#bitcoin fundamental value /thread
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#bitcoin is not a ponzi scheme. It does not "waste electricity". It is not "fake internet money".
12/02/17
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#bitcoin is REAL internet money: decentralized digital money.
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Money measures the subjective value of our economic activity. Money is a tool we use to signal what we value so we can conduct economic transactions across space and time rather than always having to barter goods in the present moment.
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if I am a bread maker, I make bread and trade it for the market price denominated in rare seashells. The amount of seashells signals how much my trading partner and I value my bread and broadcasts this information to the market.
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Only the agreement of the economic participants is required to use some particular token, eg. seashells, metal coins, or printed paper. Each token acts as a measuring device denominating some amount of value being exchanged.
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It is important that these tokens be scarce enough so that it is difficult for someone to acquire them.
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If anyone could easilty produce a gold coin without performing some economically useful activity it would dilute the value of the other coins actually exchanged for something of value thus undermining the value of the coin as a measuring tool.
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Today we use government-certified paper to denominate value. In the digital economy, we use dollar-denominated account balances stored in bank databases. Numbers. Information.
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The tool, physical or digital, is not the point. The point is the value-measuring information the tool conveys.
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The bank is responsible for securing the digitally stored balances. Without this security anyone could just change the balances to give themselves free money violating the money’s scarcity.
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This would undermine the digital dollars’ ability to act as a value-measuring tool. Maintaining the scarcity of digital dollars requires a central authority. Keeping a useful record of value transfers digitally used to require trusting a bank.
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Digital money’s usefulness combines the utility of physical money, the ability to track value, with the ability to propagate that information across the world instantly.
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I hope we can all agree that having a way to measure the value of online economic activity, aka. digital money is useful.
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That’s what Bitcoin is. Like the digital dollar Bitcoin is a value-measuring tool.
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It is a database of account balances tracking the assignment of value as we conduct economic activity.
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Like the digital dollar it is capable of being sent instantly over the internet, and UNLIKE the digital dollar bitcoin requires no central authority to function.
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This is a civilization-altering innovation...
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No bank, government, or any other central authority, is required to secure the scarcity of the information in the bitcoin database. Until Bitcoin this was thought to be an impossible task.
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On its face, it sounds kind of ridiculous... how can you ensure the scarcity of digital data, of numbers, of information without a warden? It is a little like saying that we have figured out how to stop people from spreading fake news.
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Yet economic participants can run the Bitcoin software to create a mathematically unchangeable, uncensorable record of value-measuring transactions denominated in bitcoin whose scarcity is capped at 21 million bitcoin.
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They gain the power to conduct commerce in the digital world without having to rely on their trading partner, their bank, or their government to make sure they were not cheated.
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All that is required is the agreement of their peers to use bitcoin as the value-measuring tool of choice.The same agreement they made when they decided to use seashells, and metal coins. But digital seashells. Digital coins. Digital Gold.
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That is the value proposition of bitcoin. The ability to signal value in the digital realm without having to ask anyone’s permission to do so.
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As more and more people make the choice to use this tool the world will be forced to adapt to the idea that state and money do not have to be inextricably linked.
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common anti bitcoin arguments
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#bitcoin is not a ponzi scheme. It does not "waste electricity". It is not "fake internet money".
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bitcoin has no fundamental value
12/02/17