The Argument Over Bitcoins Value

in LeoFinance5 months ago

Hey Jessaotishis

As Bitcoin continues to surge up in price people are starting to take note, people who aren't running inside the crypto circles and they're asking themselves, why is the price of Bitcoin so darn high. It's far beyond the yearly salary of a large part of the world, so how the hell can one person justify a year's salary after tax stuffed into random numbers backed up on a distributed database.

As a Bitcoiner myself, it doesn't make a lot of sense when you think about it like that, but I want to look at what is value and why I think it has value.

Toss out the ideas of stock to flow, and buyers and sellers and all that economic data we normally focus on, I want to focus on the value Bitcoin can and will bring that validates why its price will continue to surge in the coming years.

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Fiat money has no price discovery

The forex markets is one of the biggest markets in the world, with trillions being traded each day. Forex is not only a traders market but its use for those who have to travel as well as companies importing and exporting goods and services.

In a hard money system if you imported too much your currency would go down, and you'd curb your importing, the same would be for exporting, demand for your currency goes up, the price goes up, demand levels off.

When we moved to a fiat money system where anyone can create money out of thin air, markets started to function irrationally, misallocation of capital started to appear, currencies wanted hard pegs like the Hong Kong Dollar or the Yuan and so on, same with Swiss Frank and the Euro.

Having an uncapped money supply means you can jink the system, you can distort prices you can make artificial markets, and without price discovery, you cannot have true markets.

Bitcoin is price discovery; the price you see now is the price you pay. You can't create it at will to match demand, if demand increases prices skyrocket this slippage keeps markets more honest as people tend to not want to overpay for things.

Money was never this scalable

Apart from the Euro, most currencies only apply to their native country and can only be used there as legal tender, yes there are exceptions and the US dollar is often accepted in countries with failing currencies. Still, for the majority of the world, you're born into the currency you will earn in. That comes with certain restrictions, the value that is not your fault, but you are forced to navigate.

Now with Bitcoin, we have global money that can be sent across borders in an instant without a middle man at any time. As someone who has worked for foreign companies, I can tell you the pain of earning in Forex or having PayPal scalp a lot of your earnings through fees.

It's archaic and antiquated and was due for an upgrade.

Bitcoin has no industrial use or intrinsic value

I often hear this one from Gold bugs, that Bitcoin has no value because it has no other demand other than storing value. They say gold can be used in dentistry, jewellery and industrial components. That only serves as a distraction to the supply if BTC had industrial use, it's "hard cap" of 21 million wouldn't focus on only one thing which is preserving your value.

This is why I see Bitcoin as better than gold; it can only do one thing, protect your purchasing power and so far has done it pretty well.

Bitcoin's value comes in the form if it can store your wealth, it cannot be confiscated, and you can move it around the world as well as its growing acceptance around the world.

I can go to any country an exchange Bitcoin without issues, try taking your local currency to another country and see if you can exchange it at a market rate.

Bitcoin is energy stored

Bitcoin is not something that can be created out of thin air, and due to competition for network support through the miners, it's gotten harder to mint a Bitcoin. It's taking more energy and better technology to run the network efficiently. All that energy used to mint a Bitcoin essentially is the production cost of a Bitcoin.

Miners aren't willing to sell at a loss, and their profit margins are what help set the floor for the Bitcoin price. To create a new Bitcoin costs money, labour and energy if that doesn't give it value what does?

Fiat money used to cost money to create when it was largely printed, and the central bank pocketed the profit as this is known as seigniorage. The profits have become huge because only 3% of global money is physically created, and most are only accounting sitting on various databases of banks.

Due to this ease of money, creating it means fiat money has no value only belief, debt slavery and government laws ane enforcement.

Bitcoin is monetising the value of the internet

As an internet entrepreneur myself, I know the value of the internet, I've made my living on it for over 8 years now. However, most of the value of the internet is lost due to the money we're using having serious limitations.

Bitcoin allows us to be able to consume based on usage and not on pay walling services and charging a fee because you're a monopoly. I'll give you an example if you're bidding on keywords via Google Ads; Google sets the floor price, they match the bids, it's by no means a free market of bidding, it's all held within their systems.

If no one was bidding for a keyword, I should be able to set the bid like I would in any market. In a real-life example, an Uber ride is set based on Uber's algorithms and business needs, in Bitcoin, we could charge based on the expense and only pay for what you consume to the final centimetre.

This creates effect markets and thus provides a wealth of optimisation and cost-saving that can be passed on to the consumer. Its cost-savings are then passed on to to the value of Bitcoin due, the deflation of the service means you Bitocin goes further, giving your Bitocin more value.

