Bitcoin Forum

If I give you something valuable I want something valuable in return.

Now we all know what you want me to give up for bitcoin: food, water, property, services, laptops, internet, jewelry. With water I can quench my thirst, with food I can feed my family, in property I can live, with jewelry I can surprise my girlfriend etc.

Thats the PRICE of bitcoin (at least for today).

Now what do you give me in return?

What can I do with a bitcoin once you have transferred it to me?

You can buy 3D printed card with Snapily.com
It's awesome

Why would he want to give me the awesome 3D printed card for bitcoin?

What can this merchant do with bitcoin?

Well, he can buy almost anything he wants with it.

I think the idea is you can then exchange the bitcoin for goods/services/fiat currency etc, the same way you would exchange a $100 bill for other stuff.

I don't need to be able to do anything intrinsically with the bitcoin or the $100 bill (i.e. I can't eat or drink either of them) for them to have exchange value.

Gold always was wanted because it looks great. People like to wear it and touch it. When I exchanged something for gold I received value.

The Dollar only had value because government forces us to accept it. If I exchange something for dollars, I get government guns to make sure it will buy me goods

Now what about Bitcoin? Why Exchange Something for Nothing? If your answer is because you can transfer Nothing cheaply let me tell you this:

Incurring a cost (something) for transferring nothing is a waste not a benefit.

You can exchange back to fiat if you want to spend it at places that only accept fiat. or you can spend it at places that accept bitcoin.

Try sending money from one country to another (wire, western union, etc) within one hour and for a tiny fee. You won't be able to.

You can seem to be claiming bitcoin has no use, whilst gold has a use "because it looks great". I suggest you read some articles about potential uses of bitcoin (its a very long list) before launching off into "bitcoin has no value" tirade.

"Government force" is just one of many things that gives the dollar value. The greater thing that gives the dollar value is the millions of people willing to accept it as payment. The government mandate helps drive acceptance, but it's the acceptance itself that gives the value, not the mandate.

Bitcoin can grow in this space because merchants choose to accept it as payment. The end result is the same. Sure, they may decide one day that they'll no longer accept it... but for today, they do, and that's enough.

Until you can accept that a currency does not require government force for it to be useful, you won't be able to rationalise Bitcoin. Maybe Bitcoin will be the experiment to prove this point for you and others.

All value is a belief, whether dollars or bitcoins or gold. The merchants accept it due to the belief that tomorrow or next week or next year they'll be able to redeem their Bitcoin for other things they need.

If people ceased to believe they need to live in houses and buy posh cars, those things would be worth zero tomorrow. Ideas, intellectual properties, are often considered to have value despite being as intangible as Bitcoin.

Everything has value because of belief it can satisfy a present or a future need. Or even more basic: it has value because some human somewhere believes it has value.

Maybe the belief that Bitcoin will still be exchangeable for goods a month or a year from now is wrong, but I think it likely will. Others do too. There's your belief.

Maybe we're all wrong.

Maybe the US Government will go down tomorrow, and USD will be worthless.

Hedge your bets appropriately.

Why would somebody want to exchange something (dollars) for nothing (bitcoin)?

We are back to the original question.

Long list of potential uses for bitcoin? Name one use of bitcoin except dumping it on the next guy?

Please, stop trolling all around the forum with your nonsense.

Best regards,
ilpirata79

Think of bitcoin as a currency and you'll realize how stupid you sound.

You exchange bitcoin for goods and services because you know that people consider it to have value. Just like the dollar, gold or other commodities.

Probably worth doing some more reading

Its money, just in the same way that other currencies are money. There is no magic to all of this but maybe we are misunderstanding your question.

Thanks for your reply (serious). I think it demonstrates perfectly why bitcoiners are misguided. Let me go through your points one by one.

1) Your statement that "the greater thing that gives dollar value is the millions of people accepting it" is incorrect. It is the ONLY thing that gives dollars value. Now the reason anybody accepts nothing (paper) for something (goods) is that government forces us to do so (dollars have to be accepted for payment of any debt by law, alternative media of exchange are outlawed, ex. Liberty Gold or the use of soft force (regulation) makes it impossible to use them). If government would not force us to accept and use dollars the dollars price would return to the value of the paper content: almost 0.

2) Merchants will not accept nothing (bitcoin) for something. Merchants at the moment are dumping bitcoins immediately for dollars. This has been discussed already by this forum.

3) I agree. I think that Bitcoin is only bought because people are misguided and now (the majority) greedy. They think that bitcoin will continue to explode in price. They dont care about Bitcoins value (which I think is 0). I think Bitcoin will prove that you cant exchange "nothing" for "something" and that "nothing" is worth 0, even if "nothing" is rare (bitcoin might be abundant once nobody wants them anymore).

