why can't bitcoin be based on something that has value?

[tadamichi]

There is no need for trying to control the exchange rate assuming you mean what the asset can be bought and sold for. Its price should be determined by the market. That means it can go up and down. We're not talking about it having to be some type of stable coin. I dont see why you need a central entity to redeem the asset either. it just depends on what the asset is. Some assets might not need a central entity. Some might.

K let me give you an example.

Let’s say 1 litre of oil is 1$.

If you want Bitcoin to be „backed“ by another asset you need to introduce something that says 1 Bitcoin = 1 litre of oil(or whatever other asset you’re thinking of) for example. This already gives it a fixed value, it won’t ever be worth more than 1 litre of oil, because if it reaches higher prices than oil(Lets say 1 Bitcoin was 2$), people just can redeem their oil for Bitcoin and sell it right away, they essentially bought a Bitcoin for 1$ and sold it for 2$ in this example, making the price of 1 Bitcoin go back to 1$ over time, because there will always be new people coming, buying oil for Bitcoin and then selling it for profit, it would be free money from a flawed system. This system doesn’t work. That’s why it becomes fixed exchange rate, even if you try to let the market find a price. When Bitcoin would be under 1$ you could get oil for cheaper than its market price, making the market price always hover around the backed asset.

Then theres the problem of storage.

Who stores your oil? This doesn’t work in a decentralized way, because then you need to trust random people to keep reserves and redeem them for you. So a central entity is needed. In both ways it requires trust to work, with random people or central entity.

There’s no asset that can do this in a decentralized way that doesn’t require trust, and apart from this, i outlined above how it’s a dumb decision to be backed by something, because then there’s a limit on success, it could never hold more value than its reserves and thus not become universally accepted money, because it needs to be able to hold more value than 1 asset class can offer. If Bitcoin succeeds, it backs the world, not the other way around.

I hope you get this part now.

Now you have another asset that is decentralized and doesn’t have the problems i mentioned above. Is designed by computer science, cryptography, math, economics, game theory, psychology and a strong community. Has no need to have something else attached to it. Is the first currency that works trustlessly on the internet. Most successful asset of the last decade. Triggers people worldwide but can’t be stopped. That doesn’t need anyones approval, and is strong in reality and not just with words. Is an actual alternative to the current failing money system, and the only alternative there’s ever been that doesn’t require a central entity to work. Is gaining more and more people every day. Gives you full ownership over your wealth. Hardest asset to confiscate.

Let me guess. You're talking about bitcoin. All of that sounds nice in theory. But guess what I do need peoples approval to buy bitcoin. I have to depend on my bank to allow me to send money to coinbase. Then I have to trust coinbase to not freeze my funds once I send them there. Then I have to trust coinbase again when I buy bitcoin to let me send my bitcoin off their platform. I need their permission to do all of these things. And then they will report me to the government too maybe. Then if I ever want to cash out my bitcoin I need to send back to coinbase and hope they don't freeze my bitcoin and allow me to sell it. Once I sell it i have to trust them to not steal my money but to honor my instructions to send it to my bank account then i have to trust my bank not to freeze those funds once they get in the bank account.
Bitcoin is not trustless in practice. As this example shows. It requires depending on multiple central authorities for the average person.

This is something so many people are preaching since so long against,

don’t
use
centralized
services
to
buy
Bitcoin(especially not Coinbase),

There is decentralized alternatives, there is decentralized exchanges, there is p2p ways, you can buy and sell Bitcoin for cash and so on. You don’t need anyones permission to do this, it’s completely legal.

Now alternatively, consider oil. Oil has uses. it makes gasoline which runs cars. It has an objective value and people are willing to pay for it. If they lost faith in gasoline due to high prices then they can buy an electric car but that doesn't meant that gas price goes to 0. Likewise, a cryptocurrency that was backup by a decentralized asset should be able to maintain its value no matter what people thought about it whether it was too high price or not. Whether they used an alternative or not.

This point is redundant with what i mentioned above, Bitcoin is the most decentralized asset there is, so how would the other „decentralized asset“ gain its value then, and be so superior that Bitcoin needs it? There is a logical flaw here. There’s no shortcut to letting people find Bitcoins value themselves, why is this so hard to accept?

Why is bitcoin only selling for $20,000 now when it used to be 3 times that? Did it become 3 times less value for some reason?

There is too many factors working in the market to understand this fully, it’s traded 24/7/365 worldwide, any tiny impact can influence the price, this happens fast. Then there’s other factors from centralized services giving out more paper Bitcoin than they have in their reserves, to unregulated banks overleveraging into Bitcoin with billions and then almost getting liquidated. Prices can’t be predicted accurately, it will stay volatile for quite some time, that’s the only thing that’s sure.

