I get that anything is worth whatever someone is willing to pay for it. That's besides the point. My point is, beyond speculation, what do crypto coins represent?
I also understand that the value of the US dollar is being questioned almost as much without the backing of gold.
But what I really want to know is what is at the foundation level of Bitcoin that people are buying into?
I have a basic understanding of the blockchain, etc. I sold 1BTC in 2017 for $1200 when I thought that was as high as it would go. At this point, at over $100kUSD and rising steadily, what is the $ limit and what is that limit based upon? I thought it was based on the value of mining to check transactions but this seems... not worth $100k to me.
I've been thinking, the only tangible value I personally see in Bitcoin, because it's not really being used as legitimate currency, is for criminals. By now, there must be trillions of dollars in BTC acquired by criminals holding corporations hostage. When you've got people like Trump involved (either explicitly or by way of manipulation) with an executive order to establish a crypto czar, this suggests to me that he's creating pathways for bad actors to more effectively gain more wealth. These are the people who are most excited in Bitcoin, beyond speculation.
I mean, there's little to nothing on the up and up with crypto, right? It's a scam. Right?
Please, factual answers only. I'm looking for someone to dispel my speculation with genuine economics of the matter.
100 Comments
TabbsTheBat@pawb.social · 47 pts · 1y
So you know how fiat currency is backed by nothing more than the fact the government says it's valuable and we all agree to that? Crypto is sort of like that except without the government bit
davel@lemmy.ml · 20 pts · 1y
Fiat currency is backed by taxation, which can only be paid in the very same currency that the taxer prints.
📺 Your Taxes Pay for Nothing
Bronzebeard@lemmy.zip · 1 pts · 1y
Some states have been looking into allowing you to pay your taxes with crypto, so checkmate atheists.
___qwertz___@feddit.org · -1 pts · 1y
No stable state with a strong currency would ever do that.
Bronzebeard@lemmy.zip · 2 pts · 1y
Based on ... What exactly? Your gut feelings?
agamemnonymous@sh.itjust.works · 16 pts · 1y
Yup, all boils down to faith in the currency. For something like the dollar, it's backed by faith in the US government. For something like Bitcoin, it's backed by faith in the resilience of the blockchain and the value buyers place on it. Emperor Norton minted his own currency which was accepted all around San Francisco based purely on the fact that people accepted it.
Jeroen@lemmings.world · 2 pts · 1y
It's a lot more backed by the faith that if you don't manage to get some you go to jail.
EfreetSK@lemmy.world · 5 pts · 1y
But I can buy anything with fiat curency and with bitcoin I can basically buy nothing. And I never will be able probably, bitcoin is too slow to be used as an actual curency to buy common things like groceries
WhyJiffie@sh.itjust.works · 3 pts · 1y
bitcoin is a bad currency but you absolutely can buy legal things. like, check shopinbit. there's also a similar website that buys the thing for you from amazon
mrjack@lemmy.world · 1 pts · 1y
Payments of this nature using the layer 1 blockchain are not super feasible, as you say. (Although I've made several online purchases using BTC and it works quite well.) However, layer 2 solutions like the Lightning network do allow for extremely fast and cheap transactions, then they use the slower layer 1 blockchain for final settlement later.
Cryptocurrencies have three main attributes that affect their usability: Speed, Security and Costs. You can pick any 2 but there's always a tradeoff with the 3rd. For example, BTC chooses to prioritize security over everything else. This results in it being slower and sometimes more expensive than other crypto, but that extreme security is what makes it such a good store of value over the long term.
If you want faster and cheaper transactions, you can use other cryptos like Solana but the security and reliability is no comparison.
You're right, you may never use layer 1 for everyday transactions but there is nothing better when it comes to storing and transferring large amounts of value. So just sell a little BTC every now and then and convert it into whatever currency you need for everyday use, whether that be fiat or some faster, cheaper (but less secure) cryptocurrency.
vga@sopuli.xyz · 1 pts · 1y
Bitcoin is pretty fast. You get 5 confirmations in about an hour. If you compare it to credit cards, the equivalent thing (clearing and settlement) happens in about 2-7 days.
Thing that matters to the merchant is a bit different than the thing that happens with the customer. You can build similar layers in front of the customer for crypto payments that make it look like the payment went through in a second.
Knock_Knock_Lemmy_In@lemmy.world · 0 pts · 1y
People buy big ticket items like cars and houses with bitcoin, not chocolate bars.
Hirom@beehaw.org · 2 pts · 1y
Except the lack of government AND the massive amount of pollution and resources waste.
locuester@lemmy.zip · 24 pts · 1y
At its core, it represents an irreversible proof of digital existance. Blockchain is the only technology that can do this, and it makes it more valuable than you’d think.
Bitcoin itself has first mover advantage, and that keeps it on top. It’s hard to point to any particular feature of bitcoin that warrants this first place position, aside from pure decentralization of holdings.
The irreversibility of blockchain transactions is very underrated to most of us, but think about it… no bank or government, even with military involvement, can reverse a transaction or seize assets. For most of us in nations with sophisticated financial infrastructure and govt, this doesn’t sound like a big deal, but for the majority of the world, this is a huge deal.
