A big issue i have with crypto is that so many pseudo intellectuals jump straight in and everytime i ask someone what it actually is they cant give me a straight god damned answer. If you cant explain something in a way that makes sense to someone who doesnt know, chances are you have no idea what you are talking about.
All currency is just a medium for things of real value, like labor, minerals, technology etc. Those things have real intrinsic value, bitcoins, dollars and everything else only holds value based on what people think its worth. There is no intrinsic value tied to them as far as i am aware (and i am open to being proven wrong) In that case it is a pyramid scheme. Its a mass sell out away from crashing the whole gig. Bitcoins themselves are worthless just like USD. USD used to be on a gold standard that meant you could always trade USD for a certain amount of gold. Now its off and its fake fiat. Crypto though isnt backed by anything and doesnt represent anything intrinsic so imo it is going to be prone to many of the same issues other currencies are prone to. There are of course differences like that of inflation where production of bitcoins is controlled, which is nice but its still fake money with no intrinsic value.
Crypto is trustless triple entry accounting with non-inflationary and scarce units. If you don't understand why that's valuable you need to learn more about money.
Ooof too much intelligence in one post. How can I connect this to the ((((sister lovers))))
There is a ledger of every time crypto changes hands so that it can be kept track of like an accounting ledger the ledger itself is stored redundantly on many different nodes in the crypto network hence decentralized and many "people" (number of verification varies depending on which system) will check that a transaction is legitimate before it gets written into the ledger. For at least some crypto coins there is a fixed amount in totality and more cannot be minted.
How can I connect this to the ((((sister lovers))))
I can connect it to (((them))): they distribute shit like "it's just like the tulip craze and beanie babies" in the MSM (not talking about OP's post here) because of that trustless, immutable third entry in the accounting paradigm being very "problematic" for (((their))) usury goals.
For people who don't know what single/double/triple entry accounting even is:
- Single entry accounting - you (and the other guy) enter money you receive in your book. This is super easy to mess with and commit fraud with.
- Double entry accounting - you (and the other guy) enter money you receive and spend (credits and debits) into your book. This is somewhat more difficult to mess with as you'd have to alter both the sent and received records and make sure they all match.
Crypto is triple-entry accounting because not only do you have sent and received entries, you have an immutable record of all transactions sent and received maintained by "the network" rather than any one entity. It's both technologically and financially difficult to attack this third entry by any entity. This means that it's essentially impossible to "cook the books". This aspect of crypto alone is valuable without even considering the deflationary and scarcity aspects of crypto coins like Bitcoin.
non-inflationary and scarce units
Some crypto meets this standard, but definitely not all of them.
Yeah you're right, I just wanted to keep it to one sentence on the explanation and I really mainly talk about Bitcoin when talking about crypto. There are other coins that are good, and most of the good ones have a cap of some sort.
20yo with a Reddit account fancies himself the pinnacle of economics because he bought doge coin six months ago.
Completely missed the mark on all aspects. I'm closer to 40 than 20, don't use Reddit and I don't own a single dogecoin cause it's a limitless (i.e., inflationary) memecoin.
I'd argue there's no such thing as intrinsic value. All value is subjective. Gold has value because people decide it's valuable. Same goes for crypto and dollars.
I hear this dumb shit all the time. People aren't merely deciding gold is valuable. There are physical properties in the metal itself that it can do things other metals can't. It is backed by physics. Gold is necessary to build your computer. Can't do it (reasonably) without it. That's only one example.
Ok, so that's a motivation for people to choose to value it. You're actually onto something really big that even some economists don't get. When you combine both, which is accurate, you get Mengarian valuation. Very helpful way of looking at things.
Gold's usefulness in electronics was not even remotely the basis of its value before electronics existed, though. It was valuable because it was scarce and because of the psychological aspect (it's shiny).
Tiny amounts of gold are needed for electronics and that's only a recently discovered use. For most of history it had no real use other than "it's shiny and people like it." And even today that's still the main use.
To give some counterexamples to your point were cryptocurrencies have no intrinsic value: bitcoin is backed by labor and capital. In order to generate bitcoins, it is required to invest in expensive computer hardware, and it also necessitates ongoing electricity and maintenance costs. In this sense, bitcoin bears similarity to the Labor Treasury Certificates issued by Adolf Hitler where the currency was equivalent to some unit of labor.
There is also in fact a cryptocurrency that is backed by gold, which used to be the case for the dollar, like you mentioned in your post. It's called PAXG. It can be exchanged for its equivalent value of gold at any time. From the :
Each token is backed by one fine troy ounce (t oz) of a 400 oz London Good Delivery gold bar, stored in Brink’s vaults. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company.
