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

[aoluain]

Like gold is not just based on gold if you ask me, it is just the market decided to play with it, and wealthy people are playing with it, you could give them literally manure, and they will make a huge market out of manure and act as if it is something super valuable and buy and sell accordingly.

ever heard of commodities? manure is a commodity just like oil or natural gas. or hay. its tangible product that people will pay for.

Doesn't mean that it shouldn't be something special, it just means that they could take anything, say it's "backed", and then do whatever they want with it and leverage it 100 times over to make money from it.

ever heard of pork bellies?

the goal is for transactions to be transparent. going back to the basics like fiat or gold or physical transactions will negate that aspect.
Bitcoin is backed by MATH and POW which the hashrate increased so much that if the power is converted to money is really huge. that's what backed BTC.

if you back something with manure then its a shit, maybe a community of farmers will find the manure useful for organic farming but its for the farming community not for all.

I'm sure everyone at some stage has come across the phrase "In God Code we Trust" That what Bitcoin is backed by.

BP® MINI Manhole Cover, Aluminum Edition + Walnut Display Stand

That is the most basic backing of Bitcoin, its what it runs on.

Basically it doesn't need to be backed by anything. In fact, the properties that Bitcoin was built with, are more than enough to keep it's value.
Take these examples:
Divisibility - in fact, there are no Bitcoins. There are sats. The code in Bitcoin core and all the math is made up with sats (I think I am accurate on this statement, correct me if I'm not). So you can have millions of small parts of a Bitcoin and transfer each of those parts to another owner!
Portability - Bitcoin cana be sent easily at minimal costs all over the world, even if there is no internet!
Scarcity - There is fixed supply. This is a major property. No debase can happen as it happens with fiat currencies. Take the example of Venezuela that they have been kinda rebranding their currency name and removing zeros by law.
Durability - Theoretically, Bitcoin can last forever. It won't oxidise, it won't suffer from erosion, it can't be destroyed chemically. The only thing that could hipthetically happen is all 21M coins be "lost" by means of losing all PKs of all addresses containing Bitcoin. What are the odds?
Sovereignty - this is another major difference. Among other things, this means that Bitcoin is the only thing that cannot be stolen from you in extreme scenarios. You can literaly take your Bitcoin to your grave and no one can take it from you by any means. Just memorize your PKs, yes it's hard but not impossible. As for fiat, things are quite different as most fiat in circulation are numbers in computers that can be controlled by banks, governments and can be taken from you even if you don't reveal your account password/pin/whatever.

These examples and a few others makes Bitcoin no need for any backup material to grant value!

and they are the benefits and features which Bitcoin provide.

Why would it be? That's the good approach and I like it.
I personally do not think that things that we have as "based on" are not really based on it neither.

Like gold is not just based on gold if you ask me, it is just the market decided to play with it, and wealthy people are playing with it, you could give them literally manure, and they will make a huge market out of manure and act as if it is something super valuable and buy and sell accordingly.

Doesn't mean that it shouldn't be something special, it just means that they could take anything, say it's "backed", and then do whatever they want with it and leverage it 100 times over to make money from it.

The thing with manure is, we all produce it, sometimes twice per day,
and there is so much of in farming that it doesnt have any real value. 

On the Gold subject, do you have Gold in your back yard that you can just bend down
and pick up? can you run a simple program on your PC and get a Bitcoin in the first
10 minutes you try it? no! Gold is scarce, the same as all other precious metals....

and so is Bitcoin.