Blowing hot air with the thin air argument

So next time someone tells you Bitcoin is worth nothing, its a frenzy it has no value, you can now point to several arguments as to why the view of Bitcoin being valueless is wrong.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

Let's connect

If you liked this post, sprinkle it with an upvote or esteem and if you don't already, consider following me @chekohler and subscribe to my fanbase

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Intriguing article and plenty to think about but feeling a little tired right and not much energy to get any thoughts together so . . .

I'm curious as to what happens if I simply comment "I am a Jessie." 😂

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I'll let your brain have the day off to marinade in it thoughts for a bit

LOL you become one yourself, a title not easy to shake once you claim it

!ENGAGE 30

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Thank you for your engagement on this post, you have recieved ENGAGE tokens.

Thank you @miserengagement!

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More info why you see this here.

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Thanks for the blessings from on high

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Not all people understand what Bitcoin is. From somewhere on the Internet. Almost out of thin air, something intangible suddenly appears, which suddenly has a price. and a great cost. More fiat money. It's like a plane -why it flies and doesn't flap its wings.

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I am pretty sure there are plenty of examples in history like the plane, like the move from horse and buggy to cars, like electric motor vehicles. Yes it came out of nowhere, yes its digital but machines have been with us for decades making things easier for us.

We're just finding better ways of organising the world and the way we do things, fighting innovation is a losing battle

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Hey there Che how is the Mother City treating you, my town of birth and youth? Great to read your post as a fellow Bitcoiner. I only recently joined LEO so am catching up on the LEO side. Actually I used to live underneath Lion's Head in Sea Point as a youth.

You wrote a good and informative post here, much appreciated. Store of value is Bitcoin's industrial use, and medium of exchange, like any currency. It's obviaas.

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Its going as well as it can be, weathers great lol lots fo braaing going on, will head out to the beaches in the quite times

LEO's pretty cool, bunch of nutters as always but since you already a long term HIVE/STEEM'r you'll know the ropes

LOL @ Obviaaaaaaaas! I honestly wouldn't have got this deep if I didn't question why the Rand sucks so much, that's what pushed me down this rabbit hole

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Oh thank you for taking pity on me you are far too kind have a capitalist !BEER for your troubles

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Hey @arnol99, here is a little bit of BEER from @chekohler for you. Enjoy it!

Learn how to earn FREE BEER each day by staking your BEER.

Why is the price of Bitcoin so darn high?

It's not.
I just bought it for $1.
Unit bias bad :D

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LOL point taken, but isn't that the same with so called crypto investors they rather want 100 XRP than 100 Satoshis, lol I'll take the satoshis, once you understand hard cap, you won't have such a hard head

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people who buy xrp due to unit bias dont even know what sats are

Very good insights @chekohler
There a lot of different factors driving this rally.
Lot of people who were always so negative about crypto have started using or at least paying attention to it now.
This is really complicated system if you don't know the basics.
Thanks for this great post.

It's no doubt complicated because we're still in the beginning stages, imagine trying to set up your own email server back in the day, now you just login to a site and create a gmail.

We're here early and it's not always going to be like this, yes there's opportunities to benefit financially if you're patient and learn how these cycles work, but to me this is just what Bitcoin is now, it needs to be this to attract people, in the future it will look a lot different and more boring

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Most people that say Bitcoin has no value that's because they don't understand how it work or what is it's use!

Also, why most people are afraid of it is because of the high volatility that BTC has. For example, back in March it's monetary worth was aprox 4k€ and now, in december it reached 19k€. Some people in my place sold even their valuable properties to buy BTC 2-3 years ago where its price was 17k€ imagine their emotions when it's price dropped at 4k.

Long story short!
Don't invest in something that you don't understand. It's also unworthy and very consuming when you try to make a point with someone that has already made his mind!

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I am sure there are plenty of stories like that of people thinking BTC is a moon shot, and even before that there were other bubbles like real estate, well it still is and so people continue, they chase the gains at the top and don't take the time to learn about whats going on

By the time things are in mainstream news its usually too late. I've been buying BTC since the drop from 20k down to 3 and I buy every month and told people to put in a little bit each month, no one did.

Now that it's over 20k people want to buy, lol I don't get people sometimes

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Lol yeah thats the mentality!
I've been telling people to buy btc and other good cryptos like xrp, zilliqa, xlm and others. Everybody made fun of cryptos. Soon there were news all over tv, magazines and newspapers they came asking me how to buy btc...

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if anyone says btc doesn't have a value i will show him the price first and then your post :p

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LOL so I take it you'll have to save this post and pull it out when the price starts going down again, it can be your secret weapon when people hate on your precious BTC and cheer it going down like its a good thing

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hehhe i already have bookmarked!

i tend to do that in any related subject that i know i am gonna debate :P

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Very well written and well guarded arguments. All points are legit as outlined. I think the most important argument in favour of BTC is its ability to be used as a hedge against the depleting cash as demonstrated by companies who recently got into the BTC buying frenzy. Other values will be demonstrated once BTC gains its momentum. By the look of it, we will be seeing a lot more ATH and adoptions going forward. I am buckling up.

