People forget bitcoin wasn't worth anything for a long time. You take care of an asset worth millions very differently than an asset worth pennies and too much of a pain to transact for cash anyway.
because bitcoin is not money, it is an asset, it is a property that can be traded for money but its value fluctuates and is not tied to anything other than people's perceived future value in it (which can be valuable, don't get me wrong there, all I am saying that it will change all the time)
I really don't get why bitcoin is worth so much.Bitcoin is called a store of value like gold, but gold has inherent uses. If the price of gold went to zero then you could still use it to make jewellery or use it for electrical conductivity. If the price of bitcoin goes to zero then it's worthless. It's also not environmentally friendly and bitcoin mining uses up 0.21% of the world's power supply. And all of this energy is used to calculate billions of hashes per second out of which all but one will be discarded. There is also increased regulatory focus from governments who see it as a threat , with India even going so far as to suggest they would ban it.
Bitcoin has value because it can do things that no other money can do. It won't drop to zero because people need it for things they can't get anywhere else.
If you want money that can't be seized, can't be frozen, can't be manipulated, Bitcoin is your asset. If you want to be able to send money across continents, bitcoin is your asset. If you want to hedge against USD risk, bitcoin is a great choice (very very different fundamentals, and almost always rises with political instability). Some people want that badly enough for at least some of their portfolio that they are willing to accept the volatility risks.
The volatility is a detractor, but that definitely doesn't mean it's good only for speculation. Bitcoin keeps coming back crash after crash because there is real value in owning some.
I dunno, a decade ago people were still acting like Bitcoin was a currency and making apps and signing up coffee shops and talking about how if the entire global GDP of $45T went through Bitcoin, each Bitcoin would therefore be worth $2 million.
Now it's just, an asset, that's worth money, for reasons?
Bitcoins are just special numbers--there's no inherent value in them. If everybody decides tomorrow to use a different blockchain they will become completely worthless numbers.
A tulip looks pretty in your garden, (many) internet companies make money, and houses are a basic necessity. Bitcoin, on the other hand, is a purely social phenomenon. It has value only because other people think it has value.
The argument trotted out at this point is some variation of "but there is value in having an anonymous, decentralized currency." And that may well be true. But the high valuation and extreme volatility of bitcoin (not to mention its inherent deflationary character) is actually a hindrance to its use in that manner. Who will accept bitcoin if its value can fluctuate 100% in an hour, and who will spend them if their price just keeps going up?
Forgive me for being skeptical, but I’ve never seen Bitcoin used as a medium of exchange. You could argue it’s a store of value, but that’s also contentious. In the last year, it’s back to its original price. So much for being an inflation hedge.
Bitcoin's value is not based on its technical ability or its usefulness. No one understands or care about PoW vs PoS. Its only practical worth is its name recognition driving more people to buy it as an investment. Bitcoin beat Ethereum and Bitcoin Cash and Ripple and Monero and every other coin because it was first, and people know the name "Bitcoin", and they've never heard of any altcoin.
Articles like this demonstrate why most people don't get Bitcoin in the 1st place. Let's ignore the factual inaccuracies like bitcoin production bottoming out in 2040 (it's 2140, Justin, and that's a big difference) and focus on how Justin doesn't get it.
Bitcoin is in use right now transferring money around the globe. If I buy 100$ worth of bitcoin (0.478 bitcoin at current prices) and immediately use it to purchase anything, it has served its purpose as a value transfer medium. This is regardless of tomorrow or yesterday's price. It is this efficacy that people pay for when they buy bitcoins.
Bitcoin was not designed as a storage or investment medium it was designed to facilitate the transfer of value. As long as it performs that function it will continue to defy the misplaced expectations of those who refuse to go to the effort of understanding it.
This is the point critics are missing when they argue about Bitcoin's intrinsic value. Bitcoin has no value other than its network effects. Facebook, Reddit, Bitcoin, etc. are valuable because of their usage. Which makes them hard to replace even if they're not perfect.
Seems like most mainstream coverage about bitcoin is in the context of an investment instead of a currency.
I wonder if this is hurtful in the long run -- thinking about bitcoin as something to stock away for retirement rather than a useful tool in transactions. Great for prices in the short term I guess.
Bitcoin doesn't really work as a currency (at least without some layer 2 solution). It's most valuable currently as a store of value / hedge against institutions.
It’s crazy that some people seriously think Bitcoin is anything like these stores of value.
All these are ties to some fundamental value to society. If gold goes down, manufacturing will buy more of it because they use them for ICs and lots of other things. Most companies have some tangible assets behind them. If a stocks price goes far enough down someone might buy up a controlling stake and liquidate all the assets. A fiat currency in a functional state is generally strongly tied to borrowing for real physical assets. It’s deeply entangled with the economy.
There is no bottom for Bitcoin. Especially now that it’s not a very viable currency for most purchases or for lending.
What’s more, value is continually being extracted from the currency. People cashing out and payments to miners (who are basically just burning a lot of the money they make by converting electricity to heat without doing much useful work).
In gold or stocks the money put in actually exists in something valuable to society, and you own a piece of that. The the value might be boosted up 2-10x its real value today, perhaps due to its perceived future value. But you do own a piece of something tangible.
With Bitcoin, the money you put in is already gone. Used by a miner to pay for electricity or an early miner/purchaser who is now cashing out to buy an apartment. You just gotta pray that a few years down someone is willing to buy bitcoins from you for its perceived value alone. Because nobody is going to buy it for any other reason. Not to make something out of it (gold), not to liquidate the assets behind it (stocks), and not to pay taxes or pay back their mortgage (fiat currencies)
There’s so much utter insane and thinking around cryptocurrency these days. Especially Bitcoin. It’s madness.
I mean, it’s a super cool tech. But I think that blinds a lot of people to the facts around it.
Many people say the same thing about Bitcoin. They aren't wrong, either, but they also miss the point that it doesn't matter if enough people decide to value it.
Bitcoin is a store of value. Why is it a store of value? Because people believe it is, much like gold. You can gesture vaguely at the minor utility that gold has, the ability to be made into things of commercial value, but that's a fig leaf as much as it is to point to Bitcoin's potential use for payments.
Hashrate and mining investment is a reflection of that belief.
Don't take this as advice to buy Bitcoin at 50k.
Normal currencies like USD are, in the end, also based on trust. They're just pieces of paper, and the value is in the belief that those pieces of paper will represent approximately the same thing tomorrow. Trillion dollar pieces of paper could be made worthless tomorrow, but everyone trusts that they won't due to the
dire physical consequences.
Even those currencies, that we consider normal today, were bootstrapped over a very long period by originally representing physical metal that could be redeemed.
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