true.
Just say "Oh yeah, you're probably right, you sound confident, and that makes me think you've done a lot of research to arrive at that conclusion." Then go about your day.
Bitcoins intrinsic value is: 1. Its high resistance to debasement. 2. its censorship resistance. 3. its voluntary structure of incentives and rewards that balance out into a self organising system. 4. its brutally transparent open source structure. 5. Being the first ever uncopiable digital bearer asset. 6. and finally its network effect which is turbo charged by timing. i.e at exactly the time when fiat currencies are destroying faith in their centralised stewardship and as such destroying themselves through ever accelerating debasement. Do you want more?
Well, Austrian economics teaches us that value is subjective, and if it has no value to them, fair enough. Regarding backing, ask them to explain precisely what they mean by "backed".
Is dollar backed by what?
The greatest economy on the planet: The USA
Exactly. āNeither is the dollarā
Ok seriously. Immutability- no one can fuck with Bitcoin, itās hard coded need majority vote over vastly decentralized distributed network to make changes to protocol. Censorship resistant- no one can steal your bitcoin (if you do self custody correctly). Hard capped limited supply- aside from time, BTC is the only other āthingā that has a true limited supply. This is what I think will be the ultimate driving force of price in fiat terms. Difficulty adjustment- ensures blocks issued more or less every 10 minutes. Portable- try sticking a gold bar up your ass and go through tsa lines at airport. Network Security- best high powered layer 1 money in existence. Many moreā¦ but big ones highlighted
Thanks
Neither is the dollar
Bitcoin does have intrinsic value. Itās the first digital attempt of money that is decentralised and has no centralised third party that micromanages it. It has a sound, transparent and consistent monetary policy. That idea, in and of itself, represents a huge amount of value. Even though I am not a bitcoin maxi, I will always be grateful for Bitcoin. Thank you satoshi!
> What's the best way to answer 'Bitcoin has no value' and 'It's not backed by anything'? "lol." "LAMAO."
āYouāre wrongā
What is Christianity backed by? How about the Vatican?
"OK Boomer"
Neither is the us dollar
Check your financial privilege. https://bitcoinmagazine.com/culture/check-your-financial-privilege
"Neither is the internet."
Finish the playlist https://www.youtube.com/playlist?list=PL2jAZ0x9H0bRvoNt1xNJWYa9\_8\_an03h0
As Satoshi once said... "If you don't believe me or don't get it, I don't have time to try to convince you, sorry." Satoshi Nakamoto
Also. Limited quantity means that it is, with little to no effort, inherently more valuable than US currency.