It also represents freedom from fiat. Since the beginning of currency govts have used it as a means to extract wealth from the populace. Printing, confiscating, and controlling as it pleases them. We’ve historically used gold to hedge against this, and there’s even instances in history where govts have devalued and confiscated gold as a means of supporting itself. Bitcoin brings all the freedom of gold, with all the benefits of the digital world.
oxjox@lemmy.ml · 5 pts · 1y
Awesome. I appreciate this perspective.
Can you dig a bit deeper into the benefits for normal people that an irreversible transaction offers? To me, this seems like a detriment. Like, if I sell something on eBay and it turns out to be broken or fraudulent, PayPal can reverse the charges for me. Actually, I have a real world example of buying sneakers online that never arrived and had my credit card reverse the charges for me.
ThanksForAllTheFish@sh.itjust.works · 4 pts · 1y
I guess it's more useful as a store of wealth than a currency. Like gold it can be transferred irreversibly between owners, except now the transfer and storage costs are significantly reduced and it's available to the general public as an option. The key benefit is the use of the internet as a transfer medium, you no longer have to rely on a third party to facilitate the exchange, which for most large transactions means paying someone to transport it and store it (lawyers, guards, banks).
It does allow for easy exchange for all users, including criminals, but generally using it for crime is a terrible idea, as every member of the network can see all transactions. Bitcoin is more of a notice board about what addresses have what amounts, and if you can prove to the people that post on the notice board that you control an address, you're allowed to spend the contents and update everyone of where you sent it.
People came up with an idea for how to do chargebacks, it's called an escrow service, a third party that holds the money until all parties have had a chance to raise a dispute and confirm they are happy. This is the same as how PayPal works, trust based on reputation of the escrow provider, and the escrow provider is payed a fee. It's just that now with bitcoin, you also have the option to complete the transaction online without an escrow provider, the same as you would in person with cash.
locuester@lemmy.zip · 4 pts · 1y
It’s not a benefit in the example that you provide. It’s a benefit to the seller for sure. For that type of transaction it benefits you with lower prices due to retailers not having fraudulent sales result in chargebacks. This is the reason you’ll see it adopted by merchants (not Bitcoin, but stablecoins on Solana or Eth L2s).
The benefits on the consumer side are around freedom of money - no seizures, no bank runs, no fraudulent cc charges (but added key management risk), no inflation (eh, but added volatility rn), instantaneous worldwide transfers (that’s where you see the remittance market buying in). Also new decentralized financial markets which bring better yield rates than banks.
It’s a little more gray on the consumer side and I would expect services built on top to add insurance, escrow, and custody (exchanges and banks) type features.
The other place it’s making waves is with larger amounts of money. Hedge funds, venture capital, and higher net worth individuals. It makes moving capital around much easier.
So in that realm we see growth with it making its way into traditional markets - like stocks and commodities. Instantaneous settlement in this world is huge. Stock transactions can take anywhere from a day to 3 days in the tradfi system. On-chain we make atomic, irreversible, censorship resistant transactions instantly.
You can already see companies launching stock backed tokens on chains now. Just a couple weeks ago StockX went live on Solana. Anyone can buy US stocks, anonymously, with no onboarding requirements. This disrupts global capital markets.
So in summary, the benefits down at the consumer level focus more around access to new, secure products for earning yield and availability of alternative inflation-free assets with instant availability.
Also, privacy. This world really re-enables us as consumers to have some financial privacy. That’s another whole rabbit hole tho and my thumbs are tired.
dizzy@lemmy.ml · 3 pts · 1y
So PayPal or your bank are third parties that you have to trust will act honourably.
You can still do that with cryptocurrency and use third parties or dapps with escrow style protection features but you can also do direct transfers, without any third party involvement and no protection, like giving cash to someone requires no third party approval and there are no protections.
overload@sopuli.xyz · 1 pts · 1y
Almost relevant XKCD
locuester@lemmy.zip · 1 pts · 1y
There’s many defenses around a $5 wrench attack. But in the end, no, crypto doesn’t fix crime.
JASN_DE@feddit.org · 24 pts · 1y
Nothing.
nondescripthandle@lemmy.dbzer0.com · 22 pts · 1y
One could argue envriomental damage or power consumption, which is of almost no relevance to a currency, but thats the imprint they leave on the world because of their existence.
BertramDitore@lemmy.zip · 12 pts · 1y
Yeah, this is what I came here to mention. Environmental damage and power consumption are what bitcoins cost, but those costs don’t give bitcoins any inherent value.
It’s actually a pretty appalling example of human ingenuity. We’ve managed to invent something that has a disproportionately terrible impact on every person on earth through its environmental effects, while simultaneously producing no practical value to anyone other than those wealthy enough to be in control of it.
Knock_Knock_Lemmy_In@lemmy.world · 2 pts · 1y
Because bitcoins cost X to produce, people believe they are worth X.
floo@retrolemmy.com · 15 pts · 1y
Eddyzh@lemmy.world · 4 pts · 1y
This is actually quite good. OC? / Source?
floo@retrolemmy.com · 11 pts · 1y
Auntievenim@lemmy.world · 3 pts · 1y
I always pay my respects to a fellow knower
o7
To you and yours
vfreire85@lemmy.ml · 1 pts · 1y
i'm glad you said that, i was confused if this was either an apocryphal from ayn rand... or the great nagus, who knows.
floo@retrolemmy.com · 2 pts · 1y
mamotromico@lemmy.ml · 2 pts · 1y
I was unironically checking if someone had posted this or else I would.
