Bitcoin Is "Money Out of Thin Air"?

[iamTom123]

Bitcoin has just turned 9 years old...it was nine years ago that Satoshi Nakamoto shared to the world the whitepaper that would be the basis for the creation of Bitcoin and its underlying technology called the Blockchain. The ride was not really that easy because it took some time for Bitcoin to finally caught some fire which pushed the digital currency into the attention it is getting right now. People of course doubted at that time how can mere programming be able to create a digital currency that would have some value.

As of today, those people who took the risk (no matter if they might have not been serious at that time) are experiencing the surprising rainfall of value they might have never expected to happen. Lucky for them...for many of us we have to work hard to get our Bitcoin though it is really worth every penny of the hard work (or money) we put in to get hold of some Bitcoin.

There are still many people who are holding the idea that Bitcoin is essentially making money out of thin air. It is as if the idea of Bitcoin has not yet been absorbed by their consciousness and so many can be dismissing Bitcoin as just another fraud which is waiting to pop and to just evaporate like a bubble.

Of course, we have already progressed out of this stage and right now Bitcoin is already an accepted currency and store of value by many prominent personalities and institutions.

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[mobnepal]

Actually banks are creating money that we are using right now and nobody of us know about this.

In past, Commercial banks were responsible for creating paper cash, they used to give paper cash to people who will deposit heavy metals or Jwelleries in bank.

Later on reserve banks taken out this power from commercial banks, but right now banks are creating digital money and most of us are using those digital money created out of thin air with our credit cards.

https://www.youtube.com/watch?v=oJ5Hq0NDErA

[Scorpion]

The concept of currency is assigning value into a system used for exchange in a economy. Ancient Greece used peppercorn as a form currency at one stage in their history.

[KwizatzHaderach]

Central banks just print money also.
Bitcoin mining(creation) is currently gulping up vast amounts of electricity just to create.
There is some intrinsic value in its creation.

[qwerty_2134]

Yes I think because although the job you do in btc is different from other job and it takes time for you to earn money, it is so worth it once you claim your profit.

[audaciousbeing]

Bitcoin has just turned 9 years old...it was nine years ago that Satoshi Nakamoto shared to the world the whitepaper that would be the basis for the creation of Bitcoin and its underlying technology called the Blockchain. The ride was not really that easy because it took some time for Bitcoin to finally caught some fire which pushed the digital currency into the attention it is getting right now. People of course doubted at that time how can mere programming be able to create a digital currency that would have some value.

As of today, those people who took the risk (no matter if they might have not been serious at that time) are experiencing the surprising rainfall of value they might have never expected to happen. Lucky for them...for many of us we have to work hard to get our Bitcoin though it is really worth every penny of the hard work (or money) we put in to get hold of some Bitcoin.

There are still many people who are holding the idea that Bitcoin is essentially making money out of thin air. It is as if the idea of Bitcoin has not yet been absorbed by their consciousness and so many can be dismissing Bitcoin as just another fraud which is waiting to pop and to just evaporate like a bubble.

Of course, we have already progressed out of this stage and right now Bitcoin is already an accepted currency and store of value by many prominent personalities and institutions.

The assumption is right and its something people are still wallowing in the ignorance of understanding where the money is coming from and the more you try to explain, the confusing it seems for those who have made up their mind that bitcoin is a bubble that would burst very soon but the same set of people will not be able to provide you an answer as to where the fiat they have in their bank accounts, spend on several things comes from but its actually a form of programming one way or the other.

Today, someone will transfer a Chinese Yen to someone who will receive it in dollars, neither does the man in China takes the physical Yen across the world to someone who will receive the dollar equivalent rather its just some form of electronic algorithm that is being transferred from one place to another and to avoid the curiosity of people, they made it seems physical exchange has been factored into the transaction.

What Satoshi tries to do is to ensure that the freedom is handed over to the individuals rather than conglomerates and that is where in my opinion, the confusion is coming about even from the elite.

