Cryptocurrencies

[james22]

 

[james22]

 

 

[tooskinneejs]

3 hours ago, Seanzy said:

Why does anything have value? Because of purchasing power. If something gives you purchasing power, then it has value. 

 

Bitcoin gives you purchasing power, and so do dollars.

Bitcoin's purchasing power has increased over time, the purchasing power of dollars has decreased.

 

But isn't this only because people have generally believed in it over time?  If tomorrow everyone stopped believing in the value of bitcoin, wouldn't its price drop? The only thing giving it "value" is extrinsic belief.

 

As to your water example, maybe it would be more appropriate to have used a cup of virtual water rather than real water.  

[TwoCitiesCapital]

27 minutes ago, tooskinneejs said:

But isn't this only because people have generally believed in it over time?  If tomorrow everyone stopped believing in the value of bitcoin, wouldn't its price drop? The only thing giving it "value" is extrinsic belief.

 

As to your water example, maybe it would be more appropriate to have used a cup of virtual water rather than real water.  

 

I'm confused - is this not how PRICE works for everything? 

 

Investors lose faith in a stocks growth prospects? It's price goes down as multiples contract. 

Investors lose faith in a currency? Its price goes down. 

Investors lose faith in the ability to repay credit? Bond prices go down. 

 

Of course BTC is no different when you're judging it by the mechanism of price investors are willing to pay for it...price.

 

 

But value is what we're discussing:

Ownership of Bitcoin gives you access to one of the most secure global networks to transfer money/wealth on WHILE also being a store of value unto itself. You as an an owner of BTC become a part of that network. That is valuable. 

 

Just like telephones, or the internet, or social media, or credit card networks - it isn't very valuable if its only a network between 2 people. But as the network expands from 2 people, to 200 people, to 2000 people, to 2 billion people (and/or businesses), and etc. the value proposition also grows. As the value proposition grows, more people are able to get value from being a member of the network meaning more people join it which grows the value proposition further. As the network grows in value, so does the price in which someone is willing to pay to access it/own a portion of it. BTC is no different than any other network in that regarding - it gets more valuable the more people use it. 

 

For the first portion of its history - Bitcoin will be a growth investment predicated on the growth of the network/infrastructure that supports it. That growth will dominate its price action until we reach a value of the mature network. 

 

At maturity, the fixed-scarcity of Bitcoin, along with the continued value-add of the network participation, will make it a better inflation-hedge/store of value than anything currently in existence. 

 

Edited April 25, 2025 by TwoCitiesCapital

[james22]

19 minutes ago, tooskinneejs said:

But isn't this only because people have generally believed in it over time?  If tomorrow everyone stopped believing in the value of bitcoin, wouldn't its price drop? The only thing giving it "value" is extrinsic belief.

 

What's the difference between a brand name and a generic?

 

Not everything that counts can be counted.

[tooskinneejs]

19 minutes ago, TwoCitiesCapital said:

 

I'm confused - is this not how PRICE works for everything?

If everyone stopped believing in Google as an investment, its price would drop (for some time) but its intrinsic value would not because it would continue to generate cash flows.

 

The problem with BTC is that its "value" has nothing underlying it.  It's price is based on nothing except belief that it has value.  In other words, it's "value" is entirely extrinsic.

 

Similar to buying an artwork that is highly desirable, you may make money upon selling but it wasn't because the art had intrinsic value was because someone else believed it had value (extrinsic).

[Vish_ram]

You’re absolutely correct about stocks. They derive value from intrinsic cash flows (present or future).

 

This model won’t work for Gold, BTC, Art etc. 
 

in the future if BTC’s L2 networks replaces existing ones then maybe some stock like intrinsic value is present. 

[Fly]

Keep it simple. Bitcoin is a way to transfer value without having to rely on a 3rd party. The entire network can be compromised of bad actors but you can still conduct transactions safely. 
 

That may not have value to some, particularly those who trust the government in developed countries, and may be misconstrued as “illicit activity” but those are biases that should not limit the understanding of the value proposition BTC offers. 
 