In 2020 there was buying opportunities for 5000$ still, only consistency and patience get rewarded here, but no one can guarantee you a profit.

This is about buying Bitcoin, because you understand what it offers, because you believe it will succeed, because you want the money system to be fixed, because you want control over your money back, this is no free painless money. It’s a wild ride, it takes time to get, it means a lot of studying, it means taking responsibility, but it’s also fun tho.

Except that bitcoin requires computers and the internet. Fiat and gold don't depend on any of that. And until people can buy everything they buy with fiat using bitcoin then "I don't think so".

Fiat and gold depend on the internet the same as almost anything else does on this planet now.

Me wondering how gold and fiat existed prior to the 1990s. I guess they didnt.

Im not saying it cant work without the internet again, but im saying the internet isn’t leaving anytime soon, so it won’t.

We can’t expect an asset that came out in 08/09 to have the same acceptability, as gold or fiat yet. But over time this will fix itself and we can see this trend already happening. How was the internet used in the 90s and how is it used now? The Unit of account phase comes last and isn’t relevant for the initial adoption stages. Because Fiat is a terrible store of value, and Bitcoin will be adopted as hard money first.

Fiat is a great store of value. I can buy almost anything I want with it. Including things that I can't buy using bitcoin or any other crypto for that matter. I've yet to find a use case for bitcoin myself. Do I need to look harder?

Maybe we’re living in different universes, where fiat was a good store of value once, but nowadays it’s working against the working class and they’re too unaware of what inflation means. They don’t question why they can barely afford anything anymore and less and less over time, this has nothing to do with going trough bad times or not whining, that’s what older generations don’t get, this is caused by economic decision making by the system, the outcome is already determined beforehand. Money will flow to the top automatically over time and concentrate there, this is the predetermined constant that won’t ever change in fiat, which makes it a terrible store of value for regular people. Sounds more like a ponzi scheme to me, where everyone else but a few people get left with nothing over time.

So what can you use Bitcoin for?

The first stage of Bitcoin will mean it will become established as a store of value, this is the most popular use case now. You can already use it as a medium of exchange, you can already use it as a unit of account, and this will increase over time. You can become your own bank, custody ur own funds, work when banks don’t, become resistant against censorship, transact permissionlessly worldwide, have a fixed supply which means your relative Bitcoin amount will never decrease in relation to the to total supply(no inflation), which means the money you worked 30 years for, can’t loose 10% every year, because someone at the top decides so. So you better want Bitcoin to succeed, except if you enjoy working for free and gifting that money to someone, who already has too much at the top.

I hope it became clear now why it can’t be backed by anything else but itself.

ponzi scheme.

I’ll give you time to read this part.

[kasunrandil]

if it depend on something what is the special of bitcoin??? adoption is all. psycology makes adoption.

[franky1]

i think what the summarised answer(in question form analogy) to what the topic creator is asking is:

why arnt house prices fixed a stable square metre amount that all houses are backed by

totally forgetting the features and utility of what a house is and does and forgetting that people in different regions have different supply or demand. even if a house ultimately on the market does show houses do have value and when comparing the square metre 'comps' per year shows a more stable value rate than the volatile market price of houses sold each hour of the day

in short the market price of each house sold hourly is not the same as the average/minimum comps. but that does not mean that houses have no underlying value

a house does not need to be backed by gold or pegged to something else.
its intrinsic underlying value is the 'comps'
bitcoins underlying value is the mining costs (asics and electric)
golds intrinsic underlying value is its mining costs (diesel, digger and sluice machines)

the price is then the speculative buffer/layer of cheap or premium volatility amount above this underlying value that backs it

[The Cryptovator]

I think OP is spreading misinformation or he isn't aware of Bitcoin technology at all. Bitcoin is a decentralized cryptocurrency backed by the community. A decentralized currency how will backed by a centralized organization? You are the owner of your Bitcoin, so who can backed it without you? Haven't you already backed it when you bought it? Think about it deeply. You are paying for Bitcoin. That's how it's backed by the community and holders.

[ChrisPop]

bitcoin is NOT just some random value people choose as their value. which then becomes the price.
bitcoins value is not based on the random whim of the day of speculators

I agree with you generally, Franky, but I don't think speculation is the right term here. I'd use supply and demand. If at any point in time there are more sellers than buyers, the price drops. But as you said the price is not linked to value and as educated investors and traders we should make a clear difference between the two.

