Not a bitcoin fan, but this question of eating it for lunch or backing it with apples misunderstands that the fundamental liquidity backstop of bitcoin is risk. So long as you can take it to a casino (real or notional) and bet it, it has value. For it to go to zero, it would mean no two people could make a bet where one benefits from the result.
Even random shitcoins have a non-zero value so long as there are participants who can use it as a proxy for risk of any sort. The the value is a function of the risk the exchange represents. If we bet 20 randocoins on tomorrow's high temperature in a city, we've created potential value. The bitcoin bet is that its value is non-zero, and an infinite number of people can trade in and out of positions in that bet and create and extract value from it.
The only real downside risk is a bunch of smart contract derivatives that hoover up bitcoin, rehypothecate and leverage it and give you some higher risk platform token/scrip instead that has a much higher likelihood of being worthless when it defaults, but with some additional personal security.
Using Cowen's analogy, bitcoin isn't apples, it's the game token you use to play the game to win the apples.
Interesting! But isn't betting is a zero sum game? Betting on apples means some lose and some win, but the world is not better off as a result, because they cancel out.
You're right, I'm just thinking there is some long hedge that keeps the game going, like the transaction fees, where you get demand for transactions that are bets on blocks. The whole thing is a kind of self reinforcing stochastic uncertainty cloud (infinite improbability machine?), where the endogenous demand is never zero. Until it is because of something exogenous. Same as fiat.
Even random shitcoins have a non-zero value so long as there are participants who can use it as a proxy for risk of any sort. The the value is a function of the risk the exchange represents. If we bet 20 randocoins on tomorrow's high temperature in a city, we've created potential value. The bitcoin bet is that its value is non-zero, and an infinite number of people can trade in and out of positions in that bet and create and extract value from it.
The only real downside risk is a bunch of smart contract derivatives that hoover up bitcoin, rehypothecate and leverage it and give you some higher risk platform token/scrip instead that has a much higher likelihood of being worthless when it defaults, but with some additional personal security.
Using Cowen's analogy, bitcoin isn't apples, it's the game token you use to play the game to win the apples.