Why Bitcoin Has Value
Humans give Bitcoin value just like we give value to various fiat currencies and other things like cigarettes, art and beer.
If something is useful then we are likely to give it a higher value than if something is not useful.
To give something value we don’t just want it to be useful, but we also want a bit of scarcity about the product as well.
When reading the following try not to look at it from the point of view of someone in a first world country with online banking and a couple of credit cards. These are all handy things to have.
I believe the unique uses for Bitcoin will continue to expand as we learn more about it. At the moment a lot of people spend a lot of time comparing Bitcoin to Gold or comparing Bitcoin to a currency. Just like in the past people used to compare motor cars with the horse and cart. To quote from Andreas, "who really gives a shit if Bitcoin is used as a currency or as a store of value." Great but I am also interested in other uses as well that we have not thought of yet.
Anyway, what I have written below is not the future of Bitcoin. It is what Bitcoin is being used for already. This might help you understand why Bitcoin has value. It is useful to some people in some situations.
Only 21 million Bitcoins will ever be produced.
Government can make money quite easily by turning on the printing press. Mining gold is a little bit harder. Not long now until you can have fully automated gold mines!
The creation of Bitcoins has been limited to a total of twenty-one million.
It is often repeated that every millionaire in the world will not be able to buy one bitcoin each.
First “Digitally Scarce” asset created.
Very easy to cut and paste digital photos. Very easy to cut and paste this web site. Very easy to copy digital music and movies.
Trying to “double spend” a Bitcoin? Seems very difficult to get away with.
Bitcoin trades 24/7 in large volumes on a variety of exchanges around the world.
As far as I am aware you can exchange bitcoin for any fiat currency in the world.
You can also exchange Bitcoin for any of the other crypto currencies as well.
People have also been exchanging bitcoin for real estate, art and of course Lamborghinis.
Avoiding trade sanctions. USA government controlling SWIFT.
With Bitcoin you are avoiding the entire traditional banking system.
It seems that the central banks in Iran and Venezuela are both currently accumulating bitcoin for the purpose of using for international trade to avoid US Government sanctions.
Some people don’t have any identification to be able to open a bank account.
You can store bitcoin on a computer, smartphone, external hard drive, on a bit of paper, crypto steel, on an exchange, in a cloud computer and some people store it in their memory/brain.
These days with bank fees and charges it is “uneconomic” to have customers with bank accounts and not much money in them. You can store Bitcoin without being penalized.
In some countries and cultures women are not allowed to have bank accounts.
And even if they do have a bank account all the money belongs to their husband. With Bitcoin there are multiple ways you can store Bitcoin without your husband knowing.
Most governments around the world have created mediocre currencies and some of the locals prefer and trust Bitcoin more readily.
I cannot think of any currency in Africa or South America that I would be comfortable owning as a way to “store wealth”. The world probably only has about ten good currencies. USD, Swiss Franc, Euro, AUD, NZD, Japanese Yen, British Pounds. (ok so I named seven LOL)
All currencies in the world were created by humans. Humans also created Bitcoin.
If you think Bitcoin is a load of crap then how do you feel about Zimbabwe Dollars or Venezuelan Bolivar?
Sending money to the homelands. Get 10 to 20% more.
Someone from Africa living in the USA wanting to send money to relatives back in Africa can get more money to the relatives if they send Bitcoin rather than using the traditional banking system. Traditional banks on both sides will take a cut. Usually Bitcoins get a premium price in places that have mediocre currencies. There are offices set up in Africa that will pay you in the local currency in cash for Bitcoin. As an added bonus this can be a lot faster than the traditional banking system.
Speed. I could send Bitcoin to someone anywhere in the world quite quickly. They could then go to a Bitcoin ATM machine and convert the Bitcoin to local currency.
Refugees crossing oceans and borders.
Taking cash or gold bars might be a bit difficult or dangerous. In this situation you might consider storing Bitcoin on a cloud computer or on an exchange. After you come out of the refugee camp you can access your bitcoin at your convenience.
Shop anonymously. Your purchases are not linked to your name, credit card, banking details.
In the past I have given small amounts of money to charities and then they seem to then spend a fortune on sending me marketing material for the rest of my life. I would prefer to make the donation anonymously to avoid all the marketing material.
People, charities, artists, politicians etc have been taking donations in Bitcoin for a very long time. Even I am happy to take donations in Bitcoin. (See below.)
Do not need permission – to transfer, do not need a third party. (Julian Assange)
Government “freezing you assets”.
Government “Taking money from your bank account”.
Your account can never be seized or closed; you are the only one with control.
