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Comment by drcross | Hacker News Reader

>On the other hand I could create 21M cryptocoins on a blockchain (calling them Bitcoin2 or even just Bitcoin if it pleases). I can make them function identically, similarly or more efficiently than Bitcoin. I can create a new blockchain (network) or put these coins on an existing blockchain (say the Ethereum blockchain). How much would you pay for all 21M Bitcoin? How much would you pay me to create you 21M Bitcoin2 and transfer 100% of them to you?

Econ 101: The price of a currency is based on people's trust in that currency.

>The real irony is cryptocoins and blockchains couldn't even exist without gold, because it is a necessary component in the machines that created bitcoin, that hosts blockchain nodes, mines, hosts wallets and facilitates transactions.

That's not irony. Thats a happy coincidence.

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"Econ 101: The price of a currency is based on people's trust in that currency."

Right, but how many people really trust Bitcoin? And by trust, I mean trust that it will retain its value for the foreseeable future.

I have trust that the Euro will retain its value, so I feel confident pricing my product and services using it. On the other hand you'd be crazy to price anything in Bitcoin.

No one has trust in Bitcoin as a currency. Some people have some degree of trust in it as an investment vehicle, which is fine. That doesn't make Bitcoin a currency any more than gold is.

> On the other hand you'd be crazy to price anything in Bitcoin.

Why? It was easy to add Cryptocurrency as a purchasing option for the online store for my shed business. My buildings are priced in dollars, but people can use crypto to pay and the crypto value is pegged at the current rate of trade on an exchange.

Bonus: I can use the crypto to go buy materials - never have to convert it to dollars.

If they're priced in dollars and converted into Market price Bitcoin at the checkout... then they're obviously not priced in Bitcoin.

For international sales we accept euro/yuan/pounds/etc but instantly convert it to dollars. I would say that we are pricing in those currencies.

But from what I understand, I still owe you $10, even if I pay you in pounds or euros.

I wouldn't say no one. There are a number of companies that trust Bitcoin enough to use it in trade for their goods and services. For example, ProtonMail (a secure private e-mail provider) trusts Bitcoin enough to accept it in trade for its services.

So, the same thing that gives the Euro and Gold value (that people will take it trade for goods and services) is one of the components accounting for Bitcoin's valuation. The majority of Bitcoin's value at this point is likely speculation. However some percentage of the value is not derived from currency arbitrage or speculation.

Even if Bitcoin trade participating merchants do not trust the market valuation of Bitcoin enough to be willing to hold Bitcoin for very long after they accept it as part of a transaction (and therefor immediately convert it to USDs) it is still valued by the participating merchant in line with the trade. The same could be said for the value of the electronic ledger recordings created by credit cards. They are generally viewed to have around equivalent value to USDs. But, they are not a currency either.

> I have trust that the Euro will retain its value

You must feel very betrayed every year when you look at the inflation rate and the price increases...

The euro zone had around 1.5% inflation this year, what are you talking about?

How is that retaining it's value? That's nearly 10% gone after 7 years.

And that's assuming 1.5%, some years are worse.

>Econ 101: The price of a currency is based on people's trust in that currency.

That is the beauty of blockchain right? Its trustless! I'll create 21M of Bitcoin2 on the Ethereum blockchain and send you the smart contract address you can verify on etherscan and boom there is no trust needed.

Edit: As to Irony, OP could have used anything to justify the value of Bitcoin, it is ironic he would select Gold and say it has no intrinsic value other than looking good as jewelry, when it is a intrinsic component to the Bitcoin ecosystem. Notwithstanding, I don't think its a coincidence OP compared Bitcoins value to gold.

The OP meant "trust that it will continue to hold value", not (merely) "trust that transactions happen as intended". The blockchain crypto-magic only ensures the latter.

Right, it's not irony. All things couldn't exist without elements, like gold. Truisms aren't ironic.

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