Cryptocurrency - where's the actual value?

[Benjaminpalma]

So if coins are given out for mining - that is solving mathematical problems and in so doing helping to ensure the security of the system - where's the actual value in cryptocurrencies, other than as speculated-upon e-tulips?

I have scoured the web looking for the answer to this point, but articles only describe how clever it is (and, yes, blockchain tech is).

[Benjaminpalma]

Behemoth said:

It allows anyone with a computer & internet connection to make a financial transaction independent of third parties and thus independent of their fee structures (banks, forex) and broader currency interference (government manipulation of currency to meet fiscal targets). Transactions are reliable, secure, cheap, quick and worldwide. If you don't see that these capabilities are of value, then just move on

Yes - this is exactly what every website says, but what have those who have 'earned', say, Bitcoins, done other than to help maintain the system? Where's the actual value?

It's all good fun until it starts to mix with real money.

Beneath the undoubted elegance of blockchain technology, aren't cryptocurrencies just tradable ponzi scheme shares?

[Benjaminpalma]

Maxf said:

Whats the difference between a BTC and a £10 note? Neither are backed by anything other than 'the system', since we departed from the gold standard. If £10 is a stretch, what about 10 pesos or (insert other questionable economy currency here).

Obviously there is a huge difference in terms of acceptance, backing, take-up etc, but in real terms arent they both just numbers backed by nothing other than trust?

No. Traditional currencies (i) have real-terms comparable historical value, and (ii) are supported globally by thousands of tonnes of gold reserves and diversified investments.

Somebody, at some point, has added value and earned each, say, pound in existence. The only exception to this is when money is simply printed but even then the money is spent by governments on actual goods and services.

[Benjaminpalma]

bongtom said:

Most people who are "into" cryptocurrencies will tell you it is the future of money (even though it is not money) and it allows you to carry out transaction (even though the amount of transactions on purchases is quite tiny).

Yet again - more description about it's qualities. I get all this. There's still no hint of real value.

bongtom said:

The vast majority buy cryptocurrencies to make a profit and they are all holding onto to them because they have continued to go up. When they drop there will be a sell off.

We're back to tulips again, aren't we?

[Benjaminpalma]

Behemoth said:

Peddling the tulips & Ponzi stuff is tiresome & covered well elsewhere.

Where...?!!

[Benjaminpalma]

NickCQ said:

I can't understand why the coins themselves have value - I understand there's scarcity, but it's a bit like gold without even the jewellery demand.

This is exactly my point. Innovative? Yes. Elegant? Yes. Of real value? Nope.

[Benjaminpalma]

Behemoth said:

I'm not going to do your googling for you, the answers are out there and are plentiful.

Google etc ad nauseam said:

I cannot give you a single, sensible answer.

[Benjaminpalma]

Behemoth said:

The coins have value because there has to be a reward for keeping the network running and securing the transaction ledger. Otherwise nobody would bother doing it.

It is secure. Understood. But what - of value - is being secured?

Sorry to keep reverting to the tulip comparison, but isn't the reward for watering the tulips, er, more tulips?

Yes - let's stick to Bitcoin.

[Benjaminpalma]

The Spruce goose said:

people exchange fiat for Bitcoin, or invest in mining computers to mine BTC.

History said:

people exchanged fiat for tulips, or invested in gardening equipment to grow TULIPS.

[Benjaminpalma]

TooMany2cvs said:

That's a bit circular...

We keep the network going because the coins have value.
The coins have value because we keep the network going.

This!!

[Benjaminpalma]

The Spruce goose said:

I'm confused the op was asking about a bubble i explained points which you reply to line by line but add nothing of value. if you think it is a bubble and unsafe then provide more information so he can make a decision.

The thing is it is a complex subject and can only be understood by reading up about it.

I understand all the mechanics. Every last bit. I do complexity.

I understand that there is a USD exchage rate.

But - and please help me here - where is the value? What has been forgone by those who hold wealth in Bitcoin - other than helping Bitcoin to exist?

Without substance, it must surely be a bubble - albeit with more longevity than tulips. It is comparable with say the Railway mania of the late 1830s to late 1840s, although that had at least some substance in the form of an increased rail network.

[Benjaminpalma]

The Spruce goose said:

He owns BTC? lol

I don't as it happens. It seems like everyone who's really 'into' Bitcoin can only ever talk about the ingenuity and never about the insubstantiality. But then, if they also own Bitcoins, they wouldn't, would they?

[Benjaminpalma]

BJG1 said:

Same place the value in fiat currency is - faith.

No – currencies are provided in exchange for goods and services.

