Why is money made worth more than cash today?
Why is money made worth more than cash today?
I was confused where to ask on the forum, so I picked a random spot. If I got this wrong, please point me in the right direction. First off, I know nothing about crypto and have been reading online just to get it straightened out. It isn't working well for me. I'm wondering why Bitcoin has value when there are no goods involved. A computer does a lot of math and gives you a piece as payment. Right now one Bitcoin is worth about $49,000. I also heard that mining Bitcoin today uses more electricity than all of Argentina. This isn't great for saving energy. Why? Who gets paid $49K for this fake coin? Or can it not be used to buy regular money? See? I'm lost.
imo, suckers, lol. It can be converted to regular currency, but the crux of it comes down to this--if a paper currency's demand dropped to zero, it would still be worth something because of what is 'backing' the currency (usually a nation-state). But these crytocurrancies have no such backing, and tout that as their 'strength'. So if the demand drops to zero, so will the value--there is nothing protecting a freefall other than demand. And as far as merchants accepting payments, well, the issue with that is with the value of these fluctuating so much, the merchant can actually lose money by accepting a currency that can...
Two ways to work with crypto. Most people pick just one. You can buy into it like buying stock, looking low and selling high. Or you can try mining yourself by making your computer work hard for math problems to create new coins or parts of a coin. This makes you part of the big group that prints money. Basically, something is worth what others are willing to pay for it. If you spend today $100, maybe tomorrow someone will pay you $150. Your value comes from other people paying for it. If you want to mine at home with your PC, think of this as a small fight against competition in the race.
Ha ha. Yeah, I had that idea after seeing some big mining companies around. Just another thing happening here. But honestly, I'm just trying to figure it out because there are so many shops now letting you pay with Bitcoin, even selling places where they'll swap in PayPal instead of crypto.
Here is a link to an article about how Bitcoin's value is being studied because it has many people trying to use it.
So kind of like putting money into stocks but instead you're paying the miner to make Bitcoin and the power firm for electricity. Is that how it works?
Cryptocurrencies work exactly how normal money works. They have worth because you can sell them for things like goods or services. Just like paper bills, their price goes up and down compared to your local currency, such as the US dollar. A value of $40,000 is just a way to say "how much it costs" right now, similar to how an exchange rate shows how much one money type is worth in another.
imho, suckers, lol. It can be turned into regular money, but the real point is this--if someone needs cash now, they will still get it because something is backing up that paper money (usually a country). But these digital currencies don't have that safety net; they claim to be strong even though they aren't backed by anything solid. So if people stop buying them, their value goes down with no one stopping the crash except the buyers themselves. When merchants take these payments, the problem is simple: if the currency gets worthless overnight, the merchant loses money and might have to pay back less in cash later. Because of this risk, most shops just avoid using these coins right now. At best, they are trying to fix a broken system; at worst, they give scammers a place to hide while making themselves rich and leaving others broke.