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[franky1]

Like gold is not just based on gold if you ask me, it is just the market decided to play with it, and wealthy people are playing with it, you could give them literally manure, and they will make a huge market out of manure and act as if it is something super valuable and buy and sell accordingly.

ever heard of commodities? manure is a commodity just like oil or natural gas. or hay. its tangible product that people will pay for.

gold sits on 2 markets.. commodities and assets.

the commodity features are the electronics and jewellery stuff it can create
the assets features are the underlying mining cost, scarcity equalling the store of value aspects

bitcoin fits the asset category. not the commodity category

atleast try to not confuse the two markets and their different features/utilities they are used for

..
yes some say that bitcoin is becoming more of a commodity(raw item that makes other items) due to the whole 'sidechain' tokenisation thing.
but bitcoin as just bitcoin was/has been more of the asset class.

yes bitcoin is not physical. so its not "tangible". but tangible is not a synonym of intrinsic. they mean totally different things

lets take 3 other things..
a patent, a mortgage agreement, and a brand trademark

these 3 things do not have to be tangible themselves. (paper) they can be digital.
these 3 things do not have to be backed by tangible things
yes a mortgage agreement is backed by the collateral of the physical house.
but a patent is just a agreement, an idea. whereby it comes with the emotion that it permits the owner licence to do something or not do something where there is emotion that makes others fear being sued if they tresspass the idea, use the idea without the owners permission
a brand does not need to be physically stolen. (steal the contract put in a vault) it can be stolen via being used maliciously in slander or in copyright/counterfeit/phishing

these 3 things have value and can be traded electronically as they have value. all for different reasons.
its not all based on all having value based on something tangible.

EG a mortgage might have some intrinsic value based on the physical collateral. but most of the institutional derivatives trading of mortgage debt is based on the analysis of likelyhood of people defaulting/not paying. which is not about the house itself but about the emotional and cost/repayment risk of the person with debt. and how much some other institution values their own risk/reward to buy that debt at pennies on the dollar to pursue the debt.

when you start to look passed the narrow mind of "tangible" and seek out what other things are built into the underlying features of things of value. you might start to realise its not all about tangible, especially in the digital age where people can own digital property like a electronically signed patent/contract or a website brand

[danadc]

This idea has been talked about and it is a stupid idea.

it's not a stupid idea for a cryptocurrency to be backed up by a decentralized asset. that doesn't exist right now. but it's not a stupid idea.

But the important thing is, we are the ones buying or selling based on that news, and we can decide to ignore it as well. There is a huge difference between influencing something, and controlling something. Bitcoin can be influenced, but not controlled. That's the power of bitcoin.

But with that said, having bitcoin based on "nothing" and letting the market decide what it is worth does have a simplicity to it and so that is fine. that's how bitcoin is. any other way would be much more complicated. but as i said, i don't think the idea of a crytocurrency being backed up by a decentralized asset is a stupid idea. it just hasn't been done yet. that's because of its complexity.

so why don't we just agree that bitcoin should stay like it is but maybe someday a new class of coins will come along that are based on a decentralized asset. but its hard to know how because as i said, it's a much more complicated situation than just making something not have to depend on anything and be based on "nothing". the minute you try and base something on something else, if something bad happens to that something else then something bad happens to the thing that is baseing off of it. bitcoin, by virtue of being based off of "nothing" doesn't suffer if the us dollar goes to 0. or if the euro goes to 0. or anything.

The market is based on the purchase and sale of bitcoin and when the whales buy a value is generated, this has to do with the fact that there are 21 million BTC, this generates a deflationary economy, which allows it to be valued much more, then it makes no sense that it is backed by something else, it is decentralized, it is the best that can be had, for me it is the best investment of man in terms of the economic system.

[nurilham]

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.

Even gold isn't backed up by anything, right? 
So why do people trust it and want to pay with expensive value? Because people believe Gold is valuable. The main thing here is people's trust. It is the same as Bitcoin, it doesn't need to be backed up by something because people trust it. People believe Bitcoin is something valuable and useful for human life. In this matter, something like Gold and Bitcoin is acceptable although it is not guaranteed by anything.

[larry_vw_1955]

Even gold isn't backed up by anything, right? 
So why do people trust it and want to pay with expensive value? Because people believe Gold is valuable. The main thing here is people's trust. It is the same as Bitcoin, it doesn't need to be backed up by something because people trust it. People believe Bitcoin is something valuable and useful for human life. In this matter, something like Gold and Bitcoin is acceptable although it is not guaranteed by anything.