4) "All value is belief". No. I dont have to believe in the value of water. Water is valuable to human kind period. Nothing will change this "value judgement" (as if you could suddenly not decide to drink). You have to be delusional if you state that the belief in the "value" of 1 bitcoin (I cant do anything with it) is the same as belief in the value of water (I need it to survive).

5) Again similar answer to 4). People need shelter. Its not a believe that I hold, that I need shelter. If I want to stay warm and comfortable in winter times or when it rains I need shelter (aka reality). Equating this reality to the belief that bitcoin has value is laughable.

6) Same answer as 4) + 5)

7) You belief that something will be exchanged for nothing. It has never worked over a longer period of time in the history of man kind.

8) We will see what the future brings.

9) We agree.

You are willing to give up your water for BitCoin?  Wow!  Just flushed a couple of times for free...  Send me your BC.

http://BitcoinFood.com

What can you do with a dollar, except wipe your ass with it?

So the answer is: I can dump it on the next guy?

Bitcoiners: Bitcoin has no value for itself. However I can dump them on the next guy! This is a technological revolution.

sane person: But why should I buy bitcoin, if they have not value for themselves. Why should I exchange something for nothing only to hope that I can dump nothing on the next guy in exchange of something? This sounds like a pyramid not a monetary system.

Bitcoiners: Hush. Fucking troll.

Well I cant even flush bitcoin down the toilet. So I give you water that you can drink and flush down the toilet.

You give me a Bitcoin which is a fancy word for nothing.

def Bitcoin: Nothing that I can transfer at a cost.

Correct.  When you think about it the same thing applies to all forms of money since humans started using money.  Once you realize that most of the objections to Bitcoin disappear.

Golds value is that people like to look at it and touch it, they think its pretty. This value is why people accept it as a payment of goods and services. Golds monetary value is therefore directly linked and dependent on it being pretty. If it would not have been pretty we would not want it and thus it would not be widespread money.

You cant seperate between money value and utility  as gold is only money because it has utility (it being pretty).

Bitcoin has no utility (like being pretty) and thus its other aspects (scare, divisible etc.) are irrelevant.

I have refuted this statement about 20 times in 3 different threads (bitcoiners always bring it up).

Golds value: it being pretty to look at, I can touch it and like the feel of it, it has a warm shine.

Bitcoins value: nothing

Dollars value (gold standard): the paper only has no value for itself. Its value is derived by the gold backing it. Gold has value as explained above.

Dollars value (fiat): no value. we accept it because government forces us to use it.

Bitcoin is worse than fiat, as it is nothing and nobody guarantees me that nothing will be exchanged for something like the US government does with paper dollars.

This only works on the currencies home turf...it is no longer legal tender and turns into a foreign currency as soon as it crosses a border.

Just think of Bitcoin as a foreign currency used by people who could care less.  All that really matters is that buyers and sellers can use it no matter where they are in the world to buy and sell shit without anything more than a laptop computer or mobile phone.  No credit cards, no debit cards, no cheques, no special point of sale machines, no banks, no governments blah blah blah.

If you can't see a value in that then you need to get out more.

1) Reread what I wrote: The money value only exists because of its beauty. Without beauty no money value.

2) No it is not money. Money has utility/ value. Nobody will accept nothing for something. Remember: Merchants dump bitcoin immediately for dollars. Speculators buy because they think the price will go up. Some are just plain misguided. Nothing that has happened so far proves anything. Not my argument not your argument.

All currency or precious metals have value because the market gives it value. Even if we accept the theory that gold and silver have intrinsic value, the question still remains what should one ounce of gold cost? How is this determined? And why does the price constantly change?

Suppose the price of gold is currently selling for $300.00 an ounce and I think that gold should cost more than $300.00 an ounce. Suppose I ask for $1000.00. Will anyone buy it from me for $1000.00 when they can buy it for $300.00?

No. The market has determined a certain price at a certain time.

Who determines the value of Bitcoin? The marketplace. The current marketplace has determined that Bitcoin should have the price it currently has.

My two sense:

1. Bitcoin has value because of its technology. In this sense, so long as there is a need for sending instant payments that are beyond the control of governments, capital controls, and banks to anyone in the world, it will have value. Unlike other digital currencies, it is decentralized and open source, which is a strong foundation for an independent system. It is the technology itself, along with deflationary coins, which has value regardless of whether it be worth $1.00 or $10,000.

2. The current Bitcoin price is a speculative bubble. It has this large value because people want in on the action so they can become wealthy and then dump them for fiat currency. If you don't dump bitcoins, what can you do with them?

A. You can hold them as a storage of wealth (like bullion).
B. You can buy a very limited amount of goods and services.

Although it is true that gold is shiny and pretty and has industrial uses, it cannot be used effectively as an electronic transfer. Even if you create a digital gold currency, like e-gold, the problem still remains on how to create a peer-to-peer network with the baggage of backing the currency with real gold.

