Social Convention and Network Effects

[AndreaCazzaro]

Dear all,

I am a graduate student at the London School of Economics and I am conducting a research on Bitcoin for my dissertation. Precisely, I am trying to identify why Bitcoiners accept and give value to BTC as a currency. I wouldn't say this study is related to pure economics, but to economic sociology.

There are some theories that try to explain why money carries value. In the article below you can find a very interesting theory on the social convention of money. It was written by Hal Varian, a very renown economist whose major studies include network effects.

http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2004-01-15.html

If you have time to write, please share your thoughts here or send me an email. I would like to know some views on this topic and gather some short answers on these two questions:

1) What makes you accept and use Bitcoin?
2) Why do you give value to Bitcoin as a currency?

Best wishes
Andrea

P.S. I am also a Bitcoin user and I will share my views later on to avoid an information cascade.

[Sindelar1938]

Andrea

I use bitcoin because as I see it, btc is backed by mathematics which is incontrovertible and always objective. Unlike governments that issue fiat currency.

[transient858]

Merchants accepting the coin for payment use payment processor such as bitpay and coinbase to get back the fiat.

So, users who use it don't necessary believe in the coin itself or want to hold it for long term.

The value come from saving from currency conversion and foreign wire/tt transaction fee.

[Fioraver]

1) What makes you accept and use Bitcoin?
much reason, but one is that I lve it.

2) Why do you give value to Bitcoin as a currency?
bitcoin is no value, just like dollars, it is a store that carrying value.

[ljudotina]

Dear all,

I am a graduate student at the London School of Economics and I am conducting a research on Bitcoin for my dissertation. Precisely, I am trying to identify why Bitcoiners accept and give value to BTC as a currency. I wouldn't say this study is related to pure economics, but to economic sociology.

There are some theories that try to explain why money carries value. In the article below you can find a very interesting theory on the social convention of money. It was written by Hal Varian, a very renown economist whose major studies include network effects.

http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2004-01-15.html

If you have time to write, please share your thoughts here or send me an email. I would like to know some views on this topic and gather some short answers on these two questions:

1) What makes you accept and use Bitcoin?
2) Why do you give value to Bitcoin as a currency?

Best wishes
Andrea

P.S. I am also a Bitcoin user and I will share my views later on to avoid an information cascade.

To me, personaly, it has value because of:

1) Speed of International money transfer
2) Very low fees
3) Works every time, all the time (no saturday / sunday pause, no hollydays, nights, working hours...)
4) Not controlled by single entitiy (this is not as perfect as i'd like it to be but it's best we have for now)
5) Noone can take it away from me without of my knowlage / consent

[AndreaCazzaro]

Thanks a lot guys! Those are very helpful comments.

Please feel free to share more if you'd like. What do you think about the article I have posted?

Do you think the scarcity of Bitcoin is also another characteristic of the currency that makes you accept it better than a national currency?

Best
Andrea

[botany]

Thanks a lot guys! Those are very helpful comments.

Please feel free to share more if you'd like. What do you think about the article I have posted?

Do you think the scarcity of Bitcoin is also another characteristic of the currency that makes you accept it better than a national currency?

Best
Andrea

Scarcity of Bitcoin is a reason why I feel it won't go down in value and why I continue to hold it.

The reasons I accept bitcoin is
- It knows no international borders
- Ease of transfer
- A sense of privacy while using it.

[practicaldreamer]

I live in a remote area - I haven't used cash for a long time. I bank online and make a great deal of purchases online.

It is, therefore, inconsequential to me wether my medium of exchange is GBP or Bitcoin. Or rather, it would be inconsequential were it not for the fact that patronising GBP (through its usage) only serves to reinforce a banking system that has brought my country to the verge of economic collapse, and for which my children will be paying the price for years to come.

   By using BTC I no longer have to trust the commercial retail banks - I place my faith in the blockchain.

[Mobius]

I think it has value because of the fact that it is a peer to peer currency. This is very similar to why paypal has been so successful. The difference between PP and BTC is that users need to trust PP to hold their money while users of BTC do not need to trust anyone to store their funds.

[rugrats]

Dear all,

I am a graduate student at the London School of Economics and I am conducting a research on Bitcoin for my dissertation. Precisely, I am trying to identify why Bitcoiners accept and give value to BTC as a currency. I wouldn't say this study is related to pure economics, but to economic sociology.

