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Bitcoin is powered by a shared belief in its value. While it has been powered by scams as well, couch couch Tether, tt seems to be getting more adherents to be

Bitcoin is powered by a shared belief in its value. While it has been powered by scams as well, couch couch Tether, tt seems to be getting more adherents to believing that it is intrinsically valuable. The fact that it tends to go up so quickly also yields to FOMO. Because Bitcoin is just shared belief, it is hard to dispel that belief via real-world events such as earnings releases and other things that affect more grounded investments. Bitcoin is more of a movement and it is somewhat revolutionary in that it aims to replace our existing monetary system of central banks and interest rates, etc. I think the main threats to Bitcoin could be governmental if it continues to grow. If it starts to be a reserve currency competitor to USD which could affect treasury sales, I could see it being banned by the US government and others... but I am not smart enough to work out all that would play out if Bitcoin became that important. I wonder if Bitcoin will ever be forced to bend towards an inflationary monetary policy controlled by government like entities? It is code and code and always be changed. If it is so successful it becomes necessary to co-opt it into the existing system.... weird stuff.

ragnese 6y ago
> I wonder if Bitcoin will ever be forced to bend towards an inflationary monetary policy controlled by government like entities? It is code and code and always be changed. If it is so successful it becomes necessary to co-opt it into the existing system.... weird stuff. You can change the code, but it's up to the miners to actually run that code. Not saying it's impossible, but that's a big ask for a controversial change like that. Maybe someday if the mining is even more centralized than it currently is.
HarryHirsch 6y ago
it is intrinsically valuable How? As an intrinsically valuable means of speculation because sound investment opportunities are absent?
- solosoyokaze 6y ago
  It has a social network effect of people who agree that it's the store of value for the future. Your paper dollar bill has very little intrinsic value. It's just a shared acceptance.
  - scottLobster 6y ago
    Uh, my paper dollar is backed by the might of the US government and the US economy. It's a lot more than just "shared acceptance". Countries couldn't just switch off the US dollar reserve currency for international trade without massive economic repercussions, which is why no country or set of countries has developed a viable alternative to the dollar for a global reserve currency. It's not like China/Russia wouldn't like to, they have no choice. The EU came the closest, but no one outside of Europe has wanted Euros since the Greek economic crisis. Hell a large chunk of internal European trade is still done in dollars on the back-end. On the stick side, under Obama the US stepped up the various mechanisms such that we can cut off trade denominated in dollars on a whim to anyone we want, that's part of how sanctions work. If we (the US) decides we don't want a country to be able to trade internationally, we just cut them off from converting into dollars at the exchanges. There are no economically viable ways around this at present. Just ask Iran. Bitcoin however, will collapse the moment enough of the crowd loses the faith. It'll go on for a while because it's the new hotness, and some people will get lucky and rich, but at the end of the day it's an ultimately worthless commodity (unless you're trying to avoid government regulation over financial transfers) that exists as long as world governments allow it to exist. Sure, if theoretically some critical mass of the population all collectively decided Bitcoin was the future it would be, but right now we can't get a critical mass of US citizens to wear masks during a pandemic that's killed hundreds of thousands. So I wouldn't hold out too much hope for pan-Bitcoinism.
    - solosoyokaze 6y ago
      Your whole comment is basically an ad for Bitcoin. USD is valuable because we have an imperialistic global army that will kill you or starve you off if you don't use it? Seems like something we desperately need an alternative to. USD is the dirtiest fiat there is because it's backed by blood at a global scale.
      - scottLobster 6y ago