[franky1]

Think about it deeply. You are paying for Bitcoin. That's how it's backed by the community and holders.

think about it more deeper then that.
as what you say sounds like people have just come up with a random number they are willing to pay, and paid that. meaning bitcoins value is just random number..

this is wrong.
the market PRICE is random. no one can predict what its going to be tomorrow..
no one pays the exact same amount as another person..
but this is the PRICE.. not the VALUE

so think deeper.. not at the price.. but at the actual value backing it underneath.

same with houses its not the random house market price of whatever house is being sold at any given minute.. its value is based on an underlying minimum value no one would sell their house for less in the region/planet more long term.. (the comps bottomline)

if the minimum comp for the entire planet is 10 hours min wage/sq foot.. then all houses on the planet are above that in price.. so the underlying minimum value backing all houses is atleast 10 hours min wage labour/sq foot

yes some people might personally value the coin more but the overall min value of the entire economy. that number that no one can sell below.. that is the whole economy value amount that backs it all.

above that is the speculative more volatile extra amount added on

[sklopan]

I think that the reason for this is the very essence of bitcoin. It should be understood that the bitcoin model is completely different and the price of this cryptocurrency does not depend on anything specific.

[ChiBitCTy]

i dont understand why bitcoin has to be just base on people perceive value of it. and for someone to just artrarily fix the supply of them at 21 million doesn't make any sense. it should be able to contract and expand the # of bitcoins in existence. but because bitcoin is design very simplistically it is kind of like monopoly money. not backed up by anything.

It's a common myth.  Bitcoin’s price is not directly caused by subjective perceptions:  It is a result of the market, based on supply and demand.  Perceptions are one factor in the “demand” side of that.  There are other factors to demand; and perceptions do not alter supply.

Ultimately, Bitcoin’s fundamental value derives from its facilitation of productive economic activity, which would be costlier, infeasible, or impossible without Bitcoin.  I know that I have done productive non-Bitcoin, non-market business with Bitcoin, which I could not have done without Bitcoin.  That’s not extraordinary:  It is being an ordinary Bitcoiner who uses Bitcoin as money, rather than a purely speculative buyer who just wants “number go up”.  The more such people they are, the higher the organic, non-speculative demand for BTC.

i'm not saying bitcoin doesn't do that. but bitcoin has weaknesses. you can't deny that. the main weakness being that it is not backed up by something like gold. gold could then be used to measure the value of bitcoin. and gold has real world use. people wear it. it gets used in all kinds of electronics. bitcoin doesn't get used anywhere for any purpose. it's just imaginary.

This discussion of economics is far off-topic for the development forum.  I feel obliged to answer something that is more usually nocoiner FUD or newbie confusion.  If you have further questions about this, I refer you to Bitcoin Discussion or Economics.

ok well, the topic belongs somewhere.

What is the worlds reserve currency, the United States Dollar backed by? Absolutely nothing! (Well other than the “full faith and credit” of the United States government).  It’s no longer backed by gold.

You also don’t seem to understand the importance of having a finite amount ever made. If you keep allowing something to be printed (or minted) it dilutes the other dollars/coins and makes them less valuable. Bitcoin can be broken down to a very small amount, which allows for this to work and work long term.

[Dunamisx]

but bitcoin has weaknesses. you can't deny that. the main weakness being that it is not backed up by something like gold.

Why should bitcoin be backed up? why should gold or any other valuable form of investments stand in for bitcoin? There are somethings that were better left unsaid than saying falasy, the fact remains that bitcoin stands on it own and that's one of the reasons why it remains decentralized, other form of assets are centralized while bitcoin is self dependent on its own, when we go by using another asset to back bitcoin is as saying its value isn't worth it and can't stand without being dependent, this is one of the reasons why bitcoin is a good source of an investment asset and store of value that is incomparable to other digital currency or physical assets.

[Fortify]

i dont understand why bitcoin has to be just base on people perceive value of it. and for someone to just artrarily fix the supply of them at 21 million doesn't make any sense. it should be able to contract and expand the # of bitcoins in existence. but because bitcoin is design very simplistically it is kind of like monopoly money. not backed up by anything.

It's a common myth.  Bitcoin’s price is not directly caused by subjective perceptions:  It is a result of the market, based on supply and demand.  Perceptions are one factor in the “demand” side of that.  There are other factors to demand; and perceptions do not alter supply.

Ultimately, Bitcoin’s fundamental value derives from its facilitation of productive economic activity, which would be costlier, infeasible, or impossible without Bitcoin.  I know that I have done productive non-Bitcoin, non-market business with Bitcoin, which I could not have done without Bitcoin.  That’s not extraordinary:  It is being an ordinary Bitcoiner who uses Bitcoin as money, rather than a purely speculative buyer who just wants “number go up”.  The more such people they are, the higher the organic, non-speculative demand for BTC.

i'm not saying bitcoin doesn't do that. but bitcoin has weaknesses. you can't deny that. the main weakness being that it is not backed up by something like gold. gold could then be used to measure the value of bitcoin. and gold has real world use. people wear it. it gets used in all kinds of electronics. bitcoin doesn't get used anywhere for any purpose. it's just imaginary.

This discussion of economics is far off-topic for the development forum.  I feel obliged to answer something that is more usually nocoiner FUD or newbie confusion.  If you have further questions about this, I refer you to Bitcoin Discussion or Economics.

ok well, the topic belongs somewhere.

If you don't understand why the limit is fixed at 21 million, then maybe you should step away from Bitcoin because it is part of the foundation and contributes massively to the price. People who hold it are more comfortable because the supply is restricted and rather low. It also helps that it is a relatively low number, because it helps to beat inflation and there is a natural attrition rate of lost coins which will help. Why does anything have value in life? Because people have agreed to trade a good or service, in return for another good or service - it is how currency works. Instead of finding someone who wants your good or service, you convert it into a unit which can be traded in a general market.

[TheNineClub]

i dont understand why bitcoin has to be just base on people perceive value of it. and for someone to just artrarily fix the supply of them at 21 million doesn't make any sense. it should be able to contract and expand the # of bitcoins in existence. but because bitcoin is design very simplistically it is kind of like monopoly money. not backed up by anything.

The value itself is created on the premise of decentralization and putting the financial power back in the hands of ordinary people. Isn't that value? I mean, it can be based on gold, but what's gold's value based on? Value is not something universal nor is it one thing. The beauty of it is that the social interactions and the promise of a different financial future are of value.

[larry_vw_1955]

There is no need for trying to control the exchange rate assuming you mean what the asset can be bought and sold for. Its price should be determined by the market. That means it can go up and down. We're not talking about it having to be some type of stable coin. I dont see why you need a central entity to redeem the asset either. it just depends on what the asset is. Some assets might not need a central entity. Some might.

Let’s say 1 litre of oil is 1$.

If you want Bitcoin to be „backed“ by another asset you need to introduce something that says 1 Bitcoin = 1 litre of oil(or whatever other asset you’re thinking of) for example.

Yes, so that would mean each bitcoin is secured by 1 liter of oil.

This already gives it a fixed value, it won’t ever be worth more than 1 litre of oil, because if it reaches higher prices than oil(Lets say 1 Bitcoin was 2$), people just can redeem their oil for Bitcoin and sell it right away, they essentially bought a Bitcoin for 1$ and sold it for 2$ in this example, making the price of 1 Bitcoin go back to 1$ over time, because there will always be new people coming, buying oil for Bitcoin and then selling it for profit, it would be free money from a flawed system. This system doesn’t work.

What exactly about it doesn't work? You've just illustrated how there is a built in corrective feeback loop to keep the price of bitcoin no higher than that of oil because if it goes above oil's price, profit takers come in and fix that. so that entire scenario of bitcoin selling for $2 while 1 liter of oil was $1 is not going to happen.

That’s why it becomes fixed exchange rate, even if you try to let the market find a price. When Bitcoin would be under 1$ you could get oil for cheaper than its market price, making the market price always hover around the backed asset.

if bitcoin fell under $1 and oil was $1 then bitcoin holders would certainly consider redeeming it for oil and then selling that oil for $1. that can't go on forever though because at some point the market price of oil is going to be affected. and bring it into alignment with the price of bitcoin.

when it comes to asset-backed crypto though, this is what you want though. a corrective feedback mechanism that keeps things pegged to each other and not artificially. an artificial peg could be attempted with something like oil but that would have larger ramifications than just on the crypto that it was backing. the world in general won't let some oil producer just set an arbitrary price on oil.

Who stores your oil? This doesn’t work in a decentralized way, because then you need to trust random people to keep reserves and redeem them for you. So a central entity is needed. In both ways it requires trust to work, with random people or central entity.

That's easy. You store your own oil. When you want to sell it, you put the word out and buyers come and inspect it and if it meet their quality guidelines they pay you in bitcoin. And they take possession of the oil and responsibility for its storage.

There’s no asset that can do this in a decentralized way that doesn’t require trust, and apart from this,

There is but you aren't paying attention. I already gave oil as an example. Now not everyone can put up their own oil drilling well but if they wanted to they could. It just might cost money. Same as bitcoin mining. not everyone can do that since it costs alot but if they really wanted to, they could.

i outlined above how it’s a dumb decision to be backed by something, because then there’s a limit on success,

I don't look at it that way at all. I look at it as a guarantee of success. When something is backed up by a valuable asset which is a commodity in the world useful to its operation, you can't go wrong. You don't even know if bitcoin might go to zero one day and yet you're talking about placing limits on high high up it can go. smh.

it could never hold more value than its reserves and thus not become universally accepted money, because it needs to be able to hold more value than 1 asset class can offer.

