EDIT: Should also mention that you literally cannot trade crypto in some states of the US because those states require crypto institutions to have physical assets that equal their digital assets, which is actually pretty smart. Because people can’t buy shit with their 0.2 BitCoins and 50k DogeCoins, this means that those institutions don’t operate or allow trading from these states.
that doesn’t change whether bitcoin is real. it only changes whether crypto exchanges can operate legally in arbitrary jurisdictions.
that doesn’t change whether bitcoin is real. it only changes whether crypto exchanges can operate legally in arbitrary jurisdictions.
Reason I brought that fact up is because those states are saying that crypto needs to backed by something physical instead of an intangible hype and speculation factor.
What makes BitCoin worth $42k? Or Ethereum worth $2.2k? Like, what is physically driving the worth of these cryptocurrencies? Some fiat currencies moved away from precious metals, sure, but they’re back by at least the economies of each country. From what I can tell and have seen, crypto is backed by… hype and speculation. There’s no tangible thing that can back crypto, hence why it’s a fake currency because it’s more or less arbitrarily at a price point just because it is.
Oh, come on. That is a really simplistic, and unfortunately, inaccurate view of value.
I ask: what makes anything valuable? Let me pose some examples:
Suppose I have a gold bar. That’s clearly valuable and it’s value is very “real”, isn’t it? Gold can be used in many industrial applications and can be made into jewellery. But why is it specifically worth what it is? Why not infinity or zero? Because (1) gold is scarce, and (2) that’s what people are willing to pay for it.
Now suppose instead I have a mint condition first-edition base set Charizard. That’s also valuable, and it’s value is also “real”, isn’t it? But the way it derives its value is a bit more abstract than the gold bar. It doesn’t do anything and the card isn’t even legal to be played in the actual Pokemon card game. But yet, it has value. Why? Because the card is (1) scarce, and (2) people are willing to pay money to have it, even though it doesn’t do anything.
Let’s get a bit more abstract. Suppose I hold the copyright to a popular book series. The copyright is also valuable, isn’t it? But also at the same time, “copyright” is not a physical thing; it is a creation of law and is a fictitious thing that we have all agreed is worth something. Now, if we all suddenly agree that copyright is meaningless, then my copyright instantly becomes worthless. Worth even less than the Charizard, because the Charizard at least has some nominal value as firewood or an art piece! Yet, copyright is still valuable, because we, as a society, agree that it is worth something, and this is also backed by the power of the State.
If you get even more abstract than that, think about shares of a company that is not only unprofitable but is completely underwater in debt. Is that company still valuable? Well, Uber is an example of a company that fits that description. If you think about it logically, that company should have a value of zero; it’s not making anyone of its owners money and it owes more money than it has. It’s backed by a “something”, but that “something” is a pile of debt that outweighs its assets. Whereas a copyright has the backing of the State, shares in a company don’t. But then, why is Uber worth something? Again, because (1) there is only one Uber, and (2) people are willing to pay money for it thinking that its value will increase in the future.
The final step of abstraction is a digital currency. I’ll use Bitcoin here, because Ethereum does actually have “real” usage (you can use it as “gas” to perform computations on the Ethereum Virtual Machine). Bitcoin is backed by diddly-squat and has only nominal usage. But why it is valuable? The same reasons as everything else on this list—because (1) it’s scarce, and (2) people are willing to pay money for it with the expectation it might increase in value in the future.
Whatever reasoning you use, whatever rebuttal you have for my argument, unless you’re actively cherry-picking and straining your logic just so you can not be wrong in this instance, you’ll find that any reasonable argument for why Bitcoin has no value will also apply to argue what I think you’ll see is an uncomfortably large number of “real” things are worthless as well.
Electricity has physical properties. It is energy. Mining Bitcoin requires the use of energy. To the miner, the value of Bitcoin is equal to the cost of acquiring the electricity used to mine it.
Bitcoin is a fungible store of value used to convert KWh into commodities and services.
From what I can tell and have seen, crypto is backed by… hype and speculation.
bitcoin is a network protocol. cryptographic tokens are issued within it. what backs it is the security of the cryptographic system and the combined hashing power of the network. if you think it doesn’t have value, that’s ok: value is subjective. some people do think it’s valuable to be able to control these cryptographic tokens. and that’s ok, too: value is subjective.
that doesn’t change whether bitcoin is real. it only changes whether crypto exchanges can operate legally in arbitrary jurisdictions.
Reason I brought that fact up is because those states are saying that crypto needs to backed by something physical instead of an intangible hype and speculation factor.
What makes BitCoin worth $42k? Or Ethereum worth $2.2k? Like, what is physically driving the worth of these cryptocurrencies? Some fiat currencies moved away from precious metals, sure, but they’re back by at least the economies of each country. From what I can tell and have seen, crypto is backed by… hype and speculation. There’s no tangible thing that can back crypto, hence why it’s a fake currency because it’s more or less arbitrarily at a price point just because it is.
Oh, come on. That is a really simplistic, and unfortunately, inaccurate view of value.
I ask: what makes anything valuable? Let me pose some examples:
Whatever reasoning you use, whatever rebuttal you have for my argument, unless you’re actively cherry-picking and straining your logic just so you can not be wrong in this instance, you’ll find that any reasonable argument for why Bitcoin has no value will also apply to argue what I think you’ll see is an uncomfortably large number of “real” things are worthless as well.
Lmao
Electricity has physical properties. It is energy. Mining Bitcoin requires the use of energy. To the miner, the value of Bitcoin is equal to the cost of acquiring the electricity used to mine it.
Bitcoin is a fungible store of value used to convert KWh into commodities and services.
lots of currencies have never had a physical backing.
bitcoin is a network protocol. cryptographic tokens are issued within it. what backs it is the security of the cryptographic system and the combined hashing power of the network. if you think it doesn’t have value, that’s ok: value is subjective. some people do think it’s valuable to be able to control these cryptographic tokens. and that’s ok, too: value is subjective.
money existed before dollars. the dollar value of any asset is not determinate of whether that asset is money.
those states aren’t authorities on what money is