Bitcoin is software. Gold is an element that cannot be created by man. It has to be mined. And obviously there is a limited supply of it available here on earth. Gold is a precious metal that has many applications and uses. Bitcoin is just software. You can copy software and rename it. You can't do that with gold.

[tadamichi]

Even gold isn't backed up by anything, right?  
So why do people trust it and want to pay with expensive value? Because people believe Gold is valuable. The main thing here is people's trust. It is the same as Bitcoin, it doesn't need to be backed up by something because people trust it. People believe Bitcoin is something valuable and useful for human life. In this matter, something like Gold and Bitcoin is acceptable although it is not guaranteed by anything.

Bitcoin is software. Gold is an element that cannot be created by man. It has to be mined. And obviously there is a limited supply of it available here on earth. Gold is a precious metal that has many applications and uses. Bitcoin is just software. You can copy software and rename it. You can't do that with gold.

You cant actually with Bitcoin, if you run the same software you will just connect to the same network with the same rules, if you change rules your instance will split into another altcoin into its new network, with no users and be worthless and not be Bitcoin anymore. Bitcoin is unique, even as a software.

[electronicash]

Even gold isn't backed up by anything, right? 
So why do people trust it and want to pay with expensive value? Because people believe Gold is valuable. The main thing here is people's trust. It is the same as Bitcoin, it doesn't need to be backed up by something because people trust it. People believe Bitcoin is something valuable and useful for human life. In this matter, something like Gold and Bitcoin is acceptable although it is not guaranteed by anything.

Bitcoin is software. Gold is an element that cannot be created by man. It has to be mined. And obviously there is a limited supply of it available here on earth. Gold is a precious metal that has many applications and uses. Bitcoin is just software. You can copy software and rename it. You can't do that with gold.

gold is just too old and so many flaws we don't even know if the vaults storing our golds can be trusted or if the gold bars are hollow. this is why we are not in this fiat system shrouded by ponzis and governed by ponzis.

anything old is to be replaced because they are flawed. like the horses that use to roam in the towns but are not replaced by cars. BTC is base on computer networks working together spending huge amount of energy to create few of them.

[larry_vw_1955]

gold is just too old and so many flaws we don't even know if the vaults storing our golds can be trusted or if the gold bars are hollow.

then don't store your gold with a 3rd party. not your keys not your crypto. same idea.

anything old is to be replaced because they are flawed.

except you can't replace gold. it has applications in diverse industries.

[darkv0rt3x]

Value is subjective, nothing has true and inherent value.

Bitcoin could be pegged to a fiat currency like USD like as stablecoin are. But USD does not have inherent value. You could tie a crypto currency to the gold standard, the gold's value is only attributable to what a consumer is willing to freely pay for it. Does the gold have inherent value? Or is the value attached to whatever someone will pay for it? Ask a man stranded on an island whether he'd rather have a pound of pure gold or a few matches. Gold is "worth" more than the matches on the market, but the value is subjective.

Perhaps your question is suggesting why Bitcoin isn't based on something tangible. There isn't an answer for that. You can only make the comparison to other currencies that aren't based on anything tangible either. What is USD based on?

I would say the other way around. To pegg fiat money to Bitcoin as it was once pegged to gold. It would make more sense no? Make Bitcoin as if it was gold, because it was gold that held value over time. Same happens with Bitcoin, so I would say that fiat money could instead be backed by Bitcoin, couldn't it?

[larry_vw_1955]

I would say the other way around. To pegg fiat money to Bitcoin as it was once pegged to gold. It would make more sense no? Make Bitcoin as if it was gold, because it was gold that held value over time. Same happens with Bitcoin, so I would say that fiat money could instead be backed by Bitcoin, couldn't it?

