What is Bitcoin Backed by or When Will the Bubble Burst ...
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I stored bitcoins online ... aaaand they're gone.
/SorryForYourLoss is a place to showcase the top minds of bitcoin (and cryptocurrencies) failing to secure their precious internet money properly. It's a memorial for the countless incidents of thefts, scams, hacks, goxxes, .. etc.
What is Bitcoin backed by? Asking what Bitcoin is backed by is akin to asking what the kilometer is backed by. As much as there is utility for having standardised units by which we measure distance, the same goes for units that measure value. Humans have allowed despotic governments to impose dictatorships over money. The closest thing we had to money was gold. Gold’s utility as a monetary instrument derives from its scarcity. The confidence that we can’t easily inflate the stock of gold is why gold was useful for communicating value. In the same way that it’s hard to plan a road trip if the unit of distance fluctuated, the economy cannot make sound business decisions if money was unpredictable. Bitcoin is the first metric unit for communicating value – amongst other features, Bitcoin is backed by its confidence in monetary policy. This will not happen overnight. It'll take several generations. When the unproven benefits of changing financial systems outweigh its enormous costs, the pieces fall into place. My eyes are on Venezuela
“Bitcoin seems to be gamers currency. How does mining on the computer add to the value? May as well sell your cyber character from your favorite game, it’s about the same value. If you don’t get out, the ride will stop and you’ll be stranded. Governments are responsible for currency values, With Bitcoin, you own stardust.”
maybe i can post my poorly written amateurish train of thought here...What is Bitcoin backed by?
It has been said that Bitcoin is backed by math. Opinions may differ on the value of that math but to sum it up... Bitcoin backs up its self with its own properties and its own characteristics. What backs up USA dollars? Dollars are created by a bank when it assesses a borrowers ability to pay back the dollars to be lent and then lends those dollars. The loan is a promise by the borrower to pay it back. How does one obtain dollars in order to pay back the loan? One usually works to obtain dollars or one may find a way to use other peoples work to pay back the loan. So dollars are work. Dollars are backed by a promise to do work. Work is a useful product and when you can have work performed only your imagination and the laws of reality are your limits. Truely valueable indeed. Possessing dollars allows one to determine what type of work will be done by the worker in order for the worker to obtain the dollars. The bank accepts dollars as loan repayment not work. Thus the possessor of the dollars can choose to pay someone to work towards a cancer cure or pay someone to create an exciting movie. Why should one want to perform work? Motivations such as hunger, shelter, entertainment, and the ability to provide these things to loved ones are te reasons why. Also the repay the debt. At this moment I lack in none of these motivations die to my tiny taste of money from selling of some of my small amount of Bitcoin. Thank you newcomers! As a result my motivation to perform work for these things is greatly diminished at the present moment. Thus I am performing no work. Money or at least the amount of money that I could obtain by performing work is of little motivation to me. Money has become worthless to me and has no value. Without motivations money has no value and is worthless. Motivations provide value to money. What are motivations again? Food, shelter, entertainment, and the ability to provide these things to loved ones. So motivations to work are a lack of these things. What are a lack of these things? Misery and suffering are what result from a lack of these things. Thus the value of money depends on varying degrees of misery and sufering. For without misery and suffering there is no motivation. At best a balance can be achieved but certain amounts of misery and suffering can never be eliminated. Possible solutions. 1. An automated workforce which does all of the work shifting the need for motivation to the machines. 2. Change the humans in some way so that they are not afflicted by the motivations. 3. Accept the balance. Accept some misery and suffering. Currently some might argue that misery and suffering are unevenly distributed among humanity. Do we really want Bitcoin to be money? Being money entails misery and suffering. So what backs Bitcoin? At present Bitcoin is not backed by a promise to perform future work such as dollars are. Bitcoin is entirely dependant on its own properties for its value. What are the properties of Bitcoin? weightless, invisible, has no volume, very hard to steal, and can be sent around the world in minutes in large or tiny quantities Even someone in the middle of nowhere beyond the reach of the internet can still recieve Bitcoin. They can hash their own address and key on paper, send some product of work out with the public address and recieve Bitcoin to it. Im done ive got nothing and might never had had anything to begin with. here is what people who edit wiki think https://en.m.wikipedia.org/wiki/Money_creation
Besides the usual "where is its value from?" (broadly speaking: theory of supply/demand, scarcity, real applicable uses) I commonly am asked what is bitcoin backed by? Usually in a comparison to their USD backed by the "good faith and economy of the US government". Lately I've been answering this with, "Bitcoin is backed by a global distribution of stability and good faith of mathematical certainty." What do you say? Any suggestions to improve on mine? Edit: Wow, I had to come back and say all/most of your answers are truly terrible. Maybe I should have explained that I don't need the answer, I wanted a critical discussion of how we answer this to new users. There is a lack of understanding of several subjects and the concepts themselves and I'm very disappointed by the worthiness of feedback here. I'll give the exception of Garrand. The belief that it will be accepted as monetary value is a core necessity of any currency. Still a weak response to what is it backed by, though.