Both gold and Bitcoin are good.

The decision is whether you want a small number of politicians or bankers controlling things or whether you want that control to be "crowd-sourced."  I think it remains to be seen which is better or worse and since both systems will probably exist for a long time it is a matter of choice and diversity.

And I would add another point.

You keep talking about gold and silver, which I fully support, having value because it is shiny and pretty. The problem with you overall argument is that both the Bitcoin and the precious metals markets are speculative.

When the price of gold starts to rise, people want in on the action. They want to buy and then dump them for fiat. Now it is true some do not dump gold and silver at all because they think they have value, whereas fiat does not. The same is true with Bitcoin. Some buy and dump for fiat profit. Other buy and hold because they see the value of this technology and believe that its value is more important than fiat bills.

Yes, gold is tangible and pretty. It can be used for many applications. But the same principle applies to Bitcoin electronically.

Bitcoin is a decentralized payment network over which the currency exists. This has some value i guess because it's the first time in history that something like that is being achieved.

In a free society, everyone should free to choose for themselves what they are willing to accept in exchange for the goods they produce or the services they provide.  Bitcoins obviously don't meet your personal requirements and, fortunately, one of the best things about bitcoins is that using them is completely voluntary.  I don't think you have to worry about a banker or politician ever forcing you to accept bitcoins.

1) You have to understand that certain things are valuable. The question is if we figure this out or not. For example oil was valuable before we figured this out. It had no price. We did not give oil value. We discovered oils value.

Now gold also has value to us, because the brains of most humans reacts positively to golds image (beauty). We also like to touch it. Thus we accepted it for payment of goods and services. Without golds beauty no money value.

2) The price changes depending on the demand for gold and the demand for the object we price gold in.

3) This is incorrect. You are a market participant. Your bid counts and increases the price of gold.



1) Sending BTCdoes not give BTC value.

Often people say: The Bitcoin network is valuable because you can send value at little to no cost. But BTC has not value. Thus you are sending nothing at a cost. Thats called a waste.

2) Yes price is not necessarily a reflection of value. I agree with your statements, however I think it is better classified as a pyramid than a speculative bubble (as that might imply value, which is not present).

A. no you cant as a store of value can only be something that has value.
B. buying goods and services is dumping (dumping bitcoins on the merchant who dumps them on the next guy for dollars)

C. Bitcoin network has not solved the problems of value transfer, as it is not transferring value. Again BTC do not have value.
D. gold is good. Bitcoin is a pyramid.

You are giving a currrency that has innovations no other currency currently can claim. The limited number of bitcoins controlling inflation is one of them, the public records of where all bitcoins reside is another, the fact you can mine them is a third, the list goes on and on. You reap the benefits of a superior means of paying for things.

In general, you cannot eat money. Still, it is useful for many purposes.

The blockchain is also pretty.

1) I respectfully disagree, for the reasons given previously. As long as you hold that view, you won't be able to rationalise Bitcoin. I see at least why you so strongly disbelieve in bitcoin.

2) Not all merchants dump it. Less will as time passes and it proves itself more stable (assuming this happens). But, I think this is irrelevant anyway - as long as there is someone else who will give them dollars for it, a person who believes they'll then be able to exchange this BTC for goods, the chain of belief holds. Bitcoin can still find some use even if every transaction involves an exchange to or from dollars.

3) I agree that most buy it as speculation. I still think it would maintain some of this illusion of "value" without speculation. Then again - speculation IS belief. As long as the speculation holds, it has "value". How long will the speculation hold? Who knows. Maybe some nuclear alchemist will finally be able to create gold from nothing, and gold will have value only as gilding. Maybe bitcoin will regress to only having value as play money amongst hobbyists - but that is still value, even if a pizza does cost 10,000 bitcoins. I have varying amounts of belief in those different scenarios.

4) I never said the belief levels were the same. Of course, to a thirsty person water is more valuable. There is still *belief* there - they believe it will quench their first. If they had some strange mental disease and didn't hold that belief, water would have no value (according to them). If you are only somewhat thirsty, and I offer you either a glass of water or a bitcoin, a rational person may choose the bitcoin in the hope they can then exchange it some hours later for some water + some large excess of fiat. Surely you wouldn't refuse a bitcoin if I offered it to you free? You could exchange it for some gold! You would hold the belief that it is possible for some other person to give you gold in exchange... Even if you think their belief is *wrong*, you still know there is a fair chance they will accept it, and that knowledge itself I would categorise as "belief".

5,6) Same as 4. Intrinsic value still requires belief. What is shelter? It's the belief that this structure will provide you with warmth, with a comfy space to live in. If you didn't believe a house could provide that, you would not value it. Some people believe a bitcoin can provide them with real things. It doesn't matter that YOU disagree, all that matters is that this other person believes. Heck, when you buy a house, it can't even be hidden in your mind with a brainwallet like a bitcoin can! Instead, you have to rely mostly on the legal system to enforce your "ownership". Laws are an intangible thing backed by people (backed in turn by the *belief* that those people will enforce those laws).

