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I don't get why bitcoin is worth so much.Bitcoin is called a store of value like gold, but gold has inherent uses. If the price of gold went to zero then you co

I don't get why bitcoin is worth so much.Bitcoin is called a store of value like gold, but gold has inherent uses. If the price of gold went to zero then you could still use it to make jewellery or use it for electrical conductivity. If the price of bitcoin goes to zero then it's worthless. It's also not environmentally friendly and bitcoin mining uses up 0.21% of the world's power supply. And all of this energy is used to calculate billions of hashes per second out of which all but one will be discarded. There is also increased regulatory focus from governments who see it as a threat , with India even going so far as to suggest they would ban it.

capableweb 6y ago
Literally mining gold is also not very environmentally friendly and uses a lot of power, probably not as much as Bitcoin though. And Bitcoin will always remain what it is now, a system for transferring bits in a decentralized fashion over the internet. Even if Bitcoin is worth $0, as long as there is a sender and a receiver (and at least one miner online), you'll be able to transact Bitcoin, this is hardly worthless. > governments who see it as a threat , with India even going so far as to suggest they would ban it This for me is a huge selling point for Bitcoin (et al). If famously shady governments like India and the US starts talking about banning something, I immediately start looking into why and how they are banning it. So far, the arguments seems to be that they are scared of loosing control, and if it gotten that far, it's because they genuinely believe cryptocurrencies could replace their centralized currencies. More reason to get involved in it.
- me551ah 6y ago
  Gold is unique, few metals can match it's shine and electrical conductivity. But there exist many cryptocurrencies which can act as "a system for transferring bits in a decentralized fashion over the internet". Many also do a far better job than bitcoin. So shouldn't they be more valuable than bitcoin? Etherium, Monero etc Yes, but you really can't fight the government and run a parallel currency. If the government bans it then you cannot use it for any legal transactions.
  - shawnz 6y ago
    Other coins will have to not only be technologically better than Bitcoin but also work to accumulate the same level of trust that Bitcoin has. We can see this already happening with the success of Ethereum > Yes, but you really can't fight the government and run a parallel currency. If the government bans it then you cannot use it for any legal transactions. But even in that situation, you would still be free to bring your money into the control of a different government instead, who has laws you find more favourable. You wouldn't be victim to currency controls and bank runs
    - olah_1 6y ago
      Interestingly enough, with Ethereum, countries could create their own national currencies as Ethereum tokens. And easily exchange with other Ethereum tokens as well.
cloudhead 6y ago
Gold's inherent value represents less than 1% of its total value. The rest is monetary premium. Bitcoin is 100% monetary premium, ie. inter-subjective value. Another thing to consider is that people buy gold jewellery as a store of value. You don't spend $30k on a watch if you don't think it will keep its value.
- learc83 6y ago
  >You don’t spend $30k... Yes you do. You’ll almost never get the retail value out of a piece of jewelry if you try to resell it.
  - cloudhead 6y ago
    Not all jewelery has a huge markup over the metal weight. If you buy a gold watch, you can always get its gold value back. Same with stones.
    - learc83 6y ago
      Yes there exists jewelry that can be bought mainly as a store of value, but your argument was the much stronger statement: >Another thing to consider is that people buy gold jewellery as a store of value. You don't spend $30k on a watch if you don't think it will keep its value. This isn't true because the vast majority of retail jewelry, which is the majority of jewelry sold is a terrible store of value. The average person that spends say $10k on a diamond ring isn't going to be able to get that value back again. Even beyond the issue with how much it's marked up, there's the problem that jewelry stores tend to sell on consignment, so they have little incentive to buy and resell used jewelry. And if you look specifically at gold watches, a small fraction of the price is actually the price of gold itself. According to this link https://www.montredo.com/how-much-gold-is-in-a-solid-gold-rolex/ https://www.montredo.com/how-much-gold-is-in-a-solid-gold-ro... a 30k Euro gold Rolex only contains about 4k Euros worth. This link says something similar https://millenarywatches.com/how-much-gold-in-rolex/ https://millenarywatches.com/how-much-gold-in-rolex/ A $30k gold Rolex contains about $5k worth of gold, yet it costs $22k more than the non gold version.
mattm 6y ago
Yeah this confused me for a long time as well. I then realized that there is tremendous value in something that acts as a reliable store of value. For example, rich people are known to buy expensive art and then lock it away in a warehouse. Why do this? You're not getting any value out of the piece. The reason is that the sole purpose of the art piece is to be a reliable store of value. You're paying a lot for something that you know will hold its value. This is what Bitcoin has become. It's valuable because it's valuable. And the fact that it has become more valuable over time (despite volatility) makes it even more valuable.
- me551ah 6y ago
  Sorry but I disagree about your analogy with an art piece. An art piece is unique, especially the antique ones made by an artist who is no longer alive. And that artpiece will always be the only one to ever exist. There are many other cryptocurrencies which can do what bitcoin can, dogecoin was made just to illustrate that point.
  - flush 6y ago
    There are many other artists who can paint. Does not make their art equally valuable.
  - jwblackwell 6y ago
    Bitcoin is essentially unique in that you cannot double spend it.
- dr-detroit 6y ago
  It seems really volatile based on your analogy and you're underselling the untraceable untaxable aspect that lets down on their luck financial industry boys who unironicly say fugazi to deal directly with human traffickers and other higher tier criminals.
BlueTemplar 6y ago
Bitcoin (still) isn't worth that much compared to gold : gold's (above ground) reserves are around 12T$, while Bitcoin's market cap is (currently) 0.6T$.

