What is the nature of the value of Bitcoin?

[d5000]

Some months ago I started a similar thread in the Spanish subforum, and I came to pretty similar conclusions than you.

In my opinion, because of continuous energy input, these energy sources ensure the stability of the Bitcoin network, and no single force can tamper with the Bitcoin network. On this basis, more and more people have developed trust in Bitcoin, and can inject their wealth into the Bitcoin system, and value will be generated. The continuous supply of energy can maintain the stability of the Bitcoin network. The stability of the network can generate trust, and trust can generate value, and the value will ultimately be stored in the Bitcoin network.

While Wind_Fury is right that Bitcoin is not "a battery" (i.e. for the Bitcoin price it isn't relevant how many energy was put into mining in a certain point of time), I think what you wrote here is actually a pretty good explanation for the base mechanism which gives value to BTC, although it obviously only covers a part of the whole "value proposition".

Basically Bitcoin is "a medium I can trust to transfer value", because of the security provided by PoW, and because of the scarcity which ensures that my value isn't diluted. Like you wrote, there is consensus among the users regarding this part of the value proposition.

But then you can add more "items" which make up the whole value proposition. For example, there are some advantages which it has compared to the "fiat system", and any of them is "adding value" for some user groups:

1) No national barriers. It is a perfect medium for international transfers.
2) Transparency and non-reversibility of payments (important for businesses like merchants).
3) It gives new opportunities to make profit. This is not only a part of the "value proposition" for the hundreds of thousands or millions of traders or holders, but also companies who build services upon it. This item is different from the base value proposition ("it has value because the value is preserved due to security and scarcity"), because in this case, people expect to benefit from it, not only to "store" value.
4) Accessibility (you don't need a bank account for it, not even an address)

In my Spanish post, I related these factors to the network effect, which increases or decreases the base value, according to its strength (this is why some altcoins have small values, even if they use exactly the same code than Bitcoin). This is approximately what you mean with "consensus", I think.

[RainbowKun]

Some months ago I started a similar thread in the Spanish subforum, and I came to pretty similar conclusions than you.

In my opinion, because of continuous energy input, these energy sources ensure the stability of the Bitcoin network, and no single force can tamper with the Bitcoin network. On this basis, more and more people have developed trust in Bitcoin, and can inject their wealth into the Bitcoin system, and value will be generated. The continuous supply of energy can maintain the stability of the Bitcoin network. The stability of the network can generate trust, and trust can generate value, and the value will ultimately be stored in the Bitcoin network.

While Wind_Fury is right that Bitcoin is not "a battery" (i.e. for the Bitcoin price it isn't relevant how many energy was put into mining in a certain point of time), I think what you wrote here is actually a pretty good explanation for the base mechanism which gives value to BTC, although it obviously only covers a part of the whole "value proposition".

Basically Bitcoin is "a medium I can trust to transfer value", because of the security provided by PoW, and because of the scarcity which ensures that my value isn't diluted. Like you wrote, there is consensus among the users regarding this part of the value proposition.

But then you can add more "items" which make up the whole value proposition. For example, there are some advantages which it has compared to the "fiat system", and any of them is "adding value" for some user groups:

1) No national barriers. It is a perfect medium for international transfers.
2) Transparency and non-reversibility of payments (important for businesses like merchants).
3) It gives new opportunities to make profit. This is not only a part of the "value proposition" for the hundreds of thousands or millions of traders or holders, but also companies who build services upon it. This item is different from the base value proposition ("it has value because the value is preserved due to security and scarcity"), because in this case, people expect to benefit from it, not only to "store" value.
4) Accessibility (you don't need a bank account for it, not even an address)

In my Spanish post, I related these factors to the network effect, which increases or decreases the base value, according to its strength (this is why some altcoins have small values, even if they use exactly the same code than Bitcoin). This is approximately what you mean with "consensus", I think.

Hi, d5000, thank you for your patient reply, yes, we have similar views. I also read your Spanish article carefully through translation software. Your article explains the value of Bitcoin from a more professional perspective. In my article, the point I want to express is that the essence of value is consensus, especially collective consensus. When a group of people approve of the same thing or the same point of view, they have reached a consensus on the matter, and after reaching a consensus, the matter becomes valuable. So why can one thing be recognized by many people? That must be that it has many advantages in itself. This is what you call the value proposition of Bitcoin, the advantages of Bitcoin, and the benefits that Bitcoin brings to all kinds of people. So everyone believes in Bitcoin, and Bitcoin has gained everyone's permissionless trust through its algorithms and technology.

These are all in-depth thinking about Bitcoin, and I also hope to communicate with more friends through these articles I have written, and then gain consensus from more and more people. In the follow-up, I will also launch my own independent blockchain project, Rainbow City, and will also work hard to create value for Bitcoin.

[ajochems]

Money is a person's value in society, and Bitcoin can truly reflect a person's weight in the global society.

It's a real fact. But  a small correction is all the crypto coin make us to get money.What I mean is, we are earning good money from the bounty hunting. But some people forgot the way they earned some good money. To be frank, I had brought a bike with the bounty payments for 8 months.

[DarkIT]

Money is a person's value in society, and Bitcoin can truly reflect a person's weight in the global society.

It's a real fact. But  a small correction is all the crypto coin make us to get money.What I mean is, we are earning good money from the bounty hunting. But some people forgot the way they earned some good money. To be frank, I had brought a bike with the bounty payments for 8 months.

