Is money that has gone into bitcoin already spent? When I buy a bitcoin from someone and they get USD I get bitcoin. They go buy lambos or real estate for their gains. So the underlying currency is spent, but BTC market cap is increased. This would mean that cryptos don't actually have any real money in them and they could collapse without bottom basically. Is this logic correct or is real really currency as value behind crypto?

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    Change the word bitcoin to euros and see if that helps you? Commented Apr 19, 2021 at 12:29
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    @RedGrittyBrick So you say that bitcoin is a FIAT currency? I would disagree, bitcoin is speculative asset and taxed as such. It's only value is the current price, there is no ultimate underlying value.
    – ram4nd
    Commented Apr 19, 2021 at 19:39
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    @ram4nd, sounds like you're trying to slight-of-hand the instability of value into saying it has no value. Sure, talk till the cows come home about how it's a less stable value, but that whole conversation presupposes that there is at least some value. And as long as there is some value, then see RedGrittyBrick's answer. Commented Apr 19, 2021 at 20:02
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    What does "real money" even mean?
    – Tony Ennis
    Commented Apr 19, 2021 at 20:48
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    What does "spent" actually mean? When I spend a dollar bill, does that make that dollar bill worthless?
    – Aron
    Commented Apr 20, 2021 at 4:24

7 Answers 7


This would mean that cryptos don't actually have any real money in them and they could collapse without bottom basically.

Short answer: Yes

Longer answer: The value of bitcoin is what other people are willing to pay. If noone wants to buy bitcoin the value is zero.

Bitcoins are "marketed" as the new payment system with zero transaction cost. If true, it would be fantastic. In the meantime there are a number of issues with bitcoin -- I will list some, whether they are important is up to others to decide.

  • Bitcoin is marketed as a payment currency / system. But compared to the total value of all bitcoins the payment flow is probably small. Most people hold bitcoins as speculative investments, not to pay for good or services. Compared to national and International payment flows the bitcoin usage is totally insignificant.
  • Bitcoins are forbidden in some countries, and more may follow. Polititians may believe either that they have no control or that bitcoins are mostly used for illegal transactions such as drugs (true or false, decisions are often made on beliefs).
  • Transactions are far from free: it is estimated that bitcoin mining currently uses about as much electrical energy as a smaller country, say like Netherlands. Energy usage is hardly free.
  • There is as already known no intrinsic value in bitcoins. It is really only a "key". Compare to as example gold -- even if gold prices goes to zero you can actually use gold for making things.

So the longer answer is still yes -- the value may go down to very close to zero. And it could happen in a very short time.

  • I agree with everything here, but people assume that they put their money in somewhere, it's invested and it will grow. But the problem with bitcoin is that you put money in it and other people will spend it. So there is no money in it, just until other people are willing to pay more for it. Like if you buy commodities, you invest betting on that the value of the commodity goes up(supply shortages, demand increase or for what ever reason).
    – ram4nd
    Commented Apr 20, 2021 at 22:18
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    Yes, it similare to other speculative investments. Often stocks in "high-tech startups" (I only use this as an example) has a similar situation. What you invest in there is not the actual "intrinsic" value right now but you invest in the expected future increase in value. Not all wishes are fulfilled though, so some fail. Good advice generally is to never invest money you cannot afford to lose.
    – ghellquist
    Commented Apr 21, 2021 at 7:50

As @RedGrittyBrick says, change the word "bitcoin" to "euros" and see if that helps you. All currencies work this way, not just cryptos:

Is money that has gone into euros already spent? When I buy a euro from someone and they get USD I get euro. They go buy lambos or real estate for their gains. So the underlying currency is spent, but euro market cap is increased. This would mean that euros don't actually have any real money in them and they could collapse without bottom basically. Is this logic correct or is real really currency as value behind euros?

And someone in Europe probably has the exact same question about USD.

All currencies are fundamentally worthless. Except for things like gold, which you can use to plate the contacts of electrical switches, coins, which can used as paperweights, and paper notes/bills, which can be used as toilet paper.

