BTC NOT BACKED BY ECO SYSTEM

[udayantha11]

Today One Of My Friends Argued With Btc. Btc Is Not Backed By Any Asset Or Business. So Btc Is Only For Speculation Purposes.

Eth And Other Major Alts Have Asset Backing And Real Use Cases. For Example - For Eth; Smart Contracts Can Be Used In Contractual Deals.
Specially Alts Have Eco System. Btc Does Not Have.

I Stuck Because I Don't Know A Counter Answer To This. Please Explain How To Counter Attack This.

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[BlackHatCoiner]

Ugh, would you mind if you lower-cased for a sec? You know. Like an ordinary person who doesn't yell at you.

Bitcoin isn't backed by an asset, because it is itself an asset. Just like gold isn't backed by anything other than its shiny physical beingness, bitcoins are units that reflect to a digital currency that is supported by merchants who have collectively and individually recognized it can work in favor of them.

[d5000]

This is indeed an interesting topic, but @OP, *please* edit the uppercase!

Let's now analyze your friend's arguments:

1) "BTC is not backed by any asset or business". Not true. Bitcoin has the strongest ecosystem of all cryptocurrencies. There are lots of businesses working with it, exchanges, miners, merchants, other service providers, financial businesses (Grayscale etc.). And of course all the users and hodlers. Every Bitcoin bought by these entities, or on behalf of them, is the "backing" Bitcoin has.

2) "ETH and major alts have asset backing and real use cases". I would take this with a huge grain of salt. Of course Ethereum has an important ecosystem too. But most of the services offered by the businesses working with ETH smart contracts are directed to a single public: people wanting to speculate with ETH tokens. For example, most DeFi projects are contracts where you exchange one token for another one, speculating which one could become more valuable. There are DEXes where the most valuable items are - other DEX tokens (circlejerk anywhere? ). NFTs have a bit more real-world backing, but are also at the end used mainly for speculation. The way NFTs are currently used is also quite strange, often they seem not even contain a hash of the "digital work" they're representing. The only topic where I think ETH has indeed a better "backing" than BTC are stablecoins and derived assets. But the businesses assoaciated with them are often quite shady, so I don't know how "valuable" that backing may be (see the whole Tether controversy and of course Terra/Luna, even if it wasn't primarily ETH-based. Maker/Dai had problems too in the past, they may return.).

In conclusion, I don't think that the "ecosystem backing" ocurring in ETH is stronger than Bitcoin's. I would argue the opposite.

[teosanru]

TODAY ONE OF MY FRIENDS ARGUED WITH BTC. BTC IS NOT BACKED BY ANY ASSET OR BUSINESS. SO BTC IS ONLY FOR SPECULATION PURPOSES.

ETH AND OTHER MAJOR ALTS HAVE ASSET BACKING AND REAL USE CASES. FOR EXAMPLE - FOR ETH; SMART CONTRACTS CAN BE USED IN CONTRACTUAL DEALS.
SPECIALLY ALTS HAVE ECO SYSTEM. BTC DOES NOT HAVE.

I STUCK BECAUSE I DON'T KNOW A COUNTER ANSWER TO THIS. PLEASE EXPLAIN HOW TO COUNTER ATTACK THIS.

First of all ETH isn't backed by smart contracts but if offers a way to create smart contract as well, however this does not mean the smart contract has any value. Similarly other alts do provide value but is their price actually a barometer of the utility provided by it? Ofcourse not. Coming to btc it's utility is the easy transferring and storage of value which no other asset outside Crypto world provides this is what is bringing btc's value.

[blockman]

Chill out, you seem to be shouting through these all caps.

~snip~

He's right about bitcoin being speculative but he shouldn't be biased with the altcoins because they're all speculative. And to tell that it's not backed by anything, the entire market is being backed by bitcoin and talking about the use case. He's skipping the reality that bitcoin is the widely accepted cryptocurrency. If his basis is about having a smart contract as the real use case of a project then he should start to learn more about real-world use case which bitcoin has.

[stompix]

Eth and other major alts have asset backing and real use cases. For example - for eth; smart contracts can be used in contractual deals.
Specially alts have eco system. Btc does not have.

Probably your friend has the wrong impression of what a true economical ecosystem is.

