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

[franky1]

so larry not only wants bitcoin to be backed by gold. because he doesnt understand bitcoin is backed by its own cost and utility..

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

but now he also wants bitcoin to lose its digital utility and be something physical he can physically pass to someone..
..
ok larry does not understand the purpose function, utility, supply, creation,cost features of bitcoin so wants to take it all away.
..
if you want something physical thats backed by something physical that you can physically give away.. then get off your computer and go find physical things.
maybe have a kid where the kids nationality is backed up by your own as parents. and with your backing pass him off to someone else as payment for rent..
after all it fits all your idea parameters.. right?
.. but maybe your kid is lazy, ugly an an unachiever. so no one wants him.. now how good are you as his backup thats legally registered on his birth certificate. .. not much

how about you then have another kid. but this one has utility. he can do something worthwhile. people wont care about his nationality or who his parents are, they just see his work effort and hardworking ability and think he is worthy of becoming something..
is who his parents are as important? or is his value of his own work effort worth more
..
anyway lets continue about digital stuff that larry wanted backed by something else..
here is one for you larry..
imagine we called bitcoin "luna" and backed luna by something.. ... .. wait for it....... the peg breaks. and boom luna is dead
the item its backed by didnt die. but the peg to it did..

luna is a token created at no cost in of itself and is only given value by being pegged to something. and when that peg breaks the value breaks
much like how the dollar has lost 95% of all its value it had last century when it broke its gold peg.
yep it does not actually cost $10 to make $10 bank note. and more and more people are realising that $10 doesnt buy them what it used to buy them..
..
like having a spoiled brat kid who thinks he is worth alot because his parents are rich. he does nothing himself and earned nothing himself. .. and then his parents dis-own him and cut him off from his inheritance.. how much is that kid worth now..
..

bitcoins value is its own cost. its not free to create bitcoin. its not printed for a penny worth of labour and sold for multiple hours of labour.. it actually takes alot of work effort to make bitcoin

bitcoins value is actually much higher then you think. it doesnt need something else to give it value, because it already has value by itself.

what you need to realise as a stepping stone into backed value, firstly its not the market price being the value. but its ultimate bottom line cost of acquisition where no one can make/mine/print/acquire/buy/swap it for any less, that is the value.

that bottom line amount is the backed value that is in-of-itself.

take gold.. the market price is $1.7k but this is just temporary it can go up and down unpredictably in the short term. yes its function, features etc push the underlying value below the market price upwards which then push the market price up in the long term.. but thats another aspect you need to learn about

golds value, the underlying bottom amount no one can buy acquire make or mine gold for is actually around $900 right now.
golds store of value (remember not the price) the value is $900 not $1700
gold does not need to be backed by something else worth $900+ because its own mining costs back it by that.

get it yet?

dont confuse the market price with a backed value/intrinsic value.
even houses have a different measure for house value vs house price.

get it yet?

[1714973761]

1714973761

[larry_vw_1955]

but now he also wants bitcoin to lose its digital utility and be something physical he can physically pass to someone..
..

yes similar to the opendime yet not digital/electronic. what's so bad about wanting that?

if you want something physical thats backed by something physical that you can physically give away.. then get off your computer and go find physical things.

no, we're talking about something digital (similar to bitcoin) that's backed up by something physical. not sure where you got this idea of backing up something physical with another thing that is physical.

maybe have a kid where the kids nationality is backed up by your own as parents. and with your backing pass him off to someone else as payment for rent..
after all it fits all your idea parameters.. right?
.. but maybe your kid is lazy, ugly an an unachiever. so no one wants him.. now how good are you as his backup thats legally registered on his birth certificate. .. not much

how about you then have another kid. but this one has utility. he can do something worthwhile. people wont care about his nationality or who his parents are, they just see his work effort and hardworking ability and think he is worthy of becoming something..
is who his parents are as important? or is his value of his own work effort worth more
..

