How can Bitcoin, and other cryptocurrencies like Bitcoin, have any value? How can they be better than gold, when they are not tangible, have no history behind them, and can be created out of thin air? Sounds like "magical" money to me!
Welcome to our topic for Day 3 of Project [#]WOKE! We are presenting the case for "Why is Bitcoin, or a cryptocurrency similar to Bitcoin, better than the US dollar?" through a series of topics for our subscribers. If you haven't read our previous days' topics, click below to catch up. I hope these have been helpful to you so far!
Yesterday, we discussed why Bitcoin is better than gold. Let's dive into this topic deeper. To answer our question of what gives Bitcoin its value, ask yourself first, what gives gold its value?
*Unique element in the Periodic Table, and although there are many other metals with similar properties, none are exactly like gold.
*Has many other uses besides as a currency, for example, it can be used to conduct electricity, used in aerospace engineering, and in jewelry.
*Has a very long history of many centuries, of being considered a rare and precious metal of value.
With all of these wonderful attributes of gold, how can we even begin to compare it to Bitcoin and other similar cryptocurrencies?
Because value is subjective. It exists when someone else deems something to be valuable to them. The value of ANYTHING is put on it by whoever deems it to be valuable. This is true of both gold and Bitcoin. Gold does not have any intrinsic value all on its own. The only reason why gold has a long history of being valuable is because traditionally, the belief that it is valuable, was passed down through generation after generation in certain cultures. As these cultures conquered other cultures, this belief system of gold being valuable was spread.
However, before humans roamed the earth, gold existed, and it was not valued. The Native Americans and other indigenous tribes in North, Central, and South America did not value gold as a currency like the early European settlers did, which is why they gave it away so easily in trades. Since these cultures did not value gold as a currency, this belief was not passed down through the generations. They knew of gold's existence... they just didn't care for it as much as the Europeans.
The Gold Rush to California is an example of how various cultures' beliefs on what is and isn't valuable can be dramatically different. Because of these different beliefs, Native Americans had their lands taken away from them, were abused, enslaved, and forced to mine for gold. This is a tragic time in our nation's history, and illustrates the power that one's beliefs about what is valuable can have on an entire civilization. You can read more about the horrific effect the Gold Rush had on the Native Americans here: http://www.history.com/…/the-enslaved-native-americans-who-…
What is the source of the value behind Bitcoin and other cryptocurrencies like Bitcoin?
Bitcoin's payment network, the blockchain, is the only way in the world that you can send a payment to someone else in a decentralized way, without being stopped. (We discussed decentralization in yesterday's post if you want to learn more about this.)
*If you had a family member in Russia that you wanted to wire fiat to, you will be censored by the Russian government. There is no guarantee that your family member will be able to receive it.
*If you tried to donate fiat to a relief effort in Venenzuela, you will also be censored by the Venenzuelan government.
*If you are sending a suspicious amount of fiat to another party, then your payment will be blocked, and you will have to get ready for being questioned about your activities, or your payment will be outright confiscated and you could lose it indefinitely.
*As we discussed in yesterday's post, gold back digital exchanges have not had long term success in sending currency due to the actual shut down of these systems by the government, or even just the threat of being shut down by the government, because these systems are centralized.
"The fact that Bitcoin and other cryptocurrencies like Bitcoin, know NO borders, is a characteristic that makes it highly valuable for today's modern economy! Bitcoin and blockchain are the first ever system of this kind, and to say that this special characteristic is not valuable, flies in the face of reason." - Erik Voorhees, CEO Shapeshift in a debate against Peter Schiff:
So, who deems this technology to be valuable? Millions and millions of people all around the world, thousands of companies, and these numbers grow with every passing day.
Have you ever valued something that someone else didn't? Just because they didn't share in your beliefs, does this make that item less valuable to you?
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