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Bitcoin and many other cryptocurrencies are fiat currencies, nothing more. Bitcoin's value is dependent not on underlying fundamentals, but rather on supply and
by seannyg 9y ago
Bitcoin and many other cryptocurrencies are fiat currencies, nothing more. Bitcoin's value is dependent not on underlying fundamentals, but rather on supply and demand. Its supply is limited and will be fixed, but its demand is based on on its perceived usefulness, either for storing value or making purchases (maybe other things?). Until we see that it is useful for these things, we should assume its fundamental value is zero.
- dnautics 9y agoyou're describing currencies, not fiat currencies. Even gold has limited 'intrinsic' value. Pretty much all of it 'real' applications have acceptable, cheaper substitutes. Anyone buying gold-plated connectors for their audio equipment is basically an idiot (source: in high school I used to work for radio shack)
- seannyg 9y agoThere are many reasons gold has become a valuable currency: it has a distinctive density, a distinctive color, it doesn't oxidize easily, it's not radioactive or toxic, and it's relatively rare (compared to, for example, iron). Its scarcity and distinctiveness, together with its aesthetic appeal, have made it a natural choice as a currency. See, for example, http://www.bbc.com/news/magazine-25255957 http://www.bbc.com/news/magazine-25255957. Bitcoin has none of these properties ,which makes me call it a fiat currency (like the U.S. dollar). The only difference is that the U.S. dollar does have transactional value (and limited storage value).
- dnautics 9y agoThe distinctive color and density are intrinsic properties of gold that relate to its viability as a currency because it makes gold verifiable. In that sense, Bitcoin has intrinsic value due to its verifiability as well.
- Vendan 9y agoGold plated is useful because gold doesn't rust, and still conducts decently.