You are correct. Numbers in the bank accounts are worthless since the banks created them out of thin air. These numbers are just quantifiers of the obligations of the borrowers to repay their loans. Now, if borrowers have obligations, then it means that someone else has a claim. So, who has a claim? Well, both the banks, and owners of money that is created via loans. The banks because they formally issued the loans to the borrowers, and the owners of money because they literally credited borrowers with land, cars, houses and other valuable things when they traded them for the loan-created money. These two facts are formally recorded in the balance sheets of the banks. Specifically, when a bank grants a loan, the loan contract is shown both, as an increase in bank’s assets because the bank now has an additional claim on borrowers, and as a positive entry on the liability side of the bank’s balance sheet, because money owners now have an additional claim on the bank. And a claim is property in the fullest sense of that term, that it has its own value, and it may be sold, transferred, mortgaged, and inherited. Numbers in the bank accounts are worthless symbols whose only purpose is to express or measure the size of the claims in a banking system.

No, it is NOT possible to buy iPhone for BTCs. It is possible to give iPhone to someone for free and then to change numbers in a database. Changing numbers is not buying. Buying is acquiring the possession of something. Changed numbers are not possession. Of course, after the process of buying,  numbers in some database that represent information on the goods being stored in a warehouse can be changed. Numbers in a bank ledger (a running list of transactions to and from a bank account) can also be changed. But numbers themselves are valueless - they just express or measure the quantity of iPhones or digital money(digital certificate of ownership of legally enforceable claims on land, cars, homes or incomes of borrowers). So, you cannot buy iPhone for numbers (BTC), but someone can give you iPhone for free, and then change numbers in some database.

I agree that digital things in 21th century have value, except if they are quantifiers in a database. Quantifiers have no value since they are only symbols that provide information about the quantity or other properties of digital or physical things. Things which are quantified are what have value.

Bitcoin is not usable as paper notes I have in pocket. Paper notes are usable because they are certificates of ownership of legally enforceable claims on land, cars, homes or incomes of borrowers. Numbers on paper notes are quantifiers of those claims. Hence, it is not numbers (symbols) on paper notes what have value, but claims. On the other hand, bitcoin is the name of the number in a database that quantifies nothing outside the database - no claims exist that are quantified with it. As such, it is completely unusable. The fact that number connected to your address has changed when you gave your iPhone for free to someone, is like changing A to B or changing the position of glass on a table. Simply put, changing the state of some digital or physical object doesn't make you the owner of something valuable. In other words, the fact that the state of a number is some database has changed has nothing to do with ownership, value or price.

Bitcoin is a number in a database, not a thing. A thing is some entity, object, or creature that exists outside the database which contains some data about it. I explained this already.

The fact that lots of people put numbers into a database when they give their stuff for free has nothing to do with "value". Value is the feature of a thing which resides outside the database, while entry in a database is just an abstract mathematical object without value.

A song  - for e.g. "I Just Called to Say I Love You", indeed has value. But, numerical symbols that represent the order of this song in the Love Songs database have no value.

Binary digits also have value, except if they are quantifiers in a database. Microsoft Word is a computerised thing (just binary digits) and it has value because it is used as a word processor. Microsoft Word is not an entry in a database.

Sure, some objects are just combinations of atoms without value, like Bitcoin or dirt for e.g. Point?

Regarding the big picture. Costs of brute force cannot chage the fact that the result of the brute force is a number in a database, which has zero value. Utility and function are abstract terms that cannot create value. Value is created by agents or machines.

Finally, I do not deny that the binary digits that make up the bitcoin ledger have an actual function - they provide numerical evidence that someone gave its iPhone or money for free. If I gave you iPhone as a gift and as a result I enter a number into some excel database, for e.g. "1.25", and than give name to it - for e.g. ExcelCoin, that does not mean that ExcelCoin has value. ExcelCoin is just a numerical evidence that I gave you a thing for free.

A piece of paper is not a share, but a medium. An entry in a digital database is also not a share but, either a symbol which quantifies the number of shares (150) or a symbol that identifies a share (IBM). Share is the ownership in the company (International Business Machines)  - which is an actual thing - outside the database. Bitcoin is not an actual thing - outside the database - but a number in a database. So the difference is huge.

Scarcity means the limited availability of a thing. Hence, you cannot 'own scarcity', only things can be owned. But, as I have shown, Bitcoin is not a thing, but the name for the number in a database. If this number needed to be mined before put into database, it is still a number - it  didn't magically become something outside the database.