That wouldn't be possible to do in a trustless manner. Also, say every dollar bill was backed by bitcoin. What would happen if someone loses that dollar bill?

To expand on the "trustless" aspect, you can't trust the government to back up its worthless paper money with a certain amount of ANYTHING.

Fiat can be counterfeited. But bitcoin can't. But if fiat was backed by bitcoin then you could counterfeit bitcoin i guess.

[Clochaard]

Bitcoin is not backed by gold or silver or USD. As bitcoin is based on blockchains and no one can counterfeit that.

[Lambent]

First of all, Bitcoin is not imaginary, it is real and it has its existence in the digital world. An asset of the digital world does not turn Bitcoin into an imaginary object, if that was the case then Microsoft and Google would have been imaginary as well, but they are not. They are very real.
The thing is, Bitcoin having a fixed existence of $21million in this world is more important than people realise. It keeps the cryptocurrency rare, guaranteeing that its value remains stable for years to come. This is why Bitcoin is sometimes referred to as "digital gold"; like gold, there is a finite supply of Bitcoin. Although Bitcoin was never created with the purpose of hedging inflation, many financial analysts believe that bitcoin’s fixed value is what can serve the purpose.
Moreover, comparing it to gold does not make sense. Because gold too is a natural resource, and one day it will come to an end as well.

[Abiky]

Why would it be? That's the good approach and I like it.
I personally do not think that things that we have as "based on" are not really based on it neither.

Like gold is not just based on gold if you ask me, it is just the market decided to play with it, and wealthy people are playing with it, you could give them literally manure, and they will make a huge market out of manure and act as if it is something super valuable and buy and sell accordingly.

Doesn't mean that it shouldn't be something special, it just means that they could take anything, say it's "backed", and then do whatever they want with it and leverage it 100 times over to make money from it.

The OP really doesn't understand what Bitcoin is and how it works. If he did, he wouldn't had come up with backing Bitcoin against something that has value. I'd say Bitcoin has value because people say so. It's the people who determine how much a Bitcoin is worth, just like any other thing in this world. It's all a matter of psychology where anything can have value as long as people believe it to be valuable.

What backs Bitcoin's value is its decentralized and censorship-resistant nature. Being sound money no one can control, makes it extremely valuable. Not only that, but the limited supply and deflationary mechanism of the pioneer cryptocurrency makes it highly-desirable among any other cryptocurrency on Earth. BTC has proven to be superior than Gold, so it's probably it will stay with us forever. Just believe in Bitcoin and you'll see how it'll make you rich in the future. Just my opinion

[larry_vw_1955]

The OP really doesn't understand what Bitcoin is and how it works.

I probably understand just as much about those things as you do.

If he did, he wouldn't had come up with backing Bitcoin against something that has value.

The way I see it, it's all fine and good to say bitcoin has value and for people to agree it has value. But if it was backed up by some real world asset like say real estate or something tangible then it would be even better because then it couldnt ever go to 0 as long as the real estate didn't go to 0. Simple as that.

I'd say Bitcoin has value because people say so. It's the people who determine how much a Bitcoin is worth, just like any other thing in this world.

Keep in mind that bitcoin is the first but not necessarily the best that mankind will ever be able to come up with. how many people are still driving around a Ford Model T?

It's all a matter of psychology where anything can have value as long as people believe it to be valuable.

maybe part of it is psychology. but it can't just all be psycological. there really does need to be not only a perceived value but the thing really does have to be useful in some real world way. otherwise we're just pretending it is valuable.

Just believe in Bitcoin and you'll see how it'll make you rich in the future. Just my opinion

That's not why I would be interested in bitcoin. I don't think it was designed for that purpose just my opinion though.

[odolvlobo]

maybe part of it is psychology. but it can't just all be psycological. there really does need to be not only a perceived value but the thing really does have to be useful in some real world way. otherwise we're just pretending it is valuable.

