Comment on Anon gives up on Bitcoin in 2010
KillingTimeItself@lemmy.dbzer0.com 22 hours agobitcoin has value because people perceive it to have value.
Basically, it went from like 10 people using it, where it was functionally worthless, to like 10 million people using it, where it’s value per bitcoin increased by one million fold.
net money in = net money out, the early investors are just reaping the rewards of other people investing their money into it (and then losing it)
merc@sh.itjust.works 21 hours ago
Bitcoin has value because they think other people perceive it to have value. Same with dollars, euros, pesos, etc. It’s not like art where the value is in the eye of the beholder. It’s something where you have to be confident that other people will perceive it to have value too, so when you want to exchange it, there will be other people who will accept it.
Dollars, euros, pesos, etc. have value because they’re accepted in thousands of stores, and because you need them to pay your taxes. Even if you, personally, don’t think you’ll need to hold onto any pesos to pay your own taxes, you know that there are likely to be millions of other people who will need them for their taxes.
With bitcoin, there are essentially no places you can use it to pay taxes, except maybe El Salvador (I don’t know if they’re still doing that). You can’t use it to pay in many stores. Just about the only thing that keeps creating demand for bitcoin is that there aren’t many other ways to pay off ransomware demands. Unlike traditional currencies, Bitcoin really relies on the belief that someone else will continue to believe that Bitcoin is still valuable.
Will the bubble eventually burst? I think so. I just think it could stagger on for a few more decades before the belief it has value eventually collapses.
SpongyAneurism@lemmy.frozeninferno.xyz 15 hours ago
I don’t think the lost belief in its value is going to collapse on its own. It is already accepted to have value by enough people, to sustain that belief. (A bit like a religion, if you think about it)
The downfall of bitcoin will lie in it’s technological design. The whole premise of the underlying blockchain technology relies heavily on Moore’s Law to keep working indefinitely. The complexity of the cryptographic calculations that have to be solved for each BTC transaction increases with each transaction, so it relies on exponential growth of computing power, or rather energy efficency of computing (which is a bit differen than Moore’s Law), to remain useful. The more widely adopted the bitcoin becomes and the more it is traded, the greater the challenge to keep it operational. That is a very impractical limitation for it to be useful as an everyday currency. If, at some point, the time and or cost-efficiency of the crypto-calculations cannot keep up with the number of BTC transactions anymore, the operational cost (or inconvenience) will limit its use. And at that point, I think, the speculation bubble will collapse eventually.
Now when that is going to happen, I cannot possibly know. I’d invest in leverage products against it, if I did.
Maybe progress in chip manufacturing will still continue to exceed my expectations. Maybe a breakthrough in quantum computing will enable the BTC to become a universally accepted currency or maybe it will break its underlying cryptography and kill it dead.
Whatvever it may be, but my prediction is, that if the bitcoin is to collapse, it will probably have a reason rooted in technology.
DavidDoesLemmy@aussie.zone 14 hours ago
That’s not how the complexity of the mining works. It doesn’t increase with every block. It scales depending on how many miners there are (essentially). So if many people stopped mining, the complexity required would decrease.
merc@sh.itjust.works 14 hours ago
These things change. People once believed that diamonds were a valuable rock and essential for proposing marriage, but now people are starting to think that’s BS. There was massive social pressure, plus expensive propaganda from deBeers trying to keep people buying diamonds. But, people woke up.
So much of crypto’s promise is that there will always be another sucker who will buy your bitcoin for more than you paid for it. But, if actual real currencies that people pay taxes with can collapse, crypto could collapse a whole lot faster than that.
DavidDoesLemmy@aussie.zone 14 hours ago
I don’t know why you’re connecting paying taxes with a currency with it being legitimate. I don’t think those things are related