        All fiat currency is backed by blood and violence at some scale, it's meted out by court systems, police and military forces. The US happens to be the sole global superpower so the scale is larger for us, but we're actually a very well behaved superpower by historical standards. The "Imperialistic Global Army" has allowed countries who could never have traded globally due to lack of resources to industrialize. The US Navy keeps the trade lanes open for everyone, or at least it did. Whether that will be a thing going forward is an open question now that the Cold War mentality is fading and our troop deployments at historical lows. We might be going back to a truly imperialistic attitude of protecting US and allied trade lanes and letting everyone else build their own Navies if they want to protect their shipping (many countries couldn't do this even if they wanted). But Bitcoin wouldn't be a solution to that either. As for moral purity, it's no secret that a significant (albeit unknowable) portion of Bitcoin's current value comes from illegal transactions concerning everything from human trafficking to drug sales to organized crime rackets. The ability to obfuscate financial transactions is part of its intrinsic value, so anyone with an interest in doing so will be attracted to it. Plus if Bitcoin were to somehow grow large enough to even consider replacing the dollar, all the blood behind the dollar would simply shift to Bitcoin in some (albeit likely different) manner. Someone has to enforce monetary policy and financial laws, a chaotic, decentralized enforcement would arguably be even worse than centralized fiat enforcement. There's no way forward financially without some blood on your hands at some stage. So for my money I'm going to build my financial house on solid ground. I'm all for making the system more just and less bloody, but IMO Bitcoin isn't it. In the meantime we've all got to play the hand we're dealt, the only other option is to be a martyr, and while they might get some occasional press and lip service, martyrs typically don't accomplish much.
- robenkleene 6y ago
  Bitcoin is a group of technologies, the one that creates Bitcoin's "value" is a digital implementation of scarcity. Usually digital things are easy to copy infinitely, so Bitcoin's implementation of scarcity is one of its core innovations. Scarce things inherently have value in society, beyond the material themselves, because we primarily make transactions (trade) using scarce things. In other words, scarce things are useful simply by being scarce. So if you take there's value in something being purely digital, and decentralized, then Bitcoin has value through its implementation of scarcity.
jMyles 6y ago
> I could see it being banned by the US government and others... It's difficult to imagine this causing the price to go any direction other than up.
- Tepix 6y ago
  I believe the opposite to be accurate, as we have seen in the past.
  - jMyles 6y ago
    > as we have seen in the past To what do you refer here?
    - orwin 6y ago
      Korea banning BTC i think? Unless its china? the price dropped a lot.
- jwblackwell 6y ago
  It would likely cause a short term shock, especially if people were forced to sell quickly. Essentially a lot of shorter term traders would quickly exit the market. Though in the longer run, assuming the network stays up (I see no reason why not), I also think it would strengthen the case and we'd see prices continue to climb.
ffggvv 6y ago
then what happened in 2018 and 2013 where it lost 90% of its value?
- anm89 6y ago
  What happened to Amazon in the two cases where it has drawn down 90% from a high?
  - ffggvv 6y ago
    yes this analogy works because amazon ships billions in packages with almost a trillion in revenue and btc can be replicated by a sql database
    - Hydraulix989 6y ago
      I would suggest gaining additional technical familiarity about block chains if you genuinely believe they are equivalent to centralized relational databases. That's just flat-out incorrect and untrue.
      - ffggvv 6y ago
        i bought bitcoin and understood block chains in 2013. just because someone disagrees with you doesn’t mean they are dumb. and maybe sometimes you’re the one that doesn’t know what you’re talking about
        anm89 6y ago
        You seem to be lacking an understanding of the most basic principles of bitcoin, ie permissionless decentralization backed by proof of work which would not function with existing SQL databases.
        ffggvv 6y ago
        no im saying the actual practical use. keeping track of who owns what can be accomplished way better with a centralized database. the only thing novel is that its decentralized and inefficient but the average user really doesnt care about that.
anm89 6y ago
Gold doesn't have earnings releases either.
- bhouston 6y ago
  It at least is tied to a physical thing. There are then limits to how high gold can go in price as higher prices means more will come to the market to sell it because the higher prices are not viewed as sustainable. Whereas with bitcoin, it is fairly unmoored from physical constraints. There is no natural price for bitcoin. It could go up forever or drop to nothing and both are acceptable valuations that would be hard to question -- because it is merely shared belief.
  - dougk16 6y ago
    > It at least is tied to a physical thing. People should know more about the paper gold market. Most importantly how much gold people think they have stored safely in vaults, but is essentially just an IOU that could never be paid if everyone withdrew at the same time. Pretty scary/exciting stuff. I couldn't even begin to describe all the dimensions to this and still learning myself. But long story short, consider the possibility that the price of gold isn't anywhere near tied to a physical thing. :)
