I get that anything is worth whatever someone is willing to pay for it. That’s besides the point. My point is, beyond speculation, what do crypto coins represent?
I also understand that the value of the US dollar is being questioned almost as much without the backing of gold.
But what I really want to know is what is at the foundation level of Bitcoin that people are buying into?
I have a basic understanding of the blockchain, etc. I sold 1BTC in 2017 for $1200 when I thought that was as high as it would go. At this point, at over $100kUSD and rising steadily, what is the $ limit and what is that limit based upon? I thought it was based on the value of mining to check transactions but this seems… not worth $100k to me.
I’ve been thinking, the only tangible value I personally see in Bitcoin, because it’s not really being used as legitimate currency, is for criminals. By now, there must be trillions of dollars in BTC acquired by criminals holding corporations hostage. When you’ve got people like Trump involved (either explicitly or by way of manipulation) with an executive order to establish a crypto czar, this suggests to me that he’s creating pathways for bad actors to more effectively gain more wealth. These are the people who are most excited in Bitcoin, beyond speculation.
I mean, there’s little to nothing on the up and up with crypto, right? It’s a scam. Right?
Please, factual answers only. I’m looking for someone to dispel my speculation with genuine economics of the matter.
It had the same value a stock without a dividend has.
the only tangible value I personally see in Bitcoin, because it’s not really being used as legitimate currency, is for criminals.
Please, factual answers only.
In 2021, 0.15% of known cryptocurrency transactions conducted were involved in illicit activities like cybercrime, money laundering and terrorism financing
sounds like the word “known” is doing some heavy lifting there
The assumption that bitcoin is only used by criminals is much less accurate.
You’re gonna have to give me a source for that buddy.
It came from here but this source has more detail.
Is that by total number of transactions or by bitcoin volume?
I copied that from Wikipedia which got their reference from through NY times.
For specific details, this is probably a better source https://www.trmlabs.com/resources/reports/the-illicit-crypto-ecosystem-report-2022
Bitcoin doesn’t even attract criminals as it’s traceable. You can easily tell who bought what and traded what. Since all the exchanges are KYC, no criminal worth their salt would use Bitcoin. Instead, they would rather use Monero. The only people buying and selling Bitcoin are people who want to gamble on it getting higher
In the same way that MLM and Ponzi schemes are worth something.
How profitable it is is directly proportional to how willing you are to fuck over everyone around you. To how much of an asshole you are.
Just like anything else, it’s worth what people are willing to pay for it vs what people are willing to buy it for.
Currently bitcoin is just a digital commodity with a finite supply which makes it a good store of value if people continue to use it.
The thing is, there’s nothing preventing bitcoin from tanking and becoming essentially worthless besides people buying it because the price is low.
If in a hypothetical future the bitcoin price becomes stable then it will become a valuable commodity. It’s value is wholly derived from it’s users and nothing else.
It’s not very convinent for governments or large institutions to hold it in it’s current form since it’s too easy to steal without leaving a trace. For government use there is going to be needed some development to allow for government or Central banks to have complete control over the currency without giving that control away which I think might be possible. In that case settling international transactions in bitcoin as opposed to the dollar for BRICS countries might be an option which doesn’t use the US dollar.
All the other uses IMO are pretty much fluff such as paying in bitcoin.
The US dollar actually is tied to something of value: it’s the format the us government will take their taxes in or else they will increasingly use their powers as a monopoly on fhe legitimate use of force until you give them what you owe
Crypto is only worth what others will pay for it. Which is why I don’t own it
Further to that it is also what they pay their debt in. You can buy debt in dollars and earn interest in dollars
This is a negative for dollars, not a positive.
Being able to inflate your way out of debt makes a currency less valuable.
In value yes, but as a tool it’s very valuable
Valuable to the people creating debt in that currency. Not to other stakeholders.
TL;DR: It’s worth whatever a greater fool is willing to pay for it.
Bitcoin is a cult, therefore it’s invaluable to the cult members. In reality they’re all multi-level marketing pyramid schemes which is what the stock market has degenerated into as well. The former just has more overtly obnoxious shady unethical proponents. It’s easier to succumb to greed, selfishness, and seclude oneself from the rest of society by simply buying something that confirms one’s fallacy riddled beliefs than it is to question oneself and actively improving society with all of Earths inhabitants, ecosystems, and posterity in mind. Technologically humankind has made great strides, but mentally the majority still thinks like cavemen.
