 | Welcome back to the r/CryptoCurrency Academy. In Lesson 1, we established that Bitcoin is fundamentally a "Public Ledger": a new way of keeping score globally without needing a central bank. But this usually leads to the biggest question people have: "Okay, it’s a digital ledger. But why does a digital entry on a computer network have any actual value? Why is one Bitcoin worth thousands of dollars? Will it all go to zero or will it grow to infinity?" The answer is: it depends on the Market, which nobody can predict. We have to zoom out. Let’s ask a question that most people go their entire lives without ever really thinking about: What is money, actually? Lesson 2: The Evolution of MoneyMost people think money is the paper in their wallet. But money isn't a "thing." Money is a technology used to calculate and communicate value. And like all technology, it evolves to solve the problems of society. To understand why Bitcoin may or may not have any value, we have to understand the problems it was built to solve. We have to look at the history of money. Stage 1: Debt and BarterSome anthropologists and economists argue that the earliest form of money was Debt. Early human tribes used a system of social Credit and Debt. In a small tribe, if you needed shoes, the cobbler gave them to you. You wouldn’t swap anything with him right then and there. Instead, society kept a mental ledger: "The cobbler gave Bob shoes; Bob owes him one." There was also Barter:
The Problem: These mental Debt and Barter systems only work in small groups where everyone knows and trusts each other. You can't run a global economy on "I owe you one." You need a way to transact with strangers you don't trust and to Measure the value of things. Stage 2: Commodity Money (Gold)As trade expanded between strangers, humanity needed a “medium of exchange”. A way to measure the value of things. A “storage of value”. We needed something that everyone agreed had value. We settled on Commodity Money. Items that had intrinsic value and were hard to find: seashells, rice, salt, and eventually, precious metals like Gold and Silver. Gold became the king of money for thousands of years because it had unique properties. It was chemically stable (it doesn't rot or rust), it was divisible, and most importantly, it was scarce. Nature restricted the supply of gold. You couldn't just "create" more of it; you had to dig it out of the ground. The Problem: Gold is heavy, hard to transport, and dangerous to secure. If you wanted to buy a house in another city, transporting a chest of gold coins was a massive security risk. It doesn't work well for fast, large-scale commerce. Stage 3: The Goldsmith's Receipt (The Birth of "Banking")In medieval Europe, merchants got tired of carrying heavy bags of metal coins. So, they started leaving their gold with the local goldsmiths. Since goldsmiths worked with precious metals, they already had the strongest vaults and security. The goldsmith would give the merchant a paper receipt that said: "Whoever holds this paper can claim 10 Gold Coins from my vault." Suddenly, a realization hit the marketplace: Why bother walking all the way back to the goldsmith to get the gold just to pay someone? Why not just give them the paper receipt? The paper was light, easy to carry, and easy to use. This was Representative Money. The paper itself was worthless, but it was "as good as gold" because it was backed 1:1 by metal in a vault. (Fun Fact: These early goldsmiths and money-changers would conduct their business sitting on a long wooden bench in the market square. The Italian word for bench is "banco". This is where we get the word Bank. Legend says that when a banker went broke, his bench was smashed: "banco rotto" - which gives us the word Bankruptcy.) The Problem: You had to trust the "banco." What if the goldsmith secretly printed more receipts than he had gold in the vault? Stage 4: Fiat Currency (The Current Standard)For a long time, global currencies (like the US Dollar) were essentially "goldsmith receipts" backed by national gold reserves. But starting in the 20th century, governments realized that tying their money to gold limited their ability to spend. If they needed to spend money or bail out an economy, they couldn't just print more money unless they found more gold. Slowly, the tie to gold was severed. In 1971, the US completely ended the gold standard. We entered the era of Fiat Money. "Fiat" is Latin for "Let it be done". Money that comes from nothing. The paper in your wallet is no longer redeemable for gold. It holds value because the government declares it to be money, and we collectively trust the government to manage the supply responsibly. The Problem: Because Fiat is not anchored to anything physical, the "Master Bookkeepers" (Central Banks) can print as much of it as they want. When the money supply increases faster than the supply of goods, we get Inflation. It is a silent tax on savings. The Next Evolution: Why Bitcoin May Have WorthHow do we measure the value of things nowadays? With fiat money, mostly. 1 ounce of gold is priced based on market dynamics. The people buying and selling gold decide what they are willing to pay and sell for. The same is true for Bitcoin. This brings us back to Satoshi Nakamoto's invention. When you look at the history above, you see a clear pattern of trade-offs:
Bitcoin's breakthrough was digital scarcity. It is the first form of money in history that combines the best properties of the previous stages:
So, Does Bitcoin Have Value?Nobody can tell you because value is subjective. It has value to some people, but it can be worthless to others. The Price of Bitcoin, or the amount of money you need to pay to get 0.00001 or 1 BTC is, however, determined by the Market. Bitcoin is not just a currency; it is a Market Asset. Just like Gold, Oil, or Apple Stock, the price of Bitcoin is not set by a government. It is set by the open market - Supply and Demand. Why do people buy Bitcoin? Often to send it somewhere. People buy and sell BTC by the billions everyday.
Because this technology is new, the market is still trying to figure out exactly what it is worth. This leads to volatility. Because these digital tokens behave like investable assets (that you can buy, sell, and trade for profit), scholars often refer to this entire asset class not just as "Cryptocurrency", but as CryptoAssets. Can it go to zero? Can it go to infinity? Should I invest right now?This isn't investment advice. Nobody can predict the future value of an asset. The most important tip for Crypto newcomers to understand is that investing and speculating on the price of a newly invented asset is a complex subject. Don’t start thinking that you will make easy money or fast returns. Also, anyone promising guaranteed returns is guaranteed to be scamming you. Investing or speculating should be done only by professionals and people with great understanding of the risks and macro economical factors that might interfere. It is statistically very hard to become a profitable investor or daytrader. Most people will lose money trading. Will BTC get used? Will people continue to buy it? This isn’t an asset valuation attempt. Only each person can decide if they think the value of an asset will increase or decrease. If things go wrong, who knows what can happen? A common suggestion given to Crypto newcomers is to never invest more than you can afford to lose. And before you even think about multiplying your money by speculating on the price of an asset, you are on the right path to understand why it may or may not have any value. What came after the Bitcoin Revolution?Now that we know why BTC may have value, and how BTC’s price is Market determined, we can go deeper into how the technology actually works. But also, learn about how millions of other CryptoCurrencies and CryptoAssets came to be. Will Bitcoin become the new “gold standard” for value storage? What differentiates Bitcoin from other newer Cryptos? And finally, a young men's idea to transform Bitcoin into a decentralized internet computer ends up creating the world's second largest Crypto? That’s the subject of Lesson 3. See you then. rCryptoCurrency Academy: Course 1: The History of CryptoAssets
Course 2: CryptoAsset Tools and Finance
Course 3: CryptoAssets and the Smart Economy
Course 4: CryptoAssets and the Law
Course 5: The Frontier Tech of CryptoAssets
Course 6: Crypto Institutions (Governance & Compliance)
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