Bitcoin Forum

Today I had an interesting encounter with one of the economists I know. We discussed what Cryptocurrency and Blockchain were and the value behind them.

Here are some key points he brought up:

The dollar is backed by gold, the gold is the bareback of it. What is behind Bitcoin?
What inherent value does Bitcoin have?
We don't know how created it, maybe it's a government funded project
It's just speculation, the technology hasn't been tested yet.

My answers:

At one point, I think I lost because we value Bitcoin in Dollars. So, it's "backed" by dollar technically, even when we use Bitcoin to pay for something, it's calculated in $.

Bitcoin's core values are the following: Open source, censorship resistant, decentralized, peer-to-peer and verification of rules (everyone can be part and run a full node).

We don't know it, and it also can be some guy in his basement for all we know. It's core values prove that this is not government funded project, it can't be. How could they benefit? One of the interesting theories is that they released this untested technology to the masses and let them develop it further to then adopt it if it works.

Yes it is speculation, but internet was a speculation as well back in the days. I heard that when they sent out the first bits of information, the whole internet crashed. The technology needs time to adopt, and since there are so many programmers and IT experts around the world, we will see adoption of this technology even faster than ever before.

But here's the kicker that I have been thinking about since we talked: He believes the private/public sectors will adopt the Blockchain, the governments, businesses to further improve their systems. But it will NOT be an open Blockchain, rather a Centralized Private Blockchain. It will just be Database replaced with the word Blockchain, same principles. Non-censorship resistant and not open source.

I want to know what you guys' thoughts are on this. How would you counter these arguments? Let me know because this last thing has been bugging me the whole day!

Dollar is not backed by gold. Gold is not backed by anything, it has speculative value driven by supply and demand, just like everything else, just like Bitcoin.

Does is matter who created it as long as it's working? It's open source and in 9 years no one found any backdoors.

Bitcoin has been tested for 9 years already, it was and always is under attack, yet it continues to function like a clock.


This is what currently happening, and also a lot of public blockchains like Ethereum or EOS or IOTA are moving towards more and more centralization in order to get more performance, because at this moment centralized systems are still way more efficient than public, decentralized ledgers like Bitcoin. But Lightning Network is an extremely promising game-changer that will give a huge edge to public blockchains.

The dollar was backed by gold before 1971.Now it`s backed by promises. ;D
There`s nothing wrong with banks and companies developing their own private blockchains.They have the right to do so.The good thing is that all the crypto users will have choice between public and private blockchain based services.This will create competition and competition will improve the quality of online services.

Your words are true, and Now the rest of the currencies are built on dollar promises.
Since the commercial use is now the US currency, all the price is achieved compared to the dollar.
You can swap it for goods and services directly without the urge to use the dollar as an intermediary that means it does not depend on a dollar.
Speculators tend to stabilize prices more than unexpected investments, so centralized blockchains "stablecoins" as a way to get relatively coins and thus reduce the risk of encryption.

I know that in my particular country, all the politics will be shining happy if this would became true, because they will be able to put there hand into the jar with honey comma and if we are having decentralised system then they are not able to steal.

I guess my point here is that, we will still have the same system. Same banks, governments but the backend if you will, will change. Instead of this slow system which banks use, it will be private centralized Blockchain. And we, the individuals will still live in the same corrupt, centralized, controlled system instead of a free society with as little corruption as possible.

At some point in the future there will be private blockchains for companies and governments. But it is not the best thing we should have. Blockchain should be decentralized. Otherwise it will be no different than current banking solutions.

I'm not certain the US dollar is backed by gold in the way people believe it is. There are many who claim the dollar has not been backed by gold since 1971 when dollars could no longer be redeemed for gold on a 1:1 basis.

The price of bitcoin and crypto in US dollars could be labeled moreso an "exchange rate" than a form of backing. There could be a debate on this topic. Whether things like US dollars and bitcoin need to guarantee they can be redeemed for gold/dollars in order to be truly backed.