Crypto Cult Science
“Money corrupts; bitcoin corrupts absolutely. Disregarding all of bitcoin’s shortcomings, a financial instrument that brings out the worst in people—greed—won’t change the world for the better.” —https://www.arscyni.cc/file/crypto_cult_science.html
Cryptocurrencies don’t rely on a central entity and is the Lemmy equivalent to Reddit compared to the fiat currency. I like it and I like the technology but
- Good luck at having a proper stable economy using only crypto. Cryptobros hate central banks but their policies ensure that a loaf of bread doesn’t cost 3 times as much the next day. I’d rather have a central trusted authority than not having one
- Bitcoin by itself sucks. It was the first crypto so it’s the most common but it’s slow, heavy and costly to operate and to transact on
Cryptobros hate central banks but their policies ensure that a loaf of bread doesn’t cost 3 times as much the next day.
The exact opposite. Only after abandoning the gold standard does a central bank have the power to make a loaf of bread cost 3 times as much the next day.
Central banks are a relatively new invention and are not essential in the slightest.
They are able to regulate the interest rate. We don’t perceive a change of value of our fiat on a regular basis. What yesterday was $1, today is $1.0000001. Good luck maintaining the same purchasing power with Bitcoin (in terms of stability)
Because they can’t run out of money, central banks can be the largest buyer and seller over the short term.
But there is no economic rule that demands those entities exist. For example, from 1863 to 1913 the US had almost no use for a central bank.
Note that I’m very far from suggesting the world’s economy should run on bitcoin. Just that central banks are not as essential as they are made out to be. They are used as much to cause inflation as they are to control it.
Thank you for your informative reply :)
The real answer is: It depends how you define value.
Can you make money with Bitcoin? Yes. Are you likely to make money? No Is the technology useful applicable? Yes Is it being used and applied ethically and for the good of people? No. Is it a ‘store of value’? No, it’s more like an extremely volatile stock or a lottery ticket. Can you use it like money? Yes Is there any reason to use it like money? Not really, not even among other cryptocurrencies.
Depending on which of these aspects of Bitcoin matter to you it will be more or valuable.
not even fiat (heh) is worth anything if we don’t accept it as store of value, let alone an electronic register on a digital ledger.
Crypto is as valuable as you want it to be because it is not real. Not being real is a big problem for a currency.
More than dollars.
Bitcoin specifically? No. It’s a janky prototype that should have been superseded a long time ago.
Crypto in general? Probably something. It’s good for buying and selling illegal things.
Modern blockchain protocols dominate bitcoin in every dimension except market cap.
There is a limited amount of Bitcoin, and some of it is lost in forgotten wallets, so the total volume is constantly falling. This may partially increase the price.
But in reality, as in any speculative market, the price of bitcoin depends mainly on faith in it and speculation about world events (some kind of cataclysms, regular statements of this or that person about cryptocurrency, etc.)
The main real value can only be found in countries that are disconnected from SWIFT. However, almost no one appreciates this because there are only 5 officially disconnected countries. However, if this list continues to grow, cryptocurrencies (including Bitcoin) will become more prevalent in international transactions.
The cost to produce new bitcoin doubles every 4 years ( a bit more because new hardware is added). This drags up the price of all the dormant bitcoin.
There have been no new Bitcoins for a long time. Everything that miners mine is just a transaction tax. In fact, to describe the reason for bitcoin’s growth, you need to understand what money is all about. Not just crypto money, but in general. In short, the price is rising because many (including miners) believe that it will rise and do not spend bitcoins. In a normal economy (except Japan), you could just print more money and the price would drop because the currency unit would depreciate. But bitcoin is a mathematical model, and it has a limit. You will not be able to create more Bitcoins than you have already created in any way. Therefore, the belief in the growth and retention of the currency reduces turnover and the price increases. If any of the whales withdraw their entire stock in one day, the market will fall for many years.
UPD: Excuse me, I really made a mistake. You can still mine 3 bitcoins per block… but to be honest, 3 bitcoins for a whole pool is only an eighth of the original 25 bitcoins per person. In general, mining has not compensated for mining for a long time.
