4 ms·
The value of bitcoin is that it is a money with a fixed supply. A gold-backed government currency is approximately the same and would render bitcoin unnecessary
by dpatru 6y ago
The value of bitcoin is that it is a money with a fixed supply. A gold-backed government currency is approximately the same and would render bitcoin unnecessary. Yet no government is willing to issue currency that is convertible to gold on demand. Why? Because of greed. People with control over currencies want to be able to make money at will, unconstrained by the necessity to produce value or even to persuade citizens to pay higher taxes.
The electricity costs of bitcoin is the cost of countering government officials who insist on maintaining the power to inflate their currencies. The cost is analogous to the cost of freedom-seeking citizens of a despotic government. Enormous resources are used up in North Korea as the government seeks to control and restrain its population and some individuals seek to resist and escape. One could blame this cost on the Dear Leader who seeks to impose his will on the population or on the selfish individuals who resist him. It depends on your point of view.
- FabHK 6y ago> The value of bitcoin is that it is a money with a fixed supply. There are any number of things with a fixed supply, and most of them are not valuable. Scarcity is not what makes something valuable, it is some intrinsic value plus scarcity. As a money, BTC is bad and will get worse if it deflates and people want to hold, rather than spend it. If, conversely, the value collapses, it is also bad money. Note one thing, btw, which I haven't really seen mentioned: Currently, BTC mining produces 900 BTC a day in coinbase rewards, or about USD 40m, or about USD 100 per transaction. Once mining rewards halve a few times, and/or BTC drops, and assuming people are willing to pay only around 1 USD per transaction, it'll generate around USD 500k a day, and difficulty will adjust to support that amount of mining. However, that amount doesn't strike me as being absolutely immune to a 51% attack, if big sums are at stake.
- qwytw 6y ago"..that is convertible to gold on demand. Why? Because of greed" Because pegging your currency to gold only makes sense if you have a static economy. I'd advise you to read a bit about how well the gold standard functioned before 1934 (the 2008 financial crisis or the current recession are fairly insignificant compared to the "Great" and the "Long" Depressions). And bitcoin is several magnitudes worse than gold because it's inherently (hyper)deflationary.