Thank you.
reddig33@lemmy.world · 12 pts · 1y
Beanie babies 2.0.
ProfessorScience@lemmy.world · 11 pts · 1y
This is not the same for all crypto currency, but a bitcoin represents a "proof of work". When people "mine" bitcoins, they are consuming computational resources, and when they find a bitcoin, it is a certification of the work that was done to find it that becomes the value of the coin. And then, as others as mentioned, people just agree that that work has a certain amount of monetary value. But the proof of work is what limits the supply and allows that value to exist. 3Blue1Brown has a really good video that goes into the technical details if you're interested.
oxjox@lemmy.ml · 5 pts · 1y
Thank you for being one of the few to take me seriously and offer a thoughtful response.
I can understand now the value of a token that represent some amount of effort that is limited in its supply. As "promised", no other bitcoins will ever be made. So this alone makes it worth something. The fact that it represents some amount of effort achieved does seem to give it some validity. Although, IMO, certainly not $100k worth.
I'll need to think this over some more and maybe update this post with some more thoughts on the future of the coin.
tias@discuss.tchncs.de · 9 pts · 1y
The key feature is that there's a mechanism that limits supply. Other than that, value only exists because enough people agree that it has value. Fiat currency is exactly the same in this regard.
I think your questions indicate that you don't have sufficient understanding of how "ordinary" money works. It's just a promise of being able to exchange it for goods & services in the future, and its value hinges on people trusting that promise.
Jeroen@lemmings.world · 1 pts · 1y
(posted this comment somewhere else too)
(Paper) money is practically actually valuable because you need it to pay taxes. Gold, diamonds etc you could do without. Of course there is more nuance but taxes force people to value currency and therefore also accept it from others (because you need some of it or you go to jail), which gives currency the circular value.
Knock_Knock_Lemmy_In@lemmy.world · 10 pts · 1y
In 2021, 0.15% of known cryptocurrency transactions conducted were involved in illicit activities like cybercrime, money laundering and terrorism financing
pyre@lemmy.world · 4 pts · 1y
sounds like the word "known" is doing some heavy lifting there
Knock_Knock_Lemmy_In@lemmy.world · 1 pts · 1y
The assumption that bitcoin is only used by criminals is much less accurate.
oxjox@lemmy.ml · 2 pts · 1y
You’re gonna have to give me a source for that buddy.
Knock_Knock_Lemmy_In@lemmy.world · 3 pts · 1y
It came from here but this source has more detail.
Korkki@lemmy.ml · 1 pts · 1y
Is that by total number of transactions or by bitcoin volume?
Knock_Knock_Lemmy_In@lemmy.world · 3 pts · 1y
I copied that from Wikipedia which got their reference from through NY times.
For specific details, this is probably a better source https://www.trmlabs.com/resources/reports/the-illicit-crypto-ecosystem-report-2022
CanadaPlus@lemmy.sdf.org · 9 pts · 1y
Bitcoin specifically? No. It's a janky prototype that should have been superseded a long time ago.
Crypto in general? Probably something. It's good for buying and selling illegal things.
Knock_Knock_Lemmy_In@lemmy.world · 2 pts · 1y
Modern blockchain protocols dominate bitcoin in every dimension except market cap.
Windex007@lemmy.world · 8 pts · 1y
What is a first edition holographic charizard worth? What is the utility of that card?
Things are worth what people are willing to pay for them.
You can't eat a Bitcoin for sustainance. Or hammer a nail with it. You can't do either of those things with a pokemon card either.
I feel like you get this, based on your post... But you still are hung up by it.
Bitcoin's attractive utility for many is that you can transfer them pretty much unimpeded by any external entity. Like a government for example.
Like, hypothetically, what if you wanted to send a million dollars to your family back in, I dunno, Hong Kong. Do you think you can put that in a suitcase and hop on a plane? Do you think your bank will just send that wire? No. Government needs to know about it.
You can send a million dollars worth of Bitcoin, though. No problem.
What about if the government decides to seize your assets, for whatever reason? Maybe you were a little too loud about your support of Palestine and a man child president decided to make an example of you? They can raid your home. They can seize your bank accounts. Can they get your Bitcoin? Nope (if you're actually holding it yourself)
What sets Bitcoin apart from other currencies is that it's very government resistant. You CAN hold it yourself. Not digitally in a bank. Not as bills under your mattress. It cant be seized.
How much SHOULD Bitcoin be worth, given the utility it provides? No idea. But it's something.
sxan@midwest.social · 8 pts · 1y
When it was first released, I was interested in the decentralized nature of it as a currency. I liked - well, I still like - the idea of a currency that isn't controlled by a government. At the time (2009-ish?), I also thought it was anonymous, which also appealed to me; cash is mostly anonymous, but it can't be used online, and even then the fact that society was increasingly moving toward cashless - and very traceable, and usary-heavy - credit cards was clear. Stripping privacy is critical to control.