 

[james22]

26 minutes ago, tooskinneejs said:

The problem with BTC is that its "value" has nothing underlying it.  It's price is based on nothing except belief that it has value.  In other words, it's "value" is entirely extrinsic.

 

Intrinsic value refers to the inherent worth or real value of an asset, often determined through financial models and analysis of its fundamentals, rather than its current market price. 

 

In essence, it's what an asset is worth based on its underlying characteristics and potential, rather than market sentiment or speculation. 

 

Bitcoin has unique characteristics that make it useful (more so than gold) as a store of value.

 

Because it is both useful and scarce, it has value.

 

It has potential because its usefulness increases with adoption (while remaining scarce).

 

[Dave86ch]

21 hours ago, tooskinneejs said:

 

I'm not sure how you come to that conclusion from my explanation of its purported value:

 

"I think an accurate evaluation of Bitcoin is that there is no intrinsic value but there is an extrinsic value based entirely on belief."

 

There have now been three different answers to the question of value:

 

1.  Ownership of bitcoin gives you ownership of the network - This is demonstrably false.

 

2.  Its akin to owning a screw after screws were first invented (i.e., a useful tool) - I'm not sure that anyone got rich off owning screws in the early days.  Making them, maybe.  Owning them, doubtful.

 

3.  Its like owning a fraction of a highly desired piece of art - I think this is the most accurate analogy and it corresponds to the premise noted in my quote above regarding the basis for its value - 100% extrinsic value.

 

One thing is interesting for sure, there seems to be a wide disparity of views as to why people believe it has value.  

 

The difference between the screw and Bitcoin was pointed out in the post itself.

 

Bitcoin is the first network that enforces digital scarcity by channeling physical energy.

 

Scarcity is the screw we need in the cyberspace.

 

Its extension, absence of a founder, and dominant protocol mindshare make it a superior tool compared to alternatives, including gold and fiat currencies.

 

Think about it: historically, whenever new markets opened, new forms of money emerged.

 

Silk Road introduced the idea of using the internet for trading; new trade routes opened, and a new monetary system was born. Ironically, the same money used for trade is now part of the U.S. Bitcoin reserve.

 

The disparity of views is natural.

 

How many things can you build with a simple screw?

 

Versatility is a defining feature of a true tool.

 

Bitcoin, like the screw, is foundational — it enables the construction of entirely new systems, not just isolated use cases.

Edited April 26, 2025 by Dave86ch

[Dave86ch]

13 hours ago, tooskinneejs said:

If everyone stopped believing in Google as an investment, its price would drop (for some time) but its intrinsic value would not because it would continue to generate cash flows.

 

The problem with BTC is that its "value" has nothing underlying it.  It's price is based on nothing except belief that it has value.  In other words, it's "value" is entirely extrinsic.

 

Similar to buying an artwork that is highly desirable, you may make money upon selling but it wasn't because the art had intrinsic value was because someone else believed it had value (extrinsic).

If people stop believing in Google as a tool and decide to use DuckDuckGo, that’s the real question.

 

You shouldn’t value the company; you must value the tool.

 

In Bitcoin’s case, the tool is a protocol that enforces scarcity through the most extensive Proof-of-Work (PoW) network.

Edited April 26, 2025 by Dave86ch

[Fly]

 

[TwoCitiesCapital]

20 hours ago, tooskinneejs said:

If everyone stopped believing in Google as an investment, its price would drop (for some time) but its intrinsic value would not because it would continue to generate cash flows.

 

Exactly. Price is one thing. Value is another.

 

Are there some people only in Bitcoin because price goes up? Sure. Are there those same people who will leave when price goes down? Sure. 

 

But those aren't value. The fluctuations in price do not necessarily equate with fluctuations in values. 

 

Long term proponents of BTC have confidence in Bitcoin because it has demonstrated value - not because price goes up. The only way to lose that confidence is if it stops demonstrating that value. The faith is based on value, not value based on faith. 

 

 

20 hours ago, tooskinneejs said:

The problem with BTC is that its "value" has nothing underlying it. 

