I still hear people say that ā#Bitcoin is backed by energy,ā but it isnāt.
#Bitcoin is proof backed money, with energy backed settlement.
Discussion
Apparently people say whatever Michael is saying.
WE ARE SUCKLING THE TEAT OF THE GODDESS OF ETERNAL WISDOMMMMM
Well there is a reason itās intuitive to think of that way, and in one sense it KIND of is. But itās *function* is defended by energy, itās *monetary unit* isnāt.
So the ledger is *protected* by energy. But the monetary security is backed by the network of full nodes and the bitcoin software.
agreed
Well, I can read that multiple times and still not get what you mean by it. š Thatās a bummer, if you want people to catch on.
Haha, ok the long version:
it means bitcoin the money is backed by the fact that you can 100% verify everything about it, so you donāt need to have it ābackedā by anything, you already have proof. The whole point of ābackingā is proving that it canāt be arbitrarily created, that it has a meaningful and incorruptible monetary policy behind it. And of course you have that on your full node, better than any other monetary good in human history.
While bitcoin *transaction settlement* is backed by energy. Because when you do a transaction, the number of confirmations are undeniable proof as to how much energy is needed to reverse it.
So the bitcoin itself has nothing to do with the energy, the bitcoin is defined by the monetary rules, which are software. But the finality of your transactions *is* backed by energy, and has an open and measurable amount of assurance that it has been completed and will not be undone.
In other words: the money is secured by verification, and the payments are secured with energy.
I think people should first agree on what it means to be "backed by" something.
My take is that it usually refers to the promise to exchange paper IOUs for gold which gives the paper some desired scarcity.
Since bitcoin by its very nature is scarce, it doesn't need to be backed by anything, all it need to do is continue to be limited to 21 million coins. And this property of bitcoin is ingrained in its code. Proof of work and energy being required to guarantee that scarcity but by no means acting as the promise to exchange bitcoin for