one of the main concepts of a cryptocurrency, and you should know this, is fungability. that means every coin is the same. you can't discriminate one vs the other based on their transaction history. bitcoin itself does not meet the strict requirements of fungability. neither does your kind of strange example above. i think monero is an example of a fungible currency. the us dollar is fungible since when someone hands you $1, you can't know what it's history is of who owned it before you. all $1 bills are the same. in that sense.

anyway lets continue about digital stuff that larry wanted backed by something else..
here is one for you larry..
imagine we called bitcoin "luna" and backed luna by something.. ... .. wait for it....... the peg breaks. and boom luna is dead
the item its backed by didnt die. but the peg to it did..

in the sense that you could burn 1 ust token (no matter what it was worth) and get $1 worth of luna we can say that luna was backed up by ust which was backed up by nothing. and we all saw how that played out. when something is backed up by nothing it can easily go to 0, as is what happenend to the ust token. The current price is $0.01272 per UST. that's pretty close to 0, right? so i'd say ust is about as "dead" as the item it was backing up which was luna.

luna is a token created at no cost in of itself and is only given value by being pegged to something. and when that peg breaks the value breaks

so what was the purpose of luna in the first place? why not just have ust and that's it? why introduce something else based on ust because that thing can never be better or stronger than the thing that backs it, which would be ust in this case. and as i had said, the real issue was that the ust was not legitimate. it was a scam all along. it was not backed 1:1 with the us dollar. so anything that it backed was also a scam. on the other hand for the sake of argument, lets say you took usdc and used it to back luna. well that would be a different story right? then luna would not have any issues. because usdc really is backed 1:1 with us dollar (i know some people would disagree with that statement but just for the sake of argument, lets assume it to be the case).

but here's the thing: no one would ever create a luna and back it with usdc. why? because what sense would it make? you would just be creating another "stablecoin". you already have usdc. how is this luna going to be any different. it can't be any better than usdc. so why not just use usdc in the first place?

bitcoins value is its own cost. its not free to create bitcoin. its not printed for a penny worth of labour and sold for multiple hours of labour.. it actually takes alot of work effort to make bitcoin

the reason it takes alot of effort is because there's alot of people trying to "create" it. creation is a byproduct of mining though. at some point bitcoin will no longer be created. so if you're basing bitcoin's value on the cost to create it then you won't be able to assign a value to it once all the bitcoins have been mined.

gold does not need to be backed by something else worth $900+ because its own mining costs back it by that.

get it yet?

Well gold and bitcoin are different. gold is fungible for instance. since it can be melted down and reused. bitcoins can become tainted.
another thing about gold. lets say it was only located very deep down in the ground so much so that it costed $90,000 per ounce to extract it instead of $900. what do you think would happen then? would that make gold worth $90,000 to me automatically? no it wouldn't. i wouldn't pay to put it on a chain around my neck in that case. few people would. so it's not going to be worth its mining costs in that scenario.
 

[Webetcoins]

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.

I would guess that if the "true nature" of bitcoin gets priced in, I would guess that it would be at least as valuable as gold, and would have about the same marketcap as that. I know that it is a bit difficult because gold has been around for thousands and thousands of years and humanity has used that after barter was done and money was printed, but that is still something that should be considered as a risky thing to just let bitcoin be there already.

I believe that the best thing we could do right now would be to not give up on bitcoin but also do not expect the worlds from it right away, just be patient and it will come around and it will get to a high price, but until then, do not get hyped every time it goes up, and do not lose faith every time it drops.

[larry_vw_1955]

I would guess that if the "true nature" of bitcoin gets priced in, I would guess that it would be at least as valuable as gold, and would have about the same marketcap as that. I know that it is a bit difficult because gold has been around for thousands and thousands of years and humanity has used that after barter was done and money was printed, but that is still something that should be considered as a risky thing to just let bitcoin be there already.

gold has existed long before bitcoin ever came around and will exist longer after bitcoin is over and done with for whatever reason. i think we can all agree on that. bitcoin is not a precious metal but gold is. if you have a gold bar, it is something you can take out and look at and touch and appreciate its beauty.

[ultiex]

BTC is used based on value with UG organizations - the underworld. I think so

[Retiicle]

Limited supply of Bitcoin derives the value of bitcoin and nothing else.

[Ozero]

Money does not need to be "backed up" by something. In fact no money in the world is backed up by anything. Take US dollar for example, it is not backed up by anything except a stupid faith 70 years ago. So the real question you need to be answering first is why should bitcoin be different from other currencies?

In fact, it is the dollar that is an exception to the general rules for the functioning of the general financial system of public money. According to the general rule, which most states adhere to, the nominal amount of all money in the state should be equal to the sum of all goods of the state that can be in civil circulation. If the government's gross income grows, it prints money for the amount of this profit. If the government prints more money, then inflation occurs.
If a cryptocurrency is backed by fiat, gold or other values ​​of the material world, then it will cease to be a cryptocurrency in its current sense and will lose its attractiveness for investors.

[pooya87]

Let’s say 1 litre of oil is 1$.

Why should bitcoin price be affected when oil price changes? Like when the idiots in power fight each other shooting the energy price up!!!

Limited supply of Bitcoin derives the value of bitcoin and nothing else.

If that were true, any shitcoin with a limited supply would have had the same high value as bitcoin.

[larry_vw_1955]

Let’s say 1 litre of oil is 1$.

Why should bitcoin price be affected when oil price changes? Like when the idiots in power fight each other shooting the energy price up!!!

AND you picked out about 7 words out of an entire paragraph taking it completely out of context, but no need to worry.

here's another thing I realized about gold vs bitcoin maybe you have something to say about this: gold doesn't require any further maintenance costs after it has been mined and refined and put into a nice shiny gold block. bitcoin does. bitcoin requires an entire infrastructure behind it in to be in constant operation in order for it to be used. so in that sense, every bitcoin has an ongoing cost to the network whereas gold doesn't. gold is more environmentally friendly than bitcoin once it has been mined.

[owlcatz]

AND you picked out about 7 words out of an entire paragraph taking it completely out of context, but no need to worry.

here's another thing I realized about gold vs bitcoin maybe you have something to say about this: gold doesn't require any further maintenance costs after it has been mined and refined and put into a nice shiny gold block. bitcoin does. bitcoin requires an entire infrastructure behind it in to be in constant operation in order for it to be used. so in that sense, every bitcoin has an ongoing cost to the network whereas gold doesn't. gold is more environmentally friendly than bitcoin once it has been mined.

Bitcoins sitting in a dormant wallet do not require anything but the blockchain continuing, which at this point, is pretty much never going to stop in our lifetimes, even if we wanted it to fail.

You should have said "Every MINED bitcoin has an ongoing cost to the network" instead I guess, but not really the point:

Gold, sure ... It's gold, from the ground, with not a fixed supply, unlike BTC. It also WEIGHS a LOT, it requires safe storage, is difficult to transfer across borders, and is just a pain in the ass overall - So, I'd rather have all my $ in Bitcoin than in Gold personally.

To each their own, amirite?

[larry_vw_1955]

Bitcoins sitting in a dormant wallet do not require anything but the blockchain continuing, which at this point, is pretty much never going to stop in our lifetimes, even if we wanted it to fail.

You should have said "Every MINED bitcoin has an ongoing cost to the network" instead I guess, but not really the point:

Gold, sure ... It's gold, from the ground, with not a fixed supply, unlike BTC. It also WEIGHS a LOT, it requires safe storage, is difficult to transfer across borders, and is just a pain in the ass overall - So, I'd rather have all my $ in Bitcoin than in Gold personally.

