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Here is the easiest way I can explain it: Bitcoin is a social phenomena - no government or company backs it. The only reason it has value is if people value it

Here is the easiest way I can explain it: Bitcoin is a social phenomena - no government or company backs it. The only reason it has value is if people value it. Bitcoin promoters have convinced people it's a store of value, like gold except digital. As the Cult of Bitcoin spreads, it doesn't take that many new enthusiasts to push the price up, as unlike literally all other commodities on earth, the supply of bitcoin is truly constrained and there cannot be anymore made in response to demand above the normal rate of inflation. This time, big money, institutions, and the very rich are coming in addition to the widespread purchase by retail. The price is going to rise a lot.

solotronics 6y ago
This is a really good interview by Michael Saylor who was an early investor in FANG companies on what his thinking was for investing his companies reserve cash of $400mil in Bitcoin https://youtu.be/Cg10yYZjK94 https://youtu.be/Cg10yYZjK94 His conclusion is that Bitcoin is a disruptive currency. It is equivalent to how Facebook disrupted and captured social, Amazon disrupted retail, Google disrupted info. Bitcoin is disrupting centralized controlled currency. It is replacing central control with something democratized and decentralized.
- Jasper_ 6y ago
  Then why hasn't it done any of those yet? Bitcoin came out in 2009, Facebook opened its doors to the public in 2006. One achieved world dominance, the other still can't get out of being darknet money.
  - albroland 6y ago
    AFAICT, it can't even get adoption in darknet markets. Aside from extortion and ransoms which are still bitcorns, you're unlikely to use anything but monero, zcash or maybe eth for illicit purchases these days.
  - CyberDildonics 6y ago
    Because it can't. The bitcoin github and subreddit were taken over by a group of people that just wanted to make a centralized second layer that they could sell. They used (and still use) lies, propaganda and heavy censorship to keep the transaction capacity at only a few per second. Floods of incoming people that had no in depth understanding were and still are unaware that /r/bitcoin was like /r/thedonald - anything (even questions) against the (technically ridiculous) propaganda message that more than a few kilobytes per second in transactions would be a disaster was deleted and the user was banned or shadow banned. This is not controversial, you can still check out /r/bitcoin Cryptocurrency in general is an idea whose time has come. Electronic currency that can be used without permission from a third party has many enormous advantages. The original bitcoin chain is nonsense and has been a disaster for the last 7 years.
  - alwillis 6y ago
    One achieved world dominance, the other still can't get out of being darknet money. This is kinda silly. Bitcoin went from $0 to over $300 billion in market cap with no company or organization to market it. It's been the best performing asset for the past 5, 10 and 12 years. Now that it's large enough for institutional investors, family offices, ETFs and hedge funds to get involved, that's happening. Yes, 401ks, IRAs, company treasuries now have bitcoin in them. Meanwhile, every fiat currency (except two—the dollar and the pound) has failed at one time or another. Now that it's been 50 years since going off the gold standard, the dollar isn't looking so good for the long haul. Trillions of dollars have been printed this year; that erodes the buying power of the dollars we already had.
mym1990 6y ago
The only reason anything has value is if people value it...value itself is a social phenomena, and this includes any type of monetary vehicle, whether a government backs it or not. And maybe I have been living in a fantasy world, but your comment about literally all other commodities on earth not being constrained is literally wrong. The study of economics and wealth is rooted in scarcity and the ability or inability to get more of something.
- seibelj 6y ago
  I disagree on both points. The US government has deemed US dollars to be the only thing that can be used to pay taxes, so therefore it has some root value. On commodities, if there is strong demand for gold, uranium, corn, etc. the market can respond and invest more capital into creating them. Bitcoin - not so. No matter how much more capital is invested in mining, the rate of inflation is fixed, and the pie is just split differently. But there cannot be an influx of new Bitcoin above what is specified in the protocol.
  - alwillis 6y ago
