01-18-2018, 10:28 AM
(01-18-2018, 10:13 AM)fredtoast Wrote: I guess I should take the time to educate myself instead of just asking you, but who gets to keep the US dollars that people pay for bitcoins? Where does that money go? If I am "storing my wealth" where is it stored?
Stocks are backed by the assets and/or income flow of a company. That is what gives them value. The performance of the company or projected performance determines if the stock rises or falls in value. What gives bitcoins value and why does it go up and down so dramatically?
Because the bitcoin are "mined" the miners would get the money on new bitcoin similar to a company on an IPO. After that the person who you paid in order to buy the bitcoin would get it, in most cases it is done through an exchange similar to Forex trading so they'd get a fee similar to a brokerage. The storage of wealth is the same as buying gold, you are buying something that has no expiration and has upward pressure of value or at least relatively flat pressure.
Are they? If the company liquidates and I have common stock (obviously preferred shares are different) do I get anything? Probably not. If that's the case then it truly isn't "backed" by the assets or income of the company but rather loosely tied to it. The reality is market cap for most companies far exceeds it's tangible value when looking at it's books. It is a fallacy to believe that common shares of stock without dividends are anything more than loose associations to companies and their performance. You are saying a piece of paper is worth something for no other reason than it has the name of a company on it and someone is willing to give you money for it. That company isn't going to do anything for you because you hold that piece of paper, so it doesn't qualify it as a service. You can't use that piece of paper to buy anything (only through exchanging it to someone else for real currency) so it isn't a currency. That paper doesn't "do" anything of real value for you to qualify it as a good (at least no more than a line on a ledger entitling you to digital currency). So why does it really have value? The answer is because everyone agrees it does.
Volatility is similar to a lot of stocks, things like news and large buyers can cause heavy movement one way or the other. There are also things called forks which would be similar to stock splits, with a slight difference that it can sometimes create sub coins with different "rules". As to value, I already explained that in the last post. Value is derived from the people. It could be because a bunch of people simply agreed it does, or it could be because they value some of it's uses. The fact it is decentralized is one of the driving factors of it's adoption in emerging countries for the inflation fighting use.