7) Not exactly... I believe that real physical "somethings" are as intangible as a virtual bitcoin, because their physical existence has no particular meaning, only the human *belief* in them does. And belief can exist for virtual, intangible, things. You may think it is an incorrect, deluded belief... But it's still belief.

> So the answer is: I can dump it on the next guy?
YES! And that's OK. You can dump your gold on the next guy too. Maybe gold won't have value tomorrow. (And the likelihood of value tomorrow of gold vs bitcoin is a matter of opinion/belief.)

It applies to everything we consider to have future value.  (Maybe the house stops rain falling on us right now, but to assume it will do so tomorrow requires belief. To assume it will continue to do so even in the next second requires belief. It may be a very strongly held belief, but it is in no way an absolute.) "Intrinsic value" is an illusion, a human obsession. As far as science can tell us, reality itself is no more than mathematical equations. Your house is a protocol. "If rain hits roof; repel".

In summary, it is my opinion that all humans are "misguided", not only bitcoiners.

It's the greater fool theory but applied to everything; we are all fools for believing in fiat, in gold, in real estate, in the food on our plates.

The only difference between these things is the amount of belief in them. I would accept that Bitcoin has far less belief in it than gold, real estate, etc. Yet it has more than zero belief.

> What can you do with a bitcoin?
Today you can buy some select things with it.
Tomorrow, you may not be able to.
Same for government fiat, just currently with a whole lot more belief.

Bolded part: In future humans will want shelter on planet earth. You categorize this statement as a belief, because nobody can be 100% certain of future events. Even though you are correct; you are being pedantic here. The same holds true for gold: Humans since the dawn of man have liked the look of gold. Most humans find it beautiful.

Now lets look at bitcoin. Bitcoin REALLY is NOTHING. I cant do anything with it. Now bitcoiners want me to belief that NOTHING WILL IN FUTURE ALWAYS be accepted FOR SOMETHING. Now this has NEVER happened before in HISTORY over any prolonged period of time. Thus it is highly unlikely that it will happen in future with bitcoin. The fact that NOTHING can be transferred and kept on your computer does not change this.

Again there are huge differences. Calling everything a belief without highlighting those differences is highly misleading (something bitcoiners love to do).

Of course YOU cannot, because you missed the train. But WE can: store, barter, transfer, donate, create, lose it etc. etc.

porc, let me see if I understand what you mean.

You split the world into 2 categories:
A. what you call "something": anything that will always hold value to humans. Examples: water, shelter, air
B. what you call "nothing": anything that derives its value from a variable (government, belief, fashion...). Examples: fiat, bitcoin

And then your argument is that it is difficult to trust a system where we exchange something for nothing.

What I don't understand in your argument, is
1. Why are you putting gold in category A ? That gold is pretty is very subjective. I mean, I personally find a well-designed algorithm, an idea, a piece of knowledge, or a nice drawing on a paper much prettier than gold.
2. Do you suggest we go back to trading only within category A? The point of any currency from category B is to facilitate the exchange between things from category A. Of course at any moment the value of the currency could drop to zero, but that is a risk that I estimate is worth the price for the service it offers. Furthermore, in real life, it is the things from category A that have much more chance of having their value drop to zero (your house is destroyed, your bucket of water went bad, there was a breach in your container of fresh air).
3. Why do you think you can split the world into 2 simple categories? To me, there is a continuum of things that have more or less value and everything's value is a function of the time.

Edit: never mind about question 1. History strongly suggests that humans will always love gold. Let me replace it by the following question:

1 bis. You say you can do nothing with bitcoin. I guess you mean nothing in some "intrinsic" meaning, so excluding buying something. But bitcoin is a service. You can also do nothing with an insurance contract in this same "intrinsic" meaning. Would you say an insurance contract has no value?

It's very encouraging to see posters like porc. It means that we are still at the early stages. Be worried when these guys disappear and all you see is bitcoin bulls (even outside this forum).

The currency is indeed in its early stages and that is what fascinates me about it. I cant wait to see where bitcoin will be say, 2 years from now. Its still in its infancy but popularity is certainly growing.

You can buy from any of the merchants accepting it, you can gamble with it, or you can invest it somewhere!

(You can use the link in my signature if you would like to invest and get me a customer referral  ;) )

What can I do with a dollar? Why would anybody trade anything for my dollar? If I hold onto a dollar, it will steadily go down in value, why would anybody want one of those? Since nobody wants my dollar, surely it is worthless?

A. something is basically anything that has UTILITY on its own. (Food (hunger), water (thirst), house (shelter))
B. Nothing is something that does not have UTILITY on it own. BTC is a great example, as I cant do anything with it except dump it on the next guy.

