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RE: Bitcoin Explained - A Beginners Understanding
All this is very good, but there's still one thing I don't get. What service is being rendered by resolving the calculation that "mines" the Bitcoin? All I see is that some random calculation with no real world purpose is being rewarded with a Bitcoin. And this is why I don't trust the system. It is just as much a fiat currency as the dollar is, since there is no real value (hard money, as you term it) behind it. Just hype and scarcity. If I am wrong, please explain it to me. Very eager to understand...
Miners verify transactions and secure the immutable nature of the distributed public ledger. This solves the double-spend problem.
Yes, but my question isn't how the ledger is kept or balanced. My question is what value was provided in return for the creation of a Bitcoin in the first place? Solving a random mathematical equation to no real purpose isn't of value, yet it magically creates a Bitcoin.
There is no intrinsic value, just as there is no backing for any fiat currency since the dollar left the gold standard behind in the early 1970s. In that sense, it is similar to the money we are all familiar with and use every day. An important difference, however, is that Bitcoin has a coherent monetary policy governed by code rather than Central Banks and the governments and financial elites they serve. There will never be more than 22 million Bitcoins, and that won't happen for another 100+ years. Meantime, the government-sponsored printing presses churn out money and create inflation - the ultimate hidden tax on savers.