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That's not exactly true. Bitcoin does have intrinsic value. Bitcoin is expended to move bitcoin. This sounds a bit circular, but if you think about it, it's not
by darawk 9y ago
That's not exactly true. Bitcoin does have intrinsic value. Bitcoin is expended to move bitcoin. This sounds a bit circular, but if you think about it, it's not really. Value transfer is a service that Bitcoin (the network) provides. It provides that service using Bitcoin (the currency) as its incentive mechanism. This is the kernel of intrinsic value around which Bitcoin's valuation is built, and why it is, in fact, analogous to gold.
Now, what that means for the price is nothing really. Speculation commodities (like Bitcoin and gold) go up and they go down without a whole lot of rhyme or reason. But the analogy to gold is valid.
- eksemplar 9y agoGold gets it’s value from it’s application and bitcoin has none of that outside of crime. You’re right that you need to expend bitcoin to trade it, but this is more a weakness than a strength. It gives you a banking system of sorts, in that you’re guaranteed someone will handle your transaction for money. This also means that if the value of bitcoin drops then nobody will be around to do the calculations required to do transactions, making it an inherent risk.
- darawk 9y agoIt's use as fuel for transactions is its application. Gold's intrinsic value is very very tiny relative to its price. Same with Bitcoin's.
- eksemplar 9y agoFinancially that's not application though, it's a scam along the lines of your bank lending you money to invest in your bank. You can downvote it all you want, but the value of the transaction is directly tied to the value of Bitcoin. This makes it profitable on the way up, and an outright danger in the way down because it'll prohibit you from selling your bitcoin when the value crashes. Like I said, invest all you want, there are plenty of money to be made still, but at least be aware of the risks.