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    But bitcoin is not currency. Bitcoin is speculative asset.
    – ram4nd
    Commented Apr 19, 2021 at 19:36
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    @ram4nd You keep saying that. How does that change in terminology affect the result? If I buy a painting or a house, I can say it has value, solely because someone else would pay an amount of money for it. Neither is a currency. Granted, a painting has some value to you personally when you look at it. But when you go to sell it, it is purely a speculative asset, and is only worth what someone will pay for it.
    – BWhite
    Commented Apr 19, 2021 at 21:17
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    @ram4nd all the vendors who accept BTC as payment for goods and services would beg to differ... Commented Apr 19, 2021 at 21:51
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    @ram4nd there is no difference between a currency and a speculative asset Commented Apr 20, 2021 at 9:13
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    Dollars are a bit less 'fundamentally worthless' because the US government is required to let you pay your taxes with them. This can't absolutely guarantee their future value (given the potential for hyperinflation), but it's a slightly stronger basis than pure speculation. Commented Apr 20, 2021 at 12:09

Bitcoin is separate from fiat (dollar or euro or any governement currency) people choose to exchange a certain amount of dollar for bitcoin, once the exchange is done, the buyer got bitcoin and lost his dollar and the seller got dollar and lost his bitcoin.

If peoples dont want to exchange their dollar for bitcoins, then yes the price will go toward zero.

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    But dollar gives bitcoin it's value. On it's own bitcoin is just a crypto token. Without current price, it's value is 0.
    – ram4nd
    Commented Apr 19, 2021 at 19:38
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    But what give dollar its value ? except that dollar is a legal tender
    – Saxtheowl
    Commented Apr 19, 2021 at 19:44
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    Since it's no longer backed by anything. It has no value, just like bitcoin. But the question is about the money that is in crypto, is it spent or is it there? It sure seems like it's all spent and it might be in a freefall at any moment.
    – ram4nd
    Commented Apr 19, 2021 at 19:49
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    What gives bitcoin its value is not the dollar. Instead, what gives it value is the same as for any medium of exchange: the fact that you can buy stuff with it, i.e. the fact that sufficiently many people will accept it in exchange for goods.
    – Lee Mosher
    Commented Apr 19, 2021 at 20:05
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    @LeeMosher but almost nobody will accept it in exchange for goods. And the ones who do accept it would prefer you to use something else. Commented Apr 20, 2021 at 9:13

Bitcoin is like every other asset; it does not matter if you buy Bitcoin, or some stock, or a fond, a future, expensive cars or houses, raw materials, or even simply a foreign currency.

For all of these assets it holds true that they have almost no intrinsic value; they all only have the value that we as humans give them. Even food has no significant value if you've eaten and are full.

They gain value primarily because they are limited. To a starving person, the same piece of food that someone else would discard without a single thought may be worth more than a piece of gold.

All of these can "collapse without bottom", in principle. A company can immediately go bancrupt without warning. A future can go wrong. Your expensive car can total, a meteorite can strike your house, your raw materials can get lost at sea, and your food storage can be decimated by mice.

The "value" we attribute to Bitcoin specifically is that at the time it tickled the fancy of those who wanted to have a currency which is not centrally controlled. Other virtual currencies (e.h., Ethereum) add more features due to supporting contracts or even games built on top of the currency. If the designers and developers manage to convince people that they want to buy this stuff, then it becomes valuable.

Someone commented that bitcoin is not "real". Futures, ETFs and many other instruments are not "real" either, they are a pure bet on the future development of an underlying asset (which in turn might be virtual), or a mix of other assets. They are backed by something. Bitcoin is "backed" by a promise, an idea, or just the number of people already invested in it as well. Highly risky, yes, but nonetheless the same as many other assets.

And if you want to become more concrete, on a most technical level, the value of Bitcoin comes from the fact that we cannot conjure them out of thin air, but have to spend electricity. This is really a core (if not the core) function of the virtual currencies for now, if a little pedestrian. Obviously the energy has been spent and is now gone, so we cannot get it back. But this introduces scarcity, which often translates directly to value.

  • Bitcoin is not like every other asset, it's not real. Assets like company shares, real estate and commodities have value. Bitcoin has no value, it's virtual. These arguments seem very short sigted.
    – ram4nd
    Commented Apr 20, 2021 at 22:16
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    @ram4nd: Lehman shares are worthless. Enron shares are worthless. Penn Central shares are worthless, even though it had lots of real tangible assets. There are hundreds of 'superfund' sites where the land is worthless or has negative value -- people won't take it even if you pay them. Futures traders actually did pay people to take 'spot' (physical) oil just a year ago. Nothing has more value than what people will pay/exchange for it. Commented Apr 21, 2021 at 6:08
  • @dave_thompson_085 yes but there was a point when those companies had worth, until they messed up and broke their balance sheets. Oil has value, people have to move. Also price has fluctuations. If there was no manipulation(example: oil cartel OPEC). Then the price would be more stable and up to the market situation. Also FIAT system messes with markets. So I still would argue for real assets. But this is off topic.
    – ram4nd
    Commented Apr 21, 2021 at 7:45
  • Futures and many other instruments are not "real" either. They are "backed" by something. And bitcoin is "backed" by something (a promise, an idea, or just the number of people already invested in it) as well. Highly risky, yes, but nonetheless the same.
    – AnoE
    Commented Apr 21, 2021 at 9:51
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    OK, then we will have to agree to disagree, @ram4nd, no problem. I cannot really offer a much better answer (or I would have) except to point out that bitcoin is not that different to other assets. I gave some reasonable examples where other assets may be more fleeting than thought at first glance. I gave the two actual "values" that bitcoin has (i.e., being scarce due to energy expenditure; and having the philosophical value of being a decentralized currency, for people who want to have such a thing). Maybe you find a better answer amongst the others... ;)
    – AnoE
    Commented Apr 21, 2021 at 14:25

