When the price of Bitcoin was at its highest, it reached 20,000 USD. Now even if it drops about 52% from the highest point, it is still worth 10,000 USD.
Therefore, many people have never understood why Bitcoin is so valuable, let alone why people in the circle often say “one coin, one villa”. How can one bitcoin buy a villa in the future?
Today, let’s talk about why the virtual currency represented by Bitcoin is so valuable?
What is the essence of value?
Before answering “Why is the virtual currency represented by Bitcoin so valuable?”, let’s solve a more fundamental question: What is the essence of value?
In order to answer this question, we first ask ourselves the following 2 questions:
Diamonds are forever, and one is always passed on. So what is the value of diamonds?
What is the value essence of artwork?
Whether you have an answer or not, let’s first appreciate the following Da Vinci painting “The Savior” that was auctioned for $450 million.
Diamond is very hard, it is the hardest substance in the world, but besides making drill bits, what practical use is there? The wise Jew told a story that convinced most women in the world. From then on, the young boys had to devote all they had to buying a hard stone that represented the longevity for the beloved woman, and put it on the woman’s ring finger at a moment witnessed by relatives and friends.
The value of diamonds is just a widely accepted hoax, but it doesn’t matter if we believe it.
Artworks have high appreciation value and scarcity, so after the artist’s death, there is more space for appreciation of the works. But is the appreciation value really worth tens of millions or even hundreds of millions of dollars? Isn’t it the same to appreciate the reproduction on the wall? The art of high imitation is not much worse than the original painting in terms of appreciation.
If it is not because there is a huge art collection group, if it is not for the belief that someone will be willing to collect it at a higher price in the future, are there so many buyers willing to pay such a high price?
At this point, you may have realized that if we don’t give value to one thing, many things are not so “valuable” at all.
The air that is most important to our lives is free, and the food that fills us is extremely cheap. Strictly speaking, most of the amount we consume on monthly bills is not necessary for survival, but it is necessary for life. These necessities of life are actually our “consensus”, and we collectively believe that these things are indispensable.
Therefore, we can conclude that the essence of value is consensus.
The value of cryptocurrency is also a consensus.
Perhaps you think that the essence of money is not consensus, but the coercive force of government and guns.
This view is not complete. There are many methods and reasons for the generation of consensus, and government coercion is only a way to produce consensus.
In our society, there are many other ways to generate consensus: authoritative endorsement, corporate credit, historical inheritance, science, religious beliefs… all these can generate consensus.
Historically, the Catholic Church once sold “indulgences.” If you do not belong to that sect (consensus group), you will definitely not spend money to buy indulgences.
We can’t understand the value of something, just because we don’t belong to the consensus group.
Brand is consensus, culture is consensus, trend is consensus, diamond is consensus, currency is consensus, politics is consensus, religion is consensus, law is consensus, folklore is consensus, credit is consensus… In a broad sense, human economy and The operation of society is based on various consensuses.
There is value when there is consensus, and creating value is creating consensus. The main significance of government rescue is to activate the confidence of private capital. Confidence is a bullish consensus. When the bullish capital exceeds the bearish capital, the market index will rise. The core of government regulation is consensus guidance.
“The market value of the Cryptocurrency represented by Bitcoin will eventually surpass that of gold.” Because the group with this consensus is growing, the price of cryptocurrency is also rising. The value of Bitcoin is essentially consensus.
People who don’t play games will not approve game items, but this does not prevent the skins in “Honor of Kings” from selling for a set of tens or even hundreds of dollors. sSimilarly, those who do not recognize virtual currency will not prevent bitcoin from rising from zero to 20,000 dollars in ten years.
The essence of value is consensus, and the value of virtual currency represented by bitcoin also lies in consensus. It is not the people who sneer at bitcoin, but those who have a consensus, and the number of consensus groups is growing.