According to a recent report from IBISWorld, the global oil and gas industry generates over US$2 trillion in revenue a year


How much revenue are people making in bitcoin right now? I bet not more than that. Bitcoin's entire marketcap isn't even $1 trillion.

This is something so many people are preaching since so long against,

don’t
use
centralized
services
to
buy
Bitcoin(especially not Coinbase),

There is decentralized alternatives, there is decentralized exchanges, there is p2p ways, you can buy and sell Bitcoin for cash and so on. You don’t need anyones permission to do this, it’s completely legal.

it's
not
as
easy
as you
make it
out
to be

how do you get money onto decentralized exchanges? oh right, you have to first get bitcoin somehow. and so you have to use something like coinbase. meeting in dark alleys aint my thing. plus, then you have to try and sell it to someone p2p which requires meeting up in a dark alley again. and then reporting the entire thing to the irs. plus buying things p2p is probably like a 30% markup over somewhere like coinbase. so while it may be completely legal its probably completely dumb too. but if someone doesn't have any other choice so be it. you also have to either hide your money under your mattress once you sell it p2p or explain to your bank where the money came from and they might file a SAR against you or close your account. Then you WILL be storing your money under your mattress but don't forget to check the box that says you sold crypto on your irs tax return anyway.

There is too many factors working in the market to understand this fully, it’s traded 24/7/365 worldwide, any tiny impact can influence the price, this happens fast. Then there’s other factors from centralized services giving out more paper Bitcoin than they have in their reserves, to unregulated banks overleveraging into Bitcoin with billions and then almost getting liquidated. Prices can’t be predicted accurately, it will stay volatile for quite some time, that’s the only thing that’s sure.

Those type of abuses of bitcoin are kind of surprising. But just like the banking system can loan out money created out of thin air, I guess we shouldn't be surprised that industries try and mimic that type of behavior with bitcoin.

In 2020 there was buying opportunities for 5000$ still, only consistency and patience get rewarded here, but no one can guarantee you a profit.

I don't want to make a profit. I just want a stable store of value which is decentralized and trustless. something where I put in $1 and 10 years later I know it will be worth the same exact amount. No more no less. But I want it to be digital cryptocurrency, not fiat. The problem is, you can't have that. Not exactly but maybe you can come close. that's the whole idea behind backing up a cryptocurrency with a physical asset. You're pretty confident the price will be somewhat stable. There is the risk the value of the asset can go down but it's a risk you have to take.

This is about buying Bitcoin, because you understand what it offers, because you believe it will succeed, because you want the money system to be fixed, because you want control over your money back, this is no free painless money. It’s a wild ride, it takes time to get, it means a lot of studying, it means taking responsibility, but it’s also fun tho.

Bitcoin as an investment does not make sense to me. Even at $20,000 say someone put in $500. Bitcoin would have to go up to $40,000 for them to double their money. For bitcoin to double its marketcap is not easy and takes time. To go up by 5x, it would have to increase higher than it ever has before. the higher bitcoin's price is, the less attractive it is to me from an investment standpoint. what i cannot accept is putting money in and just watching it go down and down. if bitcoin is supposed to be valuable and has value then that should not be happening but i think it does happen. i understand why it goes up but they should fix it so it doesn't go down. and only goes up or stays at the same price. then it would be a better store of value for someone like me.

[Wind_FURY]

i think what the summarised answer(in question form analogy) to what the topic creator is asking is:

why arnt house prices fixed a stable square metre amount that all houses are backed by

totally forgetting the features and utility of what a house is and does and forgetting that people in different regions have different supply or demand. even if a house ultimately on the market does show houses do have value and when comparing the square metre 'comps' per year shows a more stable value rate than the volatile market price of houses sold each hour of the day

in short the market price of each house sold hourly is not the same as the average/minimum comps. but that does not mean that houses have no underlying value

a house does not need to be backed by gold or pegged to something else.
its intrinsic underlying value is the 'comps'
bitcoins underlying value is the mining costs (asics and electric)
golds intrinsic underlying value is its mining costs (diesel, digger and sluice machines)

the price is then the speculative buffer/layer of cheap or premium volatility amount above this underlying value that backs it

I believe you're giving OP too much credit. His post-history is very revealing that he likes trolling in the forum. Probably because the crash made him lose money in trading, OR he's holding coins bought near ATH and he trolls to relieve him from the stress of HODLing.

