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

[Ayers]

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.

although bitcoin is really just software and only works when there is an internet connection, but look back 13 years, many altcoins have been created and have you seen one that is similar to bitcoin or is there any better than bitcoin that you have seen?

whatever it is, their value will be determined by people's beliefs, once we lose faith in it, they will become useless
gold is no exception, its value is also determined by people's beliefs

[amishmanish]

There is one thing. Bitcoin is a blockchain based secure programe that allows you to securely share data over internet. It is a smart contract. Blockchain is a secure tech that can be used for different purposes, like saving users data. Etc. In Bitcoin case it is being used for as an advanced financial tool, for transactions. Thus it  becomes equivalent to money. So you can never back it up by anything, because it is a computer program and will remain that always. Yes it is super secure shareable and thus can be used as transaction token.

[kaggie]

Bitcoin is based on something that has value -- energy, or the energy that proof-of-work requires.

All currencies are based on the value of energy production more than anything else. All civilizations develop according to the energy that they have available.

[BobK71]

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.

Gold is a metallic substance that has shape ‍and existence which can also be seen in use. Gold and Bitcoin cannot be compared in real terms. There are two different things. One exists and the other has no existence in reality. But if I compare the potential and the price as well as the asset, then the value of bitcoin is definitely higher than gold. It must be accepted that people of this age prefer the digital form of their wealth. Bitcoin has quite a few advantages in this aspect.

[Abiky]

I am so tired of people claiming that Bitcoin has no intrinsic value.

Some people seem to think that things like electricity, rented room, mining rigs, internet costs and so on are provided for free by some socialist government entity or something? All those things cost money. You can't mine Bitcoin for free. If you want to mine Bitcoin, it will cost you money.

That potential cost of mining Bitcoin is what gives Bitcoin its minimal, base value.

Unless you steal your neighbors electricity. But in that case your neighbor would be paying for your Bitcoin mining.

But thats a short term solution.

You've said it yourself. Bitcoin is backed by the energy spent mining it using specialized hardware (called ASICs). It's not really made out of thin air, as some would say. Most people don't understand how Bitcoin can have value on its own, because they've never taken the time to do their own research. They're just following someone else's opinion about it (what wealthy people and big banks say against Bitcoin).

There's no need to back Bitcoin's value with Gold or any other precious metal, because it can do well on its own. With no central authority, people like you and me are the ones who dictate how much a Bitcoin is worth on the market. It's all based on the rules of supply and demand. Bitcoin is portable, censorship-resistant, decentralized, scarce, and pseudonymous. What more would you want? Fiat is losing its value anyways (it's only backed by debt), so investing into Bitcoin would be the wisest decision you'll ever make. Who knows if someday Bitcoin becomes the standard unit of account? Just my thoughts

[larry_vw_1955]

 It must be accepted that people of this age prefer the digital form of their wealth. Bitcoin has quite a few advantages in this aspect.

Well I don't know about that. Gold is a big business. In every town all over the world there is going to be pawn shops that will buy your gold. they not might not be interested in your bitcoin though.

Gold for some people serves as a status symbol. you can wear it and display it if you have enough money to buy a gold chain. or you can buy a gold bar and admire its beauty. you can't do that with a bitcoin. so no, i don't think people of this age all prefer bitcoin. there will always be gold collectors and people that wear gold as a status symbol. they won't care about btc at all. just how it is.

[Abiky]

Well I don't know about that. Gold is a big business. In every town all over the world there is going to be pawn shops that will buy your gold. they not might not be interested in your bitcoin though.

Gold for some people serves as a status symbol. you can wear it and display it if you have enough money to buy a gold chain. or you can buy a gold bar and admire its beauty. you can't do that with a bitcoin. so no, i don't think people of this age all prefer bitcoin. there will always be gold collectors and people that wear gold as a status symbol. they won't care about btc at all. just how it is.