If we both agreed, that BTC (a number in a database) holds value then we are simply ignorant of the truth that number is not the same as value. Number (entry in column B of our database) is symbol that quantifies a thing outside the database ( iPhone, Dollar or IBM share), while value is the feature of that thing. Since bitcoin is just a number in a database that quantifies nothing outside that database, it cannot have value in principle.

Regarding potatoes and iPhone, they are actual things and not entries in a database, regardless of what we both believe.

But, when you "traded" iPhone for bitcoins you didn't become an owner of a certain amount of kilowatts of energy (a thing outside the database/blockchain). All that has happened is that a number in a database has changed without you becoming owner of something outside the database. Hence, you gave your iPhone for free to someone.

I think you missed the point of my opening post, which is this: bitcoin has neither price nor value. Furthermore, terms 'the price of bitcoin' and 'the value of bitcoin' are oxymorons. Let's go back to our database to see why.

_____A______     ____B____    ______C______
____Alice____      ____2____    ____iPhones___
____ Bob ____     ___20____    ____US Dollars_
___ Steve____     ___15____    ___IBM Shares_


Now, can you say that entries in column B have prices? Of course not, this would be nonsensical, since they are quantities not prices. Things outside this database (named in column C) are what have prices. But, in the case of bitcoin, there are no things outside this database that are named in column C, and this column simply contains the name of the entry in column B - number 2 is bitcoin.

____Peter____     ____2____    ____Bitcoins___

So, when you say that bitcoin has price, what you are actually saying is that quantities (numbers) have prices, which is, as we just saw, nonsensical.

But when we talk about the demand and supply of iPhones, Dollars, and IBM shares, we are talking about things of value which exist outside the place(database) where the information about these things exists. There is no demand for number 5 in a database, where this database represents the number of iPhones in a warehouse for e.g. The demand is for things(iPhones) which are actual devices, and which exist outside the database. So, the demand is for an actual thing, while number in a database is just a symbol that quantifies that thing. The same is true for Dollars or IBM shares.

Bitcoin on the other hand, is not an actual thing outside the database. It is just an entry in a database that points to another entry in the same database. One entry is a number written in numerical symbols — 2 for e.g., and another entry is the same number written in alphabetical symbols — bitcoin or BTC. And of course, there is no such thing as a demand for symbols in a database. What you have in the world of Bitcoin is not demand and supply, but the modification of an entry in the database when someone gives things (iPhones or Dollars) for free. On the other hand, when supply and demand meet in case of iPhones and Dollars, the modifications in store's or bank's databases are just numerical evidences that people exchanged actual things (iPhones for dollars and vice versa). And of course, these things exist outside the databases. So, there is no such thing as demand and supply in the world of bitcoin, but instead, all there is is giving your stuff for free and recording that fact into a database/public ledger/blockchain in the numerical form.

Let's say that we have a database that represents information about ownership of things and has 3 columns (A, B and C) with the following data types: Owner name, Thing quantity and Thing name.

_____A______     ____B____    ______C______
____Alice____      ____2____    ____iPhones___
____ Bob ____     ___20____    ____US Dollars_
___ Steve____     ___15____    ___IBM Shares_
____Peter____     ____2____    ____Bitcoins___
 
Just as every database, this database is an organized collection of data which provides information about some aspect of reality, in this case the ownership of things. Alice, Bob, Steve and Peter own a specific quantity of iPhones, US Dollars, IBM shares and Bitcoins.

Now, in the first three cases of ownership, column B quantifies some actual thing which resides outside the database. Alice owns actual electronic devices. Bob owns an actual share in the total claims secured by collateral that originated from the total borrowers liabilities in the U.S monetary system. And Steve owns an actual share in the total IBM capital.

But, if we now ask what actual thing outside the database is owned by Peter, we face an inherent contradiction. Namely, there is nothing outside the database since bitcoin is just the name of a number connected to the address, in this case to Peter. In other words, column B and column C are basically the same thing - a number. It is just that column C uses alphabetic symbols, while column B uses numerical symbols. So, Peter owns 2 numbers and Peter owns number 2. But how can someone own a number? The first three rows in our database clearly show that numbers are just means to quantify things, they are not things that are owned. As such, these numbers are valueless on their own, and they can be created out of thin air. On the other hand, electronic devices, borrowers liabilities/collaterals, and company's capital, obviously cannot be created out of thin air. And that is why things (iPhones, US Dollars and IBM Shares) are what have value, not the numbers. Numbers are just symbols that represent/quantify these things and they cannot have value in principle. For e.g. in the case of dollars, it is not the number "20" in the database what Bob owns. He owns a share in the total claims that originated from the total borrowers liabilities. If the total liabilities(debt) in the U.S monetary system is X, Bob owns 20/X of share in claims derived from these liabilities.