Bubbles are caused by people that only pretend it is valuable. Real value comes from utility.

[Biscutard]

maybe part of it is psychology. but it can't just all be psycological. there really does need to be not only a perceived value but the thing really does have to be useful in some real world way. otherwise we're just pretending it is valuable.

Bubbles are caused by people that only pretend it is valuable. Real value comes from utility.

Also real value comes from a flexibility and we all know bitcoin have expand through the years and it made a great impact. That's the reason bitcoin is good because of its unexpected disappointment or happiness of its results. Investing with security ensures you money but with very low rate and it's not always we don't need money that's why people sometimes take risk for this benefits even though they know it is very tricky sometimes.

[Morosophy]

Bitcoin is not a physical asset like Gold, it is a digital currency which is not controlled by any person or organisation. Moreover, no one can ensure that bitcoin will be a 100% success.

[larry_vw_1955]

Even gold isn't backed up by anything, right?  

trying to compare bitcoin and gold is kind of a longshot. they are not as similar as you might think.

So why do people trust it and want to pay with expensive value? Because people believe Gold is valuable. The main thing here is people's trust. It is the same as Bitcoin, it doesn't need to be backed up by something because people trust it. People believe Bitcoin is something valuable and useful for human life. In this matter, something like Gold and Bitcoin is acceptable although it is not guaranteed by anything.

You can replace bitcoin with something similar like ethereum if all you want to do is transfer digital money. The something similar argument. There's alot of cryptocurrencies out there. They do similar thing. they let you transfer digital money. so bitcoin can easily be replaced by any of them because they can do the same thing.

on the other hand, you can't just as easily replace gold with some other metal in every application. there are probably certain applications where gold is the only thing that you can use. or at least a much more limit set of choices than with bitcoin where you can literally pick dozens of other cryptos to use to "send your money".

[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?

As a general rule, money must be backed by gold and foreign exchange resources and the amount of goods in the civil circulation of each state. The US dollar is just the exception to this general rule, refusing to be backed by gold. But after all, it is backed up by many other provisions, which at first glance seem to be not obvious. First of all, it is the advanced US economic system, permeated with a huge number of mutual settlements. The most developed trade with the highest status in the world.
Secondly, it is the world's foremost political and military power. No country in the world has so many military bases around the world, such firepower, and the ability to influence the internal politics of other countries.
Thirdly, the United States has a concentration of various resources and tangible assets according to conditional estimates of 45 trillion dollars, which constantly generate income.
Fourth, huge loans have been issued in dollars. The banking system expects their return with interest. And this is a very good provision.

If bitcoin moves to be backed by gold or other material values, it will lose its current status and turn into a stablecoin or regular fiat, depending on the conditions under which such security will be introduced.

[AicecreaME]

Even gold isn't backed up by anything, right? 
So why do people trust it and want to pay with expensive value? Because people believe Gold is valuable. The main thing here is people's trust. It is the same as Bitcoin, it doesn't need to be backed up by something because people trust it. People believe Bitcoin is something valuable and useful for human life. In this matter, something like Gold and Bitcoin is acceptable although it is not guaranteed by anything.

Bitcoin is software. Gold is an element that cannot be created by man. It has to be mined. And obviously there is a limited supply of it available here on earth. Gold is a precious metal that has many applications and uses. Bitcoin is just software. You can copy software and rename it. You can't do that with gold.

Anyone with particular knowledge can create cryptocurrency. But not anyone can produce gold because it is an natural mineral resource that has limited supply. While this is true, it should also be noted that bitcoin can't just be reproduced easily by copying and renaming. It doesn't work that way. If you will insist on doing so, you will definitely not succeed in renaming it alone. You can do another crypto coin, but it isn't guaranteed that it will be as valuable as bitcoin.

Remember, there are many crypto coins now circulating in the market, but not everyone has a value. Not everyone of it have the potential to rise up or surpass bitcoin too. Because without patronage, a crypto coin is useless.