My problem is not just what backs Bitcoin, but what backs its value. Nothing.
Money is backed by goods and services already created + other real things like consumption, etc... Then we had a need to create money to easily exchange between these things.
Bitcoin on the other hand already comes with a random value of $650.00 usd with no good, no services previously created, no VALUE. It's just one giant gamble, in my view.
Again, I am sure I am wrong, but I have yet to read anything that convinces me.
EDIT: Actually it is not one giant gamble. That was the wrong analogy. Bitcoin is more like a card trading game where the players get cards for making them or solving a problem related to the game. So yes, you can later take those cards and sell them, but it really becomes the last fool game.
A bitcoin is a token which gives the user the right to transact on the bitcoin network. It derives its value from this right.
The bitcoin network provides global near-instantaneous transference of ownership records for negligible transaction fees. It enables transactions to occur without a trusted third party, and also represents the advent of scriptable money. For these reasons, the right to transact on the network has value.
The line I'm starting to draw for people is from the network itself, to the resources that run it. Power powers the network - compute, storage, network (physical). Power is where we derive value. With Bitcoin, it's like we're parking power (work) into a storable unit of trust. Then you have compute, storage, network, trust.
I know what 'backed by gold is', but what the hell is 'backed by goods'? USD is backed by taxes (try to pay taxes not in USD) - yes, I can see that, but backed by goods?
Money is a token, a debt unit that passed on down the chain in exchange for product. Many things can and did serve as such token: gold, bank note, cowry shells. Their only 'value' is that they all are scarce resources (well, in case of bank notes less and less so) and socially accepted as a measure of debt. So can be bitcoin. In many ways bitcoin is much better money then others.
I make a tea pot. You own a goose. That is our economy. The money in economy should never go beyond the value of that goose + the tea pot. Now add the hours you work, the hours I work etc. The economy grows, but not beyond what has been produced. Now let's say you want to buy a home but the money is not there, then the government knowing that the value will exist, they push FUTURE money out in the system and indirectly lend it to the guy who is going to build the house. The economy grows, but this is more like forecasted revenue. You see E.V.E.R.Y. single dollar in this economy can be traced back to some good or service.
If 'backed by goods' == 'can be tracked to something that this money unit has been exchanged for' - OK, I understand that. Now, why is this definition not applicable to bitcoin? BTC also can be exchanged for goods and can be traced back to some good or service (with great precision thanks to the public block chain).
By the way, normally it is not government, but banks (private corporations) who 'push FUTURE money' into the system in a form of credit. Same can happen in BTC economy.
I still fail to see how BTC is fundamentally different from any other currency.
You create something. I create something. We create money to exchange these things.
You don't create money. Give it a value. Trade it. Raise its value. Then after 3 years, ask people to BUY that and use it to trade other things.
Bitcoin is nothing like money. Bitcoin is a card trading game and the card have a value now. Saying a bitcoin is like money or currency is like saying a car is like money/currency.
Money is backed by goods and services already created + other real things like consumption, etc... Then we had a need to create money to easily exchange between these things.
Bitcoin on the other hand already comes with a random value of $650.00 usd with no good, no services previously created, no VALUE. It's just one giant gamble, in my view.
Again, I am sure I am wrong, but I have yet to read anything that convinces me.
EDIT: Actually it is not one giant gamble. That was the wrong analogy. Bitcoin is more like a card trading game where the players get cards for making them or solving a problem related to the game. So yes, you can later take those cards and sell them, but it really becomes the last fool game.
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