Smart contracts can be used in some deals, but that doesn't mean they have an ecosystem it means they have applications for it, an ecosystem is a situation where each of the parties involved is interdependent on the other and can influence them, there is no real business other than some stupid jpg game that has anything close to resembling such a thing. Just because two people might want to make a deal that would be replicated in a smart contract doesn't mean they are forced to do it or they don't have the option of completely ignoring smart contracts and preceding in a traditional way, just as the entire world is doing right now!

None of those businesses (tokens) are matching one of the main points in the definition, and that is a "constrained" space limited by borders or laws, just how tether can issue tokens with the same value on Tron and ditch Eth without a fuss all those systems can be recreated in an instant within a different border. None of the said parties is completely interdepended of the other one.

Furthermore, 99% of the altcoins there are just participants in this mess, issuing tokens on a different chain, what's the backing they are receiving, at the end of the day every single token altcoin NFT and even Bitcoin is backed by only one thing, the trust of the people who would spend x amount on it, thinking that that's how much they are worth it, nothing else. Crypto kitties were valued in hundreds of thousands of dollars, now they are worth pennies, what's their backing power?

[franky1]

nothing is 100% backed.

stable coins are 99% backed by a 'promised' reserve of fiat peg. but recently a stable coin has failed to prove its reserve backing and crashed

gold is not purely backed by its "shine" its actually backed by the labour and cost of its creation. but this backing cost is also not 100%

bitcoin also is backed by its creation cost, but this also is not 100% of the variable price


lets make this very simple.
the very cheapest cost to acquire/create bitcoin is its backed value. the "no go" zone no one wants or can go below to get bitcoin because no one on the planet can mine or sell bitcoin for less

finding the cheapest mining/acquisition cost on the entire planet is the backed value.

right now bitcoin is backed by about $15k value because no one on the planet can get bitcoin for less by any means.

gold is backed by the cheapest mining rate on the planet hich is about $900

ethereum is PoS which if you calculate out the validators calculates to a $40 backing

fiat is not backed by common utility its backed by things like min wage
but min wage is not the same as cost of living. yep when the min wage vs cost of living spread increases, its called inflations

what you can do is create some visual display
take an assets max price it ever achieved.
take its cheapest acquisition price right now
take the look at the price

black is the no go zone price wont go below
green yellow red is the speculative risk window where the price will wiggle in-between

the [] border is the current price in its window





as you can see gold max ATH was about $2.075k and its current price is about $1.66k  but the lowest price it can possibly achieve is $900
meaning that its price in its window puts it in the yellow. meaning it can fall alot

Ethereums cheapest acquisition cost is about $40 the highest it ever achieved is $4.8k. so although ethereum is in the green it can still fall by alot

bitcoins max was about $75k. and is currently priced at $19.6k but its lowest possible cost to acquire is at $15k meaning its in a very good value spot where it cant go down much more

from this you can also work out how much of the PRICE is backed by the lowest cost acquisition backed value no one dares sell below

EG gold is 54% backed
EG bitcoin is 76% backed
EG ethereum is 3% backed

you then learn things like when bitcoins price was at the ATH it was only value backed by its underlying cost of about 20% which was also when it was in the red, so not a good value time to have bought bitcoin

but now the price is at $19.6k its very good value backed
better than some other assets

[jackg]

ETH AND OTHER MAJOR ALTS HAVE ASSET BACKING AND REAL USE CASES. FOR EXAMPLE - FOR ETH; SMART CONTRACTS CAN BE USED IN CONTRACTUAL DEALS.
SPECIALLY ALTS HAVE ECO SYSTEM. BTC DOES NOT HAVE.

Bitcoin can have other things built on it too (like backed tokens - the only thing real world exchangeable in the entire cryptospace going from your own definition). What are you going to make out of those smart contracts that are tangible and usable except other tokens?

It can't enforce contracts well either external to its network (yet at least - for eth).

Bitcoin is a secure distributed blockchain and network, its value comes from the security of the network and its community's ambitions for building on it, supporting it and using it.

[tadamichi]

ETH AND OTHER MAJOR ALTS HAVE ASSET BACKING AND REAL USE CASES. FOR EXAMPLE - FOR ETH; SMART CONTRACTS CAN BE USED IN CONTRACTUAL DEALS.

Can but aren’t. This argument will always stay irrelevant, because it doesn’t make sense to base basic business operations on a costly, centrally controlled, out of the businesses control and with no legal binding ledger when the business can achieve the same thing cheaper, more secure and better adapted to their needs themselves.