Bitcoin isn't anonymous, but other cryptocurrencies are, and bitcoin laid the groundwork. To your question, I, and many other people, paid some money to get some bitcoin - I think I spent $120? Mainly so I had enough to explore the space and play with it, because even then mining seemed painfully slow. Once money was spent on it, by whomever and for whatever reason, it acquired value: the value that, if you had some, you could sell it to someone else, or trade it for goods. In that way, it has the same value as an IOU on which I've scribbled "Good for $10 from Ruairidh Featherstonehaugh" and signed my name. Flawed metaphor, but you get there idea - the paper itself has no intrinsic value.
Despite that mining is so horrible for the environment, the concept that motivated Bitcoin still IMHO has value. An entirely digital, cashless system, not controlled by any one organization but rather by the community of participants. If Bitcoin didn't have the environmental cost - if it has been proof-of-stake rather than proof-of-work, or if the computational work was actually something useful to society like gridcoin.us, it wouldn't be so controversial. Sure, people are still going to be bitter about not buying into it early, but as long as people are willing to trade goods and services for it, it'll have real value based on market rates.
Lifecoach5000@lemmy.world · 2 pts · 1y
This is an eloquent way to sum up how I feel about it! Good show 👏
vfreire85@lemmy.ml · 7 pts · 1y
not even fiat (heh) is worth anything if we don't accept it as store of value, let alone an electronic register on a digital ledger.
Randomgal@lemmy.ca · 6 pts · 1y
The real answer is: It depends how you define value.
Can you make money with Bitcoin? Yes. Are you likely to make money? No Is the technology useful applicable? Yes Is it being used and applied ethically and for the good of people? No. Is it a 'store of value'? No, it's more like an extremely volatile stock or a lottery ticket. Can you use it like money? Yes Is there any reason to use it like money? Not really, not even among other cryptocurrencies.
Depending on which of these aspects of Bitcoin matter to you it will be more or valuable.
weeeeum@lemmy.world · 6 pts · 1y
Bitcoin has massive value as a tool to transfer money, anonymously, and through borders effortlessly. Its extremely valuable for money laundering, scamming, stealing, and dodging tariffs or raising money (see how much crypto is stolen by north Korea)
sylver_dragon@lemmy.world · 5 pts · 1y
Bitcoin is a ponzi scheme with a really long time horizon. In a way, any fiat currency kinda is as well. The difference is that a government backed fiat currency like the US Dollar is backed by the US Government saying "you will accept the USD, or else". That backing keeps the game running. Bitcoin has nothing like that. The only reason it keeps going is because of speculation, money laundering and the purchase of black market goods.
So, as long as you can go buy drugs or move money across borders with Bitcoin, it will have value. As long as it has value, some folks will speculate on it. That can keep prices up, right up until it doesn't. So, as is always the case for speculative assets, caveat emptor.
AnnaFrankfurter@lemmy.ml · 5 pts · 1y
In this world anything can have value as long as there are other stupid ppl who'd believe you. Any form of money is just a piece of paper. Gold, silver and all those are just rocks. Even food once was cherished as the ultimate wealth but now we waste food by Metric F*ck tonnes.
No one on this earth or beyond can predict what will be the value of anything. If someone says this is going to make you a millions they are either trying to sell you their course/books/etc. Or they think you are the next idiot to whom they can sell garbage.
olafurp@lemmy.world · 5 pts · 1y
Just like anything else, it's worth what people are willing to pay for it vs what people are willing to buy it for.
Currently bitcoin is just a digital commodity with a finite supply which makes it a good store of value if people continue to use it.
The thing is, there's nothing preventing bitcoin from tanking and becoming essentially worthless besides people buying it because the price is low.
If in a hypothetical future the bitcoin price becomes stable then it will become a valuable commodity. It's value is wholly derived from it's users and nothing else.
It's not very convinent for governments or large institutions to hold it in it's current form since it's too easy to steal without leaving a trace. For government use there is going to be needed some development to allow for government or Central banks to have complete control over the currency without giving that control away which I think might be possible. In that case settling international transactions in bitcoin as opposed to the dollar for BRICS countries might be an option which doesn't use the US dollar.
All the other uses IMO are pretty much fluff such as paying in bitcoin.
pineapplelover@lemmy.dbzer0.com · 4 pts · 1y
Bitcoin doesn't even attract criminals as it's traceable. You can easily tell who bought what and traded what. Since all the exchanges are KYC, no criminal worth their salt would use Bitcoin. Instead, they would rather use Monero. The only people buying and selling Bitcoin are people who want to gamble on it getting higher
Vinny_93@lemmy.world · 3 pts · 1y
Money is an IOU. Bitcoin is an IOU but the ledger is decentralized rather than in control of banks.
Once you start seeing the value of any currency as one of itself rather than trying to express it in a different value system, a Bitcoin needs nothing but its inherent worth as payment.
That said, because we all still use traditional forms of currency, a Bitcoin is now worth, say, 112000 breads. It's worth two new mid-sized cars.
