Tech Pizza special guest edition: What's the value of Bitcoin?

Hi there!

Let's get to this week's special guest edition. First of all: why am I making this? You guys know I'm a crypto skeptic, so I wanted to balance my views with the ones of someone who's more optimistic (and waaaay more expert) than me.

Who's the guest? It's Marco Crotta, a Blockchain expert who runs the Blockchain cafè, a great Youtube channel in Italian with ~20k subscribers.

So Tech Pizza 🍕 - Blockchain café ☕️. A match made in heaven.

I'll shut up now and let you read his thoughts.

Exploring "value": gold and Bitcoin

Recently we heard a lot about Bitcoin, DeFi, Bored Apes, Tokens... and many other odd terms. It might make it difficult to have a clear view in mind and form an opinion if we don't know exactly what each of those is and how they relate to each other.

In fact, most of those terms are in the so-called "crypto space", but they are very different things with different aims, approaches, opportunities, and risks. Some might be dangerous investments or even scams, others are rock solid technologies that might lead to a whole new way we intend and use money, assets, property, and investments.

Let's put things in order starting from the basics: what is value? Why does bitcoin have value? Is this the same type of value we recognize to, let's say, gold?

Why does gold have value? two reasons:

1) because it's fairly practical

2) because we think so

Gold is fairly hard to find, easy to distinguish, easy to work, forge, does not age, and has a beautiful shiny yellow color like the sun. If gold was common as sand, stink, rot, corroded, or was a meaningless brown it probably had no value. And no, there are better and cheaper electronic conductors, and until only 150 years ago it did not matter anyway.

So "value" is a derived property that turns the gold metal into an asset or a good. The property is not "in" or "of" gold, but is given by people. In other words nothing "has" value, people give value: if people think something has value, then (in that context) it has value, otherwise, it has not.

It might sound upsetting and shake some assumptions, but if you think about it, it's really as simple as that.

Gold is scarce enough that some don't have any and might want some, so they might try to trade something else for it, hence creating a market. The market makes demand and offer meet at an exchange price. Price is the value of what you give in exchange for what you want.

So why does Bitcoin have value? Exactly for the same reasons of gold.

Because an ever-growing group of people in the world says so and because it is very simple to use. Simpler than gold. Like gold, Bitcoin has a finite supply, can't have more than that. But unlike gold, bitcoin is digital, weighs zero, and can be sent via the internet, and there is no such thing as "fake" bitcoin while there is a lot of fake gold around. Well, you can't make Bitcoin jewelry but we can live with that.

Bitcoin users create a market, they make exchanges. Some buy bitcoin with fiat currency (what we call "paper money backed by faith"), others with time (work). The market sets a price that reflects the market sentiment. About that: we must admit this market is still crazy, but it's likely to calm down in the future.

Will Bitcoin have value forever? It's very likely, but we can't tell for sure. Actually, we can't tell for gold either, especially now that Uganda might have found a 31 million tons gold deposit worth 12trilion USD...

If you want to hear more from Marco, follow him on LinkedIn and on his youtube channel .

Talk to you again soon!

G

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