What is the difference between a dollar bill and a piece of monopoly money? Both are just pieces of paper with some print on it. Sure, the dollar bill has security features, but we could easily print monopoly money with the some security features.

The main difference is that all people collectively pretend that the dollar has value. The same is true for any fiat currency.

Back in the days, silver (or gold) coins had intrinsic value - the value of the metals present in the coin. Nowadays, almost all currencies are fiat currencies. They are literally just pieces of paper. The only thing distinguishing the from normal paper is that people collectively pretend those bills have value.

If you ever travel outside the US, you might actually encounter people who don't want to be paid in dollar, especially in Europe. For us, a dollar bill literally is a printed piece of paper. You can't do anything with it, except exchange it for paper we think has value - the Euro.

The same applies to cryptocurrencies. Cryptocurrencies only have value because someone else is willing to pay you for it. Bitcoins do not have intrinsic value. They are just a crypto token. They have value because someone is willing to buy them.

It doesn't really matter if you think of Bitcoin as currency or asset.

Lets pretend you buy a piece of art. you start with $1k. You buy a painting for $750. You still have $250, but also a painting worth $750, so your net worth didn't change.

Replace piece of art in the above with either Euro or Bitcoin and nothing changes.

It only starts to change if the piece of art, or the Euros, or the Bitcoins aren't worth $750 anymore -- either more or less. Your net worth changes accordingly, but you still only have $250 in hand. Only when you sell the asset/euros/bitcoin again you will realize those gains.

All of those can "collapse without bottom" -- including the Dollar! A piece of art might become worthless in a post-apocalyptic world, or simply because the artist is no longer en vogue. The Bitcoin bubble might burst. A financial crisis might make Euros or Dollars worthless, if people no longer believe that those things have value and start to barter again. We have already seen currencies collapse, e.g. the Reichsmark. Or look at the Venezuelan Bolivar for another example of hyperinflation.

The Dollar used to be backed by gold (Fort Knox). So there used to be some value to a dollar bill (the amount of gold is was backed with). But that hasn't been the case for about four or five decades.

  • four or five decades - imagine that! Modern capitalism has only been around for two generations! (three if you have a family history of making bad choices) Commented Apr 20, 2021 at 13:59
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    @vsz That doesn't make it inherently valuable. Take the GDR. The GDR Mark or, "Ostmark", was the official currency. Yet there was rampart bartering in the GDR. If you wanted something special, you had to barter for it, because everyone had enough currency and due to planned economy, the stuff everyone wanted wasn't available. And sellers couldn't raise prices, so they wanted something else. or look at reichsmark. the currency collapsed after hyperinflation. being backed by a government doesn't make any piece of paper inherently valuable, a lot of land you can use is. Metals are.
    – Polygnome
    Commented Apr 20, 2021 at 16:40
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    @Polygnome The reichsmark failed because of political choices. The idea that the Weimar Republic could have paid their war reparations in gold is ridiculous.
    – JimmyJames
    Commented Apr 20, 2021 at 16:47
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    @JimmyJames Who says they could they repaid their debts? I used it as an example to show that being backed by a government doesn't inherently make a currency valuable, unlike a plot of land, machines or labor, which can always be exchanged for something else.
    – Polygnome
    Commented Apr 20, 2021 at 16:57
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    @JimmyJames So you say currencies can no longer collapse by governments doing stupid things?
    – Polygnome
    Commented Apr 20, 2021 at 17:17

I don't really see much issue with the other answers but I think you are confused about some basic concepts here.

First of all, let's define market capitalization or 'market cap'. This is simply price of a 'share' of an asset multiplied by the number of shares available. This is a term that is usually used with relationship to stocks. The implication is that this is what the market 'believes' the total value of the asset is. For a company, it's roughly of the total value of the company. As a side note, the idea of BTC having a market cap implies it's an asset. For 'currency' we would use terms such as 'money supply' and 'circulation'.

