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SuddenlyBroke

How did bitcoin originally acquire real world value?

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Posted (edited)

I have wondered on and off since joining stake.com last week, and starting to think more about bitcoins... How did bitcoin aquire any real world value? 

I mean it's just numbers on a computer with 0 uptake one minute, and the next 1 btc is worth thousands of real world dollars. 

This has also got me thinking about our economic system more broadly. When someone buys a million pound house, all they are doing is swapping numbers in their banks computer database for a massive home! This seems crazy. 

Originally money was tied to gold, something physical of real value, but those days are long gone aren't they, so now money is just numbers on a screen even in a bank? I find this crazy. 

But at least I can see how the craziness started, money was linked to gold which had real world value in the beginning. 

But how did bitcoin initially acquire its real world value? 

Edited by SuddenlyBroke

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36 minutes ago, SuddenlyBroke said:

I mean it's just numbers on a computer with 0 uptake one minute, and the next 1 btc is worth thousands of real world dollars. 

How our "usual" money start to worth something at the 1st place ? it's just simple paper even linked to gold. But when everybody start thinking it's worth something ... than it is. Same with BTC and crypto. You can buy real stuff/services with them = they have value. And when ppl start to understand that the amount of BTC available will be limited => more money.

It's why gold and precious metals have a certain price, you can't have an unlimited stock of them. Money was tied to gold until 1971, since that paper money is less and less valuable since you can print them like you want without limitation. When prices in stores go up it's not that the object is more expensive, it's your money who is less effective.

 

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Posted (edited)
1 minute ago, Kargai said:

How our "usual" money start to worth something at the 1st place ? it's just simple paper even linked to gold. But when everybody start thinking it's worth something ... than it is. Same with BTC and crypto. You can buy real stuff/services with them = they have value. And when ppl start to understand that the amount of BTC available will be limited => more money.

It's why gold and precious metals have a certain price, you can't have an unlimited stock of them. Money was tied to gold until 1971, since that paper money is less and less valuable since you can print them like you want without limitation. When prices in stores go up it's not that the object is more expensive, it's your money who is less effective.

 

Thanks for explaining Kargai ! 

Edited by rack001

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Posted (edited)

The practical value of currency is in it being a trade vehicle. It facilitates commerce. Currency determines the allotment of products and services available in the market.      

The cost of products and services is relative to what the sellers seek for them; which is modified by demand, or money coming after it. Currency in flow, altogether, can only trade for as much as products are offered. A coin gaining ground should mean other coin losing it, or, rather, their holders.

For coin not inherently valuable, it is just faith that gives them value. Really. In the case of fiat there's also taxation, and possibly natural resources traded exclusively through it, etc.

More to the point, for what concerns the OP's topic: 

The black market adopted it back in its early days and that gave it trade value. Later on it was the very wealthy individuals from certain Asian nation who looked to hide their assets, or just means to shift them abroad, that really kicked things forward.

Edited by testB
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On 8/17/2017 at 4:59 PM, testB said:

The black market adopted it back in its early days and that gave it trade value. Later on it was the very wealthy individuals from certain Asian nation who looked to hide their assets, or just means to shift them abroad, that really kicked things forward.

Ding ding ding. It was the online market places(mostly drug selling) who adopted bitcoin as their main currency to stay more hidden from governments that really started the whole bitcoin craze. Of course it's a lot more popular now with online casinos/poker rooms/sportsbooks, money making sites, file sharing sites, etc accepting bitcoin along with it become more known to the average public due to the media and word of mouth. 

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On 9/22/2017 at 11:58 AM, Mladen said:

10000 btc pizza did the job. Guy paid for someones pizza with 10000 btc that's when people saw that bitcoin can be used as a value. 

People might laugh at it now, but it's only through trade that these coins sort of validate themselves.

 

@skillex I have trouble understanding your posts.

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On 8/17/2017 at 5:59 PM, testB said:

The black market adopted it back in its early days and that gave it trade value. Later on it was the very wealthy individuals from certain Asian nation who looked to hide their assets, or just means to shift them abroad, that really kicked things forward.

This is exactly where I was going to start too!  I was just having an interesting discussion the other day with some users about which came first, Bitcoin or the dark net markets.  I'm pretty sure dark net markets came first, but I can't imagine what they used as money other than maybe cash in the mail.  Anyway, Bitcoin as a medium of exchange had to help out a lot.

Anyway, from there I agree, Bitcoin came to be seen as something that had value, e.g. no more having to pay 10,000 of them for two pizzas.  As I've said in other threads, I think there is a lot to be said for a stateless deflationary currency backed by math.  As the OP notes, most of the money that we use today is electronic, and the only real benefit of national currencies is that you can pay your taxes in them, as well as in some cases legal tender laws.

Anyway, If you are in Venezuela or Zimbabwe Bitcoin looks great compared to your state backed currency.

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