Did you know that NO fiat currency (be it the US Dollar, the Euro, the Yen, the British Pound, for the Renminbi) is backed by anything valuable?
That’s right, NONE are backed by gold, silver, or any commodity. They have NO intrinsic value. They are all backed only by the trust in the governments and their banks.
So now you can see that all these global currencies have no more intrinsic value than Bitcoin.
So why would Bitcoin have value?
Let’s address one common refrain out there – that Bitcoin has no value because it is “made out of thin air.”
From a technical standpoint, its value is created by “mining” new bitcoin (via solving a difficult mathematical puzzle) and validating the blockchain network.
This requires a significant upfront capital investment in the mining hardware (with a 12-18 month lead time) and ongoing energy costs.
In order to sustain this ecosystem, a reward system has to be in place and acceptable. It is not just a mathematical algorithm.
Now the REAL value derives from its unique combination of characteristics: decentralized, democratizing (every entity is on equal footing), censorship-resistant, deflationary, and scarce.
It is also under the complete ownership and control of the holder, so it cannot be confiscated.
Name one other asset that has all these qualities?
- Gold? No, because gold can be, and has been, confiscated and outlawed from its citizens, even in the U.S. (in 1933).
- Real estate? In many countries, land can be confiscated by the government for multiple reasons. Yes, even in the U.S.
- Cash? Every country’s government is robbing its citizens blind by devaluing its currency’s value through inflation, not to mention the occasional bank confiscation (Cyprus, 2013).
- Stocks and bonds? Do you believe the individual investor is not at a disadvantage compared to the big players, the algorithmic trading bots, and government monetary manipulation?
- Fine art, collectibles, precious gems? Besides the obvious risks with fraud, each of these assets exist in markets which are controlled by “cartels” that can control and manipulate their supply and value in many instances.
As Simon Haven reported in a Medium article, “As Jack Dorsey (Twitter/Square) recently declared, the Internet has always wanted its own native currency, a truly global currency that will exist on its own territory and will not be limited by nation-state barriers. The Internet creates its own reality, and as we inexorably move toward a more global and connected world, money is the domino waiting to fall, the last technology waiting to be disrupted and unified.”
Therefore, because Bitcoin is safe, easy, and cheap to store and use, it is the first and only truly global money.
To summarize, Bitcoin gets its value from its usefulness, its global accessibility, its scarcity, and its freedom from control or manipulation.
That, my friends, is monetary freedom!
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