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Is Bitcoin actually worth anything? (lemmy.ml)

submitted 1 day ago by oxjox@lemmy.ml to c/asklemmy@lemmy.ml

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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.

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[–] ProfessorScience@lemmy.world 11 points 1 day ago (3 children)

This is not the same for all crypto currency, but a bitcoin represents a "proof of work". When people "mine" bitcoins, they are consuming computational resources, and when they find a bitcoin, it is a certification of the work that was done to find it that becomes the value of the coin. And then, as others as mentioned, people just agree that that work has a certain amount of monetary value. But the proof of work is what limits the supply and allows that value to exist. 3Blue1Brown has a really good video that goes into the technical details if you're interested.

[–] oxjox@lemmy.ml 5 points 1 day ago (2 children)

Thank you for being one of the few to take me seriously and offer a thoughtful response.

I can understand now the value of a token that represent some amount of effort that is limited in its supply. As "promised", no other bitcoins will ever be made. So this alone makes it worth something. The fact that it represents some amount of effort achieved does seem to give it some validity. Although, IMO, certainly not $100k worth.

I'll need to think this over some more and maybe update this post with some more thoughts on the future of the coin.

[–] tias@discuss.tchncs.de 9 points 1 day ago (1 children)

The key feature is that there's a mechanism that limits supply. Other than that, value only exists because enough people agree that it has value. Fiat currency is exactly the same in this regard.

I think your questions indicate that you don't have sufficient understanding of how "ordinary" money works. It's just a promise of being able to exchange it for goods & services in the future, and its value hinges on people trusting that promise.

[–] Jeroen@lemmings.world 1 points 20 hours ago

(posted this comment somewhere else too)

(Paper) money is practically actually valuable because you need it to pay taxes. Gold, diamonds etc you could do without. Of course there is more nuance but taxes force people to value currency and therefore also accept it from others (because you need some of it or you go to jail), which gives currency the circular value.