If you want discussion about your argument open your own topic. This topic is about the difference between speculative and real demand and how that relates to bitcoin/crypto bubble.

I am not expressing opinion. I am describing reality. And you're the one denying reality with the usual crypto propaganda. You're portraying useless virtual coins as something revolutionary in order the dumpt them on someone else at better prices.

Store of value is just speculative use. You buy a product with the purpose to sell it in the future and in the meantime you're storing value in that product. That product is store of value by the definition of speculative use. Literally all crypto coins fit that definition. They are all store of value. Some are good, and some are bad store of value. Non-speculative use is something entirely different. This is when a product is used for specific purposes - wheat for nutrition, gold for jewelry or electronics, fiat for paying debt to the banking system, bonds for receiving coupons or face value, etc.

Crypto coins have no specific purpose. They have no real demand. Rather, they are completely speculative. They are useless virtual items that change hands according to the greater fool theory.

Hahaha, this is hilarious. Now instead of the difference between speculative and real demand, the responders talk about me. Literally no one wants to talk about the topic at hand. You people either spread the usual crypto propaganda, deny reality that the only use of coins is trading, or do ad hominem attacks. It's like I am talking to some kind of cult.

And again. Why do you think that your prediction about the growth of speculative demand is important? Literally all people that bought crypto coins assume that speculative demand will grow so they can dump those coins on someone else and get higher prices. Otherwise they would not buy the coins as there is no specific purpose for which they can use them. All holders must sell them by definition and they must believe the price will be higher. That's the essence of the greater fool theory. The topic at hand talks about why the assumptions
of the buyers contradict reality.

All products traded in the market have two types of demand – real and speculative. The first means that market participants desire products because they need them for specific purposes. The second means they desire them to hold and ultimately exchange them on the market. For example. A desire for wheat to make food or gold to make jewelry, ornaments, electronic components, etc. is a real demand. If, on the other hand, wheat or gold is desired only to be held and later exchanged, that is speculative demand.

The same is true for financial products. When shares are desired for receiving dividends, buybacks or funds from liquidated assets, that is real demand. With bonds, real demand is those who want to receive coupons or face value at maturity. Units of fiat currencies are created with loans from commercial banks and purchases of government bonds by central banks, so the real demand is debtors who need them to repay those loans and bonds. If, on the other hand, the mentioned products are desired to be held and ultimately exchanged, that is speculative demand.

However, in 2009, a precedent occurred. The so-called cryptocurrencies started to appear. They are virtual points that have only speculative demand. Whoever holds them, sooner or later has to exchange them on the market because there is no specific purpose for which they would need them.

A situation where something is traded on the market but has no real demand has never been seen in human history. The only reason products are brought to the market is because real demand needs them for specific purposes. Speculative demand is only a byproduct of real demand. Speculators on the market estimate how valuable products are to real demand and then pay prices according to these estimates. For example. By wheat having a nutritional purpose, speculators approximately know how valuable it is to consumers and whether prices are cheap or expensive. Similarly, by fiat currencies having the purpose of paying debt to the banks and by debtors facing foreclosures in case of default, speculators know these currencies are worth to debtors somewhere in the range of pledged collaterals. Meaning, they will not trade houses for a specific number of currency units if they see that banks take cars as collateral when issuing that number of units.

Given that crypto virtual points have no real demand, there is nothing to estimate. There’s no way to tell whether prices are cheap or expensive. Instead, speculators pay prices blindly - solely in the hope that other speculators will pay them higher, or at least the same prices in the future. Essentially, they believe in the greater fool theory and have hopes of ever-rising or stable speculative demand. The hopes themselves are based on the misconception that the points are 'valuable' because they are stored in a decentralized manner. Alternatively, the misconception is that the points are 'scarce' because crypto protocols limit their supply. In reality, however, value and scarcity come from purpose for which real demand needs something, not from storing methods or protocols. There may be a limited supply of things no one needs and an advanced method for storing them, but it is ridiculous to call them scarce and valuable because of that.

Throughout history, there were situations of large ratios between speculative and real demand. This caused market bubbles, the most famous of which is the tulip one. But never before has that ratio been infinite, with speculative demand above zero and real demand at zero.

All bubbles eventually but inevitably pop. Then, massive sell-offs cause prices to decline, often quite dramatically. The real demand is what stops prices from further decline. With crypto lacking such demand, there is nothing to stop the decline, and prices inevitably must fall to zero.

No, what I am trying to say is that the Bitcoin network has no protective mechanism to ensure that holders of its units get back goods and services, while the fiat system has it. That's literally all I am trying to say.


The Bitcoin network stores the system units and enables the change of their holders. If that's a services then it's the most useless service in human history as the units cannot help its holders in anything. The units are just something that the network protects for its own sake.

Basically, the network is a perfect example of means that gives access to a pyramid scheme given that no one can benefit from the network and its units, but only from things that old network members received from new members.

That's storytelling needed to attract outsiders and dump them system units. Because Bitcoin lacks mechanism fot turning those units into goods and services. And now let's be serious: do you really think a piece of code and a database can make world better? Wake up people. The dream is over

Well, that is what everyone talks about. My post is about what no one talks about - the lack of mechanism for returning resources in the Bitcoin system and the existence of it in the fiat system.