    The US government has deemed US dollars to be the only thing that can be used to pay taxes, so therefore it has some root value. This is incorrect. Just because we pay taxes in dollars doesn't give it any intrinsic value. It has been decreed by the US government that we do so but that doesn't change the underlying fact that the dollar is based on… nothing other than a promise of the government that it's useful. Because more gold can be mined and more dollars can be printed, each block of gold and dollar loses value, because they're not scarce. A dollar in 1913 had the same buying power as $26 in 2020 [1]. Bitcoin is hard money; it can't be deflated and it can't lose buying power like all fiat currencies do. [1]: https://www.thebalance.com/what-is-the-value-of-a-dollar-today-3306105 https://www.thebalance.com/what-is-the-value-of-a-dollar-tod...
- navaati 6y ago
  > The only reason anything has value is if people value it...value itself is a social phenomena That's not totally true, certain things have a more fundamental value in that if you don't get them you die, such as food and shelter. If we were ethereal economic agents living on a free and infinite compute substrate you could say that, in the meantime the Maslow hierarchy makes certains things have intrasical value that other things don't have.
jiveturkey 6y ago
so wrong. >unlike literally all other commodities on earth, the supply of bitcoin is truly constrained BTC is not a commodity, so there's no point comparing it to "other" commodities, of which in fact there are true constraints. > cannot be anymore made in response to demand above the normal rate of inflation. above? BTC does not track "normal" rate of inflation. the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing". > Bitcoin is a social phenomena - no government or company backs it. This is almost correct. China controls >50% of mining resources, much more in fact. 65%. If and when it suits them, they can ruin it.
- alwillis 6y ago
  There have been major investments to bring bitcoin mining back to the US, including partnerships to use natural gas and oil to power such mining: https://www.coindesk.com/us-becoming-bitcoin-mining-power-again https://www.coindesk.com/us-becoming-bitcoin-mining-power-ag... the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing". Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally. This makes bitcoin it's own thing. It's early days, but satoshi's (1/100,000,000 of a bitcoin) are already the standard for a variety of transactions. Bitcoin is already a store of value and we can transact in it; it's just a matter of time before it becomes a unit of account.
pmiller2 6y ago
This is my view exactly. I've been telling people I know who are trying to ride the crypto train that BTC has no fundamentals, by which I mean exactly that "the only reason it has value is if people value it." Think about it: the way BTC is created is basically by expending energy to solve some contrived math problem. So what? Who should ever care at all that someone, at sometime in the past, happened to be running a computer that hit on the solution of a silly math problem? It gets even more absurd when you consider that mining pools became a thing, so that even if your particular computer hits on the solution, you didn't actually do all the work that goes into the so-called "proof of work." (Yes, I know, in this scenario, the new BTC is split among the pool members, but, that doesn't really matter very much.) So, basically, BTC is the recording of the fact that someone, somewhere contributed to the solution of a math problem. Why should that have value at all, over and above the inherent value in solving said problem, which is essentially nil in this case? Well, it shouldn't. And, yet, it does, for the reason you've noted. Although I hesitate to call BTC "money," there is an actual form of money that also has value for the same reason, is a true digital currency, which has a durable and distributed transaction record, and is much easier to manipulate for the purpose of managing an economy based on it. That would be the USD, and other such fiat currencies. And, the USD fundamentally is just the recording of the fact that a bank somewhere has managed to create $9 by turning $1 in reserve into $10 in loans out into the economy at large (or, whatever the ratio exactly is -- I forget.) In other words, if you accept that BTC is a currency at all, it's little more than a worse version of the world's de facto reserve fiat currency, with the added bonus of generally not being able to transact using it, along with extreme volatility relative to the USD, which one actually can transact with. That's not to say I don't wish I had bought some BTC back when I first heard of it and it was trading at under $1. Had I gambled even $500 on it back then, I would have somewhere in the neighborhood of $9M now, and, essentially be set for life. But, I was a poor graduate student who already realized most of what I previously mentioned and decided that I'd rather pay rent for a couple of months in the dorms than buy an expensive lottery ticket.
- mariodiana 6y ago
  I would hesitate to call it "money" as well, as apart from its use in place of money, it has no value. Even paper currency is, at bottom, worth the paper it's printed on.
ur-whale 6y ago
> The only reason it has value is if people value it The only reason anything has value is if people value it.

