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April 05, 2013, 01:50:42 AM
Last edit: April 05, 2013, 02:04:14 AM by remotemass |
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The value of the network and the bitcoin protocol is that it makes some things possible that without it they wouldn't be, so it brings added value to this material world. The usefulness of it is related with the resources it takes and the amount of traffic it has. That is: how much it is being used. That's why miners are paid, in bitcoins (rewards + transaction fees) to bring about this useful network and make it has efficient and secure as possible. In a sense we could say that the new bitcoins that enter circulation to the lucky miner's designated bitcoin addresses are like "shares" of a multinational network company - that theoretically could be sold as a whole, if all bitcoin owners - in a totally unrealistic scenario - accepted to sell their parts of its "ownership", so that it could to be used as corporate/private intranet network separate from the rest of the world/net.
And these "shares ownership", that in a sense is what the bitcoins provide - as an aanalogy - is what puts you in power and with privileges to operate it - this valuable network - accordingly to how much you own.
So yeah, bitcoins are backed by their demand only. It is the simple law of demand and supply that regulates its price in the trading markets. But still, they are valuable, because they bring about to this material world a whole new lot of possibilities, sprouting something that didn't exist before and that can compete in value with any other material resources, goods or services, with its market value established by its usefulness and scarcity and for that matter its demand and supply.
It is a real thing. Virtual currency only means it exists on the internet, in a digital network, and not on your pocket. Still, it is as material and able to compete for its market value, as anything else that holds value, usefulness and scarcity.
It is still pretty much in a legal gray area, as a currency-like commodity. But it has pretty much all the necessary attributes that we associate with money, and with the medium of exchange of excellence, which used to be gold, and is now becoming 'Bitcoin: the fastest growing currency in the world; Digital cash for the internet society without banks or financial institutions controlling it"
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