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.
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 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
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
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.
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)
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.
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.
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.
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.
I don’t think bitcoin provides much value in itself. Its basically an asset that is hard to make more of, like money or gold, which are also valuable because of this and that gold and specific currencies are relatively widely used.
bitcoin’s supposed added value over money is private digital transactions across the globe in a private way, so that you can send money whoever you want, but it’s not practically private, and has so large operating costs (even just the transaction fee) that it’s not really better than bank transactions.
so in short: its value is in its scarcity, and that you can speculate on it. the other possible advantages are not realized.
since the value is in speculation, the dollar limit is when investors start selling enough of it so that others will do the same out of fear. which is who knows how much. but it’s probably more related to other factors than the dollar value.
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.
No
Bitcoin has massive value as a tool to transfer money, anonymously, and through borders effortlessly. Its extremely valuable for money laundering, scamming, stealing, and dodging tariffs or raising money (see how much crypto is stolen by north Korea)
From a basic labor theory of value perspective, bitcoin requires labor to produce because mining it requires massive amounts of compute power. This computer power is supplied using GPUs and electricity, both of which require labor to produce.
If you use this calculator, and enter the values 67 TH/s (tera hashes per second, the rate at which you are mining), 2680 watts for electricity consumption rate, and 5 cents per kilo watt hour as prices, you will see
4.25 USD revenue per day 3.22 USD cost per day Profit rate = 32.0%
To make the values of the the hash rate and energy consumption rate realistic, I consulted the specs of the machine antminer S17, which is aparantly a machine used in the bitcoin mining world (I ain’t into crypto mining). The cost of electricty comes from Kazakhstan, which has cheap electricty and substantial mining operations.
So basically, at the current price of bitcoin can support a gross profit rate of 32% for the people who produce bitcoin, assuming you keep all the profit (no taxes, interest, rent), have no employees or maintainable costs. This is the price currently settled at based on the technological conditions and level of competition.
It is nothing too crazy of a price, and the rapid growth of price in bitcoin is due to how the currency was designed. Basically, once a certain number of bitcoin have been mined, the bitcoin generation rate per mined block halves. This forces an exponential rise in the difficulty of mining bitcoin, and therefore an exponential rise in its price.
Most probably, if bitcoin was designed to have a constant difficulty of producing, its price wouldn’t have increased at all.