[intelligent.investor]

https://pbs.twimg.com/media/DNm_7lnWsAAjlwc.jpg

Bitcoin has just turned 9 years old...it was nine years ago that Satoshi Nakamoto shared to the world the whitepaper that would be the basis for the creation of Bitcoin and its underlying technology called the Blockchain. The ride was not really that easy because it took some time for Bitcoin to finally caught some fire which pushed the digital currency into the attention it is getting right now. People of course doubted at that time how can mere programming be able to create a digital currency that would have some value.

As of today, those people who took the risk (no matter if they might have not been serious at that time) are experiencing the surprising rainfall of value they might have never expected to happen. Lucky for them...for many of us we have to work hard to get our Bitcoin though it is really worth every penny of the hard work (or money) we put in to get hold of some Bitcoin.

There are still many people who are holding the idea that Bitcoin is essentially making money out of thin air. It is as if the idea of Bitcoin has not yet been absorbed by their consciousness and so many can be dismissing Bitcoin as just another fraud which is waiting to pop and to just evaporate like a bubble.

Of course, we have already progressed out of this stage and right now Bitcoin is already an accepted currency and store of value by many prominent personalities and institutions.

Instead of Bitcoin, I would rather question whether Bitcoin Cash and Bitcoin Gold "Money Out of Thin Air"??

[Chanock]

The assumption is correct and people are still ignorance where the money from and what are the other importance of it and used. People are satisfy as long as they have money and they used it in they what they want but they never see the true importance of it. Currency is made to use people in different way the concept of it is assigning into a system that used for exchange in the economy of one government. Also currency have a vast role in the government and the people of the state.

[Anonymous Kid]

Of course it is made out of thin air (and computing power)!! But so is EVERY currency; The dollar, the pound... They are all just printed out like nothing. The true value lies in how many people trust and believe it. Money is just meant to represent assets so that they can be universally divided and accepted as a medium of exchange.

More (real*) users = Higher trust = More value.

Economics 101.

*Real means that users are using it as a medium of exchange and NOT trading or speculating with it.

[BitcoinIsAlgebraic]

Of course it is made out of thin air (and computing power)!! But so is EVERY currency; The dollar, the pound... They are all just printed out like nothing. The true value lies in how many people trust and believe it. Money is just meant to represent assets so that they can be universally divided and accepted as a medium of exchange.

More (real*) users = Higher trust = More value.

Economics 101.

*Real means that users are using it as a medium of exchange and NOT trading or speculating with it.

Not strictly true because fiat currencies are based on the availability of gold and are backed by gold. Bitcoin sort of comes from nothing mining is just a mini game to issue coins out over time and not all at once. 

[d5000]

All cryptocoins are "money out of thin air"

I am a bit worried what will happen when we see another longer bearish phase like in 2014.

The "store of value" concept looks nice at a first glance because it needs less blockchain power (capacity/speed) than the "currency" concept. But it implies also a dependence on a stable or growing price. And if prices don't grow then people lose interest and the concept doesn't sustain itself anymore.

Another thing I'm worrying about are the MMM-style Bitcoin ponzis that are driving people into shady schemes in some parts of the world.

But for now let's enjoy the (continuation of the) ride

[piloder]

To produce bitcoin through mining, there is heavy cost associated unlike paper cash which are just printed out for 10th of the actual value of the cash. There is relatively very thin profit margin for all miners who are responsible for making/producing new bitcoin so I don't think bitcoin is "Money out of thin Air".

[d5000]

To produce bitcoin through mining, there is heavy cost associated unlike paper cash which are just printed out for 10th of the actual value of the cash. There is relatively very thin profit margin for all miners who are responsible for making/producing new bitcoin so I don't think bitcoin is "Money out of thin Air".

Interesting. One could "counter" that stance, arguing that miners are not the "issuers" of the Bitcoins they receive. The protocol itself is the issuer. Bitcoin mining is only a way to get Bitcoins, defined by the protocol. The miners themselves are the "culprits" that the necessary investment in ASIC hardware and electricity is so large (because of the vicious circle: if more people invest, one must invest even more to get reasonable profits). But in theory Bitcoin would work even if miners only mined with their CPUs.

On the other hand, the security of the system would be then much lower. So in PoW currencies like Bitcoin, the usefulness of the protocol as "currency" or "store of value" depends a bit on that "heavy investment costs".

