What Is the Value to Bitcoin? Why Care?

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Generic Photo of Cryptocurrencies.

Diamond Garcia-Alvarez, Editor in Chief 2021-2022

It is no secret that Bitcoin and other cryptocurrencies are controversial. Some people believe that it’s a revolution in money, while others say that it’s a scam and should not have any value. However, time will tell. The reasonable answer would remain neutral. But if that’s the case, why should cryptocurrencies have any value. Why should I care? This article will explain the pragmatic perspective as possible. So, whether you’re skeptical and unable to understand why we should care about Bitcoin. Or if simply a crypto enthusiast, you may find this article interesting. 

 

Note: I am going to use U.S. Dollars (USD) in these examples in order to keep my findings simple. 

 

I am not an economist, and this consists of my opinion. However, I have been interested in cryptocurrencies for some time. But haven’t made the effort to do some research recently until now. While today I don’t believe that Bitcoin will replace all currencies, I have no doubt Bitcoin holds a unique position in modern society. I do understand both perspectives and don’t have a mindset for either side. I am not going to express how much Bitcoin should be worth. Nor will I make any efforts to convince you to purchase any. I will only explain why Bitcoin has value. 

 

Bitcoin has value, simply because enough people trust it, and believe that it does. Additionally, Bitcoin holds more advantages than traditional currencies around the world. I understand that this isn’t a valid argument. However, this does sum up. First, let me reiterate my point, and address other explications I’ve received. It is understandable that you may hate Bitcoin and believe that it will eventually collapse at some point. However, we must at least agree that Bitcoin has some type of value. Let’s say that you’ve found a file with a private authentication to a wallet that contains 100 Bitcoins on it, you may be tempted to some Bitcoin address, and exchange it for a large amount of money. Clearly, people are willing to trade Bitcoin in exchange for something else. In this case, Fiat Currency. (Government printed money.) This fact alone feeds into itself. The reason being the more people acknowledge its value, it becomes more valuable. There are millions of dollars in liquidity for cryptocurrency. Meaning you can sell large amounts, and people will still purchase more. 

 

“I don’t care about that. Bitcoin doesn’t have any value.” 

 

That’s a reasonable argument. In order to respond to that, I must take a different approach. I may seem unorganized and philosophical. But that will pay off. Because I think that this intrinsic value is something that needs to be addressed. First off, most people that believe what has intrinsic value don’t. Depending on your perspective. For example, metals like Gold and Silver. Gold is valuable. At least for the most part. If anyone were to find gold. However, if we were to really analyze it, Warren Buffet said when he “Gold is dug under the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” Although Gold has some industrial purposes, that doesn’t explain why it is much more valuable than copper or other metals. Which is also extremely useful. “Gold is more scares.” Scarcity only multiplies value. Let’s say I were to compose something like a painting. Well, that’s scarce. Because there is only one painting. However, it doesn’t have any value. Because nobody wants it. This is the basic concept of supply and demand. I do believe that Gold is valuable. When the Europeans went to the New World, Aztecs as well as other natives. The First People greatly valued Gold It was a symbol of trade and wealth. The fact that other human societies developed independently, and both still valued Gold who continue to be credibility is a state of value. Another example would be diamonds. Diamonds are not rare; however, companies still limit their distribution. For them to be artificially scarce. Diamond is useful for cutting tools. As it’s so hard. But it does not need to be clean. The reason why people are willing to pay exponentially large sums of money to have Diamonds clean and shiny is that there are several artificial Diamonds. Which aren’t distinguishable. 

 

“Bitcoin doesn’t have anything to support itself.” 

 

This may seem redundant. But it isn’t I believe the common argument that Bitcoin isn’t “supported by anything, it can simply just collapse. While the United States currency is supported by its government.” I agree. No, Bitcoin doesn’t have any support. While Fiat does have value. Simply because it is supported by its government. If you disagree, consider your government requires that you file your taxes that must be paid in their currency and if you don’t file your taxes, you will be punished. If it is concluded that armed law enforcement officers come to your house with an arrest warrant, and a federal judge orders you to pay. Otherwise, you’re not leaving. So in a way, the currency is supported by people trying not to go to jail. For those who believe that government-issued currency is the “Be-all, end-all.” Think about this. The U.S. Dollar is arguably one of the most valuable Fiat currencies today. Being the World’s Reserve Currency. Looking at the United States Treasury website, addressing the Federal Reserve notes. The technical term for “Dollar” is printed on all U.S. Dollars. The website, explicitly states that “Federal Reserve Notes are not redeemable in gold, silver, or any other commodity, and receive no backing by anything. To be neutral, it also states “The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserves notes are “backed” by all goods and services in the economy.” The argument that certain things are valuable because they are backed by something doesn’t preclude other items that aren’t considered valuable. Valuable collectibles for example. Such as rare baseball cards, antique furniture, and even Pokémon cards. These items aren’t supported or “Backed by anything.” Yet we want them and are willing to part from them in exchange for something equally valuable. As time passes, some items may become more valuable or remain valuable. However, just because a collectible becomes “worthless” doesn’t obligate you to trade all your rare baseball cards. 

 

Does Bitcoin Have Value. 

 

You may come up with several ideas and factors to distrust. At the end of the day, Bitcoin does have value. In our modern society, it simply just does. You are entitled to deny it. Even if you accept it, that doesn’t mean you have to like it. Or purchase any in fact. You should at least know the reasons and/or the opinions that I’ve provided. I would very much like to hear your feedback and opinions.