PAX Gold is the only gold token that you can redeem for LBMA-accredited Good Delivery gold bullion bars. For additional convenience, smaller amounts can be redeemed through a network of physical gold retailers in US and Canada. Institutional customers can also redeem for unallocated Loco London Gold. Paxos customers can always redeem for USD at current gold market prices
In my point of view, the positives of bitcoin are the fact that the supply of bitcoin is limited, it is dependent on capital to be mined, and it is not in the hands of a central authority. No third party can arbitrarily change its value by increasing the supply.
Yeah but you can always divide by another decimal slot and never reach the whole so it kind of is an unlimited supply
i have heard this but i get conflicting information when i ask what the bitcoin mining actually does. so when mining a bitcoin what are people actually doing with their computers? what is the energy exchanged for? is it just burning power for the sake of it? that would have the same value as burning houses for currency and is retarded. So what is that computing power actually being used for? do they utilize collective computer power to process information? that makes sense and would give bitcoin some intrinsic value but that is what i have deduced personally, not what anyone who promotes bitcoin has told me.
As far as I understand it, the bitcoins that have not yet been mined are encrypted; The complexity of the encryption increases as more bitcoins are mined, meaning more computing power is needed for the same amount of bitcoins as more bitcoins are mined. This means the amount of money it costs to mine a bitcoin increases with time, thus increasing the value of newly mined bitcoins.
Miners form networks together in order to collectively attempt to brute force solutions in order to obtain the key and unlock a new batch of bitcoins. To do this, either their GPU or their CPU is utilized to try one solution after the other, until one of the miners in the network hits the right solution. The bitcoins that were mined are then distributed across all the miners in the network according to the total computing power they have contributed before the solution was found. At the same time, this computing power is used to verify transactions and keep the entire network secure.
Pax g it is very difficult to get the gold. We need something like pax g in the USA but based on silver. Something that has multiple locations to collect your silver if you want. Look into paxg u have to have a lot of money put in to ever get your gold out I think it was close to 300k
You can argue that USD are backed by fiat laws. We have to hold them in order to pay taxes. I can see real value in free market currencies backed by network effects. I agree there is no intrinsic value in bitcoin but what is the intrinsic value of a bank note? What separates the value of different bank notes other than the number on them?
Currency doesnt need intrinsic value if it is a secure medium of exchange.
I see crypto as branded ledgers. Brands have value, ledgers can be trusted to persist over time. But brand loyalty can change and debt can be voided. I prefer my money without counterparty risk to be a store of value over time
I really don't want to speculate in crypto. I can see it being useful as a currency but I would not want it as money and CBDC are the beast system
Currency doesnt need intrinsic value if it is a secure medium of exchange.
Without something intrinsic, what is the value of it? I agree that currencies don't need intrinsic value since their purpose is just transfer of value, not storage of it.
I prefer my money without counterparty risk to be a store of value over time
Au and Ag.
I own lots of Au and Ag, I understand why they have value.
Crypto doesn't need intrinsic value beyond its nature of being secure, fungible, and portable. As long as the block chain exists your crypto is as secure as your pass phrase. You can travel anywhere with your pass phrase in your head and as long as the network is accessible at your destination you can access your money. This strikes me as a good thing, a useful tool.
Raoul Pal did an interesting video for Real Finance where he talks about the value of networks. For example if you are the only person on Facebook it has zero value but as the network grows its value increases.
There are no doubt limits to growth and diminishing returns but we are currently seeing a growth phase. Bitcoin may be the next Myspace or it may be the backbone of a global currency system and the early adopters are being rewarded for foresight and stomach for risk.
Money represents a store of value of human endeavors. Whether storing the value of digging up gold or the accounting effort of recording transactions is largely a matter of personal preference.
That's hilarious. So it's on the explainer bc you refuse to understand it?
The minimum value of a bitcoin is equal to the number of Joules of energy it took to mine.
Incorrect. Sunk cost fallacy. It's value is that people choose to value it, because people are intelligent, and they see there is value in valuing something that is an alternative to threat backed currency (taxation) that is used to genocide them and give money to black baby factories, as well as used to allow the banks to steal purchasing power from us.
When people store a percentage of their networth in bitcoin (lets say everyone opted to store 70% of their networth in it), at one particular price there wouldn't be enough bitcoin to do that.. so what happens instead is that the price increases so that is possible. The past has nothing to do with valuation. The present, and people's present assumptions about the future do.
But that energy is already spent and isn't coming back. Bitcoin isn't a battery to store energy. The amount of energy it took to mine it is not it's value, that's the cost of Bitcoin.
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