Oh, Cheez\u2026We\u2019re back to this question, again!<\/p>\n
As a Bitcoin columnist, I get this question a lot. Today, an answer was requested at Quora.com<\/a>, where I am the lead contributor on cryptocurrencies:<\/p>\n \u201cClearly, some people value Bitcoin. But How can<\/span> Many individuals, like the one who asked this question, suspect that Bitcoin was pulled out of thin air\u2014and that it is not backed by gold, a government, or an authoritative redemption guaranty. After all, it is just open source code. What stops me from creating an ElleryCoin using the same code?!<\/p>\n Let\u2019s start with the short answer:<\/strong><\/p>\n A More Complete Answer:<\/b> What is value?<\/i><\/p>\n Bitcoin has more intrinsic value than a government printed paper bill. The value arises from a combiation of fundamental properties:<\/p>\n Downside and Risks<\/strong><\/p>\n <\/p>\n But wait!<\/i><\/strong> What about the long transaction delay and high cost? There are sharp disagreements anong miners, users and developers concerning block size, transaction malleability, and replay issues. Aren\u2019t these a deal killers? And what about wild volatility in the exchange rate? Doesn\u2019t this retard adoption as a functional currency?<\/p>\n These are transient issues associated with a new technology. Although Bitcoin is weathering growth pains that arise from a new and distributed governance technology (democracy can be messy!), all of these issues have sound solutions. We have already witnessed and tested the solyutions with various forked coins. Think of them as beta tests. Even if current problems delay the day when you can spend bitcoin at every retail establishment\u2014it is already sucking liquidity from national currencies and becoming the world\u2019s de facto reserve currency.<\/p>\n Many individuals find all of this hard to accept. That is because we have been conditioned to think that \u2018value\u2019 arises from assets with \u2018intrinsic\u2019 value, the promise of redemption, or by edict. This is not true. In all things, (including gold, a Picasso painting, or your labor) value<\/i><\/b> arises from simple supply and demand.<\/p>\n Some individuals claim that all other factors are secondary. But, even this statement is false. All other factors are irrelevant. They may be related, but they are not the source of value.<\/p>\n I recognize that this answer may seem smug or definitive. So, allow me to suggest related questions with answers that are a bit more interesting, because they are subtle. Unlike the question of value, these two questions are open to analysis and opinion: (1) \u201cWill people continue to value bitcoin in the future?<\/i>\u201d \u2014 And (2) \u201cWhen will Bitcoin stop swinging wildly in value?<\/i>\u201d (measured by its exchange rate with other currencies).<\/p>\n This is fun! Let\u2019s explore\u2026<\/p>\n <\/i>Philip Raymond<\/a> co-chairs <\/i>CRYPSA<\/i><\/a><\/span>, publishes <\/i>A Wild Duck<\/i><\/a><\/span> and hosts the New York <\/i>Bitcoin Event<\/i><\/a><\/span>. Last month, he kicked off the <\/i>Cryptocurrency Expo<\/i><\/a><\/span> in Dubai. <\/i>Click Here<\/i><\/a><\/span> to inquire about a live presentation or consulting engagement<\/i>.<\/span><\/p><\/p>\n","protected":false},"excerpt":{"rendered":" Oh, Cheez\u2026We\u2019re back to this question, again! As a Bitcoin columnist, I get this question a lot. Today, an answer was requested at Quora.com, where I am the lead contributor on cryptocurrencies: \u201cClearly, some people value Bitcoin. But How can this be? There is nothing there to give it value!\u201d Many individuals, like the one [\u2026]<\/p>\n","protected":false},"author":353,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1318,1761,39,418],"tags":[2161,1887,2164,2098,2651,348],"class_list":["post-74815","post","type-post","status-publish","format-standard","hentry","category-bitcoin","category-cryptocurrencies","category-economics","category-internet","tag-bitcoin","tag-currency","tag-government","tag-intrinsic-value","tag-money","tag-value"],"_links":{"self":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts\/74815","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/users\/353"}],"replies":[{"embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/comments?post=74815"}],"version-history":[{"count":3,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts\/74815\/revisions"}],"predecessor-version":[{"id":74819,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts\/74815\/revisions\/74819"}],"wp:attachment":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/media?parent=74815"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/categories?post=74815"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/tags?post=74815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n this be? There is nothing there to give it value!\u201d<\/span><\/p><\/blockquote>\n\n
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