 

It has the most secure, uncensorable network for global wealth storage and transfer. That is valuable. We can debate the measure of the value, but not that it exists. 

 

20 hours ago, tooskinneejs said:

Similar to buying an artwork that is highly desirable, you may make money upon selling but it wasn't because the art had intrinsic value was because someone else believed it had value (extrinsic).

 

Beauty has value too. Again, we can debate the price you're willing to pay for it, but it has value. 

Edited April 26, 2025 by TwoCitiesCapital

[TwoCitiesCapital]

20 hours ago, tooskinneejs said:

If everyone stopped believing in Google as an investment, its price would drop (for some time) but its intrinsic value would not because it would continue to generate cash flows.

 

Exactly. Price is one thing. Value is another.

 

Are there some people only in Bitcoin because price goes up? Sure. Are there those same people who will leave when price goes down? Sure. 

 

But those aren't value. 

 

Long term proponents of BTC have confidence in Bitcoin because it has demonstrated value - not because price goes up. The only way to lose that confidence is if it stops demonstrating that value. The faith is based on value, not value based on faith. 

 

 

20 hours ago, tooskinneejs said:

The problem with BTC is that its "value" has nothing underlying it. 

 

It has the most secure, uncensorable network for global wealth storage and transfer. That is valuable. We can debate the measure of the value, but not that it exists. 

 

20 hours ago, tooskinneejs said:

Similar to buying an artwork that is highly desirable, you may make money upon selling but it wasn't because the art had intrinsic value was because someone else believed it had value (extrinsic).

 

Beauty has value too. Again, we can debate the price you're willing to pay for it, but it has value. 

[Paarslaars]

On 4/25/2025 at 9:26 PM, james22 said:

 

 

 

[james22]

2 hours ago, Paarslaars said:

 

 

 

Probably creates an opportunity for the more aggressive banks (reading the tea leaves) to act before others? 

[Paarslaars]

I would assume they all start preparing. They saw the immense inflow when the ETFs were launched, they don't want to miss it now they can have their customers jump on this.

[james22]

On 4/21/2025 at 5:04 PM, wachtwoord said:

You'll use one for keeping long term and one for short term liquidity.

 

On 4/21/2025 at 5:37 PM, TwoCitiesCapital said:

I use fiat and debt to finance life. I use BTC for long term savings outside of retirement contributions. 

 

Nobody that owns Bitcoin and truly understands it wants to sell it . . .

 

The world we’re unfolding is Bitcoin in savings, Bitcoin Vol for investing & Digital USD for transactions.

 

Bitcoin = Money

Digital USD = Currency

 

 

Edited April 27, 2025 by james22

[rkbabang]

On 4/25/2025 at 4:39 PM, tooskinneejs said:

But isn't this only because people have generally believed in it over time?  If tomorrow everyone stopped believing in the value of bitcoin, wouldn't its price drop? The only thing giving it "value" is extrinsic belief.

 

As to your water example, maybe it would be more appropriate to have used a cup of virtual water rather than real water.  

 

All value is subjective and based on the diminishing marginal utility of the next unit of anything that they want. This is true for everything humans value.  It is why diamonds and gold are worth more than water and air to most people most of the time.  And why you value $10M far more than Bill Gates does.

[rkbabang]

On 4/25/2025 at 5:33 PM, Vish_ram said:

You’re absolutely correct about stocks. They derive value from intrinsic cash flows (present or future).

 

This model won’t work for Gold, BTC, Art etc. 
 

in the future if BTC’s L2 networks replaces existing ones then maybe some stock like intrinsic value is present. 

 

So stocks are valuable because they represent ownership in a company that (hopefully) produces cash, but you are assuming this "cash" is valuable.  What backs the cash?  What is its "intrinsic" value?   Why do people value it at all? What if a Bitcoin mining company produces Bitcoin instead of cash?  What if a company uses its cash to acquire Bitcoin?  What makes your "cash" more valuable than Bitcoin?  Cash - whether it be dollars, pounds, pesos, euros, ... - is nothing but a social construct.   Why value something which someone else can produce an infinite amount of at will with no work at all? Why get paid in something that someone else can produce an infinite amount of at will with no work at all?  Right now the only reason to work for dollars or euros that I can see is because it is still possible to exchange them for Bitcoin.

