r/cryptocurrencyApr 27, 06:24 PM
The Absurdity of the Bitcoin Market: Trading Future Benefits for Past Phantoms
People who have spent enormous amounts of money and electricity to obtain records on the Bitcoin blockchain often deflect criticism by appealing to fiat money. “Fiat is just numbers in an account, ink on paper, or record in a bank’s database,” they say, “yet people trade vast amounts of real goods and services for it every day.”
What they conveniently omit is that records are everywhere. Scientific data, sports results, meteorological measurements, and stock ownership, all are records stored in some system.
The mere fact that something is a record is irrelevant; what matters is what that record represents and why anyone would pay for it.
Take, for example, the record of wind speed. It describes a physical reality used in practice, for instance, in aviation. People in that industry are willing to pay for access to such data, but it would be insane to pay tens of thousands of dollars for a single measurement.
If it is a record of stock ownership, it represents a right to future cash flows. If those flows are estimated at 100 dollars per share, no one in their right mind will pay 30,000 dollars for that record.
When it comes to fiat money, it represents a debt in the banking system that a debtor must return under the threat of losing collateral. No one would give a house in exchange for the record “10,000” if the only collateral the bank could seize in case of default were a motorcycle.
In short, we pay for records that create concrete future benefits. The greater the expected benefit, the higher the price of the record.
However, when we look at Bitcoin, its record documents only the fact that computers solved hash puzzles and found a solution. It is not a record of future benefits, but a record of past activity. It is like doing 10 push-ups and creating the record "10" or driving 250 kilometers by car and recording the figure "250." Why would anyone pay even a dime for that?
Imagine three people: one holding stocks, one holding fiat money, and one holding Bitcoin. Ask each the same question: "Why should I give you something valuable in exchange for that record? How does it benefit me?"
The stock owner answers: "Because this record gives you rights to future cash flows."
The fiat money holder answers: "Because this record gives you leverage over debtors who must work for you or give you assets to settle their obligations toward banks."
The Bitcoin holder’s response is strikingly different: "Because it is the future of finance, a monetary revolution, decentralized, supply-capped, secure, and because my neighbor got rich from it."
The Bitcoin owner is forced to rely on impressive-sounding phrases, technical features, and stories about other people’s profits. They cannot state the plain truth: "Pay me tens of thousands of dollars for a limited, well-maintained record proving that computers in the past expended electricity solving puzzles.”
No rational person would accept that deal. That is precisely why the Bitcoin community must construc