Value is based on scarcity and demand. If something is hard to come by, like bitcoin currently is, the price is hardly affected. But if demand is higher than the supply, prices skyrocket. Demand dies down the moment people feel like crypto is a scam. Supply will stop since Bitcoin has a physical limit (of the top of my head 21 billion). It is no longer realistic to start mining the stuff and receiving it for payment is just silly at this point.
But to flip it around, what is the value of a US dollar, without expressing it in terms of another currency? It used to be tied to gold. You can't really state one dollar is equal to, say, one bread. The price of bread has fluctuated. Or, has the value of a dollar fluctuated and has a bread always been worth one pair of socks?
Baseline: everything is worth one of itself and trying to express it in another value system is just a snapshot, a moment in time which will have changed soon after.
oxjox@lemmy.ml · 1 pts · 1y
Thank you for a real answer like I specifically asked for.
The fact that Bitcoin does represent some amount of effort and that there's a limited supply does seem to give it some value. While there is a theoretical finite resource of gold, it's still being discovered. Which, theoretically, makes it less valuable than a predetermined finite resource. And, the US dollar continues to decline - almost by design during this administration.
How BTC is used today and in the future can continue to be debated but I'm satisfied in understanding it's a limited supply of something that represents some amount of effort.
Vinny_93@lemmy.world · 2 pts · 1y
If you haven't yet, I can really recommend reading Satoshi's whitepaper on what Bitcoin is really for. The fact that crypto is now used as an asset to trade in order to gain 'old' money really spits in the face of the ideology of a decentralized ledger. And the fact that a dollar value is assigned to it means it becomes the target of a lot of scams. The fact that a decentralized ledger also means greater anonymity has made it a popular target for illicit activity as well.
But by design, it really only wants to take power away from banks in order to stop devaluation, make it impossible to charge people for transactions and to put control of assets into the hands of individuals. The amount of money currently in circulation is way more than the actual physical amount available, because banks can lend you money they don't even have. Bitcoin would make this impossible.
captainlezbian@lemmy.world · 3 pts · 1y
The US dollar actually is tied to something of value: it's the format the us government will take their taxes in or else they will increasingly use their powers as a monopoly on fhe legitimate use of force until you give them what you owe
Crypto is only worth what others will pay for it. Which is why I don't own it
Geobloke@aussie.zone · 0 pts · 1y
Further to that it is also what they pay their debt in. You can buy debt in dollars and earn interest in dollars
Knock_Knock_Lemmy_In@lemmy.world · 1 pts · 1y
This is a negative for dollars, not a positive.
Being able to inflate your way out of debt makes a currency less valuable.
Geobloke@aussie.zone · 1 pts · 1y
In value yes, but as a tool it's very valuable
Knock_Knock_Lemmy_In@lemmy.world · -1 pts · 1y
Valuable to the people creating debt in that currency. Not to other stakeholders.
tired_n_bored@lemmy.world · 3 pts · 1y
Cryptocurrencies don't rely on a central entity and is the Lemmy equivalent to Reddit compared to the fiat currency. I like it and I like the technology but
Knock_Knock_Lemmy_In@lemmy.world · 1 pts · 1y
The exact opposite. Only after abandoning the gold standard does a central bank have the power to make a loaf of bread cost 3 times as much the next day.
Central banks are a relatively new invention and are not essential in the slightest.
tired_n_bored@lemmy.world · 3 pts · 1y
They are able to regulate the interest rate. We don't perceive a change of value of our fiat on a regular basis. What yesterday was $1, today is $1.0000001. Good luck maintaining the same purchasing power with Bitcoin (in terms of stability)
Knock_Knock_Lemmy_In@lemmy.world · 2 pts · 1y
Because they can't run out of money, central banks can be the largest buyer and seller over the short term.
But there is no economic rule that demands those entities exist. For example, from 1863 to 1913 the US had almost no use for a central bank.
Note that I'm very far from suggesting the world's economy should run on bitcoin. Just that central banks are not as essential as they are made out to be. They are used as much to cause inflation as they are to control it.
tired_n_bored@lemmy.world · 1 pts · 1y
Thank you for your informative reply :)
WhyJiffie@sh.itjust.works · 3 pts · 1y
I don't think bitcoin provides much value in itself. Its basically an asset that is hard to make more of, like money or gold, which are also valuable because of this and that gold and specific currencies are relatively widely used.
bitcoin's supposed added value over money is private digital transactions across the globe in a private way, so that you can send money whoever you want, but it's not practically private, and has so large operating costs (even just the transaction fee) that it's not really better than bank transactions.
so in short: its value is in its scarcity, and that you can speculate on it. the other possible advantages are not realized.
since the value is in speculation, the dollar limit is when investors start selling enough of it so that others will do the same out of fear. which is who knows how much. but it's probably more related to other factors than the dollar value.
