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> From an economic standpoint, Bitcoin is backed by generated electricity, computer hardware, and network trust. Saying Bitcoin is "backed" by generated electr
by paulgb 9y ago
> From an economic standpoint, Bitcoin is backed by generated electricity, computer hardware, and network trust.
Saying Bitcoin is "backed" by generated electricity and computer hardware is like saying paper money is "backed" by the printing presses and labor that made it. Economically this is nonsense.
- vasilipupkin 9y agoyeah, that argument I never really got. It's like saying that a product is backed by the cost of that product. Doesn't make sense.
- xorcist 9y agoNonsense is perhaps a bit strong. What people mean when they say Bitcoin is "backed" by energy, is that there is a certain cost associated with producing one BTC. That cost is primary the electricity consumed and electricity has a spot price (barring distribution problems which might skew the price). Miners are not likely to sell under the price of production, at least for shorter time frames, which creates a supply elasticity. It is not backed by energy in a literal sense of course, that would be obviously meaningless. But the price of energy, BTC and mining difficulty are connected. A change in one variable affects the others.