When you are a law-abiding citizen in a first world country these are usually things we don’t worry about. If the government wants more money, they just go to the printing press. (or borrow some from a mysterious place called the Reserve Bank.)
It seems that when Julian Assange was living in the embassy, he had his bank account frozen and was unable to get donations from people using credit cards or bank transfers. However, he did take donations in Bitcoin which is now worth a few million dollars.
Many governments make it difficult to move currencies out of the country.
South Africa, China or other countries seem to make it difficult to move money out of the country.
Metal is often put in bank notes so that a metal detector will go off if you are carrying large amounts of cash or a small amount of gold through an airport.
You can take your Bitcoin keys through a metal detector without it going off. As Obama said, “everyone can carry a swiss bank account in their pocket”.
We need an international currency. We need a currency for the internet.
The internet is relatively new and billion dollar companies like Uber and AirBNB are still being created due to the popularity of the internet.
Like it or hate it the world is becoming a smaller place. Globalisation seems to be increasing continuously. It was only a matter of time before we get a global currency. Maybe it is Bitcoin?
Airports and Bitcoin - are a great combination.
So you are in transit and feeling a bit hungry and thirsty. You don't want to be ripped off by the money exchanger nor by the credit card company and you don't want to be left with a small amount of foreign currency. Bitcoin is ideal in this situation. Apparently every business at Brisbane Airport will take Bitcoin as payment. I don't quite see Brisbane Airport as the ideal airport to test this out. What about Singapore or Dubai? Places where a lot of people can spend a long time in transit.
Many airports around the world already have Bitcoin ATM machines. Quite handy if you are leaving a country to convert the local currency to Bitcoin and quite handy if you have just arrived in a country to convert your Bitcoin to the local currency. Just need to swipe your phone.
Divisible – broken up into smaller pieces.
You don’t need to buy an entire bitcoin. The US Dollar goes to two decimal places. (One dollar can be divided into one hundred cents.) Bitcoin goes to eight decimal places. You can do small transactions and big transactions.
Speed of sending money.
Sending Bitcoin can be a lot faster than using traditional banking methods.
Easy to store. Paper, QR Codes, Phones, Computers, Trezor, Cloud Computer, Your Brain
Cannot be counterfeited.
I have never heard of anyone being able to counterfeit Bitcoins. I am told that there are a lot of counterfeit US Dollars floating around Africa in particular..
Transactions cannot be reversed.
You seem to be able to reverse credit card payments and some bank payments. Not able to reverse Bitcoin payments. A lot of people see this as a positive.
The transactions cannot be denied. When you send Bitcoin from one address to another address the record of this is for all to see forever. This is a handy feature when dealing with people who may not be as honest as yourself. (The proof is stored on 300 000+ computers.)
Shopping on the dark web.
When I first read about “Silk Road” getting busted I was surprised by the amount of money the business was making.
Seems like other people read this too which resulted in more business opening up on the dark web.
I am told that 100% of the businesses on the dark web accept Bitcoin as payment. I am told that none of the businesses take credit card, bank transfers or PayPal. Who would have imagined a business like that?
Seems like this is a popular past time around the world. There seems to be a few ways you can buy and store bitcoin anonymously.
Many humans around the world like to punt on something. Shares, horse racing, poker, real estate etc. At the time of writing the good news seems to be is that most people who have bought Bitcoin has made a profit from doing so. The Bitcoin community seems to take pride in the big fluctuations in Bitcoin prices.
This is a quote from SIMPLELIFESTYLE taken off reddit.com, "I don't care about the busts. I am riding this pig wherever it takes me. If it tanks I'll have a hell of a story to tell. I am sick of half measures. I'm swinging for the fences and If I strike out then so be it. I won't be some mediocre drone living a life of quiet desperation. I believe in Bitcoin. I am going for broke, knowing the risks." Many people have gone "all in" on Bitcoin. Another opinion by some financial planners is to put 1% of your net assets into Bitcoin.
People who are long Bitcoin tell their friends about how great Bitcoin is.
People who are short Bitcoin or people who are No Coiners tend to put shit on Bitcoin. People who have a vested interest in the traditional banking system also seem to put shit on Bitcoin.
