But…crypto is FIAT…its not backed up with anything…the FIAT petrol dollar is backed up with 13 nuclear powered aircraft carrier fleets, each carrying dozens of T3 combat aircraft and faction cruise missiles, escorted by nuclear powered, nuclear armed submarines. It’s still FIAT but it has teeth enough to destroy any nations that attempt to go back onto a gold standard again (Libya/Iraq). Every nation in the world is currently utilizing FIAT after the U.S. was caught by French President de Gaulle’s economic advisors printing more paper than we had the precious metals to back it up with and announced it to the world in a live television address.
U.S. went bankrupt after the combination of the space race spending to compete against Russia, and the Vietnam war. So they decided to fudge the numbers. This caused all of the European nations who deposited their gold in the U.S. for Breton Woods to pull their gold out, causing Nixon to take the U.S. off the gold standard. Ever since then money printer go BRRRRRRRR.
Bitcoin is based on a global FIAT system. It’s digitized FIAT. It’s FIAT all the way down.
“Gold is money. Everything else is credit.” -J.P. Morgan
And sadly, every time I see Bitcoin advertised they try to use a gold coin as the image to sell it.
How disingenuous.
For starters, it’s rarity.
Current science thinks it takes an event known as a KiloNova to produce enough energy to manufacture gold. It’s when two binary Neutron Stars merge with one another. We won’t be able to reproduce it in a laboratory and grow it like we can rubies, diamonds, emeralds. We won’t be able to gain access to the asteroid belts on the edge of the solar system to see if it’s occurring in quantity there either until we develop that level of technology.
We can actually estimate from ancient times the values of commodities and trade goods/items and the price of precious metals like silver/gold has generally stayed pretty consistent, mass mining practices have allowed more to be mined, but we have found new uses for precious metals such as silver in solar panels and medical equipment, electronics.
Five quarters from the 1960’s (90% silver) are worth more than minimum wage.
Silver is worth $22.83 USD / ounce currently.
For a 1964 quarter it has $4.07 worth of just melt value for the silver in it.
Five 1964 U.S. silver quarters, even in non collectible shape are worth over $20 U.S. dollars today.
Inflation is brutal and does not forgive currency debasement.
Yeah true, rarity is an important trait for commodity money. It’s by far not the only one, but Gold checks basically all the boxes. The thing is, so does Bitcoin.
Bitcoin is no more rare than dogecoin, or MuskCoin, or whatever someone comes up with next.
Link marines! lmfao!
XRP, Ripple, Monero, Litecoin, Ethereum.
They are all tied and pegged to the dollar, to FIAT. You use FIAT to buy them, and then exchange them back into FIAT. The price only rose because of manipulation by corporations, mega banks and whales. Then they rugpulled and dumped on the bag holders. around 60K. Now they will do the same thing again, and all the bag holders will wonder why they magic beans didn’t grow them a Lamborghini.
Bitcoin produces nothing, it manufactures nothing, it builds nothing. It’s just a transfer of FIAT.
Well why has the market gone up so much? good question, because the price of oil has tanked below 70/barrel.
Watch tomorrow, Saudi Arabia is going to cut production by 1,000,000 barrels a day going into the Fourth of July holiday. Oil prices will rise, and the market will go down, Bitcoin will go down right along with it.
It’s not going up in value because it has actual value, it’s going up because the entire market has gone up. It is pegged to it. Tied together and inseparable from it.
Bitcoin is just the coin press, not the gold that goes into the coin.
Monero is also a FIAT coin press, not the gold going into the coin so to speak.
Might as well name it Rugpull Coin, people would still buy it trying to get rich quick as an “investment”.
I can see that this is somehow relevant in that they can protect their economy and hence it ensures that other countries can exchange the dollar for goods, as us companies have to accept it as payment. The reason why it was the dollar is simply because they had the most powerful economy and not necessarily because they had the most powerful military.
There is probably some truth to the argument your are making, but I feel like it’s really just a small part of why it’s the dollar. If they would for example debase it too strong too fast, it would probably lose its status despite the military power.
There will only ever be 21mil Bitcoin.
This is such a silly argument. All currencies have exchange rates to each other and can be exchanged. This isn’t special for crypto currencies, it’s the same for every currency, it’s the same for gold and other metals and every single other market good. Bitcoin can be valued in every single currency on the planet, the same way every single currency can be valued in Bitcoin or in Gold, or in apples, or whatever.
