Reader Question: "What Value Does Bitcoin Have?"

A friend of mine on Facebook asked some great questions tonight. One being, "What Value Does Bitcoin Have?" And the dialogue that followed was so great that I decided to share it here. I think it's remarkable that we're finally having real conversations about crypto currencies whereas just a couple years ago nobody knew anything about it.

Here's how the conversation went...

I get that bitcoin is exciting... exciting to watch for sure right now.... but how can you say there is value in bitcoin? Bitcoin is a currency and a fiat currency that is backed by nothing. Bitcoin stores no value at all. In fact because bitcoin has rose so high in price right now and so fast, I would be pretty scared to use it as currency even right now. You have to remember that bitcoin rose in price.. and has not rose in value.. there is a difference.

Great questions so far. He continued with the following...

Also... need to remember that investing in a fiat currency you need to be very careful.. There has been hundreds of fiat currency over hundreds of years and none of them have lasted. currencies come and go...

For starters, it costs roughly $1,000 to create one Bitcoin and that cost is quickly rising. How much does it cost to print a dollar? Another point is that there are only EVER going to be 21 million BTC coins, but the Federal Reserve will always be able to print more money. And believe me, they will continue to print more money to pay off debts which has totally diminished the value of the USD. Also, nobody controls Bitcoin so it's completely decentralized.

But the technology behind Bitcoin (and even more so with other Crypto Coins), plus the applications that each one of the different blockchain technologies is capable of is the real value that I see. Bitcoin has paved the way for crypto currencies and laid out the framework for future block chains. Bitcoin is essentially a store of value (not an easy to use currency) and continues to be a better place to store your money than the bank. I personally think of it as Gold.

Bitcoin will continue to rise but there are thousands of other crypto currencies emerging with much better security, technology, anonymity, and functionality. In fact, Bitcoin may never be able to do what it set out to do - become a decentralized worldwide currency that everyone uses for daily transactions. So you’re better off investing in the currencies who’s technology allows them to achieve this: Ethereum, Litecoin, Ripple, Cardano, and IOTA to name a few. But always do your homework and serious research before you invest in anything.

Your argument sounds much like what we hear in the mainstream media. The truth is we've never seen anything like this before. But there is a major shift taking place and I would recommend to read up on it from people who have studied these currencies, cryptography, and even crypto law. I'm personally invested in over 13 different crypto currencies and none of those are Bitcoin. However, I do still store some of my money in BTC for trading purposes. Anyways, I would HIGHLY recommend looking into the technologies behind these various crypto currencies and learn about their different blockchain applications. I never back a coin unless I fully understand what the team behind it is trying to accomplish. I sounded a lot like you about 3 years ago. After doing some serious research, learning about the technologies, and following the crypto communities, I now can say I fully understand and see where we're headed.

yes very interesting... but what in your opinion do you think is driving bitcoin price up other than market hype? imagine if someone accepts $1000 in bitcoin for payment and then it just crashed...

There are (and always will be) 21 million BTC coins. Current market cap is $325,874,212,790. And consider that less than 1% of the world's population currently owns any BTC. It's really just simple math. But I agree that some of the recent popularity is hype or FOMO (fear of missing out). Also I should note that the number of large companies that accept Bitcoin is doubling every three months. Re/Max, WordPress, Overstock, Microsoft, Subway, Wikipedia, Lionsgate Films, etc. In total more than 60,000 merchants so far take BTC. But in my opinion, I don't see it ever being heavily adopted and used for a "cup of coffee" or "bottle of water" type of transaction. Only big stuff. That's why I'm WAY more focused on the newer currencies with faster transaction times, more anonymity, and better scalability.

Take Ripple for example and how their focus is speeding up bank wire transfers. A typical intercontinental bankwire transfer today might take a week. But with Ripple it takes minutes. Again, it's the technology I'm really fascinated with.

so if your saying there are 21 million BTC and that is the cap... how are people mining BTC?

Because that 21 million hasn't (all) been created yet. Again, I would do some research. John McAfee is a great guy to follow. So is Altcoin Buzz on YouTube. There's so much to explain and I can't do it all here lol. But I love this stuff as you can tell. :)

Oh yeah, also Vitalik Buterin (co-creator of Ethereum). Watch a couple of videos with him and your head will be spinning.

What would you have added to this conversation (on either side)? Do you think Bitcoin is all hype and holds no real value? Share your thoughts by submitting a reply below!