Bitcoin price - Is that air you are breathing?

I stumbled on a short but intriging post of a fellow Steemer: https://steemit.com/photography/@danielownsall/a-piece-of-gold-is-nothing-without-a-weapon

The post made me think about how humans see Bitcoin and, more specifically, how people 'value' Bitcoin. It has turned a lot of writers to posting articles, mostly about how Bitcoin is a fad, a bubble and will go away soon (it is being recorded nicely over here).

A very lengthy but stimulating read up on how humans may see Bitcoin, can be found in this article and this article.

Recently, Hugo Salinas Price posted an article which can be regarded as semi-negative about Bitcoin. Hugo is a 'sound money' advocate who as a long history of writing articles about the perks of the current financial system.

Hugo Salinas Price

The main proposition of his article is that the value of Bitcoin is nothing more than a commonly shared belief among men. He is kind enough to point out that the same goes for fiat currencies, but thinks that the belief in cryptocurrencies will fade sooner than the belief in fiat currencies. His main argument is that cryptocurrencies do not have Central Banks acting as shepherds. Therefore, in his reasoning, belief in cryptocurrency (that has no shepherds or, at least, central shepherds) will vanish sooner than fiat currency.

My counter thought is: why does he think the lack of a (central) shepherd is a problem? I think the absence of a central shepherd is quite the opposite: it is a feature of cryptocurrency, and the lack of a Central Bank for cryptocurrency will only do it good instead of bad.

This concept of 'belief' resonates very much with the articles that I linked above (here and here). A good analogy is the value of pieces of art. We know the value of a Stradivarius violin does not represent the material value of the asset. There are equally good (or even better) violins available at a fraction of the price. All that does not matter. It is the belief that the Stradivarius is valuable that counts. The belief of men that other men will also think that (again) other men consider the Stradivarius to have a high value is enough .... for the Stradivarius to have that value. But once someone knows it is a forgery, suddenly the rational mechanism works again and the violin may still be quite valuable (as a good copy) but way less. So belief is very common among men and a core aspect of valuing things.

So Hugo is right in the idea that value is just a belief, but I think he is wrong in thinking that value needs a central shepherd. Value does not need a shepherd, but belief. Given the fact that Stradivarius, paintings and historical cars retain their value (with ups and downs) for lengths of time already (and when looking at history, other examples can be found), belief of the crowd could be enough to retain the belief for a long time.

But perhaps Hugo expects the crowd to suddenly switch from belief thinking to rational thinking in respect of the Mona Lisa soon. Who knows (Hugo does not explain).

Anyway, I thank Hugo for bringing up this concept of value again in the field of Bitcoin. I am fascinated by the proof that humans can start to value anything, literally anything, very quickly even if rational thinking would have one dismiss it right out of hand. The 700+ altcoins still trading with enthusiastic communities prove this. For me this is an example that we, humans, are able to cooperate very easily and with a very low barrier for entry. This is proof that we do not need a central shepherd (Central Banks, but also government) as much as we perhaps think we do.

And that gives positive energy for the future.