But, in the case of bitcoin, Peter literally owns number "2" in the database, since bitcoin(entry in column C) is just a fancy name for the number in column B and it represents nothing outside the database itself. So, since bitcoin is a number while numbers are only representations of values that exist outside the database, not only that bitcoin has zero value but the term "bitcoin's value" is an oxymoron.

Let's put it this way. Nine years ago you had to pay 1,000 BTC in order to get dollar. Now you have to pay 0.00016 BTC.  In the same time period, both bitcoin and dollar had exactly the same utility - they functioned as a means of exchange. Now, why would a rational person spend six million times more dollars on something that has exactly the same utility as it had before?

Would you pay 10,000 dollars for a potato or give up your car just to get a potato? Of course not. This is because the utility of a potato or the want-satisfying power of a potato is much smaller than that of a car or of 10,000 dollars worth of goods or services.
In comparison to a potato, Bitcoin is not even a physical tangible good that can be used for satisfying human wants or needs, and its only utility is that it functions as payment protocol and money. So why would you pay enormous amounts of money just to have these functions if they are equally available whether the price of Bitcoin is 0.001 $ or 6, 000 $, and more importantly if these functions can be realized with various alternative cryptos or fiat money?

... payment protocol and money function at its starting price of 0.001 $?

Bitcoin won't be fine for one simple reason. Bitcoin is just a number associated with an address. It is worth nothing whatsoever since number is just a mathematical object used to count, measure or label things. Bitcoin counts, measures or labels nothing just like numbers on children’s play paper money measure nothing. In the real market, numbers are just means used by market participants to count, measure or label actual things - delivered goods and services; an entitlement to a set amount of gold; an ownership in a corporation; a legal claim derived from borrowers’ obligation; or right to reproduce a work. These numbers, either in digital or ink form, are put on some digital or paper medium and then we have an invoice, a gold or a stock certificate, a banknote, or a record of copyright. Of course, the latter are without value on their own, and can be created ‘out of thin air’ – since puting ink on a paper or storing digital bits into computer memory is pretty trivial task. What has value are the things represented with ink or digital bits. In the case of dollars or euros, this thing is a legal claim derived from borrowers’ obligation, which is backed or secured by some form of collateral (land, car, home or borrower’s income).
 
The crypto world has naively taken this abstract manifestation of things, which emerges in a market transactions in the form of ink or digital bits, and in the absence of actual things started to treat worthless bits as if they are the actual things. This is essentially the way children play when they imitate buying and trading through the usage of play paper money. Children know that real money is a sheet of paper with some letters and numbers printed on it. So when they want to imitate economic relations of adults, they will simply take paper and put some letters and numbers on it. But of course, no actual marketable thing (a claim derived from borrower’s obligation) is represented with this play money, like it is with real money. Cryptos are essentially version of such child’s play, the only difference being that the medium is not paper but computer memory. Cryptos are created through a process where numbers are put into computer memory. But, these numbers didn’t came into existence as representative means with the purpose to count, measure or label actual legal claims, like numbers on banking accounts. Instead, crypto numbers came into existence as separate and independent objects just like numbers in children’s play money.

The intrinsic value of these objects is of course zero, and in the long run, the price of a an item always comes back to its intrinsic value. That's why Bitcoin won't be fine.

No, I am not joking, but try to figure out the concept of crypto capitalization. The capitalization is, by definition, the product of the price of an item and the quantity of items in the market. The market price of my coin is $10, and its quantity 500,000,000,000. Hence, the capitalization of my crypto is greater than the capitalization of Exxon Mobile. I am simply asking does that mean I own something that is more valuable than multinational oil and gas corporation?

...then initially mine half of the supply, and finally sell one coin for $10, then, by definition, the capitalization of my crypto is greater than the capitalization of Exxon Mobile. Does that mean I own something that is more valuable than multinational oil and gas corporation?

