Hello friends, in today’s article, we see what gives bitcoin any value. If bitcoin has any value, so then what things, give the value? so let’s understand step by step.
Fiat currency and What gives Bitcoin Value?:-
In history, Food, animal, gold, and silver coins were used as currency.
Because Food is valuable, we can use it for eating purposes. animal-like cow, goat gives the milk for drinking.
and gold and silver are valuable because they increase the beauty of a person that wearing. not just because they are limited sources.
So nowadays, we use the currency called Fiat Currency as money
Fiat money means, someone, who has the power, to take a paper and write down 100, then that paper increases a value equal to a hundred. (What gives Bitcoin Value)
by taking other colored paper, and writing on that 2000, then that paper value is about 2000.
Fiat money doesn’t have, its own value like food (used for eating), Animals (which gives milk), and not like gold and silver to increase beauty.
Fiat money has value because the government tells us. and they only have two uses
- Legal Tender:- That means, in India, everyone accepts the money, and no one rejects it. If they do, they go to prison.
- Tax Payment:- so staying in India, everyone has to pay taxes to the government to run the country. and they accept tax in Fiat money.
fiat money backed by trust in the government, means you believe that with much fiat money you have,
you can buy things, so no one rejects that money in your transaction. and you have a big belief in this. (What gives Bitcoin Value)
On the other side says, ” Fiat money is backed by Fear of government.
if you do not accept this fiat currency, then you go to prison.
The above discussion is about fiat currency, let’s come to the main points of what makes bitcoin valuable.
to understand better Money system, I highly recommend reading Robert Kiyosaki’s book,
What makes Bitcoin Valuable:-
- Is Bitcoin valuable, because, its supply is limited, As we know only 21 million bitcoin is the only exit on the planet.
Only giving a limited supply, does not mean they have value.
suppose, for me, that things don’t have any value, so for me they are worthless, whatever, their number is
2. Is Bitcoin Valuable because creating them is costly? ( high cost of creating bitcoin)
Bitcoin costs, like one-year electricity of two countries like Singapore and Switzerland, required electricity for one year, more electricity is required to create a bitcoin, than this country’s electricity. (What gives Bitcoin Value)
So bitcoin, the value must be that much, that much cost require to create them.
Suppose, creating any product, we required 1 lakh rupees, but people don’t require that product, which means that product value is zero.
So any product or things don’t have value because they have limited supply or require more money to create.
Because they have value, it means that the product is desirable and people want those things.
What makes Bitcoin Desirable:-
Because of bitcoin, you can pay direct online payments from one person to another without any intermediary/ censorship.
Payment happens in a cash by seating in the home. Are things possible because of math (cryptography) and technology
Are things possible because of math ( cryptography)
fiat money is backed by the government, just like Bitcoin is backed by math ( cryptography)
which transaction is valid, how much Bitcoin is created, how speedily it is created, all things happen by using math( cryptography)
Because, Bitcoin payments happen, without the interaction of the Government and banks. (What gives Bitcoin Value)
so for criminals, Bitcoin is a valuable and useful currency. e.g. Buying drugs, selling drugs, murdering someone, and giving rewards in bitcoin.
so like this, works Bitcoin, in the initial time, and have the most useful value for criminal.
But nowadays, the common man needs Bitcoin and bitcoin has value for common people also.
let’s why this,
Any paper is valuable because everyone thinks it is valuable this is called Intersubjective reality.
means, that if everyone accepts things, and has value, then they become valuable.
Suppose, someone, writes on paper, and 10,20,50,200,500,2000, and everyone accepts that this paper has value, whatever the number is written on it. and everyone accepts and they decide to exchange this paper, in our society, we accept this paper in our transactions and use it as money.
If our acceptance is self-sufficient then everyone uses this paper as currency. and everyone pays their bills, tax, and other traction in these papers.
when people make noise on bitcoin and say, Bitcoin is valuable, then it gets valuable.
When in the initial time, Bitcoin is not famous, in that time everyone thinks bitcoin mining is a game and bitcoin is a toy. (What gives Bitcoin Value)
When one person orders two pizzas with 10,000 bitcoin. then this positive feedback started and first-time people think bitcoin is valuable and people buy pizza.
If someone accepts bitcoin on selling pizza, that direct means, that person thinks bitcoin is valuable. and another person also takes bitcoins from that pizza owner means other things can buy with bitcoin.
With intersubjective reality, bitcoin is valuable. because, for a common person, this technology is useful, nowadays.
but there is one problem with Intersubjective reality. when this currency comes to end, they are destroyed in a few minutes.
or says they end very easily.
Let’s understand Intersubjective reality as one problem with the story.
In America. Those people living from start in America, those people called Native Americans.
and they have different, different tribes, and in that time
Wampum was used as a currency to exchange things.
Wampum is like the type of necklace,
Wampum they use because one tribe knows, that other tribes also take this for the transaction., and the second tribe knows the third one also takes this. so this thinking goes on and on
when Europian comes in 1700 in America, they bring their own europian currency, with them.
so they exchange their currency with big tribes and do transactions only in European currency.
so big tribes, stop accepting the Wampum currency, and that an effect, spread whole over America, and tribes stop accepting WAmpum as the currency of exchange. (What gives Bitcoin Value)
and they only use European currency so with small change, the whole Wampum currency is destroyed, this problem has in the intersubjective reality.
so this is all about bitcoin value.