Gold is often appreciated by mainstream investors due to its tangibility and versatility. You can use Gold for many things in the real world like manufacturing jewelry, using it for semiconductor components, etc. But you can't do that with Bitcoin because it doesn't exist in physical form (even the physical coins you see around are not really Bitcoin, they're just wallets with public/private keypairs on them). Despite this, BTC has value because it's backed by real world resources (energy spent during the mining process). Not only that, but the cryptocurrency itself has a limited supply of 21m coins and there's no central authority behind it. The decentralized and censorship-resistant properties is what has made Bitcoin an extremely-valuable cryptocurrency to this date.

If I'd were to invest into a store of value to help protect myself against inflation, I'd choose both Bitcoin and Gold for complete peace of mind. But not everyone is willing to hold both types of assets/commodities. As long as you don't invest all of your life savings into them, there should be nothing to worry about. Just my opinion

[adzino]

For obvious reasons the supply of bitcoin is limited and you can't "contract" or "expand" the supply. Imagine "contracting" the supply of bitcoin and your coins vanishing from your wallet. How would you feel?

Why does it have to be based on something that has value? Bitcoin has it's own value. We, the people determine the value of bitcoin. Fiat currency isn't based on something that has value and is printed out of thin air whenever the government wants. At least bitcoin isn't controlled by government or centralized organization where they can fix, add or remove supply.

[larry_vw_1955]

For obvious reasons the supply of bitcoin is limited and you can't "contract" or "expand" the supply.

you can't do that with bitcoin because bitcoin isn't backed up by any asset that has a stable price. but imagine how you could do it if it was. make sense now? consume the asset, your bitcoin is burned. buy the asset, you just minted a bitcoin. maybe i should call it something else other than bitcoin because people here seem to think i'm suggesting bitcoin has to be changed over to working that way.

Imagine "contracting" the supply of bitcoin and your coins vanishing from your wallet. How would you feel?

will never happen.

Why does it have to be based on something that has value?

well that's one of the weaknesses of bitcoin but that's how bitcoin works and it works so until something better comes along we're stuck with it. not like it's a huge problem but the ford model t got replaced eventually with better cars. same thing could happen to bitcoin.

Bitcoin has it's own value. We, the people determine the value of bitcoin.

People are not necessarily the best judge of something. That's why bitcoin's price fluctuates wildly over the years. Because people can't make up their minds what bitcoin is worth is what I think.

Fiat currency isn't based on something that has value and is printed out of thin air whenever the government wants. At least bitcoin isn't controlled by government or centralized organization where they can fix, add or remove supply.

Yes, bitcoin is certainly an improvement over the government just printing money out of thin air. Does that mean bitcoin is the ultimate solution to that problem? No. probably not. thus this thread 

[Jo_Liu]

To many experts, this limited supply, or scarcity, is a big contributor to Bitcoin's value. Cannot be copied: Because Bitcoin operates on a blockchain ledger, no one can counterfeit a Bitcoin.  The scarity is what Bitcoin's value based on. https://xtrading.com/financial-questions/what-makes-bitcoin-valuable/

[DigitalMonk]

Very good question. First, I was thinking like you and then tried to understand the nature of the money and the economic system what the Bretton Wood  X and X group has created after the second World War. 

You need to understand what is value and how you determine the economic value system in the financial medium of exchange ? Currency cannot be based on economic value, as many economists thought that all the fiat currency should be  based on gold value.

The fact is gold does not have any economic value but there is an ornamental value of gold, which is much lower than the gold price. Gold value was imposed by a monopoly system by the bankers that was top of the goldsmith's ornamental value.

So Bitcoin is not actually a currency like that of fiat  curgency that is tendered by the government and it has a monopoly currency value according to the Foreign Exchange Regime.

Bitcoin is different and Bitcoin directly valued by the market demand instead of gold value or fiat currency value.

Bitcoin value seems to rise and fall but it has two different fundamental elements involved, first the market demand of Bitcoin and fiat currency devaluation. Both is working together to determined the Bitcoin value in the Foreign Exchange Market.

 

[larry_vw_1955]

To many experts, this limited supply, or scarcity, is a big contributor to Bitcoin's value. Cannot be copied: Because Bitcoin operates on a blockchain ledger, no one can counterfeit a Bitcoin.  The scarity is what Bitcoin's value based on. https://xtrading.com/financial-questions/what-makes-bitcoin-valuable/

ok so let's break down the gist of that article.