reallykindasorta@slrpnk.net · 3 pts · 1y
Besides gambling hype I think regular people are into it for a couple reasons:
-don’t have to trust the whims of your state government (who could devalue their currency at any time)
-deflationary by design so your earnings maintain value (no one could discover a btc meteor to mine)
-Requires broad miner consensus to change the rules
son_named_bort@lemmy.world · 3 pts · 1y
No
Afflictedlife@lemmy.ml · 2 pts · 1y
It's value is in remittance if nothing else. It's cheaper than western union. But the network is only "cheaper" in that way because it has distributed the costs of running the network to the speculating miners who solve pointless puzzles with monsterously greedy processing farms hoping to win the lottery and get back more than they put in. It's a ponzi scheme, it takes more from everyone who came later and gives the value to early adopters who were there when you could solo mine coins with whatever hardware and a bitcoin was worth 7 dollars in exchange. Look up how many coins Satoshi is supposedly holding. If they were to cash out even a small fraction the whole market would crash. So use it as a remittance service but not an asset if you must. This from someone who mined 27k worth of it back when it was 7$ and spent it all on illicit medical cannabis before it inflated to 50k
Auntievenim@lemmy.world · 1 pts · 1y
I believe I've seen recent cost analysis of using crypto exchanges to transfer money across international borders instead of doing direct conversion through whatever "classical" money transfer service and it showed that due to exchange rates, price fluctuations between crypto exchanges, gas fees, and fiat exchange rates into and out of crypto from usd to whatever currency of the recipient its actually tangibly cheaper to just use a direct wire transfer and currency exchange.
I'll have to see if I saved the post with the price breakdowns to send you but I just wanted to share that in case you hadn't heard about it yet. If you had seen that and did find it cheaper somewhere else I'd also be interested to hear where it is actually cheaper. That's just the most recent analysis I had seen of the costs to exchange from fiat to crypto, send internationally, and then withdraw it in the native currency.
Rip to the millions you smoked away btw lol I would've done the exact same honestly
Knock_Knock_Lemmy_In@lemmy.world · 2 pts · 1y
USD FX pairs are currently cheaper using traditional transfers.
However going from a non G20 currency to another non G20 currency can be much cheaper using crypto.
Auntievenim@lemmy.world · 2 pts · 1y
Ah thats interesting, yeah the study i saw was specifically looking at usd to pesos. Good to know!
Melatonin@lemmy.dbzer0.com · 2 pts · 1y
Paper money isn't worth anything innately. Gold isn't either. Not diamonds. Nothing has innate worth except food, air, drinking water, and possibly shelter.
Sludgeyy@lemmy.world · 1 pts · 1y
Gold and diamonds have intrinsic value
Gold is needed for computer parts, and diamonds are used for cutting
They are more than just shiny
Their value will "never" hit 0 (Bitcoin would be worthless without gold for computers)
Yes, we could find substitutes in the future, but for the substances to not be useful somehow is so low and would have to be an apocalyptic scenario. And in an apocalypse, gold could even be worth more.
Semester3383@lemmy.world · 2 pts · 1y
...Except that gold, like the dollar, and like bitcoin, has the value it does because people believe it does. Sure, gold's a great semiconductor. But if that was all we used it for, the price of gold would be a tine fraction of what it is. Diamonds are great as abrasives and in certain cutting applications, but that's all synthetic now. Natural diamonds only have high value because of artificial scarcity and advertising.
Sludgeyy@lemmy.world · 2 pts · 1y
That's intrinsic value.
Semester3383@lemmy.world · 1 pts · 1y
Yes.
But many people--and I'm not saying you do this--but many people get gold, silver, and diamonds confused, and think that their intrinsic value is linked to their perceived value. does that make sense?
Sludgeyy@lemmy.world · 1 pts · 1y
I get that
I wouldn't buy diamonds or gold hoping they increase in price just as much as I wouldn't buy bitcoin to do the same.
If you offered me 1USD in Gold, Diamond, or Bitcoin.
I would take the gold. It has the most intrinsic value.
The probably that gold hits 0USD is less than bitcoin hitting 0USD.
The only reason you'd take bitcoin is if you think that it has a higher ceiling. Intrinsic value is the floor. But that is gambling
Semester3383@lemmy.world · 1 pts · 1y
I opt for bitcoin because it has more utility value for me.
My bank makes it an enormous pain in my ass to buy things from overseas vendors; they won't process any payments that are going outside of the US border. The rationale is 'fraud', even when you're dealing with well-known and trusted vendors. Even when I try calling my banks and telling them to pre-authorize the charges, they won't go through. The only way I can get around that within the established financial system is by using a 3rd party payment service; those 3rd party services make their money by lopping off a percentage of that purchase. E.g., if I'm buying something for $1000 from China (and we're going to ignore tariffs, duties, taxes, and shipping costs for the moment), then I may have to pay $1040 for it, because of the fees that are taken out. On the other hand, if I'm buying from a trusted vendor, and I use bitcoin, I can just send it to them. Bitcoin doesn't care where it's going, and--assuming you don't care about speed of confirmations--transaction fees can be quite a bit lower than using any other payment system. (And, BTW, transaction fees are built into all payment processing systems; it's just not apparent to individuals on the purchasing end. That means that if something costs .001btc, then I have to send, say, .0010001btc to the vendor, but then the)
Speculation doesn't play a role in it for me.
I have no direct use for gold; I can't plate connectors.
