In one sense, but scarcity does not equate value. Many things can be currency, but those with no inherent value, regardless of scarcity, when used as currency are fiat currency, literally valued only because we say so. Paper is a commodity, paper money is not. Oranges are a commodity, but are not a currency or particularly scarce. Computer bits are not scarce at all, and literally billions of copies of any bitcoin could be made, but it has no value that way, only if we all agree that the only person who owns a bitcoin is Jim over there. What's the difference between a bitcoin and a dogecoin? Virtually none, except people say bitcoin has a value.
Go ahead and copy bitcoin and see if it gets you anywhere (thousands have already tried).
What makes bitcoin valuable, other than having by far the best fundamental monetary qualities mankind has ever seen (and almost certainly will ever see), is its network effect. In order compete with bitcoin, an alternative would need to be significantly better.
> Go ahead and copy bitcoin and see if it gets you anywhere (thousands have already tried).
You seem to have missed the point of that paragraph. The second half of the statement was "but it has no value that way, only if we all agree that the only person who owns a bitcoin is Jim over there." The bitcoin itself is just a pointer to an entry in a ledger, and we all agree the abide by the ledger. Literally nothing is stopping anyone from forking BTC, copying the ledger, and assigning all the coins to themselves. I'm only prevented from SPENDING those BTC now because no one is going to just take my word for it, because no one has agreed to use my new ledger instead of the shared one. There's nothing that stops North Korea from printing lots of USD $100 bills, and they do it too. When we determine that a certain bill isn't printed by the US Gov't, we call it "counterfeit" and assign no value to it. My private ledger also is counterfeit and is deemed to have no value. Fake bills are harder to make, fake bits are trivial, it's the provenance of the blockchain that says they're real or fake, and human faith in the blockchain that allows us to assign value to BTC.
> What makes bitcoin valuable, other than having by far the best fundamental monetary qualities mankind has ever seen
Could you list what these are for me? I don't see cryptotokens have ANY value as actual money. I can't deny people feel they have thousands of dollars of value, but so do shares of Berkshire Hathaway, and that's not money, so I see them as more of a security crossed with a casino chip. As long as the casino is around I can cash it in, but I'm depending on that small group of people to make it have value. I can't take it to Walmart and spend it. How is a cryptotoken better than, for example, the US dollar?
> (and almost certainly will ever see),
I think claiming anything invented today will never be surpassed is unlikely to be true.
> is its network effect. In order compete with bitcoin, an alternative would need to be significantly better.
I would argue cash and gold are far better, and have effectively universal acceptance, far beyond the reach of cryptotokens. BTW has mindshare/name recognition among casino currencies, and is the easiest to convert between real currencies and back, but I can spend dollars and euros and gold at far more places than I can spend all the cryptotokens combined.
But the whole point of bitcoin is that it solves the digital double spend problem you mention.
Let's zoom out and talk about the basics of money (some of which you maybe already know). Okay, so in theory we could use anything as money. In some ways, everything is money, but in a range from terrible money (e.g. air, TVs, food) to excellent money (TBC). The laws of nature ensure that we end up using the things that work best at money as money.
Money needs to perform the following three functions:
- medium of exchange
- unit of account
- store of value
and in order to perform those functions, the thing we're using as money needs certain fundamental qualities which are:
- good divisibility
- good portability
- fungibility (equivalence/interchangeability across all units)
- robustness
- easily verified/assayed
- scarcity
These properties are well recognised, and if you take a look at gold, and compare it to predecessors such as shells, beads, Rai stones you can see why it was a stronger money, and why it became economically valuable - the world chose it as the best money and to store it's economic value in it.
But gold wasn't perfect, it still wasn't particularly portable, or divisible. As technology improved, it's not so easy to verify (e.g. tungsten wrapped gold?). It's also fairly easily stolen from us and so we naturally moved to store our gold with banks who could not only provide a secure location, but would give us paper receipts in return that evolved to become an excellent form of money whose value was bootstrapped into existence because it simply took on the value of the gold it represented.
This paper money was better at being money than gold in many ways - more portable, divisible and arguably more fungible and easily verified. However, over time it failed in one particular area: _scarcity_. The banks realised they could get away with printing more and more of it without people realising or being able to stop them. Ultimately it resulted in central banks like the Bank of England, the Fed etc who are almost freely printing infinite amounts (and charging interest on it). It continues to survive as the best money because a) most people don't realise the scarcity issue and simply see prices going up as some natural phenomenon b) even with the lack of scarcity, it still makes better money than gold especially now it's almost all digital.
The breakthrough that Bitcoin made is that it actually solved the digital double spend problem you mentioned - a previously unsolved problem in computer science. Here's an simple explanation how: https://youtu.be/CoGxakp1_3I?si=wvCxUZtUtS-jC9DX&t=694
Sure you can fork bitcoin, but no one is going to care about your new money/blockchain. If you stick a picture of a dog on it, there might be some fun/novelty value, but Bitcoin has massive network effect, and anything that wants to beat it will need to be substantially better and in a way that bitcoin won't simply adopt itself.
This means that for the first time in human history, we have a digital money that has better fundamental monetary qualities than gold and quite likely fiat too (depending on how higher-level networks such as Lightning scale). We've got perfect digital scarcity in a liquid asset and this is something that mankind has never seen before and most people aren't ready for.