They don’t need ethereum or any other shitcoin to have smart contracts or more automated workflows(if they really need it at all), except if they wanna go bankrupt or give up part of control over their operations for no benefit. It doesn’t make sense cost and operations wise, it does simply fail in practice and is actually inefficient. That’s why you don’t see them do it, despite the hype, despite the technology being there since years.

Ask the people who actually handle the finances, processes or tech stacks of businesses on this idea, let them do the calculation and not some people who are just interested in hyping up useless tokens and don’t even run the use cases they’re preaching themselves.

[franky1]

once you understand the concept in my last post about backed value
(economics)

then looking outside of the no go zone value. and only look at the speculative green yellow red area. yes different assets have different features which can inspire people s sentiments(values.. not to confuse with value) which can drive demand and the price to be at a premium

but these sentimental (values) are not the same as the backed economic value

prolonged high demand of the sentimental values of utility, function, usefulness can create a higher non-zero bottom(black area no go zone) because the costs to make/acquire stay up so high no one would dare sell and cant make/mine for less



and yes in the past, such as late 2017 there was alot of sentiment in bitcoin that it was then offering new features due to a mandated upgrade that occurred. this desire and demand increased(along with other speculative reasons of that time period) which caused that price to rise

and yes right now many are stuck in the  NFT frenzy of adoring ETH more then BTC right now which is why ethereum is speculatively higher price than bitcoin

but thats separate from the "backed economic value"

once all the speculative hype of ethereum dies down. it will settle down closer to the black area

where as bitcoin has more potential to go up, because its not in a hype period right now, so when it does have a hype. it will go up

[famososMuertos]

It is an opinion matrix created and unfounded from the very creation of bitcoin, very obvious early days, but with more than 12 years and before all the infrastructure of users, entrepreneurs and in especially the ecosystem that is supported, then this it is not valid argue such a thing present day!.

In fact, you are part of the answer by having bitcoin, which is one of the elementary principles of bitcoin, trust.

The comparing bitcoin with ETH is valid, but! I have the premise that if ETH is valid for someone, please!! do not come to me with stories that bitcoin needs an explanation.

So let's look at traditional assets; An asset can be consistent and have all the tangible support you want, companies, products, etc. but in general sometimes investors (not all but generally in WS) rely on the performance of the asset, the digital % of profit or loss, but when traditional confidence is lost in an asset, as has happened in the history of WS, that said action that was based on "something tangible" that backed it is not such a thing, where does confidence go...(to hell)

In any case, this is how I see it to give you a differentiated "block" from other previous comments.

[Welsh]

Most fiat money isn't backed by anything meaningful these days. We've simply out printed the previous metals etc, that fiat relied upon for backing it up. There's only a few notable currencies in the current climate which are backed by something physically. All the other's sort of give the impression they're backed by gold etc, but in reality they aren't.

This will also change relatively soon as we're transitioning into a digital world, and therefore a digital money system, which likely won't be backed by physical precious metals. As for the counter argument, Bitcoin has continued to go up, and that should be proof enough. However, if it isn't Bitcoin is simply backed up by a logical algorithm which assures it remains somewhat deflationary which is already a massive improvement on any other fiat system out there.

 

[franky1]

being backed by. is not about "physical" (tangible)
because you then have to ask what is the tangible physical thing backed by to gain the underlying value

fiat right now is not backed by "just trust" or "physical gold" its backed by laws such as minimum wage that keep it useful/needed and also sets the underlying value

where in america and uk the £$10 is about an hours worth of labour

gold is not backed by "shiny" or "malleable". its backed by mining cost

ethereum right now is in high premium speculation compared to bitcoin. due to the PoS of ethereum. the price fell a bit each fortnight since the merge to PoS due to the underlying cost dropping. but its fighting to stay at its price which is now a premium due to the sentimental speculative emotions of utility. but that hype cannot sustain

with fiat because the min wage vs cost of living is spreading. the price is inflating meaning the value % is decreasing. people lose value holding onto fiat during this period of inflation

people really need to learn that the PRICE is not the VALUE
value is a separate number that sits below/underneath price.

when the price is near value then the asset is cheap/valuable. when the price is spread far from value. then thats expensive/over valued/ premium

the difference between the value and the price is an indicator of speculation. where by the spread can be very wide when their is alot of demand, desire, sentiment of need

[NotATether]

Only stablecoins are backed by an asset, that's why they are called stablecoins.

The rest of the cryptocurrencies, on the other hand, are not backed by anything. This includes BTC and ETH.