I am tired of reading troll posts on news sites where gold whackjobs and brainwashed fiat slaves argue bitcoin is backed b nothing. Let me dust off my old unused economics degree here. Golds was used for economic activity because it did not deteriorate. It held up as a savings. It was rare but not easily divisible. That is why silver was used asss well. Silver and gold are hedges in modern times. They are the best store of value IF CIVILIZATION IS WIPED OUT BACK TO THE DARK AGES. SO I agree having a little is good but it will not grow your wealth. Fiat/dollars are backed by DEBT. It is not made by the government but by private banks. The government could issue currency tomorrow backed only by belief.. but the fed backs their dollars on the debt owed by taxes on labor and land and commerce. A citizen owes the government money every year. If they hold land, worked to eat or sold assets. So fiat is exchanged for someone e's effort. And the fed decides what value that bldholds. The fed borrows that right from the people. Bitcoin is backed by a concensus of people who retained their right of money for their efforts. Unmaniputable. If some people find it worth a lot and some find it worth nothing then the value meets in the middle. Even non participants affect the price. Because if they bought the value goes up. It I'd not decided by a central bank. Pardon spelling. Typed from phone.
This was such a disappointment to read... if Bakkt futures are not fully backed by Bitcoin and are actually 37% backed by dollars/Treasuries, then what are the implications? Is this the slippery slope to Bifcoin market manipulation like we see in the Gold market?
OKEx CEO: "I think DCEP can be a game-changer in the finance, blockchain, and crypto spaces. Unlike Bitcoin or Libra and USDT, DCEP is 100% state-backed by the government’s reserve fund. What’s more, from a legal perspective, DCEP is a legal tender, so merchants cannot refuse payment in DCEP."
Donald's just as confused as everyone else about what is bitcoin. Bitcoin is backed by data Donald, so it is based on data and value which is more than the USD which is backed by nothing. Donald, BTC is not Bitcoin.
Often people ask what is Bitcoin backed by? What is any crypto-currency backed with? The answer is electricity used to mine it. I did some calculations today how much power is backing Zen(not 100% accurate as change all the time but you will get the picture). The answer may surprise you. Hashrate was at 92,963,252.00 Sols. I will assume no sane GPU miner is mining Zen anymore, z9 mini overclocked produces 16500 Sols for 390W. It takes 5634 z9 mini's to create this hashrate. Very decentralized, would you say? I know. so 300 ZEN is mined each hour. At the same time 2197 kW of electricity are used to mine those coins. This means, 7.32 kW are used for each 1 Zen that is being mined. At average electricity price of 0.1 cents per kW that makes 0.732$ per 1 Zen. Now lets calculate network prior to ASICS. 3 Months ago, network has was around 60 Mh/s. Average gpu's that mined it were GTX 1070 which used 170W for 500 Sols. This means it took 120 000 GPU's for that hashrate, and it used 20400 kw of electricity. This means that for each Zen to be mined on GPU only network prior to ASICS, we needed 64 kW of power per Zen. Or 6,4$ used for electricity. Which one is safer again guys? This kind of calculations didnt even consider newer and more power efficient A9 ZMaster that has 50 000 Sols per 620 W or Asic Miner Co Zeon200,000 Sols which uses 2200W. Did the same calculations on Zcash (which stayed on equihash as well) and Bitcoin Gold which forked to 144_5 algo just to compare it. On Zcash it takes 6.145 $ worth of electricity to mine 1 Zcash. 3 months ago, it was 53,2$. Did the current calculation for Bitcoin Gold as well. Most efficient mining on Bitcoin Gold is at 110W and 65% power limit with GTX 1070 making 42-45 Sols per card. Results is 7.2$ worth of electricity needed per 1 Bitcoin Gold. If you think i made a mistake with the calculations, please contribute. Thank you (from Discord) Trololino
10-29 02:14 - 'No, what I am saying is Bitcoin is worthless and it’s scarcity will not increase demand. A better crypto currency, likely backed by some type of sound money or portfolio of investments will become the crypto curre...' by /u/Admittedly_Ignorant removed from /r/Bitcoin within 456-466min
