Re-visit the question: What is bitcoin's value backed by?

[Corelianer]

Trust.

Trusting only 21M available
Trusting never double spent
Trusting the monitoring network, To build this, need different nodes to check out.
Trusting the being not to be used in bad ways (The blockchain implies you cannot do bad with it)

Very true, only problem is if I take the code, not change a thing and start another Blockchain every single one of your points is still valid. The value of the identical other run would not be the same, so no it is't it.

Good idea, never thought of that.

[superresistant]

Trust.

Trusting only 21M available
Trusting never double spent
Trusting the monitoring network, To build this, need different nodes to check out.
Trusting the being not to be used in bad ways (The blockchain implies you cannot do bad with it)

Very true, only problem is if I take the code, not change a thing and start another Blockchain every single one of your points is still valid. The value of the identical other run would not be the same, so no it is't it.

Good idea, never thought of that.

It all come back to drugs : if FBI could shutdown now and forever all bitcoin-drug-related-shops, bitcoin would be pointless & worthless.

[Valerian77]

The value of Bitcoin (and anything else) is simply what people are willed to pay for it - same for fiat currency which has the adavantage (?) that goverments made supporting statements on it.

Eg. take a bible. There may be 2.26 billion christians on this globe with believe in what is writen there. Surprisingly the bible itself can be bought/exchanged for small money. That is because the total number of bible is not limited. Consequently the prise dropped down to the printing costs.

For comparison take a peace of ground in New York City. This is a very limited resource what many people believe in. And not surprisingly the price for this kind of ground is very high.

Bitcoins is a limited resource with a steadily growing number of believers. And the more it is attacked the more it is well known trusted. That will raise its value.

PS: Definitely it has nothing to do with drugs or other crimes.

[fattypig]

Electric bills and computer hardware price..

[SheHadMANHands]

The Bitcoin protocol is not "backed" by any single entity, such as a company, individual or organized government.  A sole instance of "backing" requires a "backer", and troublesome point of failure.

If we must place a persona behind the protocol, we'd say that it's backed by the users (the market).  In this way, the "backing" is egalitarian and spread across the network.

We could then ask why the market has chosen to "back" or support Bitcoin.  A government entity, for example, has an obvious interest in backing it's own currency.  Why do the users of Bitcoin "back" it?  Because the users believe it has value, due to it's specific attributes, which make it a great store of value and medium of exchange.

 

[ScaryHash]

It's backed up by the hashing power of the entire network.

So there is no actual office, person, or entity that can fuck it up, devalue it, or forge it, because they would actually need to do work in order to take it over.

You see, governments around the world are busy printing (or digitally creating), money out of thin air to pay for the promises that they have made to their people and their elites. But they have nothing to back them up with, so paper money is devaluing.

Bitcoin has been increasing in value over the last year, with some fluctuation, but it has had a net gain over 1.5 years ago. The reason Bitcoin has been increasing in value is because other money has been decreasing in value, while being backed by nothing.

But, the power of the network prevents Bitcoin from being printed, and has a predictable money creation rate (the mining rate), which traditional states do not have, because their policies vary depending on who is in power/popular every few years.

So, Bitcoin is backed up by the full power of the nodes and the hashing network, while other money is backed up by politicians and their promises. Which would you rather have?

[NewLiberty]

The Bitcoin protocol is not "backed" by any single entity, such as a company, individual or organized government.  A sole instance of "backing" requires a "backer", and troublesome point of failure.

If we must place a persona behind the protocol, we'd say that it's backed by the users (the market).  In this way, the "backing" is egalitarian and spread across the network.

We could then ask why the market has chosen to "back" or support Bitcoin.  A government entity, for example, has an obvious interest in backing it's own currency.  Why do the users of Bitcoin "back" it?  Because the users believe it has value, due to it's specific attributes, which make it a great store of value and medium of exchange.

 

I'm backing it with silver and soon also gold.  Fully redeemable.
And so can you, or with the asset of your choosing.
A decentralized bank vs central banking.

[johnyj]

I'm backing it with silver and soon also gold.  Fully redeemable.
And so can you, or with the asset of your choosing.
A decentralized bank vs central banking.

True, actually you don't need a lot of money to back the value of bitcoin, just a little bit in every people's risk capital will push the price up several magnitude. I'm only using a part of my risk capital to purchase bitcoin when it falls, but if everyone is doing this, the value of each coin will be unimaginable

The demand for a reliable long term saving medium will never disappear

[Carlton Banks]

It has no backing, it has something better: inherent value. [/thread]

Hashing network, software design, immutable laws of cryptographic mathematics etc do NOT correspond to a currency backing. These properties in combination confer the value, being fairly superior examples of the traditional Aristotle list. Except the whole internet/electricity dependence issue.

