Meet the New Money; Same as the Old Money; We Won't Get Fooled Again
BitCoin gets its value similar to how gold and silver got their value, but with one very important difference.
Dedicated to my wife: I'll always be wrapped around her finger
"I have only come here seeking knowledge--
things they would not teach me of in college.
I can see the destiny you sold,
turned into a shining band of gold.
I'll be wrapped around your finger"-- Sting
This approach to understanding the value of BitCoin doesn't stem from code or protocol, but from considering BitCoin as a commodity, and determining how that commodity achieves a value. BitCoin is a commoditized asset, similar to steel i-beams or gallons of gasoline refined from barrels of crude oil. BitCoin is commoditized information, and Dr. Craig Wright is the one who commoditized it via protocol-- allowing informational/computational containers to function potentially as money.
Do you know how Gold achieves it's value? How about wampum (Wampum: https://sym.re/DgeqAPd ), and barrels of oil? But BitCoin has a slight difference to those. Let's compare gold and BitCoin to see the difference:
Que the music:
There are three different ways to obtain gold:
1. Mine it.
Thus, gold mined will typically sell for a premium to the cost getting it out of the ground. "Proof of Work" is the cost of getting it out of the ground and minted into coins of the realm (with Caesar's bust on them and a serial number)
2a. Buy King Tut's Mask,
and melt-down the 321 troy ounces of gold it contains, then mint the coins. The gold will sell for whatever raw gold sells in the open marketplace, PLUS the cost to melt and mint new coins of the realm. Just one problem with this method. King Tut's Mask brings in 10 million tourists a year thru a museum charging $50 per entry, thus has a cash-flow income stream attached to it. This means the mask as a financial asset is probably worth something like $2.5 to $10 billion. 321 troy ounces melted is more like a half millliion dollars. So ONLY crazy people will do this-- crazy people like barbarians who one day sack Egypt and steal all it's treasures after burning the city to the ground.
2b. Buy some gold nuggets
which were stored in your nieghbor's grandpa's safe. It's not a ring with a cool inscription, or a fun piece of jewelry, it's just some nuggets above ground already. they will sell at a DISCOUNT to coins of the realm because the nuggets will still need minting work added, which will be a cost.
3. Buy coins of the realm.
This will cost the market price for 1 troy ounce coins, so $1,900 per ounce in 2020. If you melt down these coins of the realm to make "New & Improved" King Tut's Mask 2, 2020, put it in a museum and sell tickets, well, now you've created cash-flows which give the gold a potentially higher price.
With #2 not really efficient, #1 and #3 will compete with each other. Is it easier to buy gold coin MONEY, or mine it? that depends on the willingness of people to part with their above-ground gold. In an inflationary time, this will be quite expensive and your bidding for gold will push up it's value.
In a deflationary collapse,
gold will be sold to buy even-cheaper assets, such as Florida homes in 2009-2011. Mining investment will increase along with the gold price, but over long stretches of time, mitigated by technological advances in mining, the work to get gold out of the earth will likely increase as all the "low hanging fruit" gold has already been found/mined. Eventually we send spacehips to other parts of the solar system, Avatar-style, to look for cheaper mining methods.
But what are the ways to obtain BitCoin?
1. Mine it.
Well, we know this only lasts so long as the mining subsidy is > 0. We're at 6.25 right now. At scale, we expect this to go to zero eventually. So let's discount it as an option.
2. Buy it from someone else,
who holds satoshis. This is like #3 above, satoshis are "coins of the realm"-- there's a fixed supply of 2.1 quadrillion of them. As people obtain more for data-purposes, less available for "money" purposes.
3. Print 0-satoshi-coins,
just ask your friendly neighborhood Tokenization company (Jay Leno for Frito-Lay, "we'll make more!") to "issue" you some.
#3 is the cheapest option. So theoretically, unless missing something, it should be used most often. If so, then why should BitCoin have any value at all, above zero per Bitcoin (for 100mm sats)?
If your argument is transactions and transaction fees, well, then things like paying Nodes in fiat suddenly seems a LOT more important, doesn't it? And what would you be paying for? Moving around worthless zero-sat coins? Isn't that what AWS and iCloud already do-- without all the protocol headaches?
In BitCoin, transaction fees are similar to minting fees, you're paying to have the coins of the realm verified as authentic. Think of this "proof of work" as similar to when mints must remove old worn coins, and replace them with new restamped fresh ones. You SHOULD have to pay for this, but the best money system will be efficient and make you pay as little as possible.
King Tut's helmet still has a melt-down price for the gold used in its form, regardless of whether it sits in a museum with tons of transactions to see it, or whether it sits in a basement of some billionaire. (see "Gail Wynand").
Transactions can equal improved pricing information, but it doesn't give gold it's value or price. Transactions are GREAT for the museum, and transactions are GREAT for BitCoin Nodes. But are they great for BSV?
All ships sink with the lowering tide; all ships rise with the rising tide.
BSV is the tide, who is economically incentivized to make sure it doesn't go down to zero like the waters of Lake Havasu, if it is not ALL OF US?