pull down to refresh
184 sats \ 32 replies \ @k00b 6h \ on: What about Bitcoin are you too embarrassed to admit you still don't understand? bitcoin
I also haven't studied bitcoin script in great detail. I understand it enough to read it, but I wouldn't trust myself to write it.
I also haven't studied cryptography at a theoretical level very closely. I only understand it enough to apply it well.
The thing I still don't understand that I'm frustrated by the most is the origin of bitcoin's value. @elvismercury has raised a lot interesting questions about it. Every other other money that's existed started as something that had inherent value and only then developed a monetary premium. Bitcoin leap frogged that initial stage and most folks wave it away as unnecessary. I suspect, like elvis, that there's something to understand about that that I do not.
Nick Szabo spelled it out clearly in 2002, and the fact that he spelled it out before bitcoin had been conceived to me gives it a more scientific basis. It was predicted, and then it manifested itself.
Money starts as a collectible. The fact that physical commodities can be collectibles is incidental. Not all commodities become collectibles. For example, during covid oil had negative value. Collectibles don't ever have negative value, they might go close to zero but by definition there is always someone willing to pay more than zero to own and hold them. Houses are collectibles, rare wine if a collectible, gold bullion is a collectible, antique furniture is collectible. It is the fact that it's collectible that gives it value, not that it is a collectible because it's valuable. Air is valuable, but not collectible, because to be a collectible it must be difficult to collect, because the function of a collectible is to discriminate between the people who have it, and the people who don't, because the people who have it must have sacrificed or worked or been clever enough to get it cheap (foresight), in other words to be a collectible a thing must be capable of measuring the capacity and capabilities, the means, the status, the quality, the worth of the owner.
Then from there they can either be SoV or MoE, depending upon the response of the incumbent governance system. In our case bitcoin is a store of value first because of financial suppression and a propaganda campaign, because governments who don't hold bitcoin cannot pay their historical liabilities, and they cannot buy it without pumping the price. If there were no government backlash bitcoin would become a medium of exchange, even marginally so, and then due to its properties it would quickly become the dominant medium of exchange.
And the final stage, once it's the dominant medium of exchange and store of value, is unit of account, the thing by which everyone and everything is measured.
Fiat is no longer a collectible, so it's dying as money.
reply
Collectibles don't ever have negative value, they might go close to zero but by definition there is always someone willing to pay more than zero to own and hold them.
I like this but I'm not sure it's true. Oil had negative value like a beanie baby collector might pay someone to take their collection away.
reply
This is a fair point. I guess I was sorting shooting from the hip with that one. I think one can say that if oil had more collectible value it would not have gone into negative prices.
reply
Oil has negative carry, meaning it costs money to store it and transport it... so does gold when it's vaulted but its really not comparable given density and optionality
Land has taxes/defense, maintenance if its to be productive...
Lack of negative carry is one of Bitcoin's most unique properties.
reply
I'd argue that Bitcoin has a slight negative carry, due to a need to maintain security, but definitely much less per value unit than any of what you mentioned.
reply
Air is valuable, but not collectible, because to be a collectible it must be difficult to collect, because the function of a collectible is to discriminate between the people who have it, and the people who don't,
this is pretty good. there's a lot to think about here, but I like how you put it.
reply
Every other other money that's existed started as something that had inherent value
Arguably gold never had inherent value until electricity was invented to give it utility as a conductor
reply
reply
All were otherwise valued as ornament. Gold was used for data storage too.
reply
Cloud services / software, Bitcoin is a hosted database
Accreditation / membership, Bitcoin is a network
Value is subjective, so ornaments have no "inherent" value as you put it, only utility is inherent value, and history is rife with non-utility
reply
reply
That makes it easier then to compare I think...
Stones/shells didn't start out as money, but people collected them for ornamental purposes, then money emerged from that bootstrapping by mineral spergs
Bitcoin started out as a toy collectible much in the same way, even though it was designed as money, value still had to emerge from an otherwise valueless ornament for spergs
reply
reply
Yes I look at it as it was designed to make the jump from toy to money, it couldn't be money day 0 because money is emergent
A thing that absolutely nobody wants is going to be difficult to get many people to agree to use as money. Whereas, something that is already perceived as being valuable can easily slip into being used as a money.
So maybe the issue is with the term "inherent" which usually implies that a thing has value no matter who you ask (or what their circumstances are).
reply
reply
well, but you are hitting on something that's different about Bitcoin.
I think it's connected to the chicken-egg problem of no people spending bitcoin because no merchants accepting bitcoin because no people are spending bitcoin...
This problem should have happened to Bitcoin's value in the beginning. Nobody sees it as valuable because the only possible value is if other people see it as valuable and nobody saw it as valuable yet...
I suspect the early blackmarket uses are what jump started it: satoshi dice, silk road, early markets where you could bet or buy "shares" in companies.
Now we've reached the bitcoin is widely seen to be valuable point, but we still haven't crossed over into people widely accepting it. I like to think SN plays a role in being one of the vanguard forces pushing for monetary use of Bitcoin. It's the second most exciting thing about SN.
The strictly limited issuance of Bitcoin, is a thing of beauty also, perhaps, to those so long enslaved by the fiat debt slavery bankers cartel?
reply
You didn't have strictly limited issuance initially - ie it was not decentralized for a few years and the limit could not be assured.
To be clear: I'm not saying bitcoin needs this initial inherent value property to be great money, but there's something to know about why bitcoin doesn't need this property.
reply
Total issuance was set from day one at 21 million.
As was the programed decline in rate of issuance toward zero.
Thus strictly limited total issuance was set from day one.
Certainly it was easier to mine when just one or two people were mining but even Satoshi had to make some effort/expenditure of computing power even if small, to accumulate his sats.
As more people expended more effort to acquire value rose.
The self fulfilling cycle of FOMO.
From the start the inherent value was in holding the transfer/access keys to a token with a strictly limited total issuance...something that had never existed in the known universe before.
reply
reply
There were initially equally few people with any incentive or motive to change the consensus.
As value grew and more clamoured to mine, security increased proportional to value of the network.
At first only cryptography geeks and freaks would value the largely abstract inherent value in possessing the cryptographic keys to a token on a blockchain that most people considered of no value...but those few understood the potential of a strictly limited total issuance...in a world of fiat debt slavery debasement and corruption.
'there will only ever be 21 million'
As time, understanding and FOMO built up, those keys and the abstract transfer value they provide access to have increased in value.
The thing I still don't understand that I'm frustrated by the most is the origin of bitcoin's value
Here is an excellent article from 2014 by Jeffrey Tucker:
https://fee.org/articles/what-gave-bitcoin-its-value/
I recall reading that it was rare digital gold early on. The graph of it approaching 21 million but not reaching it. It was billed as digital gold so maybe that’s a part of it, it piggy backed on people’s mental model of gold
reply
In the context of emerging post GFC, and 'Greenspans put' Bitcoin has the inherent value of being the first ever fungible commodity with a strictly limited total volume of issuance.
reply
reply
In the case of Bitcoin, I guess the commodity is the exclusive encrypted ability to transfer the tokens held at a specific address on the blockchain?
Like all money Bitcoin is an entirely human construct...in the case of Bitcoin, only existing within/upon the human construct of the blockchain.
So the inherent value is sourced in the right to transfer the right to transfer on the blockchain.
Yes rather circular!
reply