Buying bitcoin - what backs bitcoin?
Buying bitcoins may not seem to be the most attractive investment since it is not backed by anything ( like generic currencies ) nor is it intrinsically valuable. In the same time nowadays US dollar also has no real value and it makes things simple and complicated in the same time.
What is important for you to understand when you start thinking about buying bitcoin, is the fact that intrinsic value is the tricky thing in general. From Dutch tulips in the seventeenth century to stocks nowadays – all these instruments never had any real value however were part of global economic processes. However, the bitcoin unlike any other man-made monetary system is regulated by a universal constant, a time itself.
So, this universal rule ensures that we are able to plot the supply schedule of bitcoin. Since it is predictable and impossible to cheat via various manipulations common for the modern monetary systems.
However, there are some questions – USD is backed by the power of US as the state ( including military might ). And what is backing bitcoin?
But here is the point. When, you are buying bitcoin, you relying on a complicated network. What makes that network work is a regulatory algorithm. The alog determines that new blocks of bitcoin will be mined approx. every 10 minutes. This sort of approach ensures that nothing can alter the predetermined issuance rate, nor the block size halving rate, of bitcoin.
In other words, every 10 minutes more bitcoin goes in use at a disinflationary rate. We may consider it a mathematical guarantee and this is what back the bitcoin system and its amazing intrinsic value.
You also should take in mind Milton Friedman, an American economist, statistician and writer who made a strong argument which you may want to keep in mind when buying bitcoin. Referred to as Friedman's k-percent rule, it stems from his idea of replacing central banking institutions with a computer capable of mechanically managing the supply of money.
By the k-percent rule, money supply would be calculated by generic macroeconomic and financial factors, targeting a specific level of inflation.
As the resume to all said above it is obvious - no money system we already have seen claims it is chronologically regulated. The bitcoin digital economy is backed by universal construct of time!