So you're right, philosophically the "out of thin air" stance is not at all obvious or unambiguous. Where it is obvious is in the case of ICO tokens and "PoS-only" coins like Nxt/Nem. These are really currencies created "out of thin air".

[r32godzilla]

Yes bitcoin has already crossed such initial stages and it is now not in need of opinions of big investors or economists. People have seen the true potential of bitcoin with their eyes.Bitcoin has successfully survived despite the continuous action staken against it by bankers and governments.

Bitcoin is now known by people even belonging to under developed countries.They are crazy to know and investin bitcoin.That's really a great achievement as a decentralised currency without the support of any of the governments.

[joebrook]

People often forget the work done by computers to mine bitcoins ad the resources that miners use in order to get Bitcoin. There is a lot of investment when it comes to getting Bitcoins so it can't be termed as getting money out of thin air.

[cizatext]

Referring to bitcoin as money out of tin air will be a statement out of ignorance to us who have taken our time to study and understand the fundamentals of bitcoin and how it works, well every thing at it initial stage only exist as an idea even the bank create money out of nothing its the value attached to a thing that determine it worth in the real sense.

[Kuga_ZA]

Someone sent this to me some time back. I will repost because it is important and to show you that Bitcoin is NOT "Money out of thin air" at all! Read it and understand it and educate yourself.

Do you know what "hard money" is?

Hard money is a good that serves as money and cannot produced easily in big quantities. First, money has three functions:

1. Medium of Exchange
2. Store of Value
3. Unit of Account

To achieve the first it must be salable across time and space and it must be accepted.

For the second point it must hold its value for a extended period of time.

And for the third it must be divisible.

Fiat-money has 1. and 3. but lacks the Store-of-Value aspect.

Why?

Because fiat-currencies have a low Stock-to-Flow ratio.

Let me explain this ratio...

"stock" is the ammount of the monetary good that is already in circulation and it involves the whole amount that ever was produced.

"flow" refers to new units of this good that are or will be produced.

So, if a good has a low stock-to-flow ratio it means that new units of this monetary good can be produced easily and if a monetary good has a high stock-to-flow ratio - it means that new units can't be produced easily. The higher the stock-to-flow ratio the higher the quality of a Store-of-Value, the "harder" the money.

For example, in ancient times Seashells were used as money, the rarer they were the more valuable. Because of the high stock-to-flow ratio. Now industrialisation began and with modern Boots and steam engines and what not the seashells could be pulled out of the ocean in far more easily and in large quantities. The stock-to-flow ratio sunk and with it the use of Seashells as money. Seashells were superseded with something that was hard to produce. Monetary medals set in and Gold established its status as the leader, because it was indestructible and the rarest.

For centuries, every government currency was backed by Gold, this was turned over to finance World War 1, but that is another story.
Till this day, central Banks keep large reserves of Gold, because they know what they don't admit: hard money is far more valuable than "easy money".

Gold has a very high stock-to flow ratio because it is hard to produce. And it doesn't matter how much Gold they pull out of the earthcrust in one year it cannot rise by more than 2.6% on the flow side. Because there is so much Gold circulating around the globe, it was used as SoV for hundreds of years.

Now Bitcoin comes into play, BTC is the hardest money that was ever invented since the first ape turned to man (or however the evolution happened). It has a fixed supply (as opposed to Gold) and its flow-ratio halves every 4 years. That is the best Store-of-Value currency that exists and its stock-to-flow ratio is as high as it gets. Plus it is easy to transport, can't be seized by governments if stored properly and can be transferred far more easier than Gold.

Don't let anyone fool you by saying "BTC has no intrinsic value", it has. And now you know why.

[Al Wahhaab]

Central banks just print money also.
Bitcoin mining(creation) is currently gulping up vast amounts of electricity just to create.
There is some intrinsic value in its creation.

yes. I have the hope of printing my own coins

[Marcel555]

That's like inferring that mobile networks (data and call time), are made from thin air, cause they are not tangible commodities 
High computing power is put into bitcoin mining, and this is the intrinsic value.

[ABIR HASAN]

Absolutely bitcoin is money.Bitcoin has the potential to make a future with in it.we can convert into a real money.so everybody has it.,