Yeah, I guess that’s how it goes.
I already lose sleep over the fact that it will crash down to $50k next cycle
Ok let me ask you this. When Bitcoin “rose” to 60K, what do you think was causing it to rise? What outside factor was occurring causing the value of it to go up.
It’s intrinsic value did not change at all, it’s rarity did not change, it’s the exact same thing at 20k or 50k. There was not some advancement made on the code to make it faster than competing coins, or safer, or more integrated, or more secure.
It’s the exact same coin.
We can assign a rough intrinsic value to Bitcoin similar to gold/silver in a sense…
X = Amount of electricity needed to “print” one bitcoin (I refuse to call it mining because it attempts to peg itself to precious metals deceitfully)
Y = Cost of the computer to “print” a bitcoin.
Z = X+Y giving us the intrinsic value of bitcoin, which can fluctuate on factors such as energy costs, chip costs, government regulations, taxes and so on.
I think it is calculated roughly from between $10,000 of just electricity to as high as $15,000
Some nations have super crazy high electricity prices making the cost to mine one coin over $100,000 and some countries have super low costs making it dirt cheap to mine bitcoin. This is the general average.
So we have a rough estimate of the intrinsic value of one Bitcoin.
If the trading price of bitcoin drops below the cost of the electricity to make it, then the miners would stop producing it so generally it has to at least meet that threshold.
I can even exchange with a bank my bitcoin for dollars, and use those dollars to buy more electricity and manufacture more bitcoin. Like gold and gasoline for mining it.
So I ask you, why do you think it rose in “value” from 20k to 60k and the dumped and rug pulled?
What caused the intrinsic value of one bitcoin to go far beyond the production costs.
It’s not logistics or airplanes, you don’t even need a single truck to move it.
It’s not that some war caused the production plants of Bitcoin to get cut in half, making it more scarce.
There was no natural disaster affecting supply/demand.
It’s not being used as a commodity for healthcare, or industry, or technology.
Just fate, luck, unknowable forces?
I know the answer, people saw that it was being sold in high volumes (traded back and forth between whales ledger accounts, hedge funds, commodities super houses, banks) thusly stimulating the “trade” of it, causing people to think it was time to “buy in”. Then when it rug pulled, they still had no clue how it happened.
Must just be bad luck is all, time in the markets chum, not timing the markets.
There are still bag holders from 60k waiting and hooping it will go up to 1,000,000 which if it does go up that high, then the U.S. dollar is hyper inflated into hell.
Remember the Tom Brady Superbowl ad? The Matt Damon mountain climbing ad?
That was the shoeshine boy stock tip moment.
Nothing caused bitcoin to rise that far above the production costs. Everyone had a mining rig, or was installing mining software on other people computers.
The intrinsic value did not change at all. Supply and demand did not change.
Rapidly trading high volumes caused it to go up, and normally stocks and commodities traded on the market are regulated by the FTC to prevent boosting. This had no regulation and no oversight, so the Jita scammers manipulated it heavily.
You cannot even tell what he is selling in this advertisement. Hes just using emotional manipulation, man up, be courageous, your a wuss if you don’t buy some Crypto and sail in a boat to destroy savage natives.
Hes not selling based off some new corporation embracing Crypto, he’s not selling it’s uses, showing it’s future. It’s a sales gimmick.
Speculation. That’s pretty obvious, it doesn’t really have a much actual use as a currency at this very moment, and it’s too volatile for a reliable store of value. It’s all speculation on the possibility that it may become such an asset in the future.
It does not have an intrinsic value. This is a completely meaningless term when it comes to valuing something like Bitcoin. The price is entirely set by supply, demand and speculation, maybe manipulation, which becomes increasingly more difficult as the market cap grows though.
This is actually a rather complex topic.
Bitcoin has a very strong focus on decentralization, and the reason why it is so slow is a trade-off it makes to keep the hardware and bandwidth requirements low, so as many people as possible can use it by directly running a node, verifying all transactions and the monetary policy in the process.
This has the consequence that it is extremely hard to change now. There are some small backwards compatible changes that are basically uncontroversial that have been added over the last years, but it would at this point be impossible to make any fundamental changes.
