As a phenomenon bitcoin has all the attributes of a pyramid scheme, requiring a constant influx of converts to push up the price, based on the promise of its use by future converts. So the ultimate value for bitcoin will be the same as all pyramid schemes: zero.
“Bitcoin passes $1,000 but only number that matters is zero” – Financial Times | $1034.34
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This same analysis applies to a lot of stocks on the stock market, and also applies to global currencies.
The US Dollar is also worth zero. But bitcoin as a “fiat” currency has more intrinsic value than a US dollar. The backing of the US dollar is the paper which it is printed on. That paper can be used to write notes, roll cigarettes, burn, or as a very bad toilet paper. It is worth paper intrinsically because when you go to the bank and redeem your digital money called dollars, they give you a piece of paper called a dollar. It is worth the paper it was printed on.
Bitcoin has more value than that because it allows you to transact on a digital immutable ledger, with X amount of nodes globally backing it. Transacting on that ledger is worth value. Factum demonstrates a use-case for this, which adds an intrinsic value to bitcoin. But then there is the case of what currency people choose to use vs. another. A currency that allows you to send transactions globally outside of state-operated systems is highly valuable to many people worldwide, more valuable than dollars to those people.
So it is true that the “ultimate value” of bitcoin is zero… just like the ultimate value of the US dollar is zero. But it can take a few hundred years for that to play out. Yes, one day something better than bitcoin will exist, and then people will not need bitcoin. Maybe soon if another currency competes it out of the market. Maybe not soon if this doesn’t happen.
The point the author of that comment was trying to make is silly. It is like saying, “One day, Microsoft corporation will be worthless.” It’s true material things don’t last forever. They come and go. But that’s an insufficient justification to think something is a bad investment, because owning Microsoft Corp. would have done well for a person in the 90’s.
Hey Ted, thank you for your feedback. This is also a way to see things on the market.
> As a phenomenon bitcoin has all the attributes of a pyramid scheme, requiring a constant influx of converts to push up the price, based on the promise of its use by future converts.
Pyramid Scheme? That’s too funny.
I think fractional reserve banking of fiat money is the pyramid scheme.
Bitcoin’s ledger is open and makes no promises about convertability to any other asset.
Looks like it has angered many believers http://coinjournal.net/financial-times-piece-inadvertently-makes-case-buying-bitcoin/