Bitcoin is not a Ponzi scheme but a digital version of children’s play paper money. This is true for all cryptos. Here is why. In order for people to be able to exchange or transfer ownership of things, be it: land, cars, gold, stocks, money, patents, copyrights, etc., they must name these things and specify their properties and quantities. For that purpose, alphanumeric characters are used that are written on some paper or digital medium. These instances then constitute the representation of things, and they exist in the form of an invoice,  a gold or a stock certificate, a banknote, or a record of patent or copyright. Now, it is pretty obvious that representations we just mentioned cannot exist if it were not for actual things. For e.g., an invoice cannot be issued if no item has been sold, an individual cannot get a stock certificate without the ownership in a corporation, numbers in a bank account cannot be created without some borrower becoming obligated to repay the loan, a gold certificate cannot be put in circulation if no gold was stored, etc. Thus, representations in the form of characters written on a medium, are just means to identify and quantify actual things. As such, they are abstract entities without value on their own. What has value are the things represented with them – delivered goods and services; an entitlement to a set amount of gold; an ownership in a corporation; a legal claim derived from borrowers’ obligation; an exclusive right granted by a government to an inventor; or a legal right that grants the creator of an original work exclusive rights for its use and distribution.

The crypto world is build on the negation of this fundamental duality between the thing and its representation and in it, a quasi representation in the form of digital characters exists without the thing the characters are supposed to represent. To better understand the absurdity of this world let us explain the concept of fiat money and what actual thing is represented with characters like USD, EUR or GBP and their numeric quantifiers written on banknotes or bank accounts.

In today’s world, fiat money is the most misunderstood thing, even among economists, and thus, the core reason why so many people falsely believe that this money is without intrinsic value. This misunderstanding made many to throw away their dollars, euros or pounds and join the crypto world. So, what exactly is fiat money? Well, we are all familiar with the fact that in a fiat monetary system, all money comes from debt. What that means is that, all dollars, euros or pounds in circulation, either paper or digital, must ultimately be paid back to banks. Paid back by whom? Well, by borrowers. By those individuals and companies that received the loans, spent these loans, and in that way received land, cars, houses and other valuable things from people. So fiat money is essentially legally enforceable obligation of the borrowers. Now, if one has an obligation then the other has a claim. Given the fact that a claim is property in the fullest sense of that term and it may be sold, transferred, mortgaged, and inherited, it follows that dollars, euros or pounds are actual marketable things with intrinsic value. Their beneficiaries are both, the bank and their owners, which is formally recorded in the balance sheets of the banks. Specifically, when a bank grants a loan, the loan contract is shown both, as an increase in bank’s assets because the bank now has an additional claim on borrowers, and as a positive entry on the liability side of the balance sheet, because fiat money owners now have an additional claim on the bank. What that means in practice is that borrowers have two options: either they will sell their valuable things to fiat money owners directly on the marketplace to get money for their loan payments, or the bank will take possession of their land, cars, homes and will sell their valuable things to the owners of fiat currencies indirectly, via foreclosure. So one way or another, legal enforceability of fiat money ensures that its owners will come back into the possession of valuable things similar to those they handed out to borrowers or other people in the money circulation chain. And that’s the beauty of fiat money. Since it comes from debt, and debt is a legally enforceable liability that must be settled, the demand for fiat money will exist as long as fiat money does. In other words, even if people completely abandon dollars, euros or pounds as means of exchange, the borrowers are still forced to use them until all their debt is paid off, since non-acceptance of fiat money won’t make borrowers’ liabilities go away. That means that ultimately, fiat money will provide its owners with actual things in the form of goods, services or property of borrowers, just like the gold certificates provided their owners with actual gold. To put it another way, in the past, fiat money was backed by gold, today, it is backed by the assets of the banks and by land, cars, homes and other property of the borrowers.

Now that we now that fiat money is a claim, or in other words, an actual property and  marketable thing with an intrinsic value, while characters like USD, EUR or GBP and their numeric quantifiers written on banknotes or bank accounts are just its representation, we can finally expose cryptos for what they are. In the crypto world, the same as in the world of fiat money, we have characters written on a medium (100 BTC for e.g.). But the crucial question that now needs to be asked is: what actual thing is represented on this medium and with these characters? What actual property, asset or possession is behind them? Since characters are just linguistic objects used to represent actual things, there must be something beyond them. So, what is beyond characters like “100 BTC”? Well, by now you have probably figured out that the answer is: nothing. The actual marketable thing, whose name and quantity would have to have been represented with characters, is nonexistent. Meaning, in the crypto world, the representation is the thing and the thing is the representation. Earlier we explained the dual relationship where representations (an invoice,  a gold or a stock certificate, a banknote) would not exist if it were not for actual things (goods, services, stored gold, ownership in a corporation, borrower’s obligations). The crypto world has naively copied the representative part of this relationship – which manifests in the form of characters written on a medium, and started to treat characters as if they are the actual marketable things. This is essentially the way children play when they imitate buying and trading through the usage of play paper money. Children know that real money is a sheet of paper with some numbers written or printed on it. So when they want to imitate economic relations of adults, they will simply take paper and put some numbers on it. But of course, no actual thing (borrower’s obligations) is represented with this play money. Cryptos are essentially version of such child’s play, the only difference being that the medium is not paper but computer memory. Cryptos are created through a process where numbers are put into computer memory, but this numbers didn’t came into existence as means to represent or quantify goods, services, claims or obligations, like numbers on the banking accounts or in an invoice. Instead, crypto numbers came into existence as separate, independent, abstract objects just like numbers in children’s play paper money. The consequences of such fictional world can be seen in the “prices” of cryptos.