 

[73 Reds]

31 minutes ago, rkbabang said:

 

So stocks are valuable because they represent ownership in a company that (hopefully) produces cash, but you are assuming this "cash" is valuable.  What backs the cash?  What is its "intrinsic" value?   Why do people value it at all? What if a Bitcoin mining company produces Bitcoin instead of cash?  What if a company uses its cash to acquire Bitcoin?  What makes your "cash" more valuable than Bitcoin?  Cash - whether it be dollars, pounds, pesos, euros, ... - is nothing but a social construct.   Why value something which someone else can produce an infinite amount of at will with no work at all? Why get paid in something that someone else can produce an infinite amount of at will with no work at all?  Right now the only reason to work for dollars or euros that I can see is because it is still possible to exchange them for Bitcoin.

 

Seems like you answered the basic question:  What do companies generate?  Hopefully, cash.  And why is cash valuable?  Look no further than the contractual obligation written on each note.  Its really that straight forward for many of us.

Edited April 28, 2025 by 73 Reds
spelling

[TwoCitiesCapital]

9 minutes ago, 73 Reds said:

Seems like you answered the basic question:  What do companies generate?  Hopefully, cash.  And why is cash valuable?  Look no further than the contractual obligation written on each note.  Its really that straight forward for many of us.

 

An obligation that has been defaulted on and inflated away with with each passing year by our own government? And history littered with dozens of other examples of other governments doing the same?

 

Yea....I think you're taking that "contractual obligation" a little too seriously. Good luck enforcing its purchasing power via the courts. 

Edited April 28, 2025 by TwoCitiesCapital

[73 Reds]

Just now, TwoCitiesCapital said:

 

An obligation that has been defaulted on and inflated away with with each passing year? Yea....I think you're taking that "contractual obligation" a little too seriously. Good luck enforcing its purchasing power via the courts. 

See, that's where we share a different opinion.  There has been no default (by the US, anyway).  When does $1 not buy an item that costs $1?  My belief is you confuse default with inflation.  I don't know anyone who stores their dollars in a mattress or safety deposit box.  Dollars get used and remaining dollars can be invested.  The issue is, is BTC a better way to avoid inflation than anything else?  I think not.  

[rkbabang]

17 minutes ago, 73 Reds said:

Seems like you answered the basic question:  What do companies generate?  Hopefully, cash.  And why is cash valuable?  Look no further than the contractual obligation written on each note.  Its really that straight forward for many of us.

 

Too many historical accounts of that type of contract being violated to take it seriously.  The 2 main things to know about fiat is:

 

  - There exists people who can produce as many of these as they wish. 

  - If it benefits these people to produce more they will. 

 

These are the main questions from my last post (which you ignored):

 

  - What backs the cash?

  - What is its "intrinsic" value?

  - Why value something which someone else can produce an infinite amount of at will with no work at all?

  - Why get paid in something that someone else can produce an infinite amount of at will with no work at all?

 

 

Edited April 28, 2025 by rkbabang

[73 Reds]

Just now, rkbabang said:

 

To many historical accounts of that type of contract being violated to take it seriously.  The 2 main things to know about fiat is:

 

  - There exists people who can produce as many of these as they wish. 

  - If it benefits these people to product more they will. 

 

These are the main questions from my last post (which you ignored):

 

  - What backs the cash?

  - What is its "intrinsic" value?

  - Why value something which someone else can produce an infinite amount of at will with no work at all?

  - Why get paid in something that someone else can produce an infinite amount of at will with no work at all?

 

 

Full faith and credit of the issuer backs the cash.  That is the contractual obligation which has never been violated by the US.  Cash has no intrinsic value; never said that it did.  Something is valuable/and can be paid by the backing that it has.  The "value" of such backing can be debated but to suggest that cash has no backing is simply not correct.