For this topic it is irrelevant what Bitcoin is. What is relevant is the difference between Bitcoin and fiat. Bitcoin lacks a protective mechanism to return resources. Members of the Bitcoin system cannot eat coins, drink them, live in them, drive them, use them as energy, etc. So once they are in, by holding coins, their coins mean nothing. They need people from outside of the system to get resources. To get something they can live off of. Calling coins resources won't make them eatable or drivable. Fiat system, on the other hand, has protective mechanism, as described in the OP. That's why units in that system are valuable while units in the Bitcoin system are not. It's pretty simple argument.

As Bitcoin became more widely known to the general public, many began to see it as some kind of alternative to the fiat payment system. Not only an alternative but a superior alternative. This superiority supposedly stems from Bitcoin’s “decentralization”, “security”, and “scarcity”. Here we will show that Bitcoin and fiat are different as night and day. And that the first don`t even belong to the same category as the second.

Narratives about Bitcoin are mostly focused on the field of informatics. However, payment systems belong to the field of economics. Here we will therefore focus on the second. Economically speaking, people need goods and services. They need food, clothing, energy, a roof over their heads, clean streets, medical services, etc. This is what satisfies human needs. In that sense, the technical implementation of payment systems, through which goods and services are exchanged, is irrelevant. Payment systems themselves can neither satisfy human needs nor magically create goods and services. They are only auxiliary means for exchanging them and, most importantly, securing their return.

Why is securing the return of goods and services the most important thing in payment systems? Well, suppose you gave up your house and in return, you got units of the fiat system, i.e. you got banknotes or a deposit account that show the number of received units. These units cannot satisfy your needs. They are not goods or services. So, you gave up a house that can satisfy a lot of needs, and in return, you got units that cannot satisfy any need. That is why, if a payment system is legit, it must have a protective mechanism so that in the future you can return goods or services. The fiat payment system has such a mechanism. Let’s see how it functions.

The units of fiat payment systems are created when banks grant loans to individuals and organizations or purchase government bonds. By exchanging goods and services for banknotes or deposits people become holders of those units. The fiat system ensures that holders get goods and services back. It does that through the liabilities of debtors and their collaterals, i.e., by forcing them to pay off their debt.

Namely, to be able to pay off their debt, debtors need banknotes or deposits. And the only way to get them is if they work for their holders, sell them goods and services, or, in the case of governments, accept banknotes or deposits as a tax payment. So, by being forced to pay off debt represented with units of the fiat system, debtors are returning goods and services to holders of those units. Such returns are realized daily by hundreds of thousands of debtors in the fiat payment systems worldwide.

Let’s now turn to Bitcoin. Bitcoin boils down to a network of computing devices linked together to manage a database according to some protocols. That database stores information on the number of units held by users registered on the network. The units are popularly called electronic coins or bitcoins(₿). How do people become holders in the first place? Well initially, they give up electricity in the process of the so-called Bitcoin mining. This gets them the units. So they give up a good that can satisfy a lot of needs and in return, they get units that cannot satisfy any need. That means that users of the Bitcoin network are in the same situation as users of the fiat system – they need to return goods or services.

And now comes the crucial question: does the Bitcoin network have a protective mechanism that enables users to return goods and services? Well, it does not.

And this is the key difference between the fiat payment system and the Bitcoin network. The first has banks, debtors, loan contracts, government bonds, and pledged collaterals to ensure that users return goods and services. The second has nothing. Users just hold the units, and that is it. The network is not there to protect them by ensuring the said return. Instead, the network is there to protect its units. It takes electricity for its own sake.

“Decentralization”, “security” and “scarcity” are just pointless features of the network as none of that protects users. No matter how decentralized, well-protected, or limited the units are, this cannot help anyone to return goods and services. Network maintainers, miners, protocols, the database, and everything else related to the network are entirely focused on the units. It is like these units represent some kind of transcendental value worthy of worship and high protection. The users, on the other hand, are unimportant. They exist only to sacrifice need-satisfying items or protective units of the fiat system to be able to hold that transcendental value.

There is currently an entire army of Bitcoin users. They gave up an enormous amount of valuable items to get units of the Bitcoin network. And this network has nothing to protect them. Consequently, if people outside the network decide they no longer want to give up valuable items in favor of network units, that whole army is doomed. The network cannot help them to return even a bit of what they gave for the units.

To conclude. The units of the fiat system are valuable because they protect holders by ensuring the return of goods and services. The value per specific number of units can be determined by checking the value of collaterals that banks take when issuing that number of units.

On the other hand, the units of the Bitcoin network are worthless because they do not protect holders. The fact that the Bitcoin network is designed to protect its units instead of its users is pretty bizarre. What is even more bizarre is that some people are currently giving up 30,000 protective units ($) to get one non-protective unit(₿). This indeed looks like sacrifice in favor of some transcendental value. And shows that the whole thing is some kind of digital religious practice instead of something related to economics.