1. Because it has UTILITY on its own. I can make jewelry out of it, humans love to look it at it and touch it. That not every human loves it, does not distract from that. The great majority loves it since dawn of man. Its burnt into the brain of most of us I guess.
2. BTC will not be accepted in exchange for goods by the great majority, because the great majority does not like to trade something for nothing or store value in nothing just to save some transaction costs.
3. Things either have utility or they dont.

Edit: yes but the service is transferring nothing at a cost. Now if everybody will accept nothing (bitcoin) for something than it might work. However I dont think that humanity will want to store and trade something for nothing. The reason is that such an agreement would be artificial and as soon as something changes (better technology, higher transfer costs for bitcoin, another coin, amazon only accepting its coin whatever it might be) this agreement collapses, and the one holding onto nothing will be screwed. Imagine tying the worth of your bank account to an artificial agreement. Thats what you get when you invest in BTC. Gold is not dependent on artificial agreements because it has value OF ITS OWN. Thus it is suitable money.

Now I dont believe for one second, that humanity will conduct trade and store value in BTC. You can call me an idiot, and think that I dont appreciate the value of transferring nothing from peer to peer without a bank at lower cost. Well I will gladly pay more and transfer digital gold (backed up by real gold) as I actually receive something. I will not be vulnerable to an artificial agreement collapsing due to any factor (like somebody suddenly not accepting nothing anymore, a new technology, a new coin, amazon coin whatever). Golds value is REALITY, not an artificial AGREEMENT. Now I might have to wait 1 day for my digital gold to arrive, it will not be an instant transfer, and I will have to find a  trustee for it. However I dont care if it takes 1 day. Its not like information that I want now. I have gold in my bank account (its fungible), and can use that in the meanwhile.

Again I dont believe for one second that the majority rather have BTC (nothing) than digital gold (backed by real gold). They will gladly pay the storage costs, if it means their wealth is safe and not endangered by an artificial agreement collapsing.

Porc, you are an idiot and a troll. The point of money is that it is nothing by itself but that it can be passed on to the next person. Bitcoin is closer to the perfect money than anything we have ever used before.

We keep refuting your statements but you keep saying the same stupid stuff over and over again. We get it, you don't like bitcoin. Now go away.

I guess this is the view of a typical bitcoiner.

Well money must be a store of value. How can BTC be a predictable store of value, when its a technology that can be outcompeted by other technologies and when BTCs value itself is based on an artificial agreement, that might collapse. Today you might accept my BTC for something, but who knows about tomorrow (again tullips where also once thought after and then crashed back down to earth, which in BTC case might be 0).

I will leave now, as I have expressed my viewpoint. I dont want to ruin the party. Have fun.

Yes we know: YOU can't, because you are only a troll who is unloading the same BS again and again and therefore without any coin of Gold 2.0.
You missed this paradigm change because you are blind.
But WE can: store, barter, transfer, divide, donate, create, etc. etc.

To transfer Gold 2.0 out of Argentina or Cyprus is much easyer than to escape with Money and Gold.
There is a causal reason why the value of Gold 2.0 is rising against Gold.

Is that how you spend your time? Looking and touching gold. No wonder you are asking weird questions on a bitcoin forum when you clearly hate bitcoins.

You know, from certain countries, its almost impossible to send money abroad. You can use Western Union in almost any country, but (a) its very expensive, and (b) limited to $2000 per day. With bitcoin, you can send money to anyone on the planet, no limits on amount. If that isn't utility, I don't know what is ......

This HAS to be one of the main advantages. Sending currency over the intertubes with minimal fuss and no fees. Its next to impossible otherwise.

in that case, why would anyone spend money (a real thing according to you) for say, a digital copy of a game or paypal, why would you spend your precious USD on paypal money, paypal money doesnt exist right? but merchants accept it so its "worth" something, you can use it to buy stuff online without a bank account.

I guess this is the view of a typical gold hoarder.

Well, money must be a store of value. How can gold be a predictable store of value, when it's a technology that can be outcompeted by other technologies and when gold's value itself is based on an artificial agreement, that might collapse. Today you might accept my gold for something, but who knows about tomorrow (historically, in times of strife gold is pretty useless).

I will leave now, as I have expressed my viewpoint.

 Why is Bitcoin valuable?

This is perhaps the most important topic to address, as nothing else matters if Bitcoin has no value. What makes Bitcoin worth anything? Isn't it just "fake"? Isn't it just a made-up pretend virtual currency? Many say, "I can't hold it, I can't see it, and thus it's artificial and not worth my time." Let's challenge this understandable initial reaction. Let's demonstrate why Bitcoin is valuable, and very much worth one's time.