This is may be very unintuitive, because we immediately think of Bitcoin as a technology that has to evolve and change. But this isn’t necessarily true. A currency is based on trust, and if there is a group of people who could unanimously change the protocol it would severely weaken the trust we can put into that system. This is almost entirely the case for every other crypto currency where a small group of people calls the shots.
Instead of changing the core protocol, Bitcoin evolves by building new layers on top that take the asset the base layer creates and utilizes it in new protocols that have different trade-offs. Once such example is the Lighting network, which is a mesh network of payment channels that allows for near instant payments at very low fees, with the trade-off that such a node has to be online to receive payments and secure the channel. It’s still trustless though.
This isn’t super obvious and easy to understand, but it is a topic worth exploring in my opinion if you truly want to evaluate if this actually has any value.
Yeah, I’m so sorry, but I have to stop you right there. This is an easy mistake to make and it basically invalidates the rests of your calculations. But let me explain…
There isn’t a fixed cost to “print” a Bitcoin in that sense. New Bitcoins are issued with every block mined, and there is a fixed limit of how much the miner can give to himself. At this moment, it is 6.25 Bitcoin per block. There is a block found on average every 10min and Bitcoin will automatically adjust the difficulty to find a block, to keep the average at 10min.
At the moment, there are ~900 new Bitcoin that can be mined per day. It does not matter how many miners there are or how much hardware and energy they throw at it to hash new blocks. They all mine for a share of this 900 new Bitcoin ( + fees). This means, that the higher the price of Bitcoin, the more mining it can pay for. If the price goes down, the least efficient miners will quit, because they start to pay more for their mining than they earn, which means there is more slices of the pie for the rest who become profitable again.
So it’s not the energy and hardware spent that influences the price. It’s the price that influences the amount of mining Bitcoin can finance.
This is why this can’t be used to calculate an intrinsic value.
Roughly every 4 years (every 210,000 blocks exactly) the amount of new Bitcoin a miner can issue in a block is halved. So in about a year, the amount they can mine in a day will go from ~900 to ~450.
There is a theory about this so called halving, that it basically creates a supply shock and it is assumed (this is extremely speculative) that this is one of the causes for the explosive price rises observed in the past (also called the halving cycles). Obviously this will fade over time, as the fees collected per block will grow bigger than the new coins issued and therefor dampen the effect of the halving.
There is a finite amount of halvings. At some point in the far future the issuance of new Bitcoin will stop. At that point, 21mil Bitcoin will have been mined. That is where this maximum amount comes from.
Again, probably from speculation.
It has for sure nothing to do with intrinsic value. There is currently no model to predict the price of Bitcoin or to calculate a fair value.
Then again, until someone came up with a model to value stocks, investors where probably equally puzzled how to value them. But that it’s hardly the fault of new market goods that they don’t fit into an existing idea and no one can make heads or tails of (yet).
Fact is, there is an extremely liquid market where it obviously has value
Are you still so sure you know the answer? I’m pretty sure everyone is still just wildly guessing, and it’s probably the people who have invested far more time into thinking and analyzing this asset that are closer to coming up with some clues than someone who just glanced at it and dismissed it as a gimmick.
This may be surprising, but I’m no fan of the wider crypto “ecosystem”. It’s literally 99.999% scams. There may be some networks besides Bitcoin that produce something of value, but even of the well known ones, they are almost entirely centrally developed tech startups under the control of a few.
This is an entirely separate issue how to set this things apart and it usually makes completely no sense to people why someone would say crypto is ■■■■■■■■ but Bitcoin is fine. I believe (or hope) that the differences will become more apparent to a wider audience with time, but it’s not a certainty this will happen at all.
So why even peg Bitcoin to electricity? Why not just have people get issued raffle tickets, then assign them a bitcoin if they win the raffle? What part does electricity play except to solve useless meaningless puzzles if not just to get a place in the gambling line?
As it is right now the minimum value of Bitcoin is tied to the electrical cost to “mine it”.
It has to meet the minimum sell price of the electrical costs to “mine” it, or else the miners would stop mining it until the supply fell enough that miners would begin to mine it again for profit, otherwise miners lose money. I am sure some people out there are such rabid anti government libertarians they would mine and sell bitcoin at a loss, but the average miner wouldn’t.