To each their own, amirite?

yeah to each their own. i don't disagree gold has its own disadvantages such as storage but that cost is maintained by the person that owns it. it does not impose any costs to anyone else other than its owner. now bitcoin is an entirely different story. it costs its owner to store it in the sense that they have to buy a hardware wallet or have some type of cold storage setup like metal stamping. or safe deposit box at bank. but not only that but all the nodes around the world on the bitcoin network are obliglated to store that bitcoin too in the utxo set. so it takes up disc space on EVERYONE'S computers. in realitly i would say that storing bitcoin is just as inconvenient and burdensome as storing gold unless you have a ton of gold we're talking like lots of bars of the stuff. just one big bar is no different than storing your bitcoin paper wallet somewhere.

as far as travelling goes, i wouldn't know but i would assume you have to declare it if it is worth more than certain amount just like you have to do with cash.

[2stout]

It does have value that is intrinsic and extrinsic derived from having a finite/fixed supply based on PoW, being deflationary nature, security via cryptography, scarcity, and blockchain for tx & rx verification to name just a few.

[larry_vw_1955]

It does have value that is intrinsic and extrinsic derived from having a finite/fixed supply based on PoW, being deflationary nature, security via cryptography, scarcity, and blockchain for tx & rx verification to name just a few.

"For example, mass is an intrinsic property of any physical object, whereas weight is an extrinsic property that depends on the strength of the gravitational field in which the object is placed."

maybe bitcoin has a value but i wouldn't call it intrinsic. gold is a physical object. it has intrinsic value since it has practical uses in society. bitcoin is not a physical object. so it can't have any practical uses UNLESS and this is a big caveat you were able somehow to turn bitcoin into a physical object that people could use to barter with.

just because a cryptocurrency has a finite/fixed supply that's not a necessary nor sufficient condition for being "valuable". all the things you mentioned I would say are features of bitcoin but not really anything more than features. something could have all of those same features and have very little "value".

[franky1]

maybe bitcoin has a value but i wouldn't call it intrinsic. gold is a physical object. it has intrinsic value since it has practical uses in society. bitcoin is not a physical object. so it can't have any practical uses UNLESS and this is a big caveat you were able somehow to turn bitcoin into a physical object that people could use to barter with.

the physical ability to touch and feel it is called "tangible" dont confuse that with intrinsic

also if you think digital things have no practical use.. then i guess your in the 1800's wild west, where you have never seen or used a computer and see no benefit of computers..
... wait. your here on a forum communicating with people across the world due to digital code..
this forum is not physical. the [Post] button and the digital message sent over the internet that allows others to see your messages is not physical

but lets pretend you are stuck in the 1820's, because it seems your mindset is stuck in that era's narrow concept of value and money.
lets use an example, lets fast forward a bit to the 1840's.. i guess you think morse code is not physical. and has no practical use... well i guess telegrams in your updated time are something you would never use.

lets fast forward a bit. and evolve electronic messages and code.. welcome to the 1860's.. bank wire transfers.. . i guess they have no use in society..

lets fast forward a bit. and evolve electronic messages and code.. welcome to the 1930's encryption to secure these messages and secure the code around it.. hmm.. i guess they have no use in society. seems it was useful in WW2

.. i guess you might see where im going with this. or do you need me to take you through every step of evolution, or are you going to remain with 1820's mindset

just because a cryptocurrency has a finite/fixed supply that's not a necessary nor sufficient condition for being "valuable". all the things you mentioned I would say are features of bitcoin but not really anything more than features. something could have all of those same features and have very little "value".

i think maybe you are confusing price, value, values.
they are 3 separate concepts but they impact each other

values are the sentiment and usefulness of the features and benefits.
value is the economic base number no one wants to sell below
price is the more volatile/variable number above that than changes quicker based on sentiment values+value. where each person has their own number in mind for price

bitcoin has values(features and benefit(utility) and it has value. its intrinsic value is value within itself not something its backed by externally. bitcoin has that.
you wont find the value on a PRICE market. which is why i think you find it hard to realise it has value. but it does have an underlying value no one wants to sell below

ill give you a hint. PoS coin value is alot lower than PoW coin value

[tadamichi]

It does have value that is intrinsic and extrinsic derived from having a finite/fixed supply based on PoW, being deflationary nature, security via cryptography, scarcity, and blockchain for tx & rx verification to name just a few.