Some people will think that being backed by nothing is a negative. Actually, that is irrelevant. Only scarcity matters for the price, and Proof of Work cryptocurrencies have succeeded in making currencies that become more scarce over time - some faster than others. The cost of mining rigs helps ensure that scarcity.

The US dollar hasn't been backed by anything since the 70's, yet it's still a fine payment medium.

[pooya87]

The respond is actually pretty simple, just ask them to show you a real use case of shitcoins like ethereum in real world that is not for gamblers and speculators. There is none! All they end up doing is listing a bunch of useless tokens that are created only for one purpose: fundraising and scamming people. Something that does not need a "smart contract platform" to be done.

[witcher_sense]

In order to sustain its decentralized nature, bitcoin must remain independent of any asset or business because otherwise, it will rely on some centralized maintainers of bitcoin's value, which is obviously not good if our goal is a censorship-resistant, decentralized peer-to-peer system for transferring value. In short, bitcoin "backed by nothing" is actually a feature, not a bug. As for use cases, it is a completely different story since it has nothing to do with underlying assets or businesses supporting something. To understand what use cases bitcoin has, you first need to realize that bitcoin is money in its purest form. From that simple realization, which requires doing a lot of research, you may conclude that bitcoin being a convenient and efficient medium of exchange is the only use case bitcoin has and the only one that matters. Other use cases, such as a store of value or an asset for speculation, are just derivatives of that main one. Your friend doesn't think that bitcoin is a good form of money, which is why they refused to accept the fact that bitcoin is demanded because of its credible monetary properties that makes them a good medium of exchange.

[davis196]

Rule number 1:
Don't argue with people, who are ignorant and don't understand anything about economics and finance.
This is a waste of time.
Rule number 2:
Don't argue with people, who don't understand how cryptocurrencies and blockchains work. This is also a waste of time.
Only argue with people who understand how economy and finance works. Maybe some of them will understand how cryptocurrencies work.
Ask your friend what asset is currently backing the US dollar and the Euro.
If you ask me, the US dollar is currently backed by promises and debts. The same thing applies to the Euro.
This definitely seems like a great ecosystem.

[cryptoaddictchie]

Bitcoin is backed by majority of entities. Businesses, firms, institutions, investors, retailers, popular people and any individual who holds bitcoin. Its value is derived from supply and demand thats why theres a volatility with it.

On the other hand, ethereum is the 2nd of all that has a widely used application and also same with btc backed by its constituents (holders). I think your friend is just afraid with the idea that bitcoin or crypto is somehow a strong store of value against fiat which is literally not true but who knows. It works like gold and could double and triple its value in the future.

[Findingnemo]

Today One Of My Friends Argued With Btc. Btc Is Not Backed By Any Asset Or Business. So Btc Is Only For Speculation Purposes.

Eth And Other Major Alts Have Asset Backing And Real Use Cases. For Example - For Eth; Smart Contracts Can Be Used In Contractual Deals.
Specially Alts Have Eco System. Btc Does Not Have.

I Stuck Because I Don't Know A Counter Answer To This. Please Explain How To Counter Attack This.

As a common man its understandable that why he asked such question but as someone who know the basics of economy and importantly money we need to tell them these are the lies kept told to us millions and billions of times which registered in everyone's mind so the money we use actually backed by the reserves while in reality the money isn't backed by anything, they just print more money every year which is why we get into inflation and so one.

For the topic if we say ETH and other shitcoins has more use case because they case eco system supported by network then tell bitcoin is more accepted and highly decentralized unlike those shitcoin, the real meaning and purpose is behind the bitcoin not the ecosystem.

So since we got the better technology the system will built on its own like we are witnessing what is the status of bitcoin before 10 years and now.

[hatshepsut93]

People use the term "backed" wrong. If an asset can be exchanged for another asset at a fixed rate at any time, then it means it is backed. But when people say that an asset is backed by something because that something gives it value, that's incorrect use of the term.

Bitcoin's and most altcoin's price is formed by supply and demand. The exception are stablecoins - their value is the same as the value of a currency that they represent, although in some cases it's not guaranteed, especially with algorithmic stablecoins.

Having a large ecosystem with many active users generates a lot of demand for a coin, which results in higher price. But altcoins don't really have big ecosystems, they merely pretend to have it. They hire shills by offering bounties, they do airdrops to generate some blockchain activity. Even Ethereum's ecosystem is largely fake, because it is not related to real world economy, it's just the most popular way to create and swap useless tokens.