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Yeah, you're probably right, all that software stuff can't possibly have any value at all... 🙄

a source familiar with the matter 2y ago

Software, books, musical scores, etc may indeed have tremendous value

But Bitcoin is a digital collectible, not a set of useful instructions. The ledger technology is a set of useful instructions, but owning Bitcoin is not necessary to execute the (open source) code to run a distributed ledger.

Let me put it this way: how much would you pay to be the only person on Earth who was entitled to receive Bitcoins? You get Warren Buffets' hypothetical offer to buy all the Bitcoins in the world but you also can't sell or trade them. Zero, yes? All they're good for is trading

In contrast I'd pay at least slightly above zero for a lifetime supply of beef, seed oils (which make good machine lubricant even if not food) fiat paper which I can take notes on or burn for warmth

So why should the recipients of your bitcoins be willing to give you a service or some useful commodity in exchange for them? Only because they can trade them to still further recipients

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Discussion

a source familiar with the matter 2y ago

The Bitcoin code is useful but not scarce

The bit coins are scarce but not useful

Jeff Swann 2y ago

Congratulations you have identified the fact that a "monetary premium" is just a measure of the network effect of that particular form of money. Now, what makes something a good money?

DefiantDandelion 2y ago

I will keep your analogy of a battery. For me A criteria of good money is predictable expectations of what I can do with the stored energy in the future. What can I get in exchange a year from now for the energy I have stored.

Jeff Swann 2y ago

That's a big part of the network effect too though, right?

What are the underlying characteristics of a thing that drive the growth of its network effect?

What did Bitcoin have that has monetized it from zero to $29k in 14 years? What did gold have that made it the domant money for thousands of years? What did wapum have, or african glass beads, or yap stones?

DefiantDandelion 2y ago

For BTC I think it’s been speculation about future value combined with its particular utility in being resistant to state censorship in illicit goods/services driving demand for the coins as a payment transaction system and if you want possession of a bitcoin you will either mine it or buy it. ASIC computing / energy costs / difficulty level drive the fundamental cost of what it takes to mine a btc and the market for buying BTC has to follow the mining in cost per BTC or else it drives arbitrage behavior which either drives up Bitcoin mining difficulty or the price until equilibrium is reached.

DefiantDandelion 2y ago

But I don’t think many people are actually using Bitcoin itself as a tradable thing everyone is doing dollar conversion in their head and then using BTC as an intermediary. Then getting back out of BTC. In that case the price volatility is a risk. Or they are holding on speculation of future price increases and not using BTC as a medium of exchange. I think once price stabilizes (eventually) then people will have a price expectation and it can function like money pending appropriate tax treatment, Then a network effect will take place directly with the currency.

Mark Sea 2y ago

He’s either a troll or ignorant or both!

Jeff Swann 2y ago

Nah, IIRC he said he wasn't into bitcoin when he followed me

Mark Sea 2y ago

Ah fair. Ironically, some of his arguments explain bitcoin decently.

“Bitcoin code isn’t scare” pretty much sums up why bitcoin only vs crypto matters.

Network adoption is a bitch to get over in understanding bitcoin if you live in a western (banked) country.

Mark Sea 2y ago

He’ll catch on when it starts to cost $100 for a pound of beef

a source familiar with the matter 2y ago

A good money should be a commodity which is fungible & divisible (hence a basic material) and durable (hence gold rather than another material)

Bit coins aren't a commodity though, they're just a ledger entry like fiat "dollars"

I prefer something real

Jeff Swann 2y ago

What does being physical have to do with being divisible & fungible & durable? Why not glass or sand or platinum? And why has paper money worked so well for so long?

Other important aspects are verifiability as well the cost of securing & transporting a thing. How easy is it to secure & trasport large amounts of gold?

a source familiar with the matter 2y ago

Durability is why not sand or platinum (or historical items like copper, silver, salt, etc)

Why does being physical matter? Because reality matters

Why has fiat lasted "so long"? That's a good question, I think largely it's a debt bubble that creates "perpetual" demand for the debt instruments to pay the prior debts. I think it's likely to collapse before too long and we shouldn't model the next monetary system on the worst aspects of the one that's collapsing now.

Jeff Swann 2y ago

Sand & platinum are both extremely durable.

Software is part of reality too & facilitates all sorts of very real things.

Debt does play a role, but there is no debt in the creation of Bitcoin.

Why did people naturally choose to use paper notes instead of using gold coins directly?

.𝖇.𝖔.𝖓.𝖊.𝖘. 2y ago

Props where props due. Props to you for coming on to Nostr and speaking your truth

More power to you sir 🫡

a source familiar with the matter 2y ago

These are my people

I want to live a life with real food, real money, real freedom

Jeff Swann 2y ago

🤝