What Makes Bitcoin
Valuable?
People
often ask ‘What is Money backed with?’
The truth is that money is not backed with anything,
and it has never been backed with anything, the Euro is not backed with
anything in particular, and neither is any other currency in the world. And
gold, for example, is not backed with anything; some people think that, gold
has value because we use it for jewelry, but it's actually the other way
around. Gold is valuable because it is very scarce, and because it’s very scarce
it has been the best ledger we have found in five thousands of years. So, in
that respect, bitcoin exchange, buying & selling bitcoin would be no
different than doing the same with gold.
In bitcoin we have something that is as good a ledger
as gold, meaning that it’s incredibly scarce (there will never be more than 21
million bitcoin), much more scarce than gold.
A lot of people are just seeing the carts and thinking
how high it will go. But what some people are doing is counting backwards; this
is a transactional currency, and it’s a store of value, as such it’s a product
and a service competing in a very tangible market, for stores of value and for
transactional currencies. So, what is the science of that market, and, how
much, how big a market share can bitcoin realistically take within a
foreseeable timeframe, when you ask that question, then you come up with a
market cap of bitcoin total, and then you define that by the number of bitcoin
in circulation by your estimated time, and seeing how Chinese are buying
bitcoin like crazy – this number has actually had to be adjusted upwards – then
you come out with a best bitcoin rate of, about, $2/$5 million per bitcoin.
Bitcoin, or the blockchain encryption that’s behind it
has a greater ability to bring more of the world’s population out of poverty
than anything else. At first glance it’s digital money, but if you look a bit
deeper, then you see that is just one of the applications enabled by an underlying
network that allows a distributed system of computers to build a global assets
ledger.
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