One of the main advantages of blockchain could be its "trust less" design paradigm whereby it can achieve many of the same functions banks can with fewer workers and manpower being necessary to approve/disapprove transactions under a more "trust based" format.

I think the concept of a private blockchain could be a real possibility although not necessarily a relevent one. There was a transparent website under Obama's administration which showed federal budgets and spending. No one cared enough to look @ it.  That's the real issue with the economy, business and finance in this day and age. Everyone wants to have an opinion and no one wants to bother educating themselves or being informed which leads to virtually everyone supporting the wrong policies while refusing to learn from the mistakes of the past.

Should we let him tell the source of his post? I was also wondering how he comes up with this idea, since US money and it's value is determines by the county's economy as I read on some study...

Some countries are already considering the idea of a state-issued cryptocurrency, so no matter how much we loved our dear fiat, we will inevitably move towards a crypto future. The reason I see why people use this is because the government tells them to do so, even without the backing of gold or any other significant reason or catalyst, people will follow because they'll believe that it's the best thing. Most people won't care about whether the currency they're using is open or closed-source; as long as they can use it, they will.

Even big companies and industry leaders have expressed their opinions regarding the 'blockchain' alone and not cryptocurrency. Perhaps it could spark yet another industrial revolution but one all I can say is a digital currency future and blockchain-integrated systems will be a huge part of our society in the future.

The market situation is difficult, also hope in the future no barriers do occur. Only in this way are new investors taking new steps in the market. And it will be great when they have been compromised, linked together to win, I believe they will look at it and apply it together. Formed the most powerful block in the market.

I quoted what the other party said.

And yes, money was backed by gold in the early stages, and as the time went by there was more money created (inflation) and that lead to many economic crises.

Bitcoin will gradually  be valued independently in the future when we begin to use it more in our daily transactions. Talk about bitcoin to other, explain carefully to them. Let everyone of your friends know about bitcoin and why the have to owe some bitcoin. More people in the bitcoin market  is likely to trigger more companies to accept bitcoin because every company provides its customers with the services they want.

I don't know if dollar really is backed by gold but if that is true then all currency all over the world is also backed by gold too.

I think no system is self operated and all system require some kind of control or support for proper operation, if we look into information technology many of the systems or software's are available open source and centralized but centralized systems are mass adopted as compared to open source. I think we need to develop some kind of arrangements or technologies which can maintain quality and integrity of blockchains or sooner or later centralized authorities will centralize blockchains.

Yes, I think it will be.Closed blockchain within the borders of a certain state.Or blockchain any organization,and healthcare.Understand that an open fully blockchain will undermine the defense capability of any country.In the near future it is likely to be so.

There is no such thing as centralized blockchain. We all know how the technology works, how it become more secure because of decentralization. There are many loop holes in the economist in statement though it true that establishments will use private blockchain but the thing is that, it will cost them a lot to make a blockchain because it needs a lot of people to engage in the network to make it decentralized for security feature and hiring a programmers or a group of programmers that will create, develop and update the network. It still much cheaper to avail services of existing platforms that is proven effective.

I am surprised to see an economist saying the USD is backed by gold... ::)


Private blockchains are usually centralized and they do exist. Sure it costs money to create but the rewards are a lot bigger and for a long-term (security, operating costs, time-saving,...)

Uts not a surprise that blockchain technology is being adopted by governments and private entities
so that they have control over what they create.

This is however nothing to be too concerned about because Bitcoin will continue as it has, untroubled.

Referring to Bitcoin in a $ value is not accurate, 1 bitcoin is just 1 bitcoin. Speculators, exchanges and
others looking to make FIAT profit from it recer to it in FIAT terms.

That could be true in many sense but that is not just the case here. Many private organisation or even governments might just make themselves a new sort of blockchain world but I am pretty sure that it is not going to help them at all as it will be limited and they wont be wide spread as the current blockchain is. The current blockchain is offering freedom to the whole world while the private blockchain will be just limited to that particular company, organisation etc where it will work in symphony with the applications of it. So there is lot of cons of that and prose too.