That gives us a bare minimum intrinsic supply value.
It takes X amount of electricity to mine, that electricity costs Y amount, the coin sells for Z amount.
These are tangibles that give us an intrinsic minimum value.
You know the speculation and manipulation is out of control when the minimum average electrical costs to mine it are tens of thousands of dollars less than the sell price.
I am not against bitcoin, I am simply pointing out it should, in no logical way be worth that much more as a medium device to of transferring FIAT currency (because that’s all it does, exactly that) than the cost to manufacture it.
It’s like a debit card, or an Amazon gift card costing you $10,000 worth of plastic to produce, but selling for $70,000
Sure there is room for profit, but that much?
Only if you have a monopoly (which it doesn’t) or some mega corporation has announced they will lead the future with Bitcoin (Like IBM, which they didn’t) or some really shady stuff going on.
Really really shady stuff.
Anddddd it’s the shady stuff.
Precious Metals, silver specifically, were manipulated in the 1970’s by some wealthy cattle brothers (the Hunt brothers) in Texas.
They almost pulled it off by buying up the supply of most of the available commodities Silver available for trade in the entire world and having a monopoly on it, cornering the market, influencing the value.
The price skyrocketed, it went from $6/Troy ounce, to almost $50/Troy ounce in one year. Only the U.S. government stepping in to change the lending rules right in the middle of their takeover attempt stopped them, and bankrupt them when they were unable to pay back the loans, because most of their silver purchases were made by using their previous loan based silver purchases as leverage against the future loan, then they forced the price of silver up higher, having more collateral to get loans, to buy more silver.
There are other factors at play, like Nixon taking the U.S. off the Gold/Silver standard one year later in 1971 which made the government step in and destroy the commodities market cornering.
It’s like the housing market up in Canada right now. Since January 1st the average cost of a home in Canada went up more than $100,000 American Dollarydoos. In less than 8 months.
The immigration influx is not nearly enough to come close to explain the meteoric rise in price.
The people who have the houses are happy, they think they suddenly doubled their wealth, most of them see the dollar signs light up like a Hypernet Relay and bing bing bing WAHOO neurons fire ignoring the reason their home value went up 100k in 8 months.
For Crypto lot’s of people bought the magic beans not as a form of decentralized currency conversion, but as an “investment” like it was a commodity, or a stock representing a company that produces a tangible product. Numbers go up, the numbers always go up!
Imagine if the British Pound went from the value it is at now which is…
$1.2616 British pounds = $1.00 American
Say the price of the Pound went up to say 5 - 1? What if it went up 7-1? 10-1?
You would ask "What invention did Britain just come up with to generate value in their currency?
it’s a FIAT currency so the value of it is tied the the supposed labor and wealth of the nation.
What event occurred to cause the rise, it doesn’t just magically create value out of thin air. An event has to occur to cause that reaction.
A nation discovering vast amounts of say Lithium could boost their economy, thusly the value of their FIAT.
Imagine if Matt Damon suddenly made an advertisement for Brexit and promoted the British pound
“Oiy ya bullox lubber, spot agh tea wit dah misses egh govenah? Y BONG BONG BONG! It be three chimes on big bong, you yanks is right bum scared ta buy dis here pound. Stop bein a wankagh and grab ya some pounds M8. Dus ya mum like apples? How bout dem apples”
Now, the government is going to generously offering you the soon to be Federal Reserve Gov Coin! Isn’t that amazing?They are going to regulate crypto for you! That decentralization mumbo jumbo just didn’t quite work out.
Big business integration, global acceptance, normalization, and the eyes of the money printing competition who you attempted to cut out.
Not very nice of you! You know Uncle Sam gets a cut…he always gets a cut.
Now, hes going to take the whole pie.
Can I just jump in here as there is somewhat of a block in my mind for some reason.
Would it be correct to consider the act of increasing money supply as a necessary part of managing money? I’ve considered a few things and I realise in many instances around the world the note simply must be paid, or at least the impression is given that the note is paid.
I’m considering that fiat currency and Bitcoin aren’t so different, so say I am a PC repairman and I fix a computer (proof of work) and I’m paid £100 (reward) could this process be compared to Bitcoins proof of work? obviously there is billions of us doing proof of work so Is money created and rewarded based on the work we all do?
