When we buy Bitcoin, what we are really getting is a code. What is the utility of a code? What is the use of having it?
First of all, we must remember that a code is an abstraction. It has no intrinsic value because it lacks concrete reality. Its reality is symbolic. It is a system of rules that transmit information. At its heart, BTC is nothing more than a series of letters and numbers in a database. The important thing is not the code per se. The important thing is what the code represents. What does Bitcoin represent? Bitcoin represents monetary value.
In short, we are talking about a code created by a citizen group that functions as a social pact. People buying the code hope that other people will recognize the monetary value of that code in exchange transactions. In many ways, Bitcoin is a promise. It is the promise that someone will give you money for that code. Of course, in this case the promise has not been made by a government or by a corporation. In this case, the promise has been implicitly made by an anonymous collective. Who guarantees the price of Bitcoin? The bitcoin market.
The US dollar is also a promise in this regard. But it is a promise made by a much more tangible entity. If Bitcoin is faith in the Bitcoin market, the dollar is faith in Uncle Sam. Of course we must remember that Uncle Sam provides products and services to society. And society must pay for it, paying taxes. So, if the Government makes payments with “papers”, but, at the same time, accepts those same papers as a form of payment at the time of collecting taxes, the exchange is not entirely unfair. In fact, paper simply works as an instrument that facilitates exchange. The paper itself is not the carrier of value. Paper is an object that carries the message. The real value carrier is the state promise. State recognition. That paper has the power to settle your debts with the State. It is not a small thing.
Now, let’s talk about the Bitcoin market. What is the power of this market? Initially, the community was born from the aspirations of a group of developers, libertarians, anarcho-capitalists and conservatives to create a citizen and digital currency inspired by gold. These people were willing to give money for that code. Because? Well, we could say that it all started as a monetary insurrection against statism. The initial idea was the use of this citizen currency as an alternative means of exchange. In this way, emancipate themselves from state power. Through voluntary adaptation, this “digital gold” was presented as a substitute for fiat money. In other words, it is a technology that allows transactions to be carried out without intermediaries.
What is the problem with intermediaries? In the case of Bitcoin, the intermediary is the protocol running on the decentralized network of computers. Of course, in this context “intermediary” really means the alliance that exists between the Government and the banks. It trusts a protocol. In the technology. But human institutions are not trusted. It is individualism versus collectivism. The freedom of the individual against the impositions of the collective.
Now what the militant bitcoiner gets when buying BTC is a sense of identity. A belonging. It is part of a group. It has a cause. Win friends. And win enemies. He becomes a hero of a libertarian and emancipatory movement. Here we are talking about an essentially idiosyncratic buyer.
Of course, Bitcoin is also convenient in other ways. Thus, there are many convenience buyers. Bitcoin is used by many to eliminate friction. For example, there are many people who use BTC to evade restrictions in the currency market, to send remittances, to pay fees in the gig economy, etc. In other words, Bitcoin has many practical uses. It is used to do what in some cases is difficult to do by other means.
The vast majority, however, buy BTC for speculation. In other words, to take advantage of its fluctuating price. Many buy for its financial opportunities. It is bought today at one price to sell tomorrow at a better one. For many, Bitcoin is simply a speculative asset. Let’s say it’s some kind of collectible that is used as a piggy bank.
On Twitter, the militant bitcoiner is king. His narrative dominates. And there he deprives a lot of ideological passion. When it comes to price action though, the domain belongs to a much more pragmatic bitcoiner. In this case, what you really get when you buy Bitcoin is a digital asset with great financial potential. In other words, Bitcoin represents the promise of financial growth.
For the investor, the most important thing is his financial aspirations. What he really looks for is the growth of his portfolio and the most relevant thing is the price of Bitcoin. Bitcoin, in its most practical sense, is a fee. Money is made by buying “low” today and selling “high” tomorrow. So, the buyer always buys with an optimistic forecast. Everyone is counting on future demand being greater than today’s demand. That is, for some reason people in the future will be willing to give a lot more money for the same code. The investor buys with that expectation.
A code is only as strong as the community that uses it. Now the code represents a rate. That means that for the price of Bitcoin to rise, many people need to be willing to pay for it. Pay with what? People need fiat money to buy BTC. Which implies that the price of Bitcoin depends, to a large extent, on the purchasing power of its buyers. Due to its speculative nature, liquidity and sentiment are vital.
A company at least has assets. And it can pay dividends. The investor in this case can calculate the return on his investment by studying the fundamentals of the company. The shareholder is the owner of something tangible. And you can benefit from the production. Bitcoin, on the other hand, is a code. That code is worth what the other is willing to give for it. Bitcoin is faith in the other. Like it or not Bitcoin is the faith that the other will have faith in Bitcoin.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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