> "I think claiming anything invented today will never be surpassed is unlikely to be true."
It's so good that it's very difficult to see how it will be bettered (in the physical and digital realms at least). It can of course also evolve as time goes on.
Based on its fundamental qualities compare to gold and fiat (and real estate, and bonds, and cRyPtO etc), it's very likely that it will suck in all the stored economic value in the world over the coming decades/centuries.
except for that damned ledger. cash has the advantage of being much harder to trace. (I won't go as far as to say traceless, as the bills serial numbers could be recorded at scale.) A digital record of every transaction made is the DEA and IRS' wet dream. Mixers exist but don't address the underlying issue.
The base layer of bitcoin (the bitcoin network) needs to be at least pseudo-anonymous in order to validate the supply issuance.
But there's nothing stopping higher level networks implementing privacy. Lightning does a good job already.
A network based on something like Monero could also be used, with bitcoin as the token.
I don't see this as an issue.
Bitcoin can be an anonymous as we need it to be in order to gain acceptance.
> But the whole point of bitcoin is that it solves the digital double spend problem you mention.
You're still missing the point, you're focused on the fact there's a technical measure to prevent double spending. Great. That has literally zero relevance to what I'm saying, which is that bitcoin is made of bits, and bits aren't scarce, so scarcity isn't what creates bitcoin's value. We all have agreed that a specific number of bits arranged in a specific pattern belong to Jim, and another set belong to Sally, and on and on.
> and in order to perform those functions, the thing we're using as money needs certain fundamental qualities which are:
> - good divisibility
Not even remotely, divisibility of a currency is based on math, not the currency. There was no 12.5 cent coin in the USA but for decades stock prices were priced in eighths. No one has a 9/10 cent coin, but gas in the USA always has that extra 0.9 cents on the price. Frequently money is tracking down to the fraction of a cent, but there is no official declaration from the US Gov't that sub-cents exist. In Japan the yen cannot be subdivided since 1953 with respect to minted coins.
> - robustness
This has no meaning.
> - scarcity
Not even a little. There are over 21 trillion USD in the world. Scarcity isn't part of a currency, you actually want ubiquity with a currency, not scarcity. It's CONTROLLED supply you want, not mere scarcity.
Other things that makes for good currencies are acceptability, which BTC fails in because so few people actually use it, and reliability, which BTC fails with it's extreme volatility.
BTC is a security, not a currency.
> It's so good that it's very difficult to see how it will be bettered (in the physical and digital realms at least).
Better alternatives were created VERY soon after BTC, and have much better utility as currencies than BTC, although they are also casino money, rather than actual currencies. BTC itself has been improved many times since it's launch, so it's actually really easy to see that it was not only not unsurpassable, and unavoidable that better versions would come about. Your comment is the same as saying "everything that can be invented has been invented," which as we can see, was not a true statement even when uttered in 1899.
> "what I'm saying, which is that bitcoin is made of bits, and bits aren't scarce, so scarcity isn't what creates bitcoin's value"
I've chatted about bitcoin to a lot of people and this time I've come across this argument, so kudos for not spouting the normal rubbish.
So I can agree that there's a certain pattern of bits that assign some bitcoin in the block chain to me (but only because they're associated with an address for which I have the private key).
If I try and copy that pattern of bits, the bitcoin network will reject my blockchain because I've double spent: each entry in the ledger is a transaction that moves bitcoin from one address to another. If I simply copy the transaction that says Jim gave 0.02 BTC to Sally, the network will detect it. If I try to add a new transaction that says the same thing, I'll need to sign it with Sally's private key, which is simply impossible for me to guess.
Am I getting closer to answering your point?
Regarding fundamental qualities of good money, "robustness" means how easily it can be destroyed. Gold can't be destroyed - it's a chemical element. Glass money however would be terrible. The digits in your bank account are robust, they can't be changed very easily at all without actually adding or removing money.
Scarcity does actually mean a controlled/limited supply when it comes to money. Technically it means "in short supply", which when it comes to money is the same thing - everyone would like more money. The quantity of monetary units makes no difference provided that it's divisible enough. If everyone in the world suddenly had 10x more dollars than they currently have, no one would be richer or poorer than they were before. Your wages would end up being 10x as much and everything would cost 10x as much.
Regarding acceptability, we talking about fundamental properties of the money rather than how people see it right now. For example, the first person to dig up gold would have found no one would accept it as payment because they didn't recognise it as having any value. It's value arose from the fundamental qualities I mentioned, the closest to acceptability being that it's fungible and relatively easy to recognise as gold. Its combination of colour, shininess softness and weight are quite unique and (were) hard to counterfeit.
Nakamoto went to very careful lengths to ensure that bitcoin is a commodity and not a security. Even the SEC agree that it's not a security (they'd love to class is as a security if they could).
If you think better alternatives to bitcoin exist, then it's because you see bitcoin and the alternatives in a different light to me (as evidenced by the earlier points). From my perspective, I agree that someone could always throw a curve ball and come up with a way to improve it, but after studying it carefully for years, I can't see any way that the problem bitcoin solves could be implemented significantly more efficiently. I envisage it being the best store of value for the next 1000 years or more (or at least until we advance from the digital realm)