Every item that is exchanged in legitimate economic relations, had its ‘starting price’ that reflects its initial intrinsic value. This price than served as pivot for market price fluctuations. For e.g., fiat money is created from debt and debt is secured by some form of collateral (land, car, home or borrower’s income). Since a collateral has an intrinsic value, if a bank issues a $200,000 loan and secures it with a house, then we know exactly how many units of newly created money corresponds to this particular house, or in other words, the starting price of dollars is established – we can say that the price of 1 dollar, or the exchange rate of ‘USD/HOUSE’, is 0.000005 (1/200,000). All loans and all collaterals in the US monetary system together, will determine the average starting price of dollars. Such established price then serves as a measure of value and pivot for market price fluctuations, which than further depend on economic indicators like interest rates, balance of payments and unemployment rate. Thus, since fiat money is legally tied to actual property through collateral, i.e. it exists as an actual thing with intrinsic value, we can determine the starting price of one unit of such money and use it for price evaluation and determining whether the market price is cheap or expensive. However, in the case of cryptos, something like that is impossible. Since no legal connection to actual property or collateral exists, and since cryptos are not representations of actual things, like for e.g. gold or stock certificates are, their value is nonexistent, it is oxymoronic, and it is impossible in principle to establish their starting price or to determine whether their market price is cheap or expensive. That is why the prices of cryptos are so volatile, unstable and can jump from zero to several thousand dollars in a matter of weeks.

How is it even possible for something like this to exist? Well, since the general public is not familiar with the process of creation, representation and quantification of money in the fiat monetary systems, people are ‘tricked’ into the illusion that characters stored in the online virtual crypto wallets are just like characters stored in banking accounts, the only difference being that virtual wallets are outside the reach of ‘evil banksters’. But, as we have seen earlier, nothing could be further from the truth. Crypto virtual wallets are actually outside the reach of things like bank reserves, bank liabilities, evaluation of the credit risk, collateral, legally binding contracts, foreclosure, laws, and other legal instances whose purpose is to protect the owners of banking accounts and ensure that legal claims stored in these accounts are enforced for the benefit of these owners. When people exchanged numerical characters stored in banking accounts for numerical characters stored in virtual crypto wallets they have literally thrown away the actual property, the actual legal claims, and become the owners of worthless characters stored in a public ledger.

With that being said, it becomes obvious why it is so easy to create, transfer and store cryptos, and why there is an enormous number of them available. Since cryptos are mere characters without any connection to actual things, anyone can create their own computer program, use it to generate some characters, send these characters to various internet addresses and store them into some digital ledger. Now, there is nothing wrong with generating, sending, receiving, or storing characters – people do that all the time, via email system for e.g. However, these characters are entirely valueless, and as such, they cannot exist as instances of marketable things, let alone have prices at 1,000 or 10,000 dollars. Sooner or later people will realize that by ‘purchasing’ these characters they are abandoning their ownership rights of actual things, that they are throwing away their valuable possessions, and ultimately, the whole crypto world will destroy itself.

"Galileo Galilei once said, “All truths are easy to understand once they are discovered; the point is to discover them.” Discovering truth about cryptocurrencies (let’s just call them cryptos), and showing that they are not marketable instruments, but worthless digital characters, is the goal of this article. The first step toward achieving this goal is to explain how things in the economic relations are represented and quantified with a combination of characters on a paper or digital medium. After that, we will become familiar with the duality between the marketable thing and its representation, and why the latter cannot exist without the former. Given this duality it will become clear that cryptos exist as an instance of representation, but without the thing which is supposed to be represented, which is exactly how children's play money works." You can read the rest here: https://cryptofraud.wordpress.com/