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.
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
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)
It had the same value a stock without a dividend has.
You have to think about Bitcoin in a different way from any other form of money that has ever existed because it’s literally the first of its kind.
I work hard for money. I expend my time and energy and talent in exchange for money (USD, in my case) that I can then trade in the future for the things I want/need. So money is an abstraction of my time and engergy, stored for later use.
Unfortunately, USD is pretty highly inflationary and it loses a lot of value over time, so it doesn’t make sense to save it for very long. I have to either spend it or invest it because every day I hold on to it, it loses a little more of its original purchasing power.
I could invest my money in gold or silver because those things are certainly more finite than USD and hold value better, but precious metals are heavy, difficult to transport and store in large quantities and I can’t easily use gold to pay for my daily expenses.
So here’s an idea: What if instead of converting my time, energy and talent into some physical thing that I have to hold onto and contend with inflation, etc. we just cryptographically assign that value to an entry on the public blockchain ledger? Now, that value is permanently locked into part of the total 21 million supply of bitcoin and no one can create more of it. Bitcoin is literally the hardest form of money ever created.
If I want to exchange that value with someone else in the future, I use my private cryptographic key to prove that I own it and I can effortlessly transfer it to anyone anywhere in the world in a matter of minutes.
You can’t think of Bitcoin as some “thing” that you buy because a “bitcoin” is really nothing more than a unit of measurement. The real power of the bitcoin network is the ability to store and transmit value in a completely secure and trustless way that’s immune to the manipulation of fiat currency.
If you’re truly interested in understanding the answers to your question of “is bitcoin actually worth anything”, I recommend the book Broken Money by Lyn Alden. It’s an easy read and it will absolutely change how you see money.
Thank you.
I guess the part where I’m stuck is the current volatile state of this “currency” compared to the idea or the promise of it.
Should I buy BTC now or wait? Is it a currency or an investment?
If something is an investment, can it also “be money”? Like, if I buy a painting for ten grand then twenty years later its worth 15 grand, I suppose I could trade the painting for something of an agreed upon equal value or I could sell it for money with which I can buy things. This concept isn’t really how we’ve experienced money in my lifetime.
It’s this push / pull of crypto’s facade where I’m struggling. It’s looked at as both currency and investment at the same time. It doesn’t seem to have much value today to use as currency because as soon as you buy something you’ve lost money. I could take 100USD worth of BTC to buy a thing and tomorrow that hundred dollars could have been worth $110. It’s not possible to say something is “worth” .01BTC because that value will change tomorrow.
It seems it’s only worth something today because people are investing in the promise of it. We don’t know if it will ever really be used as a currency as you’ve described. And, if and when that day comes to pass, what will the value of 1BTC be worth? Should I just wait five to ten years to buy crypto to avoid the speculative market? Maybe I miss out on capital gains over a hundred thousand dollars - is that so bad?
Or, in your opinion, is it inevitable that this will be the world wide currency of the future?
All good questions.
It can be both a currency and an investment. Money can be an investment, but not any fiat money that exists in the world today, thanks to inflation (money printing). Gold and silver can be both money and an investment, but even gold and silver have an inflation rate (new metal being mined and introduced into the market, aka market dilution.)
The reason this is a hard concept to grasp is because we are taking something that is truly finite (21 million bitcoins, EVER to exist) and we measure it against the USD which literally has no limit to the amount they can and will print. When you think of it this way, Bitcoin price relative to USD has no limit because USD money printing has no limit. There can always be more USD but never more BTC, therefore BTC’s value when denominated in USD will theoretically go up forever (though not always at the same crazy rates we’ve seen the past 15 years.)
Take gold for example. In the 1960s it was $35/oz. Today it’s over $3,000/oz. Is this because gold has somehow changed to become more valuable or did the USD just become less valuable while gold stayed the same?
1BTC will always be 1 of 21 million BTC. USD on the other hand will always be continually devalued due to money printing.
Nobody can tell you exactly how this is going to work out 20 or 50 years from now but the growing consensus is BTC price relative to fiat price can really only continue to go up because it’s literally the the hardest form of money in the world - even more so than gold. It’s the only asset in the universe that we can buy and hold and know exactly how much of it there is and ever will be.
I don’t recommend anyone buy into something they don’t understand but I will say I believe it would be well worth your time to study bitcoin and learn about what makes it different from fiat. Read books like Broken Money, The Bitcoin Standard and The Big Print.
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
You’re gonna have to give me a source for that buddy.
Gold and rare metals are the only real currency. And a bitcoin miner contains rare metals and earths for electronics.
It’s value is in remittance if nothing else. It’s cheaper than western union. But the network is only “cheaper” in that way because it has distributed the costs of running the network to the speculating miners who solve pointless puzzles with monsterously greedy processing farms hoping to win the lottery and get back more than they put in. It’s a ponzi scheme, it takes more from everyone who came later and gives the value to early adopters who were there when you could solo mine coins with whatever hardware and a bitcoin was worth 7 dollars in exchange. Look up how many coins Satoshi is supposedly holding. If they were to cash out even a small fraction the whole market would crash. So use it as a remittance service but not an asset if you must. This from someone who mined 27k worth of it back when it was 7$ and spent it all on illicit medical cannabis before it inflated to 50k
I believe I’ve seen recent cost analysis of using crypto exchanges to transfer money across international borders instead of doing direct conversion through whatever “classical” money transfer service and it showed that due to exchange rates, price fluctuations between crypto exchanges, gas fees, and fiat exchange rates into and out of crypto from usd to whatever currency of the recipient its actually tangibly cheaper to just use a direct wire transfer and currency exchange.
I’ll have to see if I saved the post with the price breakdowns to send you but I just wanted to share that in case you hadn’t heard about it yet. If you had seen that and did find it cheaper somewhere else I’d also be interested to hear where it is actually cheaper. That’s just the most recent analysis I had seen of the costs to exchange from fiat to crypto, send internationally, and then withdraw it in the native currency.
Rip to the millions you smoked away btw lol I would’ve done the exact same honestly
USD FX pairs are currently cheaper using traditional transfers.
However going from a non G20 currency to another non G20 currency can be much cheaper using crypto.
Ah thats interesting, yeah the study i saw was specifically looking at usd to pesos. Good to know!
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.
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.
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.
Part of my last minig farm, if you interesting.
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.
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This is actually quite good. OC? / Source?
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i’m glad you said that, i was confused if this was either an apocryphal from ayn rand… or the great nagus, who knows.
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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
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
Payments of this nature using the layer 1 blockchain are not super feasible, as you say. (Although I’ve made several online purchases using BTC and it works quite well.) However, layer 2 solutions like the Lightning network do allow for extremely fast and cheap transactions, then they use the slower layer 1 blockchain for final settlement later.
Cryptocurrencies have three main attributes that affect their usability: Speed, Security and Costs. You can pick any 2 but there’s always a tradeoff with the 3rd. For example, BTC chooses to prioritize security over everything else. This results in it being slower and sometimes more expensive than other crypto, but that extreme security is what makes it such a good store of value over the long term.
If you want faster and cheaper transactions, you can use other cryptos like Solana but the security and reliability is no comparison.
You’re right, you may never use layer 1 for everyday transactions but there is nothing better when it comes to storing and transferring large amounts of value. So just sell a little BTC every now and then and convert it into whatever currency you need for everyday use, whether that be fiat or some faster, cheaper (but less secure) cryptocurrency.
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?
