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Everyone Who Believes In Bitcoin Should Try To Answer This Question

Stashed in: Bitcoin, Currency

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Placing a floor on the value of bitcoins is… what, exactly?

Bitcoin bulls will usually respond with something like "cryptography" or "technology" or something like that, but these aren't really satisfying answers.

Paul Krugman explains why:

I have had and am continuing to have a dialogue with smart technologists who are very high on BitCoin — but when I try to get them to explain to me why BitCoin is a reliable store of value, they always seem to come back with explanations about how it’s a terrific medium of exchange. Even if I buy this (which I don’t, entirely), it doesn’t solve my problem. And I haven’t been able to get my correspondents to recognize that these are different questions.

Its value is as a medium of exchange.

Which has no intrinsic value since there are many alternatives.

The reason it is a good store of value is scarcity, just like gold.  There is a limit to production of either.

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