How is there a network effect if people aren't using Bitcoin to make or receive payments? Bitcoin is no more useful to me if my friend uses it versus a stranger. "Meme effect" is more like it -- the more hype there is, the better it is for anyone holding coins. The value comes from convincing enough new people to keep buying in. It's like a ponzi scheme in that respect.

I don't think $100 million paintings are a good store of value or medium of exchange either. But again: at least many of them are nice to look at.

Its utility is not in its ability to be used as a medium of exchange. Bitcoins value comes from:

1) There is no central authority that can print more

2) It is deflationary. There is a limited supply.

3) Everyone has agreed on the protocol, and everyone can be confident that their bitcoins are their own and they can trade them however they want. This is important.

4) There is no inherent value. This is the part that trips many people up. An items inherent value simply gives it a natural price minimum. For example, golds 'inherent value' is that it is an excellent conductor, and theoretically if the price gets too low then people will use it for just that, which will keep the price stable at that market value. Bitcoin doesn't have this - however this also keeps it from having no price maximum either. People want it because they want it. What is 1 BTC worth? There is nothing to tie the price to. It's worth what people will pay for it.

By far the most important driver of bitcoin's value is the marketing and the incentives for every holder to pump it. If a majority of miners got together and decided to raise the bitcoin supply limit I don't think it changes the BTC/USD price.

People are buying into bitcoin now because they see a graph going up and want it to keep going up. It could just as well be shares in a video game retailer.

I do think changing the BTC supply limit would affect the BTC/USD price because it would reduce trust in the protocol. The pump and dump you described was a large part of bitcoins initial run in 2017, but I personally see much less of that happening now. BTC has much less hype than it did in 2017. In 2017, people were discussing it replacing the USD, overthrowing 'the system' and leading to a golden age of financial equality. Discussion these days mostly centers around the 4 points I listed above. I think overall discussion much more mature now than it was.

I personally think BTC is useful, especially in times like these, mainly because it has no intrinsic value. People are scared of inflation. Interest rates are low. The market is extremely overvalued, trading at massive P/E ratios. Nobody really wants to be holding cash, stocks or bonds. So what do people do with their money when there is no alternative?

Disclaimer: I own $1500 or so in BTC.

Did the price spike in the last 24 hours because a bunch of people suddenly realized the 4 points you mentioned? Or because Elon Musk created a bunch of hype?

I feel that we are talking past each other. The 4 points I mentioned are simply what allow Bitcoin to have value at all. The price spike is obviously because Elon released that Tesla bought 1.5B worth of Bitcoin, but I never said that hype doesn't play a part in Bitcoins price. Depending on how you look at it, you could argue that 'hype' is the only reason BTC is worth anything. People simply want it. When you said:

> People are buying into bitcoin now because they see a graph going up and want it to keep going up. It could just as well be shares in a video game retailer.

You're absolutely right. People are only going to buy BTC if they think the price will go up, or remain stable, or whatever their goals are with their money. I don't think our opinions are at odds here.

Lol, 2017 : "initial" run ? More like 4th or 5th run... (I've lost count.)

And yes, "overthrowing the system" was indeed heavily discussed all the previous times, here's one example : https://m.slashdot.org/story/144938 Also remember how the creation of bitcoin was spurred by the 2008 financial crisis?

>> People are buying into bitcoin now because they see a graph going up

Aren't they doing that because they see helicopter money flying? Haven't you noticed that S&P500 and gold are also high?

What would be the difference between the network effect and the meme effect ?

Networks of people are what allows for ideas to get popular...

> a statement like this is exactly why people still don't understand the value of Bitcoin. The usefulness of a store of value has no relation to its actual value. The value comes from the network effect of others also agreeing that it has value.

So basically fiat money, then.

In other words, a Ponzi?