What is bitcoins value based off of

In the case of Bitcoin, this can be measured by its growing base of users, merchants, and startups. Price continued to fall due to a false report regarding bitcoin ban in China and uncertainty over whether the Chinese government would seek to prohibit banks from working with digital currency exchanges. Archived from the original on 13 March

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By using our site, you acknowledge that you have read and understand our Cookie PolicyPrivacy Policyand our Terms of Service. From what I understood, the economic intrinsic value of Bitcoin as a currency is based on the «CPU-work» required to produce. That is what makes Bitcoin rare enough to qualify as a currency. Is that it? Now the thing is CPU-work doesn’t come free of social costs. Doesn’t it have some incidence on things like: — market prices of fuels we all end up paying our electricity higher as a consequence of bitcoin, i. Yes, since power is used in bitcoin mining there are some additional distribution costs certainly.

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And speculative bubble it certainly is, as a non-negotiable, software-constrained supply runs headlong into greater-fool demand. As even greater fools displace the ones before, all participants, foolish or not, increase their focus on the central question of Bitcoin:. Strip away the drivers of extrinsic value, namely its greater-fool demand and its constrained supply, however, and what remains? Just as gold would retain its luster, malleability, and resistance to tarnishing, thus making it useful for numerous manufacturing and jewelry purposes regardless of its scarcity, one wonders what intrinsic value Bitcoin holds. You would think the answer would be obvious, but instead it is remarkably elusive. Never before in the history of commerce has a speculative bubble developed around an asset that had no clear intrinsic value.

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Can bitcoins become worthless? Gox suspends deposits». Retrieved 5 January Mining creates the equivalent of a competitive lottery that makes it very difficult for anyone to consecutively add new blocks of transactions into the block chain. Archived from the original on 26 March Investing involves risk including the possible loss of principal. The answer to this question is rather simple and it lies in basic economics: scarcity, utility, supply, and demand. Where can I get help? Bitcoin Cash Bitcoin Gold. Bitcoin and cryptocurrencies more broadly are still viewed as more of a «Wild West» setting when it comes to regulation. The market price of anything is determined by supply and demand, in the market. What exactly will happen at that time is difficult to say; an analogy would be to imagine the U. Archived from the original on 9 January Retrieved 24 June