There are private blockchains that are already existing. One of the current projects I encountered that uses this 'private blockchain' is Disciplina. Disciplina is a project based on a person's achievements. It is to be stored on the blockchain. But only the user can see it. It has both a public layer and a private layer. The private layer cannot be interfered with or be seen by people other than the user himself. Disciplina is like a storage. I believe most of these centralized blockchains you are talking about still relies on the 'anonymity behind blockchain' core value of it. We know it is there but we cannot see it, unless you are the one who stored it.

Yes, even i sometimes think on this topic and even i agree that we are really moving slowly towards the centralized Private Blockchains as everybody like government, Public bodies, Private Bodies, are interested in centrazlied Private blockchains and not the open blockchain one's. I also think that its going to happen sooner.

Agree with you. Change the principles of control financial system, but the goal will be the one that былa- globalization around the world with one control Center.

I cannot save from my logic thoughts, that this will be very beneficial for us because initially bitcoin is called to be a decentralized system and every attempt to turn it into a centralised is looking like an attempt to stand in charge of it.

Agree with you. Change the principles of control financial system, but the goal will be the one that былa- globalization around the world with one control Center.

yeah some of the exchanges are centralized as we all know of that and when it comes to blockchain for the cryptocurrency then there is a huge possibility to centralized it also as the government for now are entering the world of cryptocurrency and putting it to regularization.

Bitcoin doesn’t rely on USD, USD is used as a reference because USD is used globally as a reference for each country's currency, is JPY backed by USD? No right? So does Bitcoin, Bitcoin has its own value based on supply and demand, it’s the basic principle of the market. You should learn more about the economy, before reading articles that might be just figments or conspiracy theories to gain visitors.

I need to point one thing, everything has a `speculative value driven by supply and demand`, and supply and demand are people. With our trades, holding we make supply higher or lower, people that want to buy are demand. People give value to everything around.
We are not moving towards centralized private blockchains, governments do that, and some private companies, why not if they want private network, but as the customers and users we choose to use them or not, we can choose decentralized bitcoin over centralized ripple. 20 years ago nobody knew what is decentralization, everything was centralized, blockchain is a step forward not backward.

You mean centralized private blockchain because of the KYC/AML implementation by the governments or governments taking part on crypto industry? Here in my country we need like blockchain technology systems to counter corruption because just like Bitcoin transactions are transparent. I agree when adoption really is one of the most important factor affecting  the strength and might of Bitcoin.

Every exchange is limited and non-exclusive. The fact is that Blockchain doesn't exist any property. It is just technology to use for profit or humanitarian purposes.

Yes you are right, bitcoins will never rely on fiat because the price of bitcoins has increased due to the demand in the market and that is the reason why it was very popular today.

Exactly, the free market will decide whether privat or public and decentralised blockchains will be more used and popular. Both have their pros and cons.

I agree with others that this is very wrong for current economy. I can't believe any economist could be ignorant about this fact.

I think the governments might try to create their own centralized private cryptos which people still wouldn't use, giving prefference to fiat. Other people will use top cryptos more, so the govs will have to adopt top coins. Cryptos are about at least some open society values and decentralization. Inducing blockchain and living the ideas that brought it to life behind sounds like betrayal to me.

The dollar is not backed by gold. Backed by gold means you can exchange the dollar for gold at the bank. This hasn't been the case for a very long time. Similarly, because something is "priced" in dollars does not mean it's backed it. Dollars are what everything is valued in in our economy. Bitcoin, as an asset, is just another one of those things priced in dollars because it's what people are familiar with. Bitcoin's value is arbitrary. There's just a significant enough group of people insisting it has value so it does. I find bitcoin's utility to be very low and not anywhere near the value it currently has. As more people disagree with the price and refuse to buy, the price falls, as it has been steadily now for 8 months.