[crumbs]

...
It all come back to drugs : if FBI could shutdown now and forever all bitcoin-drug-related-shops, bitcoin would be pointless & worthless.

Poe's law. Never fails to amuse...

Poe (Nathan, not Edgar) was known for his scathing sarcasm, be careful about taking his law seriously...  Edgar, OTOH, was better known for being a doper, but now it turns out he wasn't.  Knowing this makes his writing virtually worthless -- like reading Burroughs & finding out he really was just a straight, misunderstood diabetic.

[polarhei]

Trust.

Trusting only 21M available
Trusting never double spent
Trusting the monitoring network, To build this, need different nodes to check out.
Trusting the being not to be used in bad ways (The blockchain implies you cannot do bad with it)

Very true, only problem is if I take the code, not change a thing and start another Blockchain every single one of your points is still valid. The value of the identical other run would not be the same, so no it is't it.

Good idea, never thought of that.

This is based with law enforcement operations done in the last two months such as silk road crushed, LR crushed and etc. . Blockchain is never be anonymous, also the source code is even using alias to package. Since it is in open nature. If you cannot adapt it. Then you will be automatically knocked out regardless you are. We just have built a model accidentally which ensure illegal operations can be spotted. Currently Fiat used can be hidden much information but it cannot be hidden in the blockchain even you try to change wallet address to hide such of these operations.

[polarhei]

Trust.

Trusting only 21M available
Trusting never double spent
Trusting the monitoring network, To build this, need different nodes to check out.
Trusting the being not to be used in bad ways (The blockchain implies you cannot do bad with it)

Very true, only problem is if I take the code, not change a thing and start another Blockchain every single one of your points is still valid. The value of the identical other run would not be the same, so no it is't it.

Good idea, never thought of that.

It all come back to drugs : if FBI could shutdown now and forever all bitcoin-drug-related-shops, bitcoin would be pointless & worthless.

No. Narcotics can be traced with the blockchain if someone has provide some information such as address, location, person to let the law enforcement to follow. Even the criminal tries to change the address to increase the difficulty of being caught, still can be found by few mistakes made by the criminal as there may be pattern found.

Before further, it is better to state one thing, The Do not to conflict with the ethical issues. Which is the design of the blockchain with obscured information stored in.

[Valerian77]

In reference to what I wrote before:

The value of Bitcoin (and anything else) is simply what people are willed to pay for it ...

the Bitcoin value is just the believe of the people. Since more and more people are believing in it this is the savest harbour any asset can have. Even one goverment tries to destroy and put little damage on it all people from other place of the word continue in their believe - this is more save than gold because goverments can forbid gold trafficking but not Bitcoin trafficking over borders.

[johnyj]

In reference to what I wrote before:

The value of Bitcoin (and anything else) is simply what people are willed to pay for it ...

the Bitcoin value is just the believe of the people. Since more and more people are believing in it this is the savest harbour any asset can have. Even one goverment tries to destroy and put little damage on it all people from other place of the word continue in their believe - this is more save than gold because goverments can forbid gold trafficking but not Bitcoin trafficking over borders.

Good point

Eventually everything's value is backed by trust and desire. The desire for money always exists, but it takes time to build up the trust of one type of money

[NewLiberty]

It has no backing, it has something better: inherent value. [/thread]

Hashing network, software design, immutable laws of cryptographic mathematics etc do NOT correspond to a currency backing. These properties in combination confer the value, being fairly superior examples of the traditional Aristotle list. Except the whole internet/electricity dependence issue.

It also has backing now (as of Oct 2013)
Thus the value of Bitcoin should not ever fall below 1BTC/4ozt. Ag
In a few months also: 10BTC / 1 ozt. Au
Redeemable in any quantity.

And, this will likely improve in the favor of Bitcoin for 2014.

[hulk]

Trust, greed and also economic stability. If USD is stable and safe, the value of Bitcoin should drop...

[NewLiberty]

Trust, greed and also economic stability. If USD is stable and safe, the value of Bitcoin should drop...

I suspect the majority of people using Bitcoin never see a USD.

[crumbs]

Trust, greed and also economic stability. If USD is stable and safe, the value of Bitcoin should drop...

I suspect the majority of people using Bitcoin never see a USD.

I suspect you're wrong

[Corelianer]

There are no swissfrancs CHF on the list. CHF is a stable currency too, but it's still fiat...

[Valerian77]

@crumbs
what is the source for this diagram ?