Jeroen@lemmings.world · 0 pts · 1y
(Paper) money is practically actually valuable because you need it to pay taxes. Gold, diamonds etc you could do without. Of course there is more nuance but taxes force people to value currency and therefore also accept it from others (because you need some of it or you go to jail), which gives currency the circular value.
Melatonin@lemmy.dbzer0.com · 4 pts · 1y
It's not valuable, it's a convention. You may as well use conch shells or Bitcoin. Don't matter what it is, it doesn't have value until we all agree it has value
Deflated0ne@lemmy.world · 2 pts · 1y
In the same way that MLM and Ponzi schemes are worth something.
How profitable it is is directly proportional to how willing you are to fuck over everyone around you. To how much of an asshole you are.
mrjack@lemmy.world · 2 pts · 1y
You have to think about Bitcoin in a different way from any other form of money that has ever existed because it's literally the first of its kind.
I work hard for money. I expend my time and energy and talent in exchange for money (USD, in my case) that I can then trade in the future for the things I want/need. So money is an abstraction of my time and engergy, stored for later use.
Unfortunately, USD is pretty highly inflationary and it loses a lot of value over time, so it doesn't make sense to save it for very long. I have to either spend it or invest it because every day I hold on to it, it loses a little more of its original purchasing power.
I could invest my money in gold or silver because those things are certainly more finite than USD and hold value better, but precious metals are heavy, difficult to transport and store in large quantities and I can't easily use gold to pay for my daily expenses.
So here's an idea: What if instead of converting my time, energy and talent into some physical thing that I have to hold onto and contend with inflation, etc. we just cryptographically assign that value to an entry on the public blockchain ledger? Now, that value is permanently locked into part of the total 21 million supply of bitcoin and no one can create more of it. Bitcoin is literally the hardest form of money ever created.
If I want to exchange that value with someone else in the future, I use my private cryptographic key to prove that I own it and I can effortlessly transfer it to anyone anywhere in the world in a matter of minutes.
You can't think of Bitcoin as some "thing" that you buy because a "bitcoin" is really nothing more than a unit of measurement. The real power of the bitcoin network is the ability to store and transmit value in a completely secure and trustless way that's immune to the manipulation of fiat currency.
If you're truly interested in understanding the answers to your question of "is bitcoin actually worth anything", I recommend the book Broken Money by Lyn Alden. It's an easy read and it will absolutely change how you see money.
oxjox@lemmy.ml · 1 pts · 1y
Thank you.
I guess the part where I'm stuck is the current volatile state of this "currency" compared to the idea or the promise of it.
Should I buy BTC now or wait? Is it a currency or an investment?
If something is an investment, can it also "be money"? Like, if I buy a painting for ten grand then twenty years later its worth 15 grand, I suppose I could trade the painting for something of an agreed upon equal value or I could sell it for money with which I can buy things. This concept isn't really how we've experienced money in my lifetime.
It's this push / pull of crypto's facade where I'm struggling. It's looked at as both currency and investment at the same time. It doesn't seem to have much value today to use as currency because as soon as you buy something you've lost money. I could take 100USD worth of BTC to buy a thing and tomorrow that hundred dollars could have been worth $110. It's not possible to say something is "worth" .01BTC because that value will change tomorrow.
It seems it's only worth something today because people are investing in the promise of it. We don't know if it will ever really be used as a currency as you've described. And, if and when that day comes to pass, what will the value of 1BTC be worth? Should I just wait five to ten years to buy crypto to avoid the speculative market? Maybe I miss out on capital gains over a hundred thousand dollars - is that so bad?
Or, in your opinion, is it inevitable that this will be the world wide currency of the future?
mrjack@lemmy.world · 1 pts · 1y
All good questions.
It can be both a currency and an investment. Money can be an investment, but not any fiat money that exists in the world today, thanks to inflation (money printing). Gold and silver can be both money and an investment, but even gold and silver have an inflation rate (new metal being mined and introduced into the market, aka market dilution.)
The reason this is a hard concept to grasp is because we are taking something that is truly finite (21 million bitcoins, EVER to exist) and we measure it against the USD which literally has no limit to the amount they can and will print. When you think of it this way, Bitcoin price relative to USD has no limit because USD money printing has no limit. There can always be more USD but never more BTC, therefore BTC's value when denominated in USD will theoretically go up forever (though not always at the same crazy rates we've seen the past 15 years.)
Take gold for example. In the 1960s it was $35/oz. Today it's over $3,000/oz. Is this because gold has somehow changed to become more valuable or did the USD just become less valuable while gold stayed the same?
1BTC will always be 1 of 21 million BTC. USD on the other hand will always be continually devalued due to money printing.
Nobody can tell you exactly how this is going to work out 20 or 50 years from now but the growing consensus is BTC price relative to fiat price can really only continue to go up because it's literally the the hardest form of money in the world - even more so than gold. It's the only asset in the universe that we can buy and hold and know exactly how much of it there is and ever will be.
I don't recommend anyone buy into something they don't understand but I will say I believe it would be well worth your time to study bitcoin and learn about what makes it different from fiat. Read books like Broken Money, The Bitcoin Standard and The Big Print.
nitrolife@rekabu.ru · 1 pts · 1y
There is a limited amount of Bitcoin, and some of it is lost in forgotten wallets, so the total volume is constantly falling. This may partially increase the price.
