A common misconception that people may grapple with early in their #bitcoin journey is “backed vs not backed”.

Although roughly 650 EH/s of computational power underlies the network, Bitcoin is not “backed” or convertible for this energy. Similar to #gold and it’s Proof of Work.

Bitcoin and Gold, however, are bearer instruments and sound money, and don’t need to be “backed” in a traditional sense, but rather do the “backing”. Essentially, if you hold the keys or the gold, you are the owner.

Bearer assets like Bitcoin and Gold can provide security for holders of debt-based currencies, if they are backed. Otherwise, you get Fiat, which is given value by decree and not kept honest by a commodity.

One point of pushback, Bitcoin absolutely is convertible for hashrate and electricity

Hashpower is traded in contracts - BTC/TH/D
Miners curtail their power - BTC/kWh

^ and the ask price of both compute and electricity sales are priced directly in sats at the revenue rate so it trades with fungibility as cost input to produce has no relevance.

#studybitcoin