Asklemmy

You have to think about Bitcoin in a different way from any other form of money that has ever existed because it's literally the first of its kind.

I work hard for money. I expend my time and energy and talent in exchange for money (USD, in my case) that I can then trade in the future for the things I want/need. So money is an abstraction of my time and engergy, stored for later use.

Unfortunately, USD is pretty highly inflationary and it loses a lot of value over time, so it doesn't make sense to save it for very long. I have to either spend it or invest it because every day I hold on to it, it loses a little more of its original purchasing power.

I could invest my money in gold or silver because those things are certainly more finite than USD and hold value better, but precious metals are heavy, difficult to transport and store in large quantities and I can't easily use gold to pay for my daily expenses.

So here's an idea: What if instead of converting my time, energy and talent into some physical thing that I have to hold onto and contend with inflation, etc. we just cryptographically assign that value to an entry on the public blockchain ledger? Now, that value is permanently locked into part of the total 21 million supply of bitcoin and no one can create more of it. Bitcoin is literally the hardest form of money ever created.

If I want to exchange that value with someone else in the future, I use my private cryptographic key to prove that I own it and I can effortlessly transfer it to anyone anywhere in the world in a matter of minutes.

You can't think of Bitcoin as some "thing" that you buy because a "bitcoin" is really nothing more than a unit of measurement. The real power of the bitcoin network is the ability to store and transmit value in a completely secure and trustless way that's immune to the manipulation of fiat currency.

If you're truly interested in understanding the answers to your question of "is bitcoin actually worth anything", I recommend the book Broken Money by Lyn Alden. It's an easy read and it will absolutely change how you see money.

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.

the only tangible value I personally see in Bitcoin, because it's not really being used as legitimate currency, is for criminals.

Please, factual answers only.

In 2021, 0.15% of known cryptocurrency transactions conducted were involved in illicit activities like cybercrime, money laundering and terrorism financing

Bitcoin specifically? No. It's a janky prototype that should have been superseded a long time ago.

Crypto in general? Probably something. It's good for buying and selling illegal things.

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.

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.

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.

The real answer is: It depends how you define value.

Can you make money with Bitcoin? Yes. Are you likely to make money? No Is the technology useful applicable? Yes Is it being used and applied ethically and for the good of people? No. Is it a 'store of value'? No, it's more like an extremely volatile stock or a lottery ticket. Can you use it like money? Yes Is there any reason to use it like money? Not really, not even among other cryptocurrencies.

Depending on which of these aspects of Bitcoin matter to you it will be more or valuable.

Bitcoin has massive value as a tool to transfer money, anonymously, and through borders effortlessly. Its extremely valuable for money laundering, scamming, stealing, and dodging tariffs or raising money (see how much crypto is stolen by north Korea)

not even fiat (heh) is worth anything if we don't accept it as store of value, let alone an electronic register on a digital ledger.

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.

The US dollar actually is tied to something of value: it's the format the us government will take their taxes in or else they will increasingly use their powers as a monopoly on fhe legitimate use of force until you give them what you owe

Crypto is only worth what others will pay for it. Which is why I don't own it

Just like anything else, it's worth what people are willing to pay for it vs what people are willing to buy it for.

Currently bitcoin is just a digital commodity with a finite supply which makes it a good store of value if people continue to use it.

The thing is, there's nothing preventing bitcoin from tanking and becoming essentially worthless besides people buying it because the price is low.

If in a hypothetical future the bitcoin price becomes stable then it will become a valuable commodity. It's value is wholly derived from it's users and nothing else.

It's not very convinent for governments or large institutions to hold it in it's current form since it's too easy to steal without leaving a trace. For government use there is going to be needed some development to allow for government or Central banks to have complete control over the currency without giving that control away which I think might be possible. In that case settling international transactions in bitcoin as opposed to the dollar for BRICS countries might be an option which doesn't use the US dollar.

All the other uses IMO are pretty much fluff such as paying in bitcoin.

No

Bitcoin doesn't even attract criminals as it's traceable. You can easily tell who bought what and traded what. Since all the exchanges are KYC, no criminal worth their salt would use Bitcoin. Instead, they would rather use Monero. The only people buying and selling Bitcoin are people who want to gamble on it getting higher

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.

My views on it are the same as the DPRK. A tool used by capitalists that can help fight against capitalism.

I don't think bitcoin provides much value in itself. Its basically an asset that is hard to make more of, like money or gold, which are also valuable because of this and that gold and specific currencies are relatively widely used.

bitcoin's supposed added value over money is private digital transactions across the globe in a private way, so that you can send money whoever you want, but it's not practically private, and has so large operating costs (even just the transaction fee) that it's not really better than bank transactions.

so in short: its value is in its scarcity, and that you can speculate on it. the other possible advantages are not realized.

since the value is in speculation, the dollar limit is when investors start selling enough of it so that others will do the same out of fear. which is who knows how much. but it's probably more related to other factors than the dollar value.

TL;DR: It's worth whatever a greater fool is willing to pay for it.

Bitcoin is a cult, therefore it's invaluable to the cult members. In reality they're all multi-level marketing pyramid schemes which is what the stock market has degenerated into as well. The former just has more overtly obnoxious shady unethical proponents. It's easier to succumb to greed, selfishness, and seclude oneself from the rest of society by simply buying something that confirms one's fallacy riddled beliefs than it is to question oneself and actively improving society with all of Earths inhabitants, ecosystems, and posterity in mind. Technologically humankind has made great strides, but mentally the majority still thinks like cavemen.

Crypto Cult Science

“Money corrupts; bitcoin corrupts absolutely. Disregarding all of bitcoin's shortcomings, a financial instrument that brings out the worst in people—greed—won't change the world for the better.” —https://www.arscyni.cc/file/crypto_cult_science.html

From a basic labor theory of value perspective, bitcoin requires labor to produce because mining it requires massive amounts of compute power. This computer power is supplied using GPUs and electricity, both of which require labor to produce.

If you use this calculator, and enter the values 67 TH/s (tera hashes per second, the rate at which you are mining), 2680 watts for electricity consumption rate, and 5 cents per kilo watt hour as prices, you will see

4.25 USD revenue per day 3.22 USD cost per day Profit rate = 32.0%

To make the values of the the hash rate and energy consumption rate realistic, I consulted the specs of the machine antminer S17, which is aparantly a machine used in the bitcoin mining world (I ain't into crypto mining). The cost of electricty comes from Kazakhstan, which has cheap electricty and substantial mining operations.

So basically, at the current price of bitcoin can support a gross profit rate of 32% for the people who produce bitcoin, assuming you keep all the profit (no taxes, interest, rent), have no employees or maintainable costs. This is the price currently settled at based on the technological conditions and level of competition.

It is nothing too crazy of a price, and the rapid growth of price in bitcoin is due to how the currency was designed. Basically, once a certain number of bitcoin have been mined, the bitcoin generation rate per mined block halves. This forces an exponential rise in the difficulty of mining bitcoin, and therefore an exponential rise in its price.

Most probably, if bitcoin was designed to have a constant difficulty of producing, its price wouldn't have increased at all.