  - globular-toast 6y ago
    The only plus I can see is a stronger belief that you can't synthesise gold. Synthesising Bitcoin would take an enormous amount of coordinated computing power, but it is technically possible. Other than that I don't see why it matters that gold is a physical thing.
    - dougk16 6y ago
      See my peer comment. You can "synthesize" gold pretty easily. I agree most people don't consider this when buying gold though. So "stronger belief" is still accurate. Unfortunately unscrupulous people make fortunes off of that strong belief.
  - anm89 6y ago
Closi 6y ago
The problem with belief is that the Bitcoin price only raises when you find new people who believe in it to put more money into it. As soon as the BTC market reaches maximum penetration and no new buyers can be found, Bitcoin becomes price stable. And once price stability is reached, because the price isn't appreciating anymore, people will want to start spending their earnings. And as BTC in particular isn't actually that good as a currency, people need to turn their BTC into fiat in order to realise their value and spend them. And then suddenly... there aren't any buyers and it crashes.
- Tepix 6y ago
  You're not taking inflation into account.
  - Closi 6y ago
    Inflation isn't the driving force here.
  - arcticbull 6y ago
    Inflation is only relevant from the time you receive cash to the time you invest it in productive (or in the case of Bitcoin, totally unproductive) investments. In fact, inflation is the only reason people put money into Bitcoin lol. If there wasn't any inflation, nobody would buy Bitcoin. Really makes you think.
- bhouston 6y ago
  The stock market continues to go up even though its adoption is already widespread. The reason is that governments continue to print USD, and other currencies, which they get invested, re-loaded out, etc. I expect that this can continue in Bitcoin as well for quite some time if there continues to be a shared belief in its intrinsic value.
  - Closi 6y ago
    A shared belief in intrinsic value? What's the calculation then that results in the current bitcoin price without referring to it's existing or historical price? The stock market goes up because you are looking at a market index of the biggest companies, which are growing bigger as markets concentrate. The difference is if you have a share for a year, it earns you a return separate to what happens to the price of the stock (i.e. a dividend), and this is the intrinsic value (i.e. you can do a fundamental analysis of the stock to reach a price). If you hold onto a Bitcoin for a year it might be worth more, but only because the market is pricing it differently, not because of any fundamentals. This is why it does not have intrinsic value.
parasubvert 6y ago
Bitcoin isn’t likely to be banned. Might as well ban World of Warcraft gold while you’re at it. Clearly it has value as a speculative vehicle and as a systemic risk hedge (like Gold). Whether it can become a true currency is still debatable. Its infrastructure feels more like selling stock or bonds today.
- bhouston 6y ago
  It is not a currency. It is an asset like gold for sure. I think because it is deflationary in nature, it will stay an asset. Currencies need inflation to encourage spending.
  - parasubvert 6y ago
    100x this. I still don't quite get the logic behind hard money.
Hitton 6y ago
>Bitcoin is powered by a shared belief in its value. So is US dollar.
- justapassenger 6y ago
  Dollar is powered by one of the biggest economical, political and military power in the world.
  - viklove 6y ago
    The USD also had some difficult beginnings, and through luck and force of will has been established as the de-facto world currency. Saying that no-one will ever challenge the king is foolish, short-sighted, and naive.
    - justapassenger 6y ago
      No one reasonable says that USD cannot be challenged. Chinese yuan is on the way there and we’ll see that fight pretty soon. Bitcoin is not even not in the same league - it’s playing different sport.
deleted 6y ago
[deleted]
loceng 6y ago
"Bitcoin is powered by a shared belief in its value." The nuance in this is that its value also includes a financial incentive - the MLM structure inherent to Bitcoin, and that is truly what aligns everyone in Bitcoin - it's not for whatever other positives may exist as the primary glue, arguably 99%+ is the financial gain and potential that is the glue. But yes, pro-Bitcoiners have been good at refining their narrative, the propaganda, conveniently ignoring the MLM structure whenever writing prose of how amazing Bitcoin is - while avoiding answering questions related to its pitfalls like with Bitcoin how do you implement policy and mechanisms like the Magnisky Act to block money of known bad actors as an economic punishment and attempt to sway their bad actions - before needing to perhaps (hopefully not) escalate actions into the physical, destruction-violence mechanism?

