Bitcoin is a social phenomena - no government or company backs it. The only reason it has value is if people value it. Bitcoin promoters have convinced people it's a store of value, like gold except digital. As the Cult of Bitcoin spreads, it doesn't take that many new enthusiasts to push the price up, as unlike literally all other commodities on earth, the supply of bitcoin is truly constrained and there cannot be anymore made in response to demand above the normal rate of inflation.
This time, big money, institutions, and the very rich are coming in addition to the widespread purchase by retail. The price is going to rise a lot.
His conclusion is that Bitcoin is a disruptive currency. It is equivalent to how Facebook disrupted and captured social, Amazon disrupted retail, Google disrupted info. Bitcoin is disrupting centralized controlled currency. It is replacing central control with something democratized and decentralized.
That's not totally true, certain things have a more fundamental value in that if you don't get them you die, such as food and shelter. If we were ethereal economic agents living on a free and infinite compute substrate you could say that, in the meantime the Maslow hierarchy makes certains things have intrasical value that other things don't have.
On commodities, if there is strong demand for gold, uranium, corn, etc. the market can respond and invest more capital into creating them. Bitcoin - not so. No matter how much more capital is invested in mining, the rate of inflation is fixed, and the pie is just split differently. But there cannot be an influx of new Bitcoin above what is specified in the protocol.
The only reason anything has value is if people value it.
Think about it: the way BTC is created is basically by expending energy to solve some contrived math problem. So what? Who should ever care at all that someone, at sometime in the past, happened to be running a computer that hit on the solution of a silly math problem? It gets even more absurd when you consider that mining pools became a thing, so that even if your particular computer hits on the solution, you didn't actually do all the work that goes into the so-called "proof of work." (Yes, I know, in this scenario, the new BTC is split among the pool members, but, that doesn't really matter very much.)
So, basically, BTC is the recording of the fact that someone, somewhere contributed to the solution of a math problem. Why should that have value at all, over and above the inherent value in solving said problem, which is essentially nil in this case? Well, it shouldn't. And, yet, it does, for the reason you've noted.
Although I hesitate to call BTC "money," there is an actual form of money that also has value for the same reason, is a true digital currency, which has a durable and distributed transaction record, and is much easier to manipulate for the purpose of managing an economy based on it. That would be the USD, and other such fiat currencies. And, the USD fundamentally is just the recording of the fact that a bank somewhere has managed to create $9 by turning $1 in reserve into $10 in loans out into the economy at large (or, whatever the ratio exactly is -- I forget.)
In other words, if you accept that BTC is a currency at all, it's little more than a worse version of the world's de facto reserve fiat currency, with the added bonus of generally not being able to transact using it, along with extreme volatility relative to the USD, which one actually can transact with.
That's not to say I don't wish I had bought some BTC back when I first heard of it and it was trading at under $1. Had I gambled even $500 on it back then, I would have somewhere in the neighborhood of $9M now, and, essentially be set for life. But, I was a poor graduate student who already realized most of what I previously mentioned and decided that I'd rather pay rent for a couple of months in the dorms than buy an expensive lottery ticket.
>unlike literally all other commodities on earth, the supply of bitcoin is truly constrained
BTC is not a commodity, so there's no point comparing it to "other" commodities, of which in fact there are true constraints.
> cannot be anymore made in response to demand above the normal rate of inflation.
above? BTC does not track "normal" rate of inflation.
the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing".
> Bitcoin is a social phenomena - no government or company backs it.
This is almost correct. China controls >50% of mining resources, much more in fact. 65%. If and when it suits them, they can ruin it.
the only reason BTC has value is because it can be swapped for fiat currency. it will never be its own "thing".
Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally.
This makes bitcoin it's own thing. It's early days, but satoshi's (1/100,000,000 of a bitcoin) are already the standard for a variety of transactions.
Bitcoin is already a store of value and we can transact in it; it's just a matter of time before it becomes a unit of account.
I don’t trust Bitcoin either, of course. If something were to happen to Coinbase or some attack on the network itself it could tank awfully quickly.
Gold isn't easily transportable. If you had $100,000 in gold and wanted to leave the country with it, that would be quite a hassle.
A bitcoin wallet can live on your smartphone or a USB stick. Or you can memorize 12 words and gain access to your wallet anywhere there's an internet connection.
If you wanted to send $1000 of your gold somewhere, that's another hassle.
A bitcoin transaction can be sent in minutes anywhere in the world.
The supply of gold grows each year; the higher the price goes, the more gold is produced, therefore decreasing gold's buying power.
Bitcoin is on a fixed schedule that can't be changed. There will only ever be 21 million bitcoin, making each one that much more valuable.
From back in June, a prediction that Bitcoin would catch up with the S&P 500 based on the historical correlation:
https://cointelegraph.com/news/bitcoin-sp-500-correlation-me...
Bitcoin will switch to a quantum resistant encryption algorithm long before that becomes a threat.
[1]: "Using DLCs, Bitcoiners can make bets based on events to which the oracle is attesting. Last week, we saw one of the first of these done by Suredbits Founder Chris Stewart and creator of BTCPay Server Nicolas Dorier, betting on the result of the U.S. election."—https://bitcoinmagazine.com/articles/dlcs-are-on-bitcoin-bri...
"#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy."
Certainly it's that, and not rampant Tether printing / fraud / lack of exit off-ramps / institutionaland retail investor ignorance
If you want Tether explained, this is the best article I've seen (I wish I'd written it).
https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
This is a year old; it's only gotten more blatant since then.
The NYAG's inquiry has been slowed by COVID, but is grinding on.