Many people are using Bitcoin as part of their retirement funding plan. A lot of people are dollar cost averaging (DCA) into Bitcoin. IE Every week or every month they buy the same dollar amount of Bitcoin. Many people just buy and hold Bitcoin. (Hodlers)
Many people have already retired as a result of making prudent Bitcoin investments in the past. Many people are just happy that they have paid off their car, student loan or mortgage. These people who have had a good win from Bitcoin often tell other people which encourages more people to buy Bitcoin or to learn more about Bitcoin. Maybe ask yourself, "Why am I reading this?" I commend you for reading this. My parents ignored personal computers hoping they would go away, then they ignored the internet until they started using it and now they are hoping Bitcoin will go away so they don't look foolish since they don't own any. I am sure there are many people around the world that bought Bitcoin at $1000 and claim they bought it at $100. I am sure there are many others who bought at $10 000 and claim they bought it at $1000 just to give themselves some technology street cred.
We love passive investments. A nice clean investment.
Don’t have shareholder meetings. Don’t have customers. Don’t have suppliers. Don’t have repairs. It is like a Van Gough painting except you don’t get the painting.
Some people are not sure if their country will have a banking system next year. Some people are not sure if their country will exist next year. In times of war – gold or Bitcoin or both?
The Bitcoin blockchain is currently working on who knows how many computers in every corner of the globe. 300 000 + computers? Who knows? Compare this to your local bank. How many computers are backing up your banking records? Do you trust your local bank? Can your government interfere with those banking records?
Anyway the Bitcoin blockchain/network will continue to work even if entire countries disappear (or if a few buildings or companies get bombed.) Bitcoin might be 100% banned in many countries but it can still legally or illegally operate in many others.
When a country tries to ban bitcoin in anyway then the demand for Bitcoin in that country seems to go up.
As more people accept Bitcoin as payments then the usefulness of Bitcoin goes up as well.
Remember when some people had email and some people didn’t.
Being part of a community
Bitcoin is backed not by a government but by the Bitcoin Community.
Miners, reporters, investors, innovators, bloggers, developers, critics.
Geeks who just find it interesting.
Businesses that accept Bitcoin.
People who buy bitcoin to spend it.
Bitcoin meetups. People actually meeting.
People who just love using new technology.
The Bitcoin prices seems to go up and down and fluctuates a lot. However the Bitcoin Community and/or the Bitcoin Network seems to be growing continuously.
One thing I love is that the richest people in the world talk publicly about Bitcoin. Warren Buffet, Bill Gates, Steve Wozniak, Richard Branson etc. At the same time many people in prison are talking about Bitcoin, at the same time that some rappers are rapping about bitcoin and at the same time some of the poorest people in the world are relying on Bitcoin to save them from an unfortunate situation. Like I wrote before. The Bitcoin community is very diverse.
This is one company that even in my wildest imagination I would have never predicted. - The New York Stock Exchange is working with Microsoft and others to operate a bitcoin exchange. Being able to buy and sell bitcoin on Papal is something many people predicted.
Obviously I dedicate this website to all the nocoiners in the world.
However it was also written for people who own Bitcoin and still have NFI. The Bitcoin Family is large and diverse. I am sure the uses and outook for Bitcoin is extremely varied depending on peoples nationality, culture, upbringing and a lot of other factors. When Bitcoin has an enemy, The Family sticks together. That is something that also gives Bitcoin value.
To all the people that I have inspired to learn more about Bitcoin I could recommend learning how to make a donation to the below address. Once you have mastered this I am sure you will be an expert at asking others for Bitcoin donations.
You can scan the QR code on the left or use the address below. I am sure you will see a lot more of this on information websites in the future.
As I have said the Bitcoin community is large and diverse. Here is what Mark_Bear on Reddit wrote about Bitcoin and value. Short and concise.
What gives Bitcoin value?
Let's start with something most people are already familiar with: gold. Intrinsically, gold's usefulness is very similar to that of copper and aluminum, yet gold costs much more. Why? Scarcity.
Gold has all seven properties of "good money":
Difficult to produce and/or difficult to counterfeit
Some forms of money are better than others. Fiat money is lacking some of the seven properties.
Bitcoin has all seven properties and is therefore "good money". In some ways, Bitcoin is even better than gold:
* Gold is very expensive to transport securely. Bitcoin is very inexpensive to send securely.
* Gold is expensive to store securely. Bitcoin is very inexpensive to store securely.
* Gold is heavy, takes up space. Bitcoin weighs nothing, takes up no space.
* Gold sets off metal detectors. Bitcoin cannot be detected.
* Gold is easily confiscated by governments and/or criminals. Not so for Bitcoin, if stored properly.
Bitcoin is like gold that gets stored on the Internet, and gets sent around the world via the Internet.
These things are what give Bitcoin "value".
Don't like Reading?
This guy wrote a book called "The Bitcoin Standard" which has been recommended as a must read for people wanting to learn more about Bitcoin and value.