ragnese 6y ago

> I wonder if Bitcoin will ever be forced to bend towards an inflationary monetary policy controlled by government like entities? It is code and code and always be changed. If it is so successful it becomes necessary to co-opt it into the existing system.... weird stuff. You can change the code, but it's up to the miners to actually run that code. Not saying it's impossible, but that's a big ask for a controversial change like that. Maybe someday if the mining is even more centralized than it currently is.

HarryHirsch 6y ago

it is intrinsically valuable How? As an intrinsically valuable means of speculation because sound investment opportunities are absent?

solosoyokaze 6y ago
It has a social network effect of people who agree that it's the store of value for the future. Your paper dollar bill has very little intrinsic value. It's just a shared acceptance.
- scottLobster 6y ago
  Uh, my paper dollar is backed by the might of the US government and the US economy. It's a lot more than just "shared acceptance". Countries couldn't just switch off the US dollar reserve currency for international trade without massive economic repercussions, which is why no country or set of countries has developed a viable alternative to the dollar for a global reserve currency. It's not like China/Russia wouldn't like to, they have no choice. The EU came the closest, but no one outside of Europe has wanted Euros since the Greek economic crisis. Hell a large chunk of internal European trade is still done in dollars on the back-end. On the stick side, under Obama the US stepped up the various mechanisms such that we can cut off trade denominated in dollars on a whim to anyone we want, that's part of how sanctions work. If we (the US) decides we don't want a country to be able to trade internationally, we just cut them off from converting into dollars at the exchanges. There are no economically viable ways around this at present. Just ask Iran. Bitcoin however, will collapse the moment enough of the crowd loses the faith. It'll go on for a while because it's the new hotness, and some people will get lucky and rich, but at the end of the day it's an ultimately worthless commodity (unless you're trying to avoid government regulation over financial transfers) that exists as long as world governments allow it to exist. Sure, if theoretically some critical mass of the population all collectively decided Bitcoin was the future it would be, but right now we can't get a critical mass of US citizens to wear masks during a pandemic that's killed hundreds of thousands. So I wouldn't hold out too much hope for pan-Bitcoinism.
  - solosoyokaze 6y ago
    Your whole comment is basically an ad for Bitcoin. USD is valuable because we have an imperialistic global army that will kill you or starve you off if you don't use it? Seems like something we desperately need an alternative to. USD is the dirtiest fiat there is because it's backed by blood at a global scale.
    - scottLobster 6y ago
      All fiat currency is backed by blood and violence at some scale, it's meted out by court systems, police and military forces. The US happens to be the sole global superpower so the scale is larger for us, but we're actually a very well behaved superpower by historical standards. The "Imperialistic Global Army" has allowed countries who could never have traded globally due to lack of resources to industrialize. The US Navy keeps the trade lanes open for everyone, or at least it did. Whether that will be a thing going forward is an open question now that the Cold War mentality is fading and our troop deployments at historical lows. We might be going back to a truly imperialistic attitude of protecting US and allied trade lanes and letting everyone else build their own Navies if they want to protect their shipping (many countries couldn't do this even if they wanted). But Bitcoin wouldn't be a solution to that either. As for moral purity, it's no secret that a significant (albeit unknowable) portion of Bitcoin's current value comes from illegal transactions concerning everything from human trafficking to drug sales to organized crime rackets. The ability to obfuscate financial transactions is part of its intrinsic value, so anyone with an interest in doing so will be attracted to it. Plus if Bitcoin were to somehow grow large enough to even consider replacing the dollar, all the blood behind the dollar would simply shift to Bitcoin in some (albeit likely different) manner. Someone has to enforce monetary policy and financial laws, a chaotic, decentralized enforcement would arguably be even worse than centralized fiat enforcement. There's no way forward financially without some blood on your hands at some stage. So for my money I'm going to build my financial house on solid ground. I'm all for making the system more just and less bloody, but IMO Bitcoin isn't it. In the meantime we've all got to play the hand we're dealt, the only other option is to be a martyr, and while they might get some occasional press and lip service, martyrs typically don't accomplish much.
robenkleene 6y ago
Bitcoin is a group of technologies, the one that creates Bitcoin's "value" is a digital implementation of scarcity. Usually digital things are easy to copy infinitely, so Bitcoin's implementation of scarcity is one of its core innovations. Scarce things inherently have value in society, beyond the material themselves, because we primarily make transactions (trade) using scarce things. In other words, scarce things are useful simply by being scarce. So if you take there's value in something being purely digital, and decentralized, then Bitcoin has value through its implementation of scarcity.

jMyles 6y ago

> I could see it being banned by the US government and others... It's difficult to imagine this causing the price to go any direction other than up.

Tepix 6y ago
I believe the opposite to be accurate, as we have seen in the past.
- jMyles 6y ago
  > as we have seen in the past To what do you refer here?
  - orwin 6y ago
    Korea banning BTC i think? Unless its china? the price dropped a lot.
jwblackwell 6y ago
It would likely cause a short term shock, especially if people were forced to sell quickly. Essentially a lot of shorter term traders would quickly exit the market. Though in the longer run, assuming the network stays up (I see no reason why not), I also think it would strengthen the case and we'd see prices continue to climb.

ffggvv 6y ago

then what happened in 2018 and 2013 where it lost 90% of its value?

anm89 6y ago
What happened to Amazon in the two cases where it has drawn down 90% from a high?
- ffggvv 6y ago
  yes this analogy works because amazon ships billions in packages with almost a trillion in revenue and btc can be replicated by a sql database
  - Hydraulix989 6y ago
    I would suggest gaining additional technical familiarity about block chains if you genuinely believe they are equivalent to centralized relational databases. That's just flat-out incorrect and untrue.
    - ffggvv 6y ago
      i bought bitcoin and understood block chains in 2013. just because someone disagrees with you doesn’t mean they are dumb. and maybe sometimes you’re the one that doesn’t know what you’re talking about
      - anm89 6y ago
        You seem to be lacking an understanding of the most basic principles of bitcoin, ie permissionless decentralization backed by proof of work which would not function with existing SQL databases.
        ffggvv 6y ago
        no im saying the actual practical use. keeping track of who owns what can be accomplished way better with a centralized database. the only thing novel is that its decentralized and inefficient but the average user really doesnt care about that.

anm89 6y ago

Gold doesn't have earnings releases either.

bhouston 6y ago
It at least is tied to a physical thing. There are then limits to how high gold can go in price as higher prices means more will come to the market to sell it because the higher prices are not viewed as sustainable. Whereas with bitcoin, it is fairly unmoored from physical constraints. There is no natural price for bitcoin. It could go up forever or drop to nothing and both are acceptable valuations that would be hard to question -- because it is merely shared belief.
- dougk16 6y ago
  > It at least is tied to a physical thing. People should know more about the paper gold market. Most importantly how much gold people think they have stored safely in vaults, but is essentially just an IOU that could never be paid if everyone withdrew at the same time. Pretty scary/exciting stuff. I couldn't even begin to describe all the dimensions to this and still learning myself. But long story short, consider the possibility that the price of gold isn't anywhere near tied to a physical thing. :)
- globular-toast 6y ago
  The only plus I can see is a stronger belief that you can't synthesise gold. Synthesising Bitcoin would take an enormous amount of coordinated computing power, but it is technically possible. Other than that I don't see why it matters that gold is a physical thing.
  - dougk16 6y ago
    See my peer comment. You can "synthesize" gold pretty easily. I agree most people don't consider this when buying gold though. So "stronger belief" is still accurate. Unfortunately unscrupulous people make fortunes off of that strong belief.
- anm89 6y ago