''' No, what I am saying is Bitcoin is worthless and it’s scarcity will not increase demand. A better crypto currency, likely backed by some type of sound money or portfolio of investments will become the crypto currency of the future. Bitcoin is like one of those dumb web companies from the dot com bubble. They knew roughly where technology was going, but they just didn’t create a good product. Bitcoin, backed by nothing, is worthless. It’s pure speculation and has no basis which would make it valuable for anything. ''' Context Link Go1dfish undelete link unreddit undelete link Author: Admittedly_Ignorant
Perhaps I have done too much bitcoin reading in the last weeks, as I feel a strong need to confront a massive misunderstanding about bitcoin's value being based off of nothing. You hear it from banking and government officials, you hear it from gold bugs (extra frustrating because I am a bit of a gold bug), and you hear it from the financial talking heads. I used to love Peter Schiff a decade ago, now I want to throw something at him. The statement (often phrased as a question to give the appearance of fairness from a talking head): Bitcoin has no value because it is not backed by anything. I find this statement to be so mindbogglingly idiotic that it makes me instantly lose respect for the person making it. And every last one of these people are using money not backed by anything. OK they do have one thing backing it, but telling me my dollar is backed by the full faith and credit of the us gov is effectively the same as saying my dollar is redeemable in AAA rated bull$@. I digress, back to the point. So what is bitcoin backed by? Bitcoin is backed by almost a decade of work from 100s of developers that were so passionate about this project they gave their time freely (even though it had significant value). Bitcoin is backed by the work done (and still being done) by the most powerful computing network that ever existed. Bitcoin is backed by the oldest block chain ledger that has been made cryptographic-ally secure by that same computing network. To imply that bitcoin is not backed by anything of value is to imply that high quality ideas, mental labor, and voluntary participation have no value. I'm longing for the day when I start hearing really witty retorts to these chowder heads. "Thanks for informing me Ms. Talking Head, I had no idea a computer network more powerful than Google's was worthless" "Sorry Mr. Schiff, I won't use goldmoney because that is a website and since hours spent programming are worthless, goldmoney's site must be worthless too" Like I said, I did too much reading the last week and just needed to get that off my chest somewhere it might be appreciated;)
But if Bitcoin is not backed by anything, what it is backed by? Before we answer that question, there is an elephant in the room we must address first. The myth of fiat currency. DGLD is a gold-backed digital asset that is a central element of the Gold Token Network, which has been launched two weeks ago by CoinShares. This crypto is a joint product of Blockchain, the developer of the popular Bitcoin wallet, the Switzerland-based firm MKS that specializes in gold trading, and CoinShares. Contrary to popular belief, bitcoin is in fact backed by something. It is backed by the only thing that backs any form of money: the credibility of its monetary properties. Money is not a collective hallucination nor merely a belief system. Over the course of history, various mediums have emerged as money, and each time, it has not just been by ... Bitcoin-backed Ethereum token tBTC gets its long-awaited release today. Thesis, the developer of the Keep Network and tBTC, claims it offers the safest way yet for holders of the world’s most popular cryptocurrency to access Ethereum’s $8 million Decentralized Finance (DeFi) sector, and earn on their investment. Bitcoin and cryptocurrency watchers are nervously waiting for bitcoin to make another move after a sudden sell-off this week.. The bitcoin price, the main driver of the cryptocurrency market, had ...
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