25’000 years ago our ancestors invented Gods, and Deities. They came in all their forms – the stars, the sun, animals, stones, trees, altars, temples, and even druid priests wearing horse heads with antlers.

Belief and believers

They believed in these Gods.

Our ancestors were willing to part with offerings of something valuable – animals, food, