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Bitcoin isn't backed by anything. "Backing" is also grossly misunderstood in general. Any "Backing" a currency has can generally be thought of as an put optio
by Sambdala 14y ago
Bitcoin isn't backed by anything.
"Backing" is also grossly misunderstood in general.
Any "Backing" a currency has can generally be thought of as an put option on something fungible.
For example, gold will never drop below $10-$20 per Oz because of the industrial/jewelry/etc uses people find for it. However, that "backing" only makes up a small percent of the price of gold.
- kruhft 14y agoBacked in the structural sense not the monetary sense. I should have written 'Bitcoin is a commodity with a solid foundation of Mathematics.'
- dragonwriter 14y ago> Bitcoin isn't backed by anything. True; in a sense, its a formalized potlatch system in which the publicly-demonstrated destruction of wealth (energy and wear-and-tear on hardware, demonstrated via computation proofs) is rewarded instead of with informal social regard, with concrete exchangeable tokens.
- zik 14y ago> Bitcoin isn't backed by anything. It's unusual in that it does have a cost of creation - the expense of the machinery and power required to mine a bitcoin. So it does have a "base value" of a sort, you just can't redeem it.