capableweb 6y ago

Literally mining gold is also not very environmentally friendly and uses a lot of power, probably not as much as Bitcoin though. And Bitcoin will always remain what it is now, a system for transferring bits in a decentralized fashion over the internet. Even if Bitcoin is worth $0, as long as there is a sender and a receiver (and at least one miner online), you'll be able to transact Bitcoin, this is hardly worthless. > governments who see it as a threat , with India even going so far as to suggest they would ban it This for me is a huge selling point for Bitcoin (et al). If famously shady governments like India and the US starts talking about banning something, I immediately start looking into why and how they are banning it. So far, the arguments seems to be that they are scared of loosing control, and if it gotten that far, it's because they genuinely believe cryptocurrencies could replace their centralized currencies. More reason to get involved in it.

me551ah 6y ago
Gold is unique, few metals can match it's shine and electrical conductivity. But there exist many cryptocurrencies which can act as "a system for transferring bits in a decentralized fashion over the internet". Many also do a far better job than bitcoin. So shouldn't they be more valuable than bitcoin? Etherium, Monero etc Yes, but you really can't fight the government and run a parallel currency. If the government bans it then you cannot use it for any legal transactions.
- shawnz 6y ago
  Other coins will have to not only be technologically better than Bitcoin but also work to accumulate the same level of trust that Bitcoin has. We can see this already happening with the success of Ethereum > Yes, but you really can't fight the government and run a parallel currency. If the government bans it then you cannot use it for any legal transactions. But even in that situation, you would still be free to bring your money into the control of a different government instead, who has laws you find more favourable. You wouldn't be victim to currency controls and bank runs
  - olah_1 6y ago
    Interestingly enough, with Ethereum, countries could create their own national currencies as Ethereum tokens. And easily exchange with other Ethereum tokens as well.

cloudhead 6y ago

Gold's inherent value represents less than 1% of its total value. The rest is monetary premium. Bitcoin is 100% monetary premium, ie. inter-subjective value. Another thing to consider is that people buy gold jewellery as a store of value. You don't spend $30k on a watch if you don't think it will keep its value.

learc83 6y ago
>You don’t spend $30k... Yes you do. You’ll almost never get the retail value out of a piece of jewelry if you try to resell it.
- cloudhead 6y ago
  Not all jewelery has a huge markup over the metal weight. If you buy a gold watch, you can always get its gold value back. Same with stones.
  - learc83 6y ago
    Yes there exists jewelry that can be bought mainly as a store of value, but your argument was the much stronger statement: >Another thing to consider is that people buy gold jewellery as a store of value. You don't spend $30k on a watch if you don't think it will keep its value. This isn't true because the vast majority of retail jewelry, which is the majority of jewelry sold is a terrible store of value. The average person that spends say $10k on a diamond ring isn't going to be able to get that value back again. Even beyond the issue with how much it's marked up, there's the problem that jewelry stores tend to sell on consignment, so they have little incentive to buy and resell used jewelry. And if you look specifically at gold watches, a small fraction of the price is actually the price of gold itself. According to this link https://www.montredo.com/how-much-gold-is-in-a-solid-gold-rolex/ https://www.montredo.com/how-much-gold-is-in-a-solid-gold-ro... a 30k Euro gold Rolex only contains about 4k Euros worth. This link says something similar https://millenarywatches.com/how-much-gold-in-rolex/ https://millenarywatches.com/how-much-gold-in-rolex/ A $30k gold Rolex contains about $5k worth of gold, yet it costs $22k more than the non gold version.

mattm 6y ago

Yeah this confused me for a long time as well. I then realized that there is tremendous value in something that acts as a reliable store of value. For example, rich people are known to buy expensive art and then lock it away in a warehouse. Why do this? You're not getting any value out of the piece. The reason is that the sole purpose of the art piece is to be a reliable store of value. You're paying a lot for something that you know will hold its value. This is what Bitcoin has become. It's valuable because it's valuable. And the fact that it has become more valuable over time (despite volatility) makes it even more valuable.

me551ah 6y ago
Sorry but I disagree about your analogy with an art piece. An art piece is unique, especially the antique ones made by an artist who is no longer alive. And that artpiece will always be the only one to ever exist. There are many other cryptocurrencies which can do what bitcoin can, dogecoin was made just to illustrate that point.
- flush 6y ago
  There are many other artists who can paint. Does not make their art equally valuable.
- jwblackwell 6y ago
  Bitcoin is essentially unique in that you cannot double spend it.
dr-detroit 6y ago
It seems really volatile based on your analogy and you're underselling the untraceable untaxable aspect that lets down on their luck financial industry boys who unironicly say fugazi to deal directly with human traffickers and other higher tier criminals.

BlueTemplar 6y ago

Bitcoin (still) isn't worth that much compared to gold : gold's (above ground) reserves are around 12T$, while Bitcoin's market cap is (currently) 0.6T$.