But in reality, as in any speculative market, the price of bitcoin depends mainly on faith in it and speculation about world events (some kind of cataclysms, regular statements of this or that person about cryptocurrency, etc.)
The main real value can only be found in countries that are disconnected from SWIFT. However, almost no one appreciates this because there are only 5 officially disconnected countries. However, if this list continues to grow, cryptocurrencies (including Bitcoin) will become more prevalent in international transactions.
Knock_Knock_Lemmy_In@lemmy.world · 1 pts · 1y
The cost to produce new bitcoin doubles every 4 years ( a bit more because new hardware is added). This drags up the price of all the dormant bitcoin.
nitrolife@rekabu.ru · 1 pts · 1y
There have been no new Bitcoins for a long time. Everything that miners mine is just a transaction tax. In fact, to describe the reason for bitcoin's growth, you need to understand what money is all about. Not just crypto money, but in general. In short, the price is rising because many (including miners) believe that it will rise and do not spend bitcoins. In a normal economy (except Japan), you could just print more money and the price would drop because the currency unit would depreciate. But bitcoin is a mathematical model, and it has a limit. You will not be able to create more Bitcoins than you have already created in any way. Therefore, the belief in the growth and retention of the currency reduces turnover and the price increases. If any of the whales withdraw their entire stock in one day, the market will fall for many years.
UPD: Excuse me, I really made a mistake. You can still mine 3 bitcoins per block... but to be honest, 3 bitcoins for a whole pool is only an eighth of the original 25 bitcoins per person. In general, mining has not compensated for mining for a long time.
UPD: I checked just in case. The average commission payment is now 1.5 bitcoins. almost half of the reward
UPD: I will reveal my thought even more. An ASIC at 1160 Th/s costs 33k dollars and consumes 11 kW. Even in my region with a low-cost light (only 5 cents per kW), such an asic will be able to bring only 58 dollars per day. And it will pay off only in 1.7 years. This is the moment when the miner will FINALLY stop working at a loss. And this is in ideal conditions without increasing the complexity of the network and other things. So all the miners who don't buy huge amounts in bulk barely pay for their business.
Knock_Knock_Lemmy_In@lemmy.world · 1 pts · 1y
Fees are less than 2%
I think you have the wrong units. The average fee is 1.5 USD.
This is quite quick. Last time I looked the it was around 3 years. Most of the cost comes from buying the hardware.
nitrolife@rekabu.ru · 1 pts · 1y
my calculations were made without taking into account the growth of the network's complexity. So, when I tried it last time, the network's complexity had increased so much in a year and a half that the equipment was not bringing in much, and it was not worth the risk of investing. However, things may be different now, and I may be mistaken.
UPD: Now I just buy Bitcoin on exchanges, and it brings me the same % of income as mining. But I don't have to deal with equipment, follow ridiculous laws, or waste electricity. =) That's why I say that many peole just tkabe bitclin to cold wallets. Less bitcloin exists on exchage then grow price.
Knock_Knock_Lemmy_In@lemmy.world · 1 pts · 1y
When I first looked at Bitcoin it was around $10/BTC and electricity to mine (on a cpu) was about the same.
The people who make money mining bitcoin have a combination of very cheap electricity and/or next generation asic hardware.
nitrolife@rekabu.ru · 1 pts · 1y
Part of my last minig farm, if you interesting.
nitrolife@rekabu.ru · 1 pts · 1y
and yes, I also mined bitcoins on the CPU. back when you could get near 200 bitcoins per hour of work. After that I mined altcoins on video cards, mined through nicehash. what I have not mined. and I can say - it's all thrown money. much, much more profitable just to buy cryptocurrency and hold on cold wallet.
nitrolife@rekabu.ru · 1 pts · 1y
if you don't want to tell me that people are setting up mining farms in Somalia (because it's pointless from a risk perspective), I don't think electricity rates are particularly lower anywhere else.
In any case, you can make money from anything. It's just that the risks associated with mining don't justify the investment. That's all.
nitrolife@rekabu.ru · 1 pts · 1y
https://bitinfocharts.com/ru/comparison/bitcoin-fee_to_reward.html#3m
Percents you can calculate self. That's not for all blocks, but in a day.
UPD: This is not for every block, of course, but for the whole day. I was wrong about that. Maybe really 2%
Knock_Knock_Lemmy_In@lemmy.world · 1 pts · 1y
Ballpark calculations
Winning a block gets you 3.125 BTC + approx. 0.06BTC in fees (2%). $6000 in transactions fees with 4000 transactions per block = $1.50 per transaction.
PresidentCamacho@lemmy.ca · 1 pts · 1y
It had the same value a stock without a dividend has.
Outwit1294@lemmy.today · 1 pts · 1y
Crypto is as valuable as you want it to be because it is not real. Not being real is a big problem for a currency.
glowing_hans@sopuli.xyz · 0 pts · 1y
Gold and rare metals are the only real currency. And a bitcoin miner contains rare metals and earths for electronics.
geneva_convenience@lemmy.ml · -1 pts · 1y
More than dollars.