Also, I’m interested in your view on this, Bitcoin will always be tied to fiat and can’t operate on it’s own due to the need to increase/decrease money supply manually,
Also, if you have any views on El Salvador. Thanks
Currently in the UK we have our main water supplier on the brink of administration (they have no money left to pay their bills).
Now, the only possible outcome is for the government (the tax payer) to step in and find the money to pay off the £14 Billion gap in their finances. I’m thinking most of this £14 Billion will be printed and introduced into our economy as it seems unavoidable. Also, if the waterboard becomes part of the government then water supply might be something which a payment could be demanded through taxes. Generally there is no other option than to print the money and pay off the bills and then at a later date destroy it.
If we look at the real world scenario (which you never seem to consider) this poor man could be spending that 3 hours supporting his family by performing works with whatever his trade is, I’m pretty sure the cost of paying his bill by Bitcoin is nothing in comparison to what he could get from using those 3 hours more efficiently. Do I expect you to understand this simple observation? Nope.
It provides security, If I am paid by bitcoin then a record of the payment that both the sender and receiver can trust is created. If I am doing business with someone and we find a discrepancy then both of us can review the “trusted” ledger and work out where the error is and confirm.
You actually have my agreement here, the endgame is fiat.
Googled: At the third quarter of 2020, there were roughly 12,020 Monero transactions recorded worldwide daily.
The rate at which it’s being adopted (used for genuine retail transactions) must be measured and be invested in based on that, to me it doesn’t looks like any investor will become a millionaire from it anytime soon.
No, the fiat value of a Bitcoin will be determined by it’s demand regardless of if it’s a silly/manipulative investor or a genuine user for retail transactions. What people refuse to understand is a good part of a bitcoin’s value is based on lots of people holding it and a small part is based on genuine retail usage.
if everyone stopped holding Bitcoin suddenly we would see a much lower value which is more aligned to the current 350k to 400k BTC daily transactions (I expect the people using it for security/privacy reasons during RETAIL transactions is considerably lower than 350k daily transactions).
You’ll find this process is completely ignorant of electricity cost, I would expect at times of low BTC usage (secure/private retail use only) the value of BTC is low but the fees are sky high. We may actually see what I’m talking about here in action where BTC investors cash out all at the same time.
We will definitely see a higher BTC value if for example a conglomerate of retailers start using BTC internally (renting bitcoin for a few seconds/minutes to transfer value then quickly transferring to fiat) all of them in the conglomerate would benefit from 100% accurate accounting and recordkeeping which all of them could fully trust.
This way way they might not appear to run out of BTC and more BTC will become available once some of the retailers have finished renting it for quick value transfer. From these perspectives the value of a BTC isn’t greatly relevant as it would be used for the benefits in it’s functionality.
Another perspective is if investors cash out then we could see the rise of non-profit miners who are cyhperpunks who only do it to support the network and nothing more, the cypherpunks who use the network to stay secure and private will happily pay a few pence more fees to cover non-profit miners electric bills and nothing more, no fat cat investor looking to be a billionaire, nothing, just a barebone space with barebone computers maintaining the bitcoin network. No one would even care if the miners were profitable, the fees would cover it.
It is in a sense a raffle system. A hash for a block needs to have a specific amount of leading zeros, the higher the difficulty the more zeros. At some point a miner will randomly find a valid configuration of a block that hashes to a string with the required amount of zeros.
Basically you have to spend a little energy to calculate a ticket in the raffle. Because the energy for the calculation can be spent anywhere on the world by anyone, you basically have a decentralized lottery that does not require a central issuer for the tickets.
This may sound dumb or trivial. But it solves a problem we did not have a solution for until Satoshi solved it this way.
No, I already explained this. Go back and read it. If my explanation is not clear please let me know, I’m happy to elaborate on it.
How much profit do you think a miner makes? Because of the way it works, it automatically pushes every miner to the point where they basically mine Bitcoin at the marginal cost of production. To still earn anything at all, they basically have to find energy sources that are as cheap as possible. They are far away with competing with regular electricity customers in almost all places this days.
Shocking really. You think people who invest in stocks, real estate, gold, art or any form of commodity do this for completely altruistic motives and not to make a profit? It’s always gambling on future prices or on expected cash flow, if it’s an asset that produces one. Crypto are extremely high risk with potentially very high profits.
