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Bitcoin is a marketing-based currency in the sense that it has no real value besides the fact that it was the first currency with cryptographic properties that
by vladd 15y ago
Bitcoin is a marketing-based currency in the sense that it has no real value besides the fact that it was the first currency with cryptographic properties that gained widespread adoption: if someone would take the code and fork it into an alternative ("Webcoins"), the intrinsec value of a Webcoin would be zero (unless it also found a way to gain market share or early adopters).
That's very similar with a Ponzi scheme, where you need early adopters to pour money in, so you can have a positive cashflow on which to iterate with other customers. But otherwise you don't have an underlying asset to sustain the value.
- powertower 15y ago> that gained widespread adoption No. What it has gained is: speculation.
- hugh3 15y agoExactly. If I asked the first thousand people I passed on the street what a bitcoin was, I doubt any of 'em would be able to tell me.
- owenmarshall 15y ago>But otherwise you don't have an underlying asset to sustain the value. That's the biggest problem with Bitcoin, I think. Now, if I could purchase more goods and services with Bitcoins, this might mitigate the risk of using it. But as of now, not many retailers accept it. As a result, the Bitcoin market is being driven solely by speculation.
- util 15y agoIt seems like this in particular applies to most government-issued currencies as well (except that they have very good marketing and market share). Each currency itself has no intrinsic value and depends on "marketing" (reputation of the government minting it) and market share (number of places accepting it). If people lose faith that a government will do a good job managing its currency or even think that the government will disappear soon, the worth of the currency (in terms of what people will give you for it) will probably fall.
- vladd 15y agoA government collects taxes from all the businesses and people in a given country, which is huge in terms of being able to provide value. Bitcoin has no such thing.
- util 15y agoHaving access to more wealth gives people more faith that the government will be around a long time, will not do crazy things with the currency. That's not the same thing as the currency having more intrinsic value. (Also, it would not seem to make sense to talk about backing a currency with taxes denominated in that same currency, would it? But I'm unclear what you meant by "provide value".) (What I've heard about bitcoin makes me a bit skeptical, but I want to be skeptical for the right reasons.)
- deleted 15y ago[deleted]