solotronics 6y ago

This is a really good interview by Michael Saylor who was an early investor in FANG companies on what his thinking was for investing his companies reserve cash of $400mil in Bitcoin https://youtu.be/Cg10yYZjK94 https://youtu.be/Cg10yYZjK94 His conclusion is that Bitcoin is a disruptive currency. It is equivalent to how Facebook disrupted and captured social, Amazon disrupted retail, Google disrupted info. Bitcoin is disrupting centralized controlled currency. It is replacing central control with something democratized and decentralized.

Jasper_ 6y ago
Then why hasn't it done any of those yet? Bitcoin came out in 2009, Facebook opened its doors to the public in 2006. One achieved world dominance, the other still can't get out of being darknet money.
- albroland 6y ago
  AFAICT, it can't even get adoption in darknet markets. Aside from extortion and ransoms which are still bitcorns, you're unlikely to use anything but monero, zcash or maybe eth for illicit purchases these days.
- CyberDildonics 6y ago
  Because it can't. The bitcoin github and subreddit were taken over by a group of people that just wanted to make a centralized second layer that they could sell. They used (and still use) lies, propaganda and heavy censorship to keep the transaction capacity at only a few per second. Floods of incoming people that had no in depth understanding were and still are unaware that /r/bitcoin was like /r/thedonald - anything (even questions) against the (technically ridiculous) propaganda message that more than a few kilobytes per second in transactions would be a disaster was deleted and the user was banned or shadow banned. This is not controversial, you can still check out /r/bitcoin Cryptocurrency in general is an idea whose time has come. Electronic currency that can be used without permission from a third party has many enormous advantages. The original bitcoin chain is nonsense and has been a disaster for the last 7 years.
- alwillis 6y ago
  One achieved world dominance, the other still can't get out of being darknet money. This is kinda silly. Bitcoin went from $0 to over $300 billion in market cap with no company or organization to market it. It's been the best performing asset for the past 5, 10 and 12 years. Now that it's large enough for institutional investors, family offices, ETFs and hedge funds to get involved, that's happening. Yes, 401ks, IRAs, company treasuries now have bitcoin in them. Meanwhile, every fiat currency (except two—the dollar and the pound) has failed at one time or another. Now that it's been 50 years since going off the gold standard, the dollar isn't looking so good for the long haul. Trillions of dollars have been printed this year; that erodes the buying power of the dollars we already had.

mym1990 6y ago

The only reason anything has value is if people value it...value itself is a social phenomena, and this includes any type of monetary vehicle, whether a government backs it or not. And maybe I have been living in a fantasy world, but your comment about literally all other commodities on earth not being constrained is literally wrong. The study of economics and wealth is rooted in scarcity and the ability or inability to get more of something.

seibelj 6y ago
I disagree on both points. The US government has deemed US dollars to be the only thing that can be used to pay taxes, so therefore it has some root value. On commodities, if there is strong demand for gold, uranium, corn, etc. the market can respond and invest more capital into creating them. Bitcoin - not so. No matter how much more capital is invested in mining, the rate of inflation is fixed, and the pie is just split differently. But there cannot be an influx of new Bitcoin above what is specified in the protocol.
- alwillis 6y ago
  The US government has deemed US dollars to be the only thing that can be used to pay taxes, so therefore it has some root value. This is incorrect. Just because we pay taxes in dollars doesn't give it any intrinsic value. It has been decreed by the US government that we do so but that doesn't change the underlying fact that the dollar is based on… nothing other than a promise of the government that it's useful. Because more gold can be mined and more dollars can be printed, each block of gold and dollar loses value, because they're not scarce. A dollar in 1913 had the same buying power as $26 in 2020 [1]. Bitcoin is hard money; it can't be deflated and it can't lose buying power like all fiat currencies do. [1]: https://www.thebalance.com/what-is-the-value-of-a-dollar-today-3306105 https://www.thebalance.com/what-is-the-value-of-a-dollar-tod...
navaati 6y ago
> The only reason anything has value is if people value it...value itself is a social phenomena That's not totally true, certain things have a more fundamental value in that if you don't get them you die, such as food and shelter. If we were ethereal economic agents living on a free and infinite compute substrate you could say that, in the meantime the Maslow hierarchy makes certains things have intrasical value that other things don't have.