And yes, most of it is pure pump and dump scams without anything behind it. That doesn’t mean that there aren’t some coins that actually have value. If you spend zero effort looking into the topic it will obviously all blend together and it’s impossible for you to make an educated guess what has potential and what’s just a scam or fad or just a dumb idea.
What I don’t get is why people like you speak so confidently about something you clearly don’t understand. You don’t do yourself any favor with this behavior. You babble on an on about a topic you spent zero time investigating, what do you think you could possibly have to say about it that would be at all convincing?
I’m not trying to be disrespectful here. You clearly know a lot about money and the history of it. That may even help you understand some aspect of this new form of money most other don’t, but there are things about it that need time investment to understand it.
And this is the only investment I can actually recommend someone makes regarding this. Invest time to learn how it actually works. Since you seem to be a gold bug, I highly recommend the book “The Bitcoin Standard”, it should be right up your alley.
Indeed. Though not mathematically necessary, it is required for a usable money.
Money’s goal is to make producer meet consumers, and for that it needs to be stable, that includes prevent deflation : if there is deflation, then it’s better to keep your money than to invest because your money will be worth more in the long term than most investments, leading to a negative feedback (less money being exchanged => higher value of money). That’s why most central banks have a target inflation rate of 2% ; and that’s also why I wrote that BTC is bad as a money.
Now since the production of goods and services increases (real GPD growth of 2% for dollar over the last 10 years) then to have slight inflation you also need to increase the supply of money.
There is also the currencies exchanges which makes the currencies an investment : if you believe that country C will increase its production (for example by war to acquire resources) , or that simply the currency value will increase (for example when the country forces companies to exchange in its currency) , then purchasing that currency is a good investment - but if also induces deflation. That’s why it’s important to increase the money supply, otherwise the investment in a currency makes next investments more interesting, and people can start pump&dump which are bad for economy ( less stability means less activity in the country ) .
Now regarding BTC, it does not need that because it’s not backed by an economy. But being not backed by an economy means it does not have value as a currency, and lacking the regulation it lacks the stability to be a valuable money. Therefore the only value in BTC is speculation.
It has a value to those seeking security/privacy or large groups of businesses who require a trusted ledger. I’m still unsure why the average person is buying it to hold for profit based on what I have learned.
It does not bring any security. Encryption’s been in use for years now, including for bank transactions.
Its lack of stability also means that you can lose the value in your wallet even when the numbers are the same. Trading stability for a pseudo security actually means you have none.
That’s called accounting.
Because that’s how it’s been sold. Because the average person believes the techno BS they are served when they lack the knowledge, especially when this techno BS is presented with hope (social improvement, financial stability) . Because it takes a LOT of energy to acquire the information required to understand a topic, and especially it takes a LOT more to debunk than to make false claims.
Basically because there was room for easy scams, so easy scams there was.
Stop trying to promote that people who deem privacy as an issue don’t exist, it’s simply not factual and no matter how many times you type it, it will not suddenly become fact.
There are in fact people who see privacy as an issue: Cypherpunk - Wikipedia. These folks will embrace creations like Bitcoin, it was someone from this group who created Bitcoin, it is also evident that this creator wants privacy since nobody knows who he is.
“The list was discussing questions about privacy, government monitoring, corporate control of information, and related issues in the early 1990s that did not become major topics for broader discussion until at least ten years later. Some list participants were highly radical on these issues.”
The irony here is that you don’t remember your older posts where you claimed a poor man had to drive for 3 hours by bus to get to a bank… El Salvador is actually quite a small country. Google map of banks in El Salvador and you’ll see that unless he’s by foot and lives in the middle of the jungle there is no way he needs more than half an hour to reach a bank.
So now, on top of the hilarious stupidity of your hate posts, you are dissing the guy you used in the example? Wow… clearly shows who you really are when those people no longer have a financial advantage for you…
I don’t expect you to learn from this but at least I hope you’ll become a better person one day…
So the “problem” “we” did not have a solition for? So the problem is “wasting energy” and we is “Oligarchs”, ok, I could accept your answer in that way, and they like privacy. Seems to make sense…
So, it’s no more than a bank transfer using a lot of energy and no security?