Financial privacy has long been symbolized by the notorious "Swiss bank account." Yet, anyone with a Swiss bank account has to trust that bank, and as we've seen in the last couple years, "bank privacy" even in Switzerland is a myth - banks there have been bending over for the US government and divulging customer information. So imagine having a private, numbered Swiss bank account, but without having to bother with the Swiss bank itself. That is Bitcoin. Instead of placing your trust in a regulated bank governed by fallible humans, Bitcoin enables you to place your trust in an unregulated cryptographic environment governed by infallible mathematics. 2+2 will always equal 4, no matter how many guns the government points at the equation.

 Bitcoin is thus the only currency and money system in the world which has no counter-party risk to hold and to transfer. This is absolutely revolutionary and you should read the preceding sentence again. Gold advocates will point out that physical gold bullion has no counter-party risk, but that is only true for storage in your own home. Store it in a vault or bank and you have counter-party risk. And sending gold? You have to trust all sorts of people if you wish to transfer your gold somewhere else or spend it across distance.

Bitcoin means complete ownership of money both in storage and transfer. Nobody can prevent you from having it. Nobody can prevent you from spending it. Even if one's home is broken into, or even if the government issues a "confiscation order" (as they did with gold in 1933), one's Bitcoins are perfectly safe. Try fleeing a country with $1,000,000 in bullion without the government knowing about it. Easier said than done. With Bitcoin, it's almost easier done than said - you could put $1,000,000 of Bitcoin on a USB drive, or even write the private key on a piece of paper, or just email the wallet file to yourself to be retrieved outside the country.

Starting to see the value? Never in the history of the world has an individual had this ability. It is unprecedented.

 No really, WHY is Bitcoin valuable???

At this point, skeptics should say, "okay fine, you can store and spend Bitcoins without interference, but what gives them initial value? Why do they have a price?" It's a very good question, and even expert economists have struggled with the answer.

But really, the answer is simple. Bitcoins have value because A) they are useful and B) they are scarce. Combine those two attributes in any asset and you will discover it has a price. The moment the first Bitcoin was traded to someone in exchange for something else, an exchange rate (market price) was established. Subsequent exchangers agreed or disagreed with that rate, and made further trades accordingly. Bitcoin thus spontaneously developed a price, as do all things in an open market if they are sufficiently useful and sufficiently scarce.

Let's look at value a little further, because it's a contentious issue with Bitcoin. There are many (including Paul Krugman) who believe Bitcoin isn't worth anything and is no more than a speculative bubble fad.

I wouldn't expect Krugman to "get it," but wiser/real economists need only observe metals to start understanding why Bitcoins have value. After all, any strong advocate of gold or silver as money should hopefully understand why these metals should be money. The answer is that these metals tend to be chosen in an open marketplace as money, because their specific properties make them useful as a means of exchange. It is the properties of gold and silver—unique to these metals—which make them excellent money. They are scarce, fungible, uniform, transportable, have a high value-to-weight ratio, are easily identifiable, are highly durable, and their supplies are relatively steady and predictable. Contrast other goods like chickens, or seashells, or sand, and you discover that none of them are as good on the above attributes as precious metals. Chickens can't well be cut in half or recombined, seashells are not uniform, and sand is too plentiful to be used as money. Why not other metals... why don't we use iron as money? It's not scarce enough - you'd need carts of it at the store to go shopping.

 As any Austrian economist can tell you, money is merely that commodity in an open market which best satisfies the properties necessary for useful exchange. Gold and silver take the cake every time a violent government doesn't get in the way... or at least, this is true historically. But, this doesn't mean that gold and silver are "perfect, infallible money." Indeed, there are practical problems. One can't easily divide and combine silver coins to make change. One can't easily send large values of gold across distance without hiring security and waiting for transport. One must pay storage fees, or risk theft at home. And, while difficult, it is possible to make fake gold and silver ingots and pass them off in trade as real.

So then it follows that if gold and silver are not perfect money (though admittedly the best we've had), perhaps mankind could discover or invent something that was even better. This is the Bitcoin experiment - the question of whether Bitcoin, with its specific attributes, is an even better form of money than what the marketplace currently enjoys (or in the case of state fiat, is forced to use). If the Austrians are right, and a marketplace tends to chose the medium of exchange which best works as money, and Bitcoin's specific attributes make it excellent money, then perhaps the marketplace will, over time, increasingly use it for such.

The answer so far, is yes. Bitcoin is finding more and more niches for early adoption, which further supports its market price, providing confidence to holders that it will retain value, and this further lends Bitcoin to be used for still more purposes. It's an organic and messy process, full of trial and error, potholes, brilliant innovations and terrible failures. But that's what an open marketplace is, no? Every day a more resilient economy is being built, and not at the point of a gun, but voluntarily - not by decree of Bernanke, but by spontaneous, self-interested private order.