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I am actually not a fan of the frenzy time to be honest, a lot of emotions, a lot of people are going to get hurt as the ones who were here before know whats going to happen and others think they getting paper rich. It does a lot of damage to perceptions of crypto, but on the other hand it moves more capital to those who have conviction in the system.

It's going to be fun non the less, I've already secured some positions and waiting for my exit values, don't let greed get the best of you

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Thanks for letting me know what could happen :)
I do not have any trading positions. I am not sure i have all the details required for it. I will see this bull run through and see if I can make any quick profits.

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Good thoughts! "Stored energy", yes. I always thought, electricity can´t be stored easily, but apparently all were wrong :)
But the best argument doesn´t help, if people are brainwashed since decades. Some are not open for arguments, sadly.

Yeah and how does electricity have value? If we can't touch or taste it like they make the arguments about? all elements aren't measured by what you can hold in your hand, it's such a silly argument. Energy comes in all forms, Bitcoin is just another form of stored energy, like all money has been over time.

I don't try to convince people, i only do what I think is best for me and keep my trap shut

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You can´t touch or taste radioactivity, so therefore it shouldn´t harm you, right? The same lame argument :)

LOL well if people think that I would encourage them all to go visit Chernobyl

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It is "funny" to see how much people (without the least background on the subject) continue the same arguments to go against Bitcoin.

Nice post, @chekohler.

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I am happy to hear the other side of the argument because I don't want to feel like I am too biased and miss something but they have to come up with better arguments, I would actually love it if someone dropped different ideas for me to think about.

Other than a major bug in the code or governments trying with everything they got to take it down, I don't see this thing going anywhere its here to stay no matter if you have a good or bad opinion of it

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I read two articles that popped up in my Google feed earlier that were written with the exact arguments against BTC you mentioned here. It's got no value, it's only backed by a belief, not fundamentals, it has no use, it's gambling, stay away from it, it's a ponzi with no concern for environmental impact etc

Can't help but feel these folks didn't spend any more than 5 minutes (if that) on actually doing some research on it after probably feeling a little salty that they missed the boat. Either that or they are trying to shake weak hands so that they can then jump in!

Either way, you simply cannot just turn a blind eye to all the institutions getting involved with this and willing to buy up hundreds of millions, some cases billions, of dollars worth of BTC, to just dismiss it as "these guys are idiots, they are just gambling".

We're off to the races!

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You know when number go up everyone's going to have an opinion, I do like to listen to the arguments but so far it's been pretty weak. Bitcoin isn't a panacea but fuck me you guys fucked up the economics so bad that this digital asset is the best we've got and is exposing the fraud we have today

Lol nothing really changed for me, I buy my daily Bitcoin regardless of the price, who gives a fuck stack sats burn fiat, stop smashing like and subscribe and start smashing buy

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Yeah the arguments I've seen from Financial Times and Telegraph are nothing short of hilarious. Sadly, people still believe those opinion pieces. At least they have toilet paper should they need it!

I'd rather tune in to the Daily Luno personally, that brings me nothing but good news as I see the sats count go up (albeit a little slower than it had been in the past)!

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They say its rubbish but they bother to write about it and put the ticker and price up on the site or screen lol what a bunch of knobs, I don't mind all their readers just dump their cash in our pockets

23k here we come, FML its going to be harder to extra t a sat from a stone

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Basically I agree with what you say, my only doubt in the medium to long term future about the BTC is that it will happen when central banks switch to their own cryptom currencies which can basically function as the BTC in the sense that they send themselves immediately and unexchangeable, "stable currency" values. At that point I do not know how the BTC will react, it may become a permanent store of value or be replaced by country-backed currencies.

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I don't see a problem with CBDC's they won't all be created equal, some may be programmed not be swaped for bTC but then all you do is swap it for a CBDC that does, so if I have USD I by CHF and then BTC

Stable coins are also coming to BTC next year with OMNI you can check my previous post on that, so you'll get different types of stable coins, backed, CBDC, algorithmic and collateralised and it will all be used for different reasons

I don't see that as a threat to BTC at all

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This is a very long read but quite educative and entertaining. Bitcoin is the currency of the future, only for those who can decipher what is taking place.

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Thanks, Its also just where we are now in the maturity of the life cycle

I don't think its the future of money yet, it has the potential for sure, but a load of work still needs to be done, so many focus on price but that's only there to fund the growth of the network. Scaling solutions like liquid, RGB and Lightning, as much as I like what they are trying are still up for debate.