Closi 6y ago

The problem with belief is that the Bitcoin price only raises when you find new people who believe in it to put more money into it. As soon as the BTC market reaches maximum penetration and no new buyers can be found, Bitcoin becomes price stable. And once price stability is reached, because the price isn't appreciating anymore, people will want to start spending their earnings. And as BTC in particular isn't actually that good as a currency, people need to turn their BTC into fiat in order to realise their value and spend them. And then suddenly... there aren't any buyers and it crashes.

Tepix 6y ago
You're not taking inflation into account.
- Closi 6y ago
  Inflation isn't the driving force here.
- arcticbull 6y ago
  Inflation is only relevant from the time you receive cash to the time you invest it in productive (or in the case of Bitcoin, totally unproductive) investments. In fact, inflation is the only reason people put money into Bitcoin lol. If there wasn't any inflation, nobody would buy Bitcoin. Really makes you think.
bhouston 6y ago
The stock market continues to go up even though its adoption is already widespread. The reason is that governments continue to print USD, and other currencies, which they get invested, re-loaded out, etc. I expect that this can continue in Bitcoin as well for quite some time if there continues to be a shared belief in its intrinsic value.
- Closi 6y ago
  A shared belief in intrinsic value? What's the calculation then that results in the current bitcoin price without referring to it's existing or historical price? The stock market goes up because you are looking at a market index of the biggest companies, which are growing bigger as markets concentrate. The difference is if you have a share for a year, it earns you a return separate to what happens to the price of the stock (i.e. a dividend), and this is the intrinsic value (i.e. you can do a fundamental analysis of the stock to reach a price). If you hold onto a Bitcoin for a year it might be worth more, but only because the market is pricing it differently, not because of any fundamentals. This is why it does not have intrinsic value.

parasubvert 6y ago

Bitcoin isn’t likely to be banned. Might as well ban World of Warcraft gold while you’re at it. Clearly it has value as a speculative vehicle and as a systemic risk hedge (like Gold). Whether it can become a true currency is still debatable. Its infrastructure feels more like selling stock or bonds today.

bhouston 6y ago
It is not a currency. It is an asset like gold for sure. I think because it is deflationary in nature, it will stay an asset. Currencies need inflation to encourage spending.
- parasubvert 6y ago
  100x this. I still don't quite get the logic behind hard money.

Hitton 6y ago

>Bitcoin is powered by a shared belief in its value. So is US dollar.

justapassenger 6y ago
Dollar is powered by one of the biggest economical, political and military power in the world.
- viklove 6y ago
  The USD also had some difficult beginnings, and through luck and force of will has been established as the de-facto world currency. Saying that no-one will ever challenge the king is foolish, short-sighted, and naive.
  - justapassenger 6y ago
    No one reasonable says that USD cannot be challenged. Chinese yuan is on the way there and we’ll see that fight pretty soon. Bitcoin is not even not in the same league - it’s playing different sport.

deleted 6y ago

[deleted]

loceng 6y ago

"Bitcoin is powered by a shared belief in its value." The nuance in this is that its value also includes a financial incentive - the MLM structure inherent to Bitcoin, and that is truly what aligns everyone in Bitcoin - it's not for whatever other positives may exist as the primary glue, arguably 99%+ is the financial gain and potential that is the glue. But yes, pro-Bitcoiners have been good at refining their narrative, the propaganda, conveniently ignoring the MLM structure whenever writing prose of how amazing Bitcoin is - while avoiding answering questions related to its pitfalls like with Bitcoin how do you implement policy and mechanisms like the Magnisky Act to block money of known bad actors as an economic punishment and attempt to sway their bad actions - before needing to perhaps (hopefully not) escalate actions into the physical, destruction-violence mechanism?