I don’t understand why it has value. And for that reason, I’m out.
š you could also learnā¦
Iām with you. I donāt understand much of bitcoin. But I do know Iāve made hundreds of dollars in less than a year off of $900 invested
I stay as active as I can in learning more about it and paying attention to experts. And nobody is predicting a doom and gloom catastrophe.
The value IS the network.
It is immutable. It cannot be counterfeited. Transactions are public. Transactions cannot be reversed. Transactions are relatively fast and cheap. Any asset ownership can be tied to this worldwide network so ownership can be proven without a doubtāand ownership can be changed without third party involvement.
That last part is huge if you understand how clearing houses can delay transactions by days.
The entire thing is so much more than ābuying a cup of coffee.ā
99% of the people discussing this on TV have no idea how any of this worksāand most of them are shills for existing investment firms.
It has value because:
The Government cannot easily confiscate it.
It is virtually immune from theft and is safe to self-custody using a hardware wallet.
You can cross borders and take your wealth with you since the wealth is in the cloud.
It is immune from confiscation through inflation since the fixed supply of 21 million bitcoin is inviolable in the code.
You can pass it to your heirs silently.
You can buy things anonymously through privacy coins such as Monero.
etc.etc.etc.
No major currency today is convertible into gold or otherwise backed by gold or even by holdings of other national currencies. All major national currencies today are fiat currencies backed by legal tender laws and the strength of the underlying national economy and the credibility of the government in paying its debts and maintaining the value of the currency.
When you think about how modern currencies like the dollar work, you will soon realize that most dollars are not even put in the form of paper currency but are in the form of electronic ledger book entries. Spent your recent $1,400 stimulus payment on Amazon, and you get goods, but you never pass any paper currency. It is all done electronically, from the stimulus payment sent from the US Treasury and deposited in your account to the payment you sent to Amazon.
The same holds true for how Amazon pays its employees and suppliers. Most of the dollars involved flow only as electronic entries, with the ledgers involved ultimately tied to the US government's original issuance of electronic dollars. And so also with the billions and trillions of dollars that flow as dollars in the US and global financial systems.
Note that this system requires banks for it to work. In effect, the banks collect and hold on their books dollar credits and debits and can prove through a chain of transactions that every dollar can be traced back to the US Treasury. Customers thus cannot create their own dollars, nor can the banks.
Consider also that in this system customers cannot manage their electronic dollar transactions and holdings without a bank of other financial institution. What the banks provide as an essential function is a may to hold and transfer electronic dollar credits.
In effect, unless you are going to conduct all your business in cash, you need a bank. And since doing everything in cash is impractical, modern fiat currencies need banks, which in turn provide employment for legions of bank employees and executives of all sorts -- all supported by fees and costs paid by customers. So also do modern fiat currencies need governments to issue currency and supervise the banks and other financial institutions.
To be sure, even in a modern nation, paper currency still has a role in many small, face to face transactions. Yet a bank is not needed to get cash, only an ATM or a cash back transaction at a retailer. And cash is a nuisance for retailers and even banks and most are trying to get away from it.
In this context, it is possible to create an alternative currency that exists only as electronic ledger entries without any backing by money of any sort. That is what bitcoin and other cybercurrencies do, with the ledger books maintained by specialized software and by businesses and people who maintain the ledgers in return for new credits.
Instead of having a national government and treasury to create and issue currency, bitcoin has encrypted software and bitcoin miners with banks of computers. And without a need for banks, bitcoin can function as electronic cash in which funds are transferred directly from buyer to seller. The key attraction of bitcoin for vendors and customers is that just like cash, it gets fee-charging, IRS reporting banks out of the way.
My guess is that national governments will soon enough move to impede the use of bitcoin and other cybercurrencies to protect tax revenue and their gains from creating and issuing currency known as siegniorage. Indeed, an official dollar cybercurrency could have major advantages for the US Treasury while undermining the attraction of private issue cybercurrencies.
Alternatively, a proliferation of cybercurrencies might limit the credibility and value of such currencies that do not have official approval or major corporate or institutional backing. Could bitcoin survive a blockade by the world's internet service providers? And competition from an official US Treasury cyber dollar and approved corporate cyber currencies like an Amazon cybercurrency? My guess is that is where we are headed eventually.
The value is in the computer protocol.
For example, speed, cost, scalability and what problem is it solving?