It’s Not About The Technology, It’s About The Money
no technology present here
Money is basically just a socially-established number that is objectively associated with a person.
We each agree on how much everybody has, and have the ability to add/subtract from each other.
Different mediums can be used to enforce this number:
physical - passing gold around
centralized institution - bank deposits
honor system - friends keeping tabs
decentralized collective - Bitcoin
Multiple monies exist at any given time.
Barter and Utility
The unique utility that money gives us is stored optionality - the ability to defer the decision of what to receive in exchange for your work/goods.
This explains why people value money with gold-like properties more - they enable this behavior much better.
Someone who does not want to use money must, by definition, have a very good idea about what he wants to get in exchange for his goods/services.
Intrinsic Value Fallacy
The foundational fallacy is that people try to explain money in physical terms when it is purely a sociological phenomenon.
Gold is not valuable because it is durable, fungible, portable, and scarce; it is valuable because of the self-sustaining tradition around it.
Its properties enable this, but don't guarantee it.
The same applies to Bitcoin. It’s why you can't copy Bitcoin's value by forking the blockchain and adding extra features. The shared socially-reinforcing belief of billions of people is impossible to replicate.
Similarly, if a new metal better than gold was found - it wouldn't inherit all its value.
Network Effect
Money becomes more useful and more valuable the more people use it.
As more people begin to hold money, its value and utility both rise. The rational response of everyone else is to try to get more themselves, resulting in a positive upward spiral.
This incentive is at the polar opposite of conventional stocks.
If a stock gets too expensive, its value decreases because an investor buys a smaller share of the company's revenue for more dollars.
Contrastly, $100 of Bitcoin today is much more valuable than $100 of Bitcoin years ago because it is spendable at more places.
This unique positive feedback between price and value makes the growth of Bitcoin self-sustaining. There is no top until everybody adopts it.
Cream Rises to the Top
The positive feedback between demand and value means that money is winner-take-all in a free market. If one currency was ever-so-slightly more preferred than the other, then this imbalance will only grow until the other one collapses.
The word blockchain is thrown around with the idea of solving major problems, but there isn't much apparent use outside of currency.
There are no applications of blockchains that do not involve a double-spending problem. This is why Bitcoin is the only cryptocurrency destined for success.
Bitcoin offers a 1000x improvement over fiat currencies, but no other cryptocurrencies offer a 1000x improvement over Bitcoin.
— originally posted on 2 minute bitcoin https://2minutebitcoin.org and https://www.2minutebitcoin.org/blog/bitcoin-is-about-the-money-not-the-blockchain-technology
Original Author: Daniel Krawisz
Original Word Count: 4,879
Original Posted Date: July 13, 2016
Original Source: https://nakamotoinstitute.org/mempool/its-not-about-the-technology-its-about-the-money/
Condensed from 13,546 words into just 476, this 2-minute bitcoin read follows Michael Saylor's brilliant appearance on Robert Breedlove’s What Is Money Show where he talks through the rise of humanity through the dark and steel ages.