BUT to take the topic seriously, OP is asking the WRONG question. He didn't consider the actual history of Money, and how things without value, became items of value, https://nakamotoinstitute.org/shelling-out/

[tadamichi]

This already gives it a fixed value, it won’t ever be worth more than 1 litre of oil, because if it reaches higher prices than oil(Lets say 1 Bitcoin was 2$), people just can redeem their oil for Bitcoin and sell it right away, they essentially bought a Bitcoin for 1$ and sold it for 2$ in this example, making the price of 1 Bitcoin go back to 1$ over time, because there will always be new people coming, buying oil for Bitcoin and then selling it for profit, it would be free money from a flawed system. This system doesn’t work.

What exactly about it doesn't work? You've just illustrated how there is a built in corrective feeback loop to keep the price of bitcoin no higher than that of oil because if it goes above oil's price, profit takers come in and fix that. so that entire scenario of bitcoin selling for $2 while 1 liter of oil was $1 is not going to happen.

The problem becomes the reserves, the worth will be based on how much oil Bitcoin would have in its possession, not on how much oil there is. The problem starts in this example, when Bitcoin falls under 1$, then the oil reserves would start to deplete, making it go to 0. And this would happen in this scenario, because it would be easy to start an attack like this for big capital holders.

Backed currencies always had this problem, they start to fall apart when the reserves start to get depleted.

Backed currencies value = amount of reserves in possession

that can't go on forever though because at some point the market price of oil is going to be affected.

You almost got it, but Bitcoin would run out of oil, making it backed by nothing again.

There’s no asset that can do this in a decentralized way that doesn’t require trust, and apart from this,

There is but you aren't paying attention. I already gave oil as an example. Now not everyone can put up their own oil drilling well but if they wanted to they could. It just might cost money. Same as bitcoin mining. not everyone can do that since it costs alot but if they really wanted to, they could.

You’re drifting into fantasy land, you gotta catch up on some things. In theory everything works, but we always gotta take real life effects into account. Properties/ purpose of money and where oil exists.

You don't even know if bitcoin might go to zero one day and yet you're talking about placing limits on high high up it can go. smh.

Because i rather have a system architected well beforehand, than to repeat economic foolishness of the past. Im willing to take the risk for something better, im okay with it being able to fail, and i rather work on making something promising work, than to clinch onto some nonexistent security, that just doesn’t exist in this world. And even if it fails, it doesn’t mean anything. New doors will open itself, and everyone who was into this made a lot of experiences and gained a lot more knowledge. Equipping them well for the future. Plant the seeds you wanna harvest in this world, if no one plant seeds anymore, there wont be anything to harvest anymore. This is my personal mindset, not an attack on anyone.

According to a recent report from IBISWorld, the global oil and gas industry generates over US$2 trillion in revenue a year


How much revenue are people making in bitcoin right now? I bet not more than that. Bitcoin's entire marketcap isn't even $1 trillion.

Money needs to able to hold more than 2 trillion $, and like i said, it depends on the reserves in possession, not the yearly oil supply. The usd alone has 22 trillion $ in circulation. And this is just one fiat currency.

how do you get money onto decentralized exchanges? oh right, you have to first get bitcoin somehow.

Now you outed yourself as biased larry, because you obviously didn’t try or ever wanted to. You don’t have to get Bitcoin first. You can send money with ur bank, by mail, by giftcards, in person. You choose, and there’s probably even more ways.

and so you have to use something like coinbase. meeting in dark alleys aint my thing. plus, then you have to try and sell it to someone p2p which requires meeting up in a dark alley again.

Nah, there’s decentralized exchanges, that make this process easy and online, with protection against scams. Some require security deposits from both sides, for example. The process is similar to Coinbase, a little less convenient, but you’re gaining privacy and control in return. This will become relevant in the future.

and then reporting the entire thing to the irs.

Idk how this works in the us, here it’s sufficient to just archive everything in a simple way, and you don’t gotta report anything, until asked.

plus buying things p2p is probably like a 30% markup over somewhere like coinbase. so while it may be completely legal its probably completely dumb too.

For this the trick is to open ur own offer, you choose your buying price, someone will accept it, if you choose an markup similar to a fee on Coinbase. 1-2% for example.

but if someone doesn't have any other choice so be it. you also have to either hide your money under your mattress once you sell it p2p or explain to your bank where the money came from and they might file a SAR against you or close your account. Then you WILL be storing your money under your mattress but don't forget to check the box that says you sold crypto on your irs tax return anyway.

Too much comfort got us into this situation in the first place. Jk.

In 2020 there was buying opportunities for 5000$ still, only consistency and patience get rewarded here, but no one can guarantee you a profit.