Bitcoin Value is Partly Determined by Bitcoin Scarcity

Not all cryptocurrencies have a maximum supply like bitcoin but some do. Does that mean they are valuable?

What Gives Bitcoin Value? Difficult To Take, Yet Simple To Move

Well again, most cryptocurrencies rely upon public key cryptography for their security and such. So that makes them difficult to take if you don't know the private key but simple to move if you do know the private key. So that means all cryptocurrencies are then valuable?

Or is bitcoin somehow unique in that it has value while some of the others don't yet they function essentially equivalent to bitcoin. Maybe bitcoin is just treated as more valuable because it is more popular thus more people use it than some other cryptocurrency? Is that the basis underpinning bitcoin's true value proposition because if so, that could change. All it would take is people to start using some other cryptocurrency in place of bitcoin and then bitcoin would be less valuable?

[philipma1957]

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.

First off btc has definite utility in the power sector.

It also can be used to create demand and build larger solar arrays.

Lets explain the demand concept.

Warehouse owner has a 2 acre flat roof not in use.
He is a dry goods warehouse. Means he uses no refrigerators and very little power.

He wants to creat a solar array. His demand is very low. Maybe 10kwatts an hour day 240 kwatts a day or 7200 kwatts a month.

A two acre solar array can have 400  400 watt panels which is about 160 kwatts peak per hour.

that is about 800 maybe 900 kwatts a day.

so lets put a 400 panel array on the roof. Nope why daily demand is only 240 kwatts not 800-900

So maybe only 100 panels are allowed maybe 120.

you waste the space on the roof  and can not do the 400 panels.

Well bitcoin fixes this.
Put in enough gear to make 40kwatts an hour vs your current 10 kwatts an hour.

that is about 10 s19 miners.

do it for six months maybe one year you now have the demand to allow 400 panels. vs 100-120 panels

This is real utility. you created 900 kwatts a day worth of power vs 240 kwatts a day of power

and you mined btc.

That is real value. commerical power is at least 5 cents a kwatt

900-240= 660 times 5 cents is $33 a day in extra power created by those miners

that is over 11000 a year in extra power create.

thus real utility

so the argument you post should be deleted or altered to say besides demand utility (which i clearly show is real) what worth does btc have.

I have a second one btc due to pow mining can allow for excess power production to not be wasted.

Yeah power plants have over capacity and shut down if coal or oil but if the plant is hydro it can not be shut down. btc mining allows that excess power to not be wasted.


that is  two real examples of why btc has true value.

third since i proved that btc has real value it means a real value item can be moved out of a country in case of a war.

ie you live in ukraine and escape you can easily recover your coins in another country.

so three real true reasons that can not be erased or dismissed as fake value.


and as the op what you got to shut that down?

World world three and complete loss of the civilized world 🌎 world be one valid argument
Complete world agreement to outlaw btc  also works that would mean no internet.

Maybe you have a third one?

[Cryptmuster]

Gold is a metallic substance that has shape ‍and existence which can also be seen in use. Gold and Bitcoin cannot be compared in real terms. There are two different things. One exists and the other has no existence in reality. But if I compare the potential and the price as well as the asset, then the value of bitcoin is definitely higher than gold. It must be accepted that people of this age prefer the digital form of their wealth. Bitcoin has quite a few advantages in this aspect.

Each of these assets has its own value, its own advantages and disadvantages. What determines the price of gold? It needs to be found, mined, for this you need a lot of equipment, then processed, transported and stored. All this affects its final cost, as in the case of bitcoin, in order to get it you need equipment, electricity, equipment maintenance. But the amount of bitcoin is limited compared to gold, and the more people want to own some part of bitcoin, the more expensive it will become.

[larry_vw_1955]

that is over 11000 a year in extra power create.

thus real utility

$11,000 income per year to install 400 solar panels and a bunch of bitcoin miners ?  I don't see how that would make financial sense. Hopefully this person would have some other use for those solar panels if he couldn't make a profit from mining bitcoin.