"For example, mass is an intrinsic property of any physical object, whereas weight is an extrinsic property that depends on the strength of the gravitational field in which the object is placed."

maybe bitcoin has a value but i wouldn't call it intrinsic. gold is a physical object. it has intrinsic value since it has practical uses in society. bitcoin is not a physical object. so it can't have any practical uses UNLESS and this is a big caveat you were able somehow to turn bitcoin into a physical object that people could use to barter with.

You open up an interesting point larry, it’s hard to even say if Bitcoin is physical or not. It’s information that is contained in atleast/ more than 15000 physical nodes worldwide. It’s not completely detached from physical objects. Im not sure how to classify information, but it can be stored in the most different ways.

This gives it a certain kind of flexibility, that no physical object in the classical sense has. You can choose the physical form to store your keys for example. Steel, paper, digital etc. You could even store your key in your brain(not advisable). Your coins/ the information on the other hand exist worldwide in different places at the same time, you don’t need physical possession over them to redeem them. Imagine you could recover your money or Gold worldwide from wherever you want, this is only possible with information. The question is how practical usage is defined for you, and how you classify information. Information is definitely powerful and has usages. Then there’s people who are developing Bitcoin bills for example, similar to fiat bills, which kinda gives you an physical object that you can pass around for trade, with the same potential risk as traditional bills. Information can be stored in many different physical objects and in different ways.

just because a cryptocurrency has a finite/fixed supply that's not a necessary nor sufficient condition for being "valuable".

Exactly it’s just one factor out of many, but important for becoming a durable store of value.

Since we see how easy it is to manipulate, corrupt, bend, fake, censor, control, destroy information in our current times. My question becomes, what value would a system have where information can’t easily be censored, manipulated or faked(and the things i mentioned above)? Where information can’t easily be destroyed from outside and it starts to flow freely without intervention, in one of the best protected networks ever created. And then uses the advantages of a non physical object, it can’t be confiscated, destroyed, redeemable from anywhere, can move faster etc. And we start to use this as the foundation of money.

And then the other question becomes if information isn’t the basis of everything in the first place, and that physical objects are used to transmit some kind of information anyways, but underlay physical constraints that limit them. So wouldn’t using something that isn’t physical and doesn’t have these constraints be the more efficient way to do this in the first place?

[sklopan]

Then the price of bitcoin would be measured not by the value of bitcoin, but by the value of what it was tied to. I think this is really worth understanding and paying attention to.

[Smartvirus]

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.

Your proposing that bitcoin should be backed just like the USDT that is supposedly rumored to be backed with $ and also pegged as such. Then, it would would sense or have a real value to it right, @OP.
Why should a currency be backed by another currency? Fiat currencies are backed by the CB which are saddlers with the responsibility of its printing and as such, could bring about inflation and vice versa in a nation. Now, bitcoin have got non of that but is capped at 21million  and the fact that no one can alter it being a complety decentralised currency it what makes for its uniqueness and differentiates it from other currencies out there. It puts the power in the peoples hands. Except you don't like it then, you could settle with fiat currencies. It's simply choice.

[marahoga112]

The best basement for Bitcoin is the Proof-of-Work algorithm and its Protocol. The disappear of Satoshi Nakamoto is another solid basement for value of Bitcoin. It supports the decentralized protocol of Bitcoin, and developments etc.
Also bitcoin doesn't need to be backed up by some commodity. Not everything on earth need to follow a traditional method. Sometime out-of-the-box assets are far more sustainable than others.so,it's fundamentally incorrect.