Bitcoin is provided in exchange for helping to create and secure Bitcoin.

Currency has value.

Bitcoin are tulips.

Behemoth said:

Yes I am. For those that use BTC, it works.

Until the Emperor’s New Clothes moment, tulips worked.

Benjaminpalma said:

So if coins are given out for mining - that is solving mathematical problems and in so doing helping to ensure the security of the system - where's the actual value in cryptocurrencies, other than as speculated-upon e-tulips?

I appreciate all your input, but I can’t yet see the difference between a Bitcoin and a tulip bulb. Except that tulips are nice to look at.

[Benjaminpalma]

Behemoth said:

Oh dear oh dear. There is no analogy with tulips in functionality. Absolutely none, whatsoever. BTC functions. That's what I mean when I say it works. It wouldn't matter if 1BTC were worth 10p or £100k. The system works and has worked from the very beginning when values were miniscule. The work required to create new coins or to manage transactions is self regulating and fluctuates according to extent of use.

As I've said before, I know about functionality. It's clever. Not as clever as the emergence of life itself - as seen in a tulip bulb - but it functions well. Nature is self-regulating.

Yet neither Bitcoin nor over-priced tulip bulbs reflect effort other than, in the case of Bitcoins, mining them.

Dear God - someone please find any some evidence - any evidence - anywhere - of Bitcoins having any value whatsoever other than a demonstration of the cleverness of a blockchain-based decentralised ledger.

[Benjaminpalma]

Behemoth said:

Let's just see what it takes for a currency to function well. Maybe that'll sort out your tulip obsession.

Needs to be easily transportable
Needs to last a long time, preferably indestructible
Needs to be easy to divide

Tulips don't do any of these things. Gold, diamonds and even cash aren't very good at some of them either. Bitcoin does them all, easily.

Any better?

In the context of the times in which the tulip mania existed, tulip bulbs fulfilled all these requirements.

In my fruitless quest to unearth (geddit?) any value to Bitcoin - other than its own elegance and efforts made to create and secure it - I can only find compelling comparisons to tulip mania by the BBC's Rory Cellan-Jones.

[Benjaminpalma]

Behemoth said:

Few needed the internet or the web in 1994. Do you need it now? Things get adopted because they are better, more efficient, quicker.

The internet delivers real value. Bitcoin, it seems from our discussion above, has no value other than as a speculation medium.

[Benjaminpalma]

Behemoth said:

You almost certainly would not have said this about the web in 1995. In 1995, people just like you were saying the web had no purpose, no utility, no future. I know, I was there & I knew its potential. Very few others did. It's normal for new technology early in its adoption curve.

I was using it - with patience - in 1995. The possibilities were obvious to most then, and it's still surprising how slowly it's all crept forward.

The reverse is true with Bitcoin as it seems it's only now that people are starting to point at the Emperor's nakedness.

At least we will have been left with blockchain technology which will automate so many administrative tasks in future.

[Benjaminpalma]

x5x3 said:

Another benefit of Bitcoin is the degree of anonymity it provides. It is not entirely anonymous as the blockchain is there for anyone to analyse but a lot of people are fed up with the amount of data amazon/visa etc carry about us and our spending habits.

Benefit this, benefit that, etc.

Still no value behind it.

[Benjaminpalma]

x5x3 said:

and the value in gold is?

The value in gold is nothing more than others desire it and it has been desired for a long time. I can buy some but then it has no use - other than as a store of value.

The continued reference to the Tulip bulb bubble is just a red-herring - there was never going to be a finite supply of bulbs, Bitcoin has far more similarities with gold than tulips.

I do understand your point, my interest started when I came across the original white paper in 2012 and was captivated by the idea of a currency not owned or manipulated by a government. The main issue I now see is that I am far too scared to spend any in case the price goes up further. Now that could be a bubble or it could be the start of something really big.

Yes the cryptos have a way to go in regards to volume/price of transactions etc but the one certain factor is that technological advances will enable us to solve these issues faster and faster.

Boomark this thread and come back in a couple of hundred years.

Anyone reading this thread should go and read the original white paper - understand the concepts and ideas and then make up your own mind.

https://bitcoin.org/bitcoin.pdf

With fiat currency, at some point in the past there will have been an act of forbearance in exchange - with the exception of inflationary quantitative easing.

With bitcoin, there will have no forbearance other than mining.

Hence, bitcoin has no intrinsic worth.

Get it?!

[Benjaminpalma]

Dr Jekyll said:

No.

No currency has intrinsic worth it's just a question of what people will exchange for it.

So when receiving Bitcoin, what have those who receive it done in exchange?