So let's talk about Lambo's for a second. Let's say you sell some BTC, and buy a lambo. The person you bought it from goes to the casino, and gambles it away. The money is spent, gone. Does the lambo have any 'money in it'? It's lost some value but you should be able to find a buyer and get most of what you paid for it. But let's say you then drive it into a tree and total it. It bursts into flames as you escape and it is completely destroyed. You pay to have the remnants of a lambo hauled away to a scrap yard. Does it have 'money in it' now?

Money is a fiction: there's no such thing as 'real money', all money is imaginary. But it serves a really useful purpose: it relieves us of the time and effort required to determine e.g. how many eggs a candle is worth. When you buy BTC, you are giving up money and 'receiving' BTC in exchange. What that BTC is worth to you is what ever you are able to get for it in exchange for something else. What you exchanged for it in the first place is irrelevant. These are independent transactions. It's just like selling a home. The buyer doesn't care how much money you spent on it or what you put into fixing it up, the price buyers are willing to pay is based on market value.

You might be thinking of so-called 'stable coins'. These are digital currencies/assets that are 'pinned' to a fiat currency such as the US dollar. Some countries do the same thing and tie their currency to the value of the USD. The question is, though, do they actually have enough dollars to cover the pseudo-dollars they have issued.

  • Gold has value of the metal and silver is even better example. That is money and has been for thousands of years. USD was a substitution for gold, then it had value in the money itself. Now it's just FIAT, so no value in there. The point would be that all of the profits from bitcoin are spent, so there is no fallback price. It can go to zero like FIAT.
    – ram4nd
    Commented Apr 20, 2021 at 22:14
  • @ram4nd Gold has the value that the market gives it. If no one wanted gold, it would have no value. There are plenty of worthless metals. There are even metals with negative value i.e. you need to pay someone to take it away. Gold was used as money because it's rare, easy to work, and hard to destroy. You can bury it in a hole and expect it to still be there. That's all. Platinum is actually a superior metal for such use except ancient people couldn't smelt it.
    – JimmyJames
    Commented Apr 21, 2021 at 14:05
  • gold has multiple uses in electronics. If you want technology you need gold, also monetary aspect, minging costs, jewelry. But I agree it's more of a hold in vaults metal. Silver has more uses in real life, half of the supply is used industrially. Those real attributes gives the metal intrinsic value. Bitcoin has no such values, it's intrinsic value is 0. It's a collectible internet token.
    – ram4nd
    Commented Apr 21, 2021 at 17:33
  • @ram4nd Yes there are a handful things you can do with gold in industry, none of them impact the price significantly other than jewelry. You seem to be missing the point. Value is based on what we think things are worth: full stop. The fact that things that are useful are considered to have value by people that might use them is pretty unsurprising. I think BTC is a ponzi scheme personally but that doesn't change anything about what gives things value.
    – JimmyJames
    Commented Apr 21, 2021 at 17:44
  • @ram4nd I just thought of a good example. Back when Rockefeller was getting rich selling kerosene for lamps, gasoline was considered a useless byproduct. It was literally just dumped on the ground. There wasn't any fundamental difference between the gasoline that people now spend significant parts of their income on in order to get around and the stuff that was considered a nuisance to be rid of. Gold is a commodity with an interesting history but its subject to the same laws of supply and demand as anything else. For example, it's rare now but there might be a lot more in the asteroid belt.
    – JimmyJames
    Commented Apr 21, 2021 at 19:02

So the underlying currency is spent, but BTC market cap is increased.

The "Bitcoin market cap" is a bit of a misnomer. Usually the term is referring to the "total purchasing power of all bitcoins in existence based on the latest spot price of a trading pair with another currency".

You seem to assume that a trade has only one participant and the other side is some abstract construct like the "market cap" or the "economy". Trades have two sides.

When you spend money, it's just somewhere else, it isn't gone. When you sell bitcoins for USD, the other party of that trade is buying bitcoins for USD. The "market cap" only increases if the exchange rate of bitcoin was higher in that trade than the previous spot price. If the exchange rate was lower, the "market cap" decreases. Similarly, when you spend either USD or bitcoins to purchase a sports car, you gain a car, and the car dealer gets they money.

Money inherently doesn't have intrinsic value, that's sort of its point. You may enjoy the article Bitcoin Has No Intrinsic Value — and That’s Great..

  • Bitcoin has no purchasing power, only when it's converted to "real currency". Actually historically money has intrinsic value and currency was a substitute to it. That system worked, this doesn't. History shows this very clearly.
    – ram4nd
    Commented Apr 24, 2021 at 6:49

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