20 years ago the Internet was more decentralized because there were no big sites. Today Google, Facebook, Twitter have a huge share of Internet users. And when information becomes centralized, it's easier to control it.
Also, those private blockchains aren't meant for consumers, they are used internally and between companies. Coins like Ripple and EOS are not centralized private blockchains, they are centralized public blockchains, which is more dangerous, because they try to compete with Bitcoin and try to hide from users that they are centralized.

This is very wise to consider that bitcoin is backed up with dollar basically, I have not thought about this from that angle before. So thank you for another point that I can use in my own conversations.

Interesting. With some ICOs, you could almost say that the amount of control they have over the value of their tokens make them completely centralized, even though they may still use blockchain as the underlying technology.

But firstly, I don't think that it's fair to say bitcoin is backed by dollars. Bitcoin's value does not depend on any fiat currency to be maintained, even though it is indeed priced in fiat currencies. Nor is it fair to say that dollars are backed by gold - that hasn't been the case for decades.

I think that yes, we're seeing more and more centralized blockchains being made, that aren't necessarily getting more support. They may be issued by individual governments (petro), or organizations. Most of these projects do lack grassroot support, however.

Blockchain can obviously be used for a wide range of things, including in corporations as an immutable ledger. And that will definitely be explored in the future by many, i think.

It doesn't mean bitcoin will be affected, though. Even with these private blockchains, as long as people are using the bitcoin network, it will function. And people are smart enough to know that government issued crypto-tokens with a centrally controlled supply is no different to fiat, so they will continue to use bitcoin.

That might be possible and the latest best example is EOS, which has solid strong advantages, like platform features for dAPPS, but hardly can be called decentralized with 3 entities holding more that 51% stake.

With institutions arriving at the scene, a lot of them are definitely developing centralised blockchains either for their own use, or for investors to invest in. Some are technically not centralised, but the fact that if the founder goes rogue the prices of the token will plummet means that there is still huge central influence over the blockchain.

In that sense, we're definitely seeing more and more of those projects, that are using the blockchain technology, but still retaining that control over the network.

Bitcoin and other decentralised, public blockchains in contrast in my opinion are the only cryptos that are worth investing in, imo. And that's probably a sentiment shared across the community. Besides, these two things aren't really mutually exclusive at all. Private blockchains won't all of a sudden take over bitcoin's market share or anything like that.

Yup...

this may be a difficult problem to solve, maybe you should hold meetings from all countries to improve this, because banks already exist in all countries, so it is difficult to control.

Blockchain is a database but with different principles from conventional databases, blockchain, you should understand from that word. About privacy it’s depends on the developer, some offer anonymity and some don’t, depending on the usage.

Yes we are moving towards centralised private blockchain as today means 21st September news come that USA most popular Bank PNC is about to adopt ripple technology in their system.
One thing regulation of cryptocurrency is second name of centralisation of blockchain.

If we want to see the blockchain technology massively adopted, no choice to get centralized private blockchains in the future. The adoption will come from companies and so creating their own blockchains, of course, it will be centralized ones. I don't think there is any use to make it public and decentralized for them. Let' say you own an insurance company, why would you make a decentralized blockchain

Yeah. There would be absolutely no reason for these businesses to have a decentralized blockchain if their intentions are to use the blockchain as the private ledger for internal transactions or whatnot. It simply doesn't make any sense.

But we are seeing a trend where governments are issuing their own cryptocurrencies which are pretty much completely controlled by them, and thus, centralized. There are also centralized cryptocurrencies that are coming out and trying to raise funds through ICOs.

These are the centralized blockchains that I think OP is referring to, and they have been becoming a trend recently as I've mentioned as many countries have already started developing them. But I would never touch these, especially if they're being touted as an investment.

Blockchain is good technology and can used in any purpose like hospital, election, or government service. Blockchain different with cryptocurrency and i think its fine if blockchain applied in many services because it will creating transparancy and more faster service

That’s not a problem, it's their right, Blockchain was created by Satoshi Nakamoto as an open source software for public use and development. Like the internet that you are using now, is it wrong if the internet is used as a private facility?