Then what is Bitcoin and other cryptocurrencies based on? They are not based on anything. They, like the US dollar and all other fiat currencies in the world are based on value given them by society. And if you really think about it, what gives gold its value? Nothing, but what people are willing to pay for it. I don't think it is the fact that there is nothing to back the currency, but the fact that it is centralized and that centralized power can just keep printing more and more without limits. I think what gives Bitcoin its value is like what gives gold its value; there is a finite supply. I'm sure that if we found some planet full of gold and people started mining it that gold's value would suddenly plummet from the new massive influx of supply, just like what is happening to the dollar.
Exactly, all money is only based on the value that society gives to it.... very similar to all other institutions set up amongst humans, including government, religion, friendships, and even the popularity of a meme itself.
All these are simply institutions in varying scales that result in ideas flowing from one human to another, influencing how other humans perceive each other and the universe.
Nothing real is actually taking place. When we move from loving a religion to hating it, that happens entirely inside our heads (well... hopefully
). When a government collapses, it's essentially the
opinion of the masses that has changed, not necessarily anything fundamental about the government itself.
All these concepts, including money itself are merely
social webs we form between ourselves. In many ways they resemble the hydraulic fluid flowing from one part of a machine to another, or even the electricity that flows from one neuron in your brain to another.
Now, you mentioned that you think that a finite supply gives bitcoin its value. But this isn't true on its own. For example, BBQCoin is also limited, but it isn't nearly as valuable. Why not? I only own 25 pairs of underwear, and those are limited, but they aren't very valuable. Clearly there's something else at stake besides just scarcity, but I agree with you that if scarcity is broken then the asset is worthless. It would be like flooding the brain with electricity, finding a near-infinite supply of gold, or declaring that every human had the right to govern himself however he or she wanted, or
declaring that every human could have their own relationship with God however they chose and no one could stop them (now you understand why the teachings of Jesus were considered so dangerous 2000 years ago).
