BTC NOT BACKED BY ECO SYSTEM

[d5000]

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.

I partly agree with the hypothesis that Bitcoin's "not backed by anything" - it's at least not a backing like the gold standard where you could exchange a Bitcoin to [random other asset].

But: Only "scarcity" matters? We have to look closer into the meaning of the word "scarcity". At least, a "limited supply" of coins and mining equipment isn't the determining factor - and that's what most people associate with scarcity. You can create a second Bitcoin with exactly the same or a even more restrictive reward schedule and chances are it won't have the same value (there were some altcoins that tried that and miserably failed, even if we ignore the 51% attack risk).

Thus, it is important that there's an ecosystem providing value to the network. Often the word "network effect" is used for that - more users willing to buy or accept it, more service providers (which make the currency even more useful) result in a higher value. And that's what the OP is referring to. I think it's a complex system of value creation, with lots of ingredients, that make Bitcoin special, even in comparison to similarly designed coins like LTC or XMR.

Of course, if you're using the word "scarcity" correctly incorporating demand into the equation, then the "ecosystem" becomes part of the demand side.

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!

Mostly correct, although I would argue that algorithmic stablecoins like Dai do have some use - for example as a means to save money in countries with an unstable currency like Argentina. But yes, most of the DeFi space is simply "trading a certain kind of ETH/whatever transaction for another one and whose transaction gets more hype wins!". And NFTs can be done with any cryptocurrency, including Bitcoin.

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[BlackHatCoiner]

Pretty much what hatshepsut93 said. If you use the term "backed by" as an insurance that 1 BTC can be traded at any time with 1 unit of an other asset, then it's wrong, because bitcoins aren't liabilities, same as bank notes were during the gold standard epoch. But, "backed by" is a synonym to "supported by" as well, which in this case is true; bitcoin's supported by a variety of merchants across the world.

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.

But, is that a good question? Say the same merchants who accept bitcoin, added ethereum to their available payment options. Would that unmake ethereum a shitcoin? Take a better example: Fiat. Everybody accepts fiat, but I can't deny it's a shitcoin, because a small group of non-elected people decide the monetary policy, and there's only one full node running. 

[pawanjain]

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.

I think you are mixing up things. Bitcoin and Ethereum both are not backed by anything. Both are digital assets.
The thing you are talking about basically is the utility. Ethereum's utility is smart contracts which people can use for a wide range of things.
Bitcoin's utility is the coin itself which is decentralized and enables us to make P2P transactions. This is what you should counter with.
Although these coins are not backed by anything they have their own values which I have just mentioned.

[pooya87]

Mostly correct, although I would argue that algorithmic stablecoins like Dai do have some use - for example as a means to save money in countries with an unstable currency like Argentina.

I disagree because even in those cases people should stick to real fiat currencies instead of an extremely high risk token created on a centralized mutable blockchain that promises to have a stable price with no guarantees. Not to mention this token itself is controlled by a centralized organization.
Besides MakerDAO is more of a lending platform than a stablecoin, and the price of the token is subject to the market volatility of the shitcoins like ethereum it relies on. We saw this specifically in 2020.

[mindrust]

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.

What asset backing ETH does have exactly? ETH and BTC are both not backed by any other asset. ETH has a real life use indeed but so does Bitcoin. People send and receive btc every day. They sell stuff, purchase stuff. That's the main use case of bitcoin. ETH on the other hand is providing housing for other projects mostly. People don't usually use ETH as a payment method.

You don't have to counter your friend's arguments anyway. He is not going to change his mind just because you successfully defended your arguments. People will believe what they want to believe.

[BlackHatCoiner]

Mostly correct, although I would argue that algorithmic stablecoins like Dai do have some use - for example as a means to save money in countries with an unstable currency like Argentina.

It might have some use case, but saving to a stablecoin must be one of the worst things you can do. First of all, saving on fiat currency is generally not a good idea, especially these days that it gets de-valuated day by day. And since stablecoin reflects to a fiat currency's market value, it's a bad tactic. Second, as said by pooya87, there are no guarantees that the company does have the necessary reserves, and that it'll continue maintaining this stability.

In fact, from a Forbes article of 2021, Tether released that they hold about 75% of their USDT in cash. The rest 25% comes from investments. And that wasn't always the case; they switched from 100% cash to 75% in March 2019.

Summarily, it isn't safe, because there's another centralized entity introduced to the whole situation, along with the FED.

I disagree

The only use case I can think of is anonymity. Say a merchant doesn't want volatility of bitcoin, and want (ironically the volatility of) their fiat currency. They can accept USDT, and you can acquire it and immediately spend it without holding it for a long enough time to experience losses.

[d5000]

[...]people should stick to real fiat currencies instead of an extremely high risk token created on a centralized mutable blockchain that promises to have a stable price with no guarantees.

The situation in Argentina is a bit "specific". The official exchange market is restricted. You can buy only the equivalent of $200 US dollars on the official exchange market, and only if you declare you don't receive subsidies for electricity and gas (which 90% of the population receive). You can do some financial operations to get "hard currencies" (e.g. buying Argentine bonds or stocks that also are listed in New York, and sell them for US). Of course there's a black market too. But these methods all involve some risks and/or are expensive. Thus people buy stablecoins and use them for saving, and also for buying/selling goods.

I agree with you that investing in stablecoins is much riskier than in the underlying fiat currency, but in this specific case, for some people which fear Bitcoin's volatility and don't want to trade, it can make sense. At least for relatively small amounts, e.g. to save for the next vacations.

So there are some niche use cases, but overall, I agree that 90%+ of Ethereum's "smart contracts" are only used for "circlejerk" speculation.

[bitgolden]

The idea of "backed by something" was gone about 50 years ago. Fiat right now is backed by governments but the idea is that it’s backed by the citizens, the moment citizens leave that fiat, the fiat becomes useless, aka we have seen buying gum with billions of dollars in some cases in some nations, and $5 get you a 5 star hotel in those nations.

So, you need to be really careful about what you invest into and use if it's backing you are looking for. USA is the greatest economy in the world and they are not backed by anything, it’s just guns and gunpowder at this point that keeps them in power, and they are doing horribly with that as well. So bitcoin is fine, it's same as any other fiat.