UPD: I checked just in case. The average commission payment is now 1.5 bitcoins. almost half of the reward
UPD: I will reveal my thought even more. An ASIC at 1160 Th/s costs 33k dollars and consumes 11 kW. Even in my region with a low-cost light (only 5 cents per kW), such an asic will be able to bring only 58 dollars per day. And it will pay off only in 1.7 years. This is the moment when the miner will FINALLY stop working at a loss. And this is in ideal conditions without increasing the complexity of the network and other things. So all the miners who don’t buy huge amounts in bulk barely pay for their business.
mining has not compensated for mining for a long time.
The average commission payment is now 1.5 bitcoins. almost half of the reward
I think you have the wrong units. The average fee is 1.5 USD.
And it will pay off only in 1.7 years
This is quite quick. Last time I looked the it was around 3 years. Most of the cost comes from buying the hardware.
I think you have the wrong units. The average fee is 1.5 USD.
https://bitinfocharts.com/ru/comparison/bitcoin-fee_to_reward.html#3m
Percents you can calculate self. That’s not for all blocks, but in a day.
UPD: This is not for every block, of course, but for the whole day. I was wrong about that. Maybe really 2%
This is quite quick. Last time I looked the it was around 3 years. Most of the cost comes from buying the hardware.
my calculations were made without taking into account the growth of the network’s complexity. So, when I tried it last time, the network’s complexity had increased so much in a year and a half that the equipment was not bringing in much, and it was not worth the risk of investing. However, things may be different now, and I may be mistaken.
UPD: Now I just buy Bitcoin on exchanges, and it brings me the same % of income as mining. But I don’t have to deal with equipment, follow ridiculous laws, or waste electricity. =) That’s why I say that many peole just tkabe bitclin to cold wallets. Less bitcloin exists on exchage then grow price.
When I first looked at Bitcoin it was around $10/BTC and electricity to mine (on a cpu) was about the same.
The people who make money mining bitcoin have a combination of very cheap electricity and/or next generation asic hardware.
Part of my last minig farm, if you interesting.
and yes, I also mined bitcoins on the CPU. back when you could get near 200 bitcoins per hour of work. After that I mined altcoins on video cards, mined through nicehash. what I have not mined. and I can say - it’s all thrown money. much, much more profitable just to buy cryptocurrency and hold on cold wallet.
if you don’t want to tell me that people are setting up mining farms in Somalia (because it’s pointless from a risk perspective), I don’t think electricity rates are particularly lower anywhere else.
In any case, you can make money from anything. It’s just that the risks associated with mining don’t justify the investment. That’s all.
So you know how fiat currency is backed by nothing more than the fact the government says it’s valuable and we all agree to that? Crypto is sort of like that except without the government bit
Except the lack of government AND the massive amount of pollution and resources waste.
Fiat currency is backed by taxation, which can only be paid in the very same currency that the taxer prints.
📺 Your Taxes Pay for NothingSome states have been looking into allowing you to pay your taxes with crypto, so checkmate atheists.
No stable state with a strong currency would ever do that.
Based on … What exactly? Your gut feelings?
But I can buy anything with fiat curency and with bitcoin I can basically buy nothing. And I never will be able probably, bitcoin is too slow to be used as an actual curency to buy common things like groceries
People buy big ticket items like cars and houses with bitcoin, not chocolate bars.
bitcoin is a bad currency but you absolutely can buy legal things. like, check shopinbit. there’s also a similar website that buys the thing for you from amazon
Bitcoin is pretty fast. You get 5 confirmations in about an hour. If you compare it to credit cards, the equivalent thing (clearing and settlement) happens in about 2-7 days.
Thing that matters to the merchant is a bit different than the thing that happens with the customer. You can build similar layers in front of the customer for crypto payments that make it look like the payment went through in a second.
Yup, all boils down to faith in the currency. For something like the dollar, it’s backed by faith in the US government. For something like Bitcoin, it’s backed by faith in the resilience of the blockchain and the value buyers place on it. Emperor Norton minted his own currency which was accepted all around San Francisco based purely on the fact that people accepted it.
It’s a lot more backed by the faith that if you don’t manage to get some you go to jail.