I don't want to make a profit. I just want a stable store of value which is decentralized and trustless. something where I put in $1 and 10 years later I know it will be worth the same exact amount. No more no less. But I want it to be digital cryptocurrency, not fiat. The problem is, you can't have that. Not exactly but maybe you can come close. that's the whole idea behind backing up a cryptocurrency with a physical asset. You're pretty confident the price will be somewhat stable. There is the risk the value of the asset can go down but it's a risk you have to take.

I get that larry and it’s completely fine to want this. There might be a day where Bitcoin will be stable, but this depends on too many variables, right now and in the near future it won’t fit this requirement. And there probably won’t be any trustworthy backed-digital asset in the near future. If you want stability i wouldn’t even recommend you Bitcoin at the moment. It might be hard to find anything for this purpose at the moment.

This is about buying Bitcoin, because you understand what it offers, because you believe it will succeed, because you want the money system to be fixed, because you want control over your money back, this is no free painless money. It’s a wild ride, it takes time to get, it means a lot of studying, it means taking responsibility, but it’s also fun tho.

Bitcoin as an investment does not make sense to me. Even at $20,000 say someone put in $500. Bitcoin would have to go up to $40,000 for them to double their money. For bitcoin to double its marketcap is not easy and takes time. To go up by 5x, it would have to increase higher than it ever has before. the higher bitcoin's price is, the less attractive it is to me from an investment standpoint. what i cannot accept is putting money in and just watching it go down and down. if bitcoin is supposed to be valuable and has value then that should not be happening but i think it does happen. i understand why it goes up but they should fix it so it doesn't go down. and only goes up or stays at the same price. then it would be a better store of value for someone like me.

There’s no fix for not going down, this should always be considered before going into Bitcoin with any amount. To be able to afford to be down for months or even years, both mentally and financially. There’s no shame for anyone to say, that they can’t do or want it right now, or that Bitcoin isn’t for them. Bitcoin means signing up for a fight, it can’t get more uncomfortable than this.

[qwertyup23]

The price that derives the value of BTC is the law of demand and supply. In addition, with its inflationary and limited supply, the price is something that increases as more supply is being mined. Though many investors have frowned upon the lack of intrinsic value BTC has compared to gold (which is considered as a precious and non-renewable resource), the price of BTC is what many have took advantage in order to invest either for long-term or short-term.

Though I do understand where you are coming from OP, I guess it's better if you just focus on the investment aspect of it.

[larry_vw_1955]

BUT to take the topic seriously, OP is asking the WRONG question. He didn't consider the actual history of Money, and how things without value, became items of value, https://nakamotoinstitute.org/shelling-out/

i'm actually a big fan of the history of money and one of my big ideas is if bitcoin could have a physical representation without needing verification digitally. so you could just hand a bitcoin to someone as a payment without any government or central entity backing. but that's a separate topic for another thread sometime. perhaps if you know so much about money and how it evolved over human history you could contribute to this idea of mine. we need to keep this thread on topic though...

The problem becomes the reserves, the worth will be based on how much oil Bitcoin would have in its possession, not on how much oil there is. The problem starts in this example, when Bitcoin falls under 1$, then the oil reserves would start to deplete, making it go to 0. And this would happen in this scenario, because it would be easy to start an attack like this for big capital holders.

Maybe we got things slightly mixed up bringing the us dollar into this hypothetical 1 btc backed by 1 liter of oil example In reality, the us dollar should not be in the discussion whatsoever. it is meaningless. the only thing that matters is people agree to 1btc=1 L oil. now you might say that's a very arbitrary thing to agree on but if it's set up so that bitcoin is backed 1:1 with oil then it is stable with respect to oil. now oil prices can go up and down yeah but that's a different story. you can't control that so much. but oil price dictates what the bitcoin is worth in us dollars not the other way around.

now before anyone points out what they think are the issues with this scenario, I'll tell you what it is. when someone consumes 1 L of oil, what happens to the 1btc that was backing it? what's supposed to happen to it? how do you ensure that's what actually happens to it?

There’s no fix for not going down, this should always be considered before going into Bitcoin with any amount. To be able to afford to be down for months or even years, both mentally and financially. There’s no shame for anyone to say, that they can’t do or want it right now, or that Bitcoin isn’t for them. Bitcoin means signing up for a fight, it can’t get more uncomfortable than this.

That's why i decided it's not the best investment for me. that doesn't mean i don't like it or dont want to own some someday just not right now.

[Abiky]

If you don't understand why the limit is fixed at 21 million, then maybe you should step away from Bitcoin because it is part of the foundation and contributes massively to the price. People who hold it are more comfortable because the supply is restricted and rather low. It also helps that it is a relatively low number, because it helps to beat inflation and there is a natural attrition rate of lost coins which will help. Why does anything have value in life? Because people have agreed to trade a good or service, in return for another good or service - it is how currency works. Instead of finding someone who wants your good or service, you convert it into a unit which can be traded in a general market.