Many have made the argument that "nothing backs Bitcoin." And this is true. Bitcoin cannot be redeemed for any fixed value, nor is it tied to any existing currency or commodity. But, neither is gold. Gold is not backed by anything - it is valuable because it's useful and scarce. Cars are not backed by anything, they are merely useful as cars and thus have value. Food is not backed, nor are computers. All these goods have value in proportion to their usefulness and scarcity, and one merely needs to see the usefulness of Bitcoin to understand why, without backing from any government nor corporation, without being tied to any fiat currency or existing commodity, it commands a price on the market and rightly so.

http://evoorhees.blogspot.com/2012/04/bitcoin-libertarian-introduction.html

So when I send 1btc to you, what would you do with it? -> that is your answer.

porc,

Your definitions of "something" and "nothing" are your own. (Notice you used the term "basically" in your definition.)

Take several steps back and look at the big picture here. You clearly have a good understanding of money, but you're not seeing the whole picture.

You can argue that Bitcoin has no intrinsic value, but Bitcoin isn't "nothing"... It is a digital token in the same way that a dollar (or gold) is a physical token.

I think it can be simply put this way:

Intrinsic value of a dollar: the paper it's printed on
Intrinsic value of a piece of gold: some industrial uses ("oh look, it shines, how cute!" is not intrinsic but an abstract subjective notion)
Intrinsic value of a bitcoin: none

Abstract value of a dollar: what people believe it is useful for
Abstract value of a piece of gold: what people believe it is useful for
Abstract value of a bitcoin: what people believe it is useful for

Money/currency is an abstract idea, hence the token's intrinsic value is irrelevant. Gold has no true intrinsic value as currency, it just has a longer history than other forms of currency. It appears more likely that it will be exchangeable in the long-term, but that's not an intrinsic (https://www.google.com/search?q=intrinsic) quality. The value we give it is just a token, an abstraction, a symbol.


It's an artificial (i.e. non-intrinsic) agreement based on shared beliefs about the past (history, tradition) and the understanding/belief of its scarcity (scarcity being an intrinsic quality). Your argument seems to be that gold has this magical appeal to it for some unknown reason. Your argument reduces to a reductio ad absurdum ("Gold is valuable because it is." ... "Bitcoin has no value because it has no value").

porc, ask yourself this: If Bitcoin had a history going back 10,000 years, while it would still be "nothing" (according to your definition), would you still say it's worthless/useless? And if gold had been used as a currency for only the last 5 years, would you say its value does not derive from an "artificial agreement"?

When you see the full picture, the inescapable conclusion is that cryptocurrency is the greatest innovation in media of exchange. It is to money what the Internet is to communication. It renders the central banking cartel's scam obsolete and irrelevant. It's revolutionary.

I just want to remind to anybody who is taking the time to carefully present arguments in this thread, that even if porc is not listening to you, you are not wasting your time, since other people like me are interested in these arguments. This thread provided me with good insights about the viability of bitcoin, and as a result I'm more convinced than ever of its great future.

Yes, that's the utility of a troll. As Peter Lambert wrote: We can feed him indefinitely.

The Dollar is forced upon us by government. Before it was backed by gold. Read this (I have posted this in other threads), as I do not believe you have grasped my position:


Remember: Intrinsic value is one of the essential properties of money, that allows it to fulfill its functions. Without intrinsic value, gold could not fulfill its monetary role. You want to seperate golds intrinsic value from its monetary value, however that is impossible, as without intrinsic value gold has NO monetary value. The reason you insist on seperating these two aspects of gold, is because you want to believe that bitcoin can function as money despite its lack of intrinsic value.

Now lets look at the functions of money, in order to appreciate, why it HAS to have intrinsic value.

1) Store of value.

 To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved. WIKI

Now what would happen, if in future nobody would accept my gold as payment for goods and services. Well, I could make jewelry out of it and wear that jewelry or I could decorate my house with it.

What happens when nobody accepts my BTCs? Well, I could do ABSOLUTELY NOTHING with my BTCs in this case. So already we see, that bitcoin actually has enormous counterparty risk, as it is only worth what somebody is willing to pay for it. If nobody wants my BTCs I am left with ABSOLUTELY NOTHING (i.e. bitcoin).

Now obviously I want to have a high degree of certainty, that somebody will want to exchange my store of value with other valuable things, as otherwise I would have an excess of one resource, that I would be stuck with.

What is golds guarantee in this regard? Well, it says: I am beautiful, people have loved my look since dawn of man, and have thus always been willing to accept me as payment for other valuable goods and services. Thats REAL backing.