Yeah power plants have over capacity and shut down if coal or oil but if the plant is hydro it can not be shut down. btc mining allows that excess power to not be wasted.

it depends what type of hydro electric generation is being used. if it's pumped storage then they can store the excess energy into a reservoir for later use. so it's not being wasted in that case. it just gets used later during periods of peak demand. try this example instead: https://www.marketplace.org/2022/03/25/crypto-miners-use-natural-gas-stranded-in-wells-to-power-energy-hungry-rigs/

third since i proved that btc has real value it means a real value item can be moved out of a country in case of a war.

ie you live in ukraine and escape you can easily recover your coins in another country.

that's an extreme example but ok i wouldn't argue that bitcoin (or any other cryptocurrency) makes it easy to move your money. but it's not maybe as simple as just packing up a few bags and memorizing your brainwallet passphrase. what if you own alot of physical assets like real estate and houses? first you have to sell them, get the money, convert it into bitcoin. in an emergency, you might not have all the time in the world to do all those things.

and as the op what you got to shut that down?

World world three and complete loss of the civilized world 🌎 world be one valid argument
Complete world agreement to outlaw btc  also works that would mean no internet.

Maybe you have a third one?

the third one is that something better comes along that people prefer it and bitcoin takes a back seat to it. so far that hasn't really happened.

[Wakate]

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?

This is the best answer that suit op request because I still haven't seen currency been backed by something which keeps me contemplating. Bitcoin is a peer to peer currency and it existence had prompted many altcoins that we see in the market now.
 Many altcoins now that are in the market seem to be backed by something which is nit ways read and most time it is users to decieve investors to keep investing in n such project. Bitcoin is still doing what it promised and I am happy that many adopters of it has no regret so far.

[Abiky]

Each of these assets has its own value, its own advantages and disadvantages. What determines the price of gold? It needs to be found, mined, for this you need a lot of equipment, then processed, transported and stored. All this affects its final cost, as in the case of bitcoin, in order to get it you need equipment, electricity, equipment maintenance. But the amount of bitcoin is limited compared to gold, and the more people want to own some part of bitcoin, the more expensive it will become.

Just like Gold, time and energy is spent to mine Bitcoins. It's safe to say that cryptocurrency's value doesn't come out of thin air. Most people can't believe how something intangible as Bitcoin can be more valuable than Gold. That's because they truly don't understand how Bitcoin works. The general public only believes what the government says about Bitcoin, so they will say Bitcoin doesn't have value without taking the time to do their own research. It shouldn't matter since ultimately the market decides how much Bitcoin is worth in Fiat terms. As long as there's demand for BTC, it won't be going anywhere soon. Just my thoughts

[Skybuck]

Electricity has value you dummy ! lol.

[Artem Sereda]

 It breaks the whole concept of decentralization and cryptography that is built VIRTUALLY. Bitcoin was created for this, to create a coin that "does not exist".

[JaimeAlejandro]

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.

BTC is backed by electricity, that is a scarce good. The reason to have a limit of 21 one million units is to add even more scarcity to the currency. It could have been any limit. It could have been just 1 unit and it would haven’t been the most convenient, but it would have worked. In any case, it seems to me that what you don’t understand is the concept of money.

Start with this interview to Saifedean Ammous: https://podverse.fm/es/episode/m3jJcVzOl.

Try to understand this concept also: all and any currency used as money, based on multiplication of its fundamental unit, over the time and independently on how long it takes to reach the mathematical limit, its value tends to cero. This is the pathetic case of fiat currencies (include ETH on this type of currencies). On the contrary, all and any currency used as money, based on the subdivision of its fundamental unit, over the time and independently on how long it takes to reach the mathematical limit, its value tends to infinite (this is hypothetically and meanwhile nobody demonstrates this statement to be false, where wealth created by humans tends to).

If you understand the mathematical concept of limit, you’ll understand this. If not, maybe you should also study this concept first.

You can also download Ludwig Von Mises “The Theory of Money and Credit” from this link: https://mises.org/library/theory-money-and-credit.