Bounty hunting was a boon to us. Many friend of mine had brought iphone 11 max with the bounty payment alone. But I use my bounty payments for the reinvestment. Because we should make the money regenerate another money. Only the business mind people know this fact, we should make the money to earn another money. Don't allow money to sleep.

[dezoel]

While Wind_Fury is right that Bitcoin is not "a battery" (i.e. for the Bitcoin price it isn't relevant how many energy was put into mining in a certain point of time), I think what you wrote here is actually a pretty good explanation for the base mechanism which gives value to BTC, although it obviously only covers a part of the whole "value proposition".

Basically Bitcoin is "a medium I can trust to transfer value", because of the security provided by PoW, and because of the scarcity which ensures that my value isn't diluted. Like you wrote, there is consensus among the users regarding this part of the value proposition.

But then you can add more "items" which make up the whole value proposition. For example, there are some advantages which it has compared to the "fiat system", and any of them is "adding value" for some user groups:

1) No national barriers. It is a perfect medium for international transfers.
2) Transparency and non-reversibility of payments (important for businesses like merchants).
3) It gives new opportunities to make profit. This is not only a part of the "value proposition" for the hundreds of thousands or millions of traders or holders, but also companies who build services upon it. This item is different from the base value proposition ("it has value because the value is preserved due to security and scarcity"), because in this case, people expect to benefit from it, not only to "store" value.
4) Accessibility (you don't need a bank account for it, not even an address)

In my Spanish post, I related these factors to the network effect, which increases or decreases the base value, according to its strength (this is why some altcoins have small values, even if they use exactly the same code than Bitcoin). This is approximately what you mean with "consensus", I think.

Wow, this is really a great way to describe bitcoins value plus it is a well thought out and written explanation for it that can be translated to any language and shared over the world to answer this question which has been asked a million times by now probably.

I have to say I would add one more thing to there as well; the idea of inflation. Inflation in the fiat world is something we came to grew used to it, for some reason we need to have "growth" and that results with inflation, we can't have the same finite amount of money because in that case wealthy people usually make more and more money meaning eventually they would own all of it, and we would have none of it, so they need to create more fiat in order to make sure that we keep getting some and wealthy people keep growing.

I would say let the wealthy people not grow and allow us to catch up, but that isn't going to happen anytime soon. In bitcoin we have that chance, we can keep buying more and more, sometimes at lower price and sometimes at higher price but we get to buy more and more of it, and rich people will not be given any free bitcoins ever, and that means store of value part of bitcoin gives us a chance to get richer over period of time while not dropping the value of what we are holding.

[jaysabi]

Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.

The law of conservation of energy has no applicability to bitcoin.  Under this extremely confused analogy, it could only be applicable if energy could be converted into bitcoin and then converted back into energy, which is not the case.  Bitcoin only consumes energy, and what energy is consumed creating bitcoin is never conserved or reclaimable.  In fact, it only requires ever more energy to continue transferring bitcoin through the blockchain once it is created.  This is the antithesis of what you're trying to convey.  Bitcoin is an energy sink and in its current form will never not be.

[RainbowKun]

Bitcoin mining follows the law of conservation of energy, converting the wind, water, and solar energy into electricity, and then into hashing power by mining machine and finally Bitcoin will be dug out. That is a process of storing the energy of nature in the form of Bitcoin. The stored Bitcoin is value. Bitcoin built a value network where value is exchanged and transferred in the form of Bitcoin.

The law of conservation of energy has no applicability to bitcoin.  Under this extremely confused analogy, it could only be applicable if energy could be converted into bitcoin and then converted back into energy, which is not the case.  Bitcoin only consumes energy, and what energy is consumed creating bitcoin is never conserved or reclaimable.  In fact, it only requires ever more energy to continue transferring bitcoin through the blockchain once it is created.  This is the antithesis of what you're trying to convey.  Bitcoin is an energy sink and in its current form will never not be.

In fact, the conservation of energy I am talking about here is more of a value conversion. It is not the conservation of energy in physics in the complete sense. Humans provide a steady stream of energy for Bitcoin mining machines to support the normal operation of the Bitcoin network, and the Bitcoin network can record human economic data and become the ultimate account book of the human economy. In this process, the Bitcoin network rewards miners with Bitcoins as a fee for the miners to maintain the network. From this process, natural energy is stored in Bitcoin, which is a product of value storage.

[beerlover]

There could be fundamental market forces governing the price valuation of assets you mentioned.

Luxury clothes (and items) could be limited edition, deflationary collectibles, priced high off brand name recognition.

Diamonds are valued from scarcity and real world application used in diamond drills and other items.

Gold likewise scarcity and real world application in electronics and other markets.

Bitcoin's value could derive from it being one of few easily accessible inflation protected assets. In addition to its deflationary design and other aspects of implementation. Money is a problem solving mechanism relating to token of exchange. Arguably Satoshi Nakamoto designed and built a "better mousetrap" with bitcoin, in contrast to previous electronic payment networks, savings assets and other relevant aspects of money.

That brand  recognition costs a lot of money as well, that is where the value comes from. Creating a brand like lacoste costs so much money, I can make ANY type of clothing for nearly free here where I live, it would cost me incredibly cheap and I mean like literally same quality, it would cost me like $7-12 to make a lacoste shirt and in most cases it is sold for 50 bucks at least, some even more for "limited" stuff. So why don't we?

Because, it is incredibly hard to build a brand like that and that is why we see only like 10-15 brands that big in clothing. Other stuff basically have the same type of reasoning as well, it is just takes time and money and effort to get there. Diamonds are barely valuable whereas they made it valuable by marketing it so much.