jiveturkey 6y ago

so wrong. >unlike literally all other commodities on earth, the supply of bitcoin is truly constrained BTC is not a commodity, so there's no point comparing it to "other" commodities, of which in fact there are true constraints. > cannot be anymore made in response to demand above the normal rate of inflation. above? BTC does not track "normal" rate of inflation. the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing". > Bitcoin is a social phenomena - no government or company backs it. This is almost correct. China controls >50% of mining resources, much more in fact. 65%. If and when it suits them, they can ruin it.

alwillis 6y ago
There have been major investments to bring bitcoin mining back to the US, including partnerships to use natural gas and oil to power such mining: https://www.coindesk.com/us-becoming-bitcoin-mining-power-again https://www.coindesk.com/us-becoming-bitcoin-mining-power-ag... the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing". Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally. This makes bitcoin it's own thing. It's early days, but satoshi's (1/100,000,000 of a bitcoin) are already the standard for a variety of transactions. Bitcoin is already a store of value and we can transact in it; it's just a matter of time before it becomes a unit of account.

pmiller2 6y ago

This is my view exactly. I've been telling people I know who are trying to ride the crypto train that BTC has no fundamentals, by which I mean exactly that "the only reason it has value is if people value it." Think about it: the way BTC is created is basically by expending energy to solve some contrived math problem. So what? Who should ever care at all that someone, at sometime in the past, happened to be running a computer that hit on the solution of a silly math problem? It gets even more absurd when you consider that mining pools became a thing, so that even if your particular computer hits on the solution, you didn't actually do all the work that goes into the so-called "proof of work." (Yes, I know, in this scenario, the new BTC is split among the pool members, but, that doesn't really matter very much.) So, basically, BTC is the recording of the fact that someone, somewhere contributed to the solution of a math problem. Why should that have value at all, over and above the inherent value in solving said problem, which is essentially nil in this case? Well, it shouldn't. And, yet, it does, for the reason you've noted. Although I hesitate to call BTC "money," there is an actual form of money that also has value for the same reason, is a true digital currency, which has a durable and distributed transaction record, and is much easier to manipulate for the purpose of managing an economy based on it. That would be the USD, and other such fiat currencies. And, the USD fundamentally is just the recording of the fact that a bank somewhere has managed to create $9 by turning $1 in reserve into $10 in loans out into the economy at large (or, whatever the ratio exactly is -- I forget.) In other words, if you accept that BTC is a currency at all, it's little more than a worse version of the world's de facto reserve fiat currency, with the added bonus of generally not being able to transact using it, along with extreme volatility relative to the USD, which one actually can transact with. That's not to say I don't wish I had bought some BTC back when I first heard of it and it was trading at under $1. Had I gambled even $500 on it back then, I would have somewhere in the neighborhood of $9M now, and, essentially be set for life. But, I was a poor graduate student who already realized most of what I previously mentioned and decided that I'd rather pay rent for a couple of months in the dorms than buy an expensive lottery ticket.

mariodiana 6y ago
I would hesitate to call it "money" as well, as apart from its use in place of money, it has no value. Even paper currency is, at bottom, worth the paper it's printed on.

ur-whale 6y ago

> The only reason it has value is if people value it The only reason anything has value is if people value it.