Some things have value because people trust in them as a medium of exchange or store of value. Even though Bitcoin is often described as "Magic Internet Money", its value is based on the rules of supply and demand. That, and also the fact that Bitcoin is the most decentralized and censorship-resistant kind of money in the world, makes it an extremely valuable cryptocurrency. If the OP is asking why Bitcoin can't be based on something that has value, then he/she doesn't understand Bitcoin is all about. It's something commonly expressed by people who either hate Bitcoin or lack knowledge of it.

Bitcoin's been doing well on its own (despite the ups and downs in Fiat terms), so I'd say it doesn't need to be backed by anything to hold its value for a very long time. 21 million coins will ever be mined, making the pioneer cryptocurrency a truly scarce digital asset. If you believe in Bitcoin, then I'd suggest you "hodl" it no matter what. Otherwise, Bitcoin is not for you. With how far Bitcoin has gone since day one, it's unlikely it'll disappear (or go to zero) anytime soon. Just my thoughts

[larry_vw_1955]

Some things have value because people trust in them as a medium of exchange or store of value. Even though Bitcoin is often described as "Magic Internet Money", its value is based on the rules of supply and demand. That, and also the fact that Bitcoin is the most decentralized and censorship-resistant kind of money in the world, makes it an extremely valuable cryptocurrency. If the OP is asking why Bitcoin can't be based on something that has value, then he/she doesn't understand Bitcoin is all about. It's something commonly expressed by people who either hate Bitcoin or lack knowledge of it.

Well maybe a better title to my posting would be "why can't a cryptocurrency be backed 1:1 by a physical asset?" that's really what I'm getting at, not that I expect bitcoin to change into something like that. but i do want to see something backed 1:1 by a physical asset similar to bitcoin except that it has that feature. the problem is i think it would be a much more complicated thing than bitcoin. we've seen that doing it with assets like oil or gold is somewhat problematic and awkward but if you could quantify some electronic thing of value then you could maybe base the asset on that. it could be a certain amount of disc space or a certain amount of cpu processing. As long as it can be quantified and has value then it could serve as a potential asset to back up the crypto 1:1.

Bitcoin's been doing well on its own (despite the ups and downs in Fiat terms), so I'd say it doesn't need to be backed by anything to hold its value for a very long time. 21 million coins will ever be mined, making the pioneer cryptocurrency a truly scarce digital asset. If you believe in Bitcoin, then I'd suggest you "hodl" it no matter what. Otherwise, Bitcoin is not for you. With how far Bitcoin has gone since day one, it's unlikely it'll disappear (or go to zero) anytime soon. Just my thoughts

you maybe right that it doesn't need to be backed up by anything to hold its value indefinitely but how do you really know? i think that all depends on what else is out there competing with bitcoin. also keep in mind there's probably only a limited supply of bored apes but they could go to 0 one day too. limited supply doesn't guarantee demand. it depends on the marketplace and what else is out there and what the competition is. i don't want bitcoin to go to 0 but i don't think 21 million has anything to do with that. look at eth. it doesn't have a limited supply and its price seems to mirror bitcoin's as far as ups and downs.

oh and as long as people are in control of bitcoin then nothing is really set in stone guaranteed. to do that you have to have a smart contract.

[amishmanish]

Bitcoin is a currency for crypto, for blockchain mining industry. It is backed by blockchains. The value it derives is from the expanding applications and  its potential in future tech industry. However it has found application in many conventional markets as well. Thus it gained value against FIAT. In 10 years from now every industry in one way or other will be using blockchains and bitcoin will most probably become the default cryptocurrency for these organizations.

[Wind_FURY]

BUT to take the topic seriously, OP is asking the WRONG question. He didn't consider the actual history of Money, and how things without value, became items of value, https://nakamotoinstitute.org/shelling-out/

i'm actually a big fan of the history of money and one of my big ideas is if bitcoin could have a physical representation without needing verification digitally. so you could just hand a bitcoin to someone as a payment without any government or central entity backing. but that's a separate topic for another thread sometime. perhaps if you know so much about money and how it evolved over human history you could contribute to this idea of mine. we need to keep this thread on topic though...

It's actually not. You were debating if Bitcoin's "value" should be based on something backing it, "that has value". If you got the context why I was bringing up the history of money, it's because the properties that Bitcoin already has is in fact of value, with censorship-resistance as one of Bitcoin's main value propositions. But we also have to acknowledge that the true nature of Bitcoin might not be priced in yet, and it might be illustrated by a sanctioned-Russia.