[larry_vw_1955]

the physical ability to touch and feel it is called "tangible" dont confuse that with intrinsic

i dont think i am confusing the two words. intrinsic is something that exist within the object itself so it has to be physical. for example, a bank account has intrinsic value of the amount of its balance. the bank account number itself? no intrinsic value. banks can and do change account formats and numbers sometimes and that could cause the old account number to stop working. zero intrinsic value.

people doesn't realizing that information has to be tied to something that has intrinsic value. the information itself have no intrinsic value. that something it is tied to has to be physical. the example i gave with banks changing account number formats could happen with bitcoin. that's why the private key itself has no intrinsic value. it depends on the entire external infrastructure of bitcoin to give it value. miners around the world storing the utxo set. and allowing them to spend their "information".

but put them on a desert island by themself with their private key and they can't use it for anything. it's useless. they can't do anything with it at all. now if you had a bar of gold in that situation, you could transform it into a very long wire. then string that wire accross the ocean and use it to transmit morse code SOS. since gold is a very good conductor of electricity.

You open up an interesting point larry, it’s hard to even say if Bitcoin is physical or not.

it could be but it's not right now. someone would had to invent a physical bitcoin. but that's alot harder to do than just inventing some "bitcoin bills" as you refer to below.

Then there’s people who are developing Bitcoin bills for example, similar to fiat bills, which kinda gives you an physical object that you can pass around for trade, with the same potential risk as traditional bills.

well if those "bitcoin bills" are backed by some centralized 3rd party then they are not really true bitcoin. that's the problem. that's why they have the same "potential risk as traditional bills" i.e., being backed up by nothing, the company stops redeeming your bitcoin IOUs

Your proposing that bitcoin should be backed just like the USDT that is supposedly rumored to be backed with $ and also pegged as such. Then, it would would sense or have a real value to it right, @OP.

we already had alot of things like usdt, gusd, usdc that are backed by the us dollar. what's the purpose of making another one? i was talking about backing something with a physical asset or electronic commodity. so that it would always have the value of the underlying asset thus guaranteeing it can't go to 0 as long as the underlying asset retains its market value...

[tadamichi]

You open up an interesting point larry, it’s hard to even say if Bitcoin is physical or not.

it could be but it's not right now. someone would had to invent a physical bitcoin. but that's alot harder to do than just inventing some "bitcoin bills" as you refer to below.

It can’t be invented physically in that sense, but my question is, how do you classify information?

When you’re using a bill, you’re also using it to transfer some kind of information. You’re giving its ownership to someone else and they now can spend the amount on the bill themselves too, by giving it’s ownership to someone else. Something physical is used to transfer that information(the bill), but like you already said below, this form of transferring information has drawbacks.

Now you have the option to use something like Bitcoin to transfer the same kind of information, but in a different form. And the advantage here is that it’s way more secure, efficient, verifiable and trustless to transfer this kind of information.

Isnt there a point to be made about that using physical things(in the classical sense) to transfer information has its boundaries and we’re seeing the consequences of it?

Then there’s people who are developing Bitcoin bills for example, similar to fiat bills, which kinda gives you an physical object that you can pass around for trade, with the same potential risk as traditional bills.

well if those "bitcoin bills" are backed by some centralized 3rd party then they are not really true bitcoin. that's the problem. that's why they have the same "potential risk as traditional bills" i.e., being backed up by nothing, the company stops redeeming your bitcoin IOUs

There was ways to make them work more like a paper wallet, and used multisig in a way that you don’t have to trust manufacturer. They really hold the key on the bill. And are verifiable by anyone etc.

Anyways this wasn’t the point of my discussion, i just wanted to highlight that information can be stored in many different physical ways. And that using something like Bitcoin as the basis for this can actually prevent the problems we had in the past, with bills for example. Because the information inside the network can’t easily be faked like that, is open to anyone and is much more secured than other systems.

What value would a system have to you personally where information can’t easily be faked, flows without someone in control, is secure, verifiable, censorship resitant and so on(we know what Bitcoin offers), and this system stores the information about your wealth?