I am not blind to its shortcomings.

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I just started thinking that they will put a larger tax on bitcoin to keep their Ponzi dollar scheme going. Pay it or go to jail! I could really see this happening. It will be kinda like real estate, you own it, but we can tax you all we want and tell you what you can do, like not being able to collect rent. I guess most people will just hide it or move to a more friendly place.

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I've already mentioned why I think tax is good for crypto if people want to cash out and pay the tax by all means, that's the price you pay for using fiat and there will be parts of crypto that require it yes, but this only forces those who are savvy to either find a geography that is friendly or never to sell and only leverage it.

I would much rather take a loan against my BTC then ever sell it

Nice write up - I agree 100% that BTC is better than fiat, but one main observation:

FIAT might be printably by central banks, but surely it's just as easy to print new crypto on new blockchains - doesn't that have a similar deflationary effect on the value of all crypto, just that we haven't realised this yet because the space is so new so why Bitcoin in particular?

I'm convinced part of the reason the price of Hive is so stagnant is because we've doubled the supply - to investors, Steem and Hive are basically the same I'm sure and Steem probably looks a lot more attractive to the Asian market.

I'm not sure btc is monetesing the power of the internet - other tokens are more set to do that and will probably eat into BTCs value, I'm sure we're all banking on Hive to be one of those - but ETH seems to be a good candidate too.

All in all though this is a nice write up, certainly a good choice of question!

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The way I see it is all these other tokens can't have economies without BTC. If you tried to launch STEEM without BTC and try to build fiat to steem payment rails it would be almost impossible with such a tiny network, BTC has laid the foundation and value flows through it.

All alts are Tethered to BTC and are to me basically rehypothecation of BTC, if I sold all my HIVE today, there wouldn't be enough liquidity to give me the value it claims to have tokens are great experimentation and are needed and yes we will tokenise a lot of things but it will always be tethered to BTC

BTC will also have smart contracts, and tokens we see OMNI and RGB launching soon and BTC's second layer will grow to absorb more value. The bigger BTC becomes the more capital can flow into things like lightning.

I don't doubt there will be niche tokens in the future just like there are millions of websites, but there are only a few important sites that really matter to the world, same with BTC

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I've heard of OMNI and the prospect of more stuff being built on BTC, but don't know very much about it TBH - but isn't ETH kind of streaks ahead there?

Also I would have thought that the more crypto I can buy for FIAT the less dominant bTC comes - I can buy and sell Hive for dollars on Huobi already, and so many other cryptos too.

I'm certainly glad I've bought into BTC - having diversified with my Steem shitcoin money - but I'm sceptical!

I'm still learning however!

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Yes you are right ETH is miles ahead, that's their use case, I think BTC is like a stick to alts, so if ETH and alts create something the market wants, BTC will absorb it, then it becomes the standard, so the alt needs to continue to innovate, chasing a new carrot, giving us more options and BTC is just the floor that keeps rising

I don't see them as competing I see the entire market working together in competition with each other, its weird but it works.

we have global money that can be sent across borders in an instant without a middle man at any time.

We can send the money without any middle man some time this is dangerous too.. it is big invitation for the illegal activities too...
Dont take it otherwise just a thought....

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Yes, we're never going to stop people from doing bad things that's impossible, I honestly don't care what other people do with their time and money I am not here to worry about others, I can only take care of myself

We are social persons so for our day to day activities we interact with so many peoples so the activities of other (good or bad) always effects us in other way....
So we cant ignore the ither dark side of crypto currencies....

I often hear this one from Gold bugs, that Bitcoin has no value because it has no other demand other than storing value. They say gold can be used in dentistry, jewelry and industrial components.

I love the argument that bitcoin has no industrial use or intrinsic value, why would anyone buy gold because they think more people are going to want to bling out! Bitcoin has more value than gold because you can easily transfer it, sell it, etc. Most people who say negative things about bitcoin are just jealous no-coiners who wished they bought a long time ago!

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LOL yes no-coiners or closet coiners trying to accumulate while trying to get others to sell. If You really thought Bitcoin is so shit you wouldn't even talk about it, I mean I don't care much for apple or tesla so I don't talk about it, I don't pay attention to it.

Why would someone be so annoyed with what others do with their money and on top of that if you think you're right, wouldn't that mean you benefit when people buy Bitcoin and you don't? Because we're going to lose all our money and you will win, so wouldn't that make you happy enough to not care what others are doing?

I mean for me I don't care about stock investors, I do what I like and I don't tell them the markets going to eat them alive

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People are greedy and jealous but if they make a good decision they'll tell you to jump aboard, i.e. shilling their own idea/stock!

Lol totally, lots of fools gold flying around in digital lately, I actually did a rant about shilling not too long ago