What is BTC guarantee in this regard? Well it says: I am worth nothing, but people have agreed to exchange me for something, because they want to save transaction costs, and because they like exchanging me peer to peer (no third party or bank). Now without reading futher how convincing/trustworthy does that sound to you (pretend like you have never heard of BTC, or that BTC has collapsed in price)? Lets continue: In future people might not accept nothing for something. In future they might switch to a different coin, that is technologically superior (thus my wealth is stored in myspace and suddenly facebook comes along; technology is not predictable). In future the transaction costs might explode due to prohibitive regulation, so that the artificial agreement to exchange something for nothing collapses.  In future, government will enforce its capital gains tax laws (thus making bitcoin expensive to transact in and resulting in a collapse of the artificial agreement to exchange something for nothing). In future, maybe people will prefer real backing over backed by nothing, especially if real backing can be transferred electronically (digital gold). In future people might think that it was crazy to accept nothing as payment, just to safe on transaction costs. In future there might be reputable trustees, and people might regain trust with third parties. In future maybe people decide that instant payment is not that important to them, as money is fungible. In future people might realize that bitcoin is not anonymous and that it is not internet or gold 2.0. Bitcoin might stay highly volatile as the believe in an artificial agreement (THAT IS EXTREMELY VULNERABLE TO FADS AND OUTSIDE PRESSURES giving bitcoin huge counterpary risk) is extremly volatile.

Now from my perspective the situation is even worse: Right now people are ONLY accepting nothing for something, because they strongly believe that nothing will go up in price (after all it has been going up in price in the past, so it must be true for the future Wink). Eventually some early adopter will want to cash out, and if there is nobody there to take his position, the price will fall through the floor.

So I believe, that bitcoin because it does not have intrinsic value, cant be relied upon as a store of value. It is entirely dependent on the counterparty honoring an pseudo agreement. So bitcoin actually has enormous counterparty risk. Gold is a great store of value, as people will always accept it because it is beautiful. It is burnt into our brain. It has no counterparty risk, because the counterparty cant help but love and accept it (like with food and water).

Thus intrinsic value is ESSENTIAL for one of moneys core functions: store of value. Money value cant be seperated from intrinsic value, as it is DEPENDENT on it.

2) Medium of exchange

Same arguments apply. Right now people exchange something for nothing, due to an artificial pseudo agreement (transaction costs, peer to peer if you ask bitcoiners). I believe its even worse: Right now people ONLY accept it because it is going up in price. As soon as it crashes, people will stop accepting it, as it is irrational to agree to exchange something of utility for something of no utility in order to save transaction costs.

I think this is the problem, that you have a position. You're here to defend your position, not to arrive at the truth via logical argumentation.


How exactly would that be useful? By that logic you should be stocking up on cacao beans (http://en.wikipedia.org/wiki/Theobroma_cacao#Currency_system). They're much more useful than jewelry or decoration. Jewelry and decoration is only slightly more than "absolutely nothing"... while cacao beans are a superfood. You can almost survive on cacao beans alone.

You haven't made the case for why something must have intrinsic value to be valuable, or why Bitcoin must have intrinsic value to be valuable. You're operating on outdated assumptions, just like good old Greenspan (Bitcoin and Intrinsic Value: a Layman’s Response to Alan Greenspan (http://www.coindesk.com/bitcoin-intrinsic-value-alan-greenspan/), 11 Dec 2013), former head honcho of the central banking cartel and arguably the guy most responsible for the "financial crisis" that the Genesis Block refers to.


It's not just to reduce transaction costs... I don't need to list the many other reasons why Bitcoin is superior to other digital payment systems; you should know. Practically perhaps not quite yet, but technically, privacy-wise, morally, ethically, evolutionarily, the emergence of decentralized cryptocurrencies represent the beginning of the end for the central banksters, the parasites who play a depraved game of musical chairs with the entire planet.

You are looking at this from an outdated Austrian economics box, ignoring the actual technological advancements that make new systems possible. You're thinking only in narrow economic terms, rather than big-picture human terms. I can't claim to be an expert on the subject, but were von Mises et al alive today, I suspect they'd have to revise much of their writings in light of the Internet.

Also, regarding the anonymity issue, that argument may hold true for Bitcoin, but not for cryptocurrencies in general, which is the real idea we're talking about (Bitcoin being only the first and most successful implementation of double-spending-proof decentralized cryptocurrencies).

Intrinsic value is nothing more than a figment of your imagination.  It may be important to you that your money possess this so-called intrinsic value, but you do not and can not make that decision for anyone else on this planet other than yourself.

Furthermore, when three or more people agree to use something to facilitate the exchange of goods and services, then that something is money, even if you conclude that what they are using is not a very good form of money.

Once you have bitcoin, you can purchase it with anything you want in any shop that accepts bitcoin. It is just the same as the real money that circulates today, though bitcoin is transferred digitally.

I think nowadays you can easily use bitcoin as digital currency as it is underpinned by people's trust to it.

Also ATMs have just started to appear all around the world. Once the news that they are highly successful will spread, their adoption will rise exponential. Same as with shops. I hope we will have a text book snowball effect.