There are some theories that try to explain why money carries value. In the article below you can find a very interesting theory on the social convention of money. It was written by Hal Varian, a very renown economist whose major studies include network effects.

http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2004-01-15.html

If you have time to write, please share your thoughts here or send me an email. I would like to know some views on this topic and gather some short answers on these two questions:

1) What makes you accept and use Bitcoin?
2) Why do you give value to Bitcoin as a currency?

Best wishes
Andrea

P.S. I am also a Bitcoin user and I will share my views later on to avoid an information cascade.

I had a heated offline discussion about this very subject not too long ago.
We eventually concluded that the Bitcoin's early value was driven, above all, by ideology.
Subsequently, mining costs became a fundamental factor behind BTC's perceived and potential value.
Today, speculation, fiat pressure, regulations (or the lack of)  and commerce (existing and potential) all play important roles in determining BTCs economic value.

[lihuajkl]

I think it has value because of the fact that it is a peer to peer currency. This is very similar to why paypal has been so successful. The difference between PP and BTC is that users need to trust PP to hold their money while users of BTC do not need to trust anyone to store their funds.

called decentralisation. The system is built up based on mathematical method easily. Any one can trust it because of its transparency without corruption, printing fiat randomly etc.

[foxkyu]

1) What makes you accept and use Bitcoin?
2) Why do you give value to Bitcoin as a currency?

1. because it's simple. now is digital era. most of people want instant. for example, you can travel the world without confusing about currency. just use bitcoin and it's done.
2. the value itself it's depend on benefits provided

[giveBTCpls]

Worldwide accepted if the merchant accepts it, instant transaction (who cares if it takes some time to get confirmed), and you don't get rapped by fees.

The problem is owning BTC. For most people, the 99%, it's a risk to buy BTC (and buying is the only way to get it these days, because few legitimate jobs pay you in BTC) so it remains a rare thing to own to date.

[Daniel91]

1) What makes you accept and use Bitcoin?
2) Why do you give value to Bitcoin as a currency?

I accept Bitcoin because I think that Bitcoin is the future, more convenient way to pay for different digital services and products and because people more and more want financial freedom, privacy and protection and Bitcoin is perfect solution for this issues.

[Mobius]

I think it has value because of the fact that it is a peer to peer currency. This is very similar to why paypal has been so successful. The difference between PP and BTC is that users need to trust PP to hold their money while users of BTC do not need to trust anyone to store their funds.

called decentralisation. The system is built up based on mathematical method easily. Any one can trust it because of its transparency without corruption, printing fiat randomly etc.

That was my point exactly. People like sending payments directly to one another, and the piece of mind that a 3rd party is not going to run away with their money gives them the confidence to keep their money in bitcoin.

[AndreaCazzaro]

This is very interesting guys. Some comments are very

I see many of you mention the problem of trust in institutions. A few decades ago North, Nobel laureate in economic science, said that institutions are at the core of economic development. Do you think they are still important? Or do you think we have reached a phase in which institutions are not necessary anymore and they are just causing issues?

All the best
Andrea

[DhaniBoy]

Many things we can do with bitcoin, we can travel ticket to go around the world, or we can buy any goods which useful for our daily life, we can buy anything that we want with bitcoin, and there is no tax that we must buy to the goverment, This is a symbol of freedom in the transaction, hopefully world currency could use this type of currency that is bitcoin ... 

[Skavenger]

1) Bitcoin cannot the printed out of tin air like FIAT money, it's math proof
2) The math proof scientific approach for money instead of "in God we trust" money aka FIAT money.

[Marlo Stanfield]

Dear all,

I am a graduate student at the London School of Economics and I am conducting a research on Bitcoin for my dissertation. Precisely, I am trying to identify why Bitcoiners accept and give value to BTC as a currency. I wouldn't say this study is related to pure economics, but to economic sociology.

There are some theories that try to explain why money carries value. In the article below you can find a very interesting theory on the social convention of money. It was written by Hal Varian, a very renown economist whose major studies include network effects.

http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2004-01-15.html

If you have time to write, please share your thoughts here or send me an email. I would like to know some views on this topic and gather some short answers on these two questions:

1) What makes you accept and use Bitcoin?
2) Why do you give value to Bitcoin as a currency?

Best wishes
Andrea

P.S. I am also a Bitcoin user and I will share my views later on to avoid an information cascade.

1) The fact that I can reasonably expect to be able to exchange Bitcoin to the currency of my choice in a timely manner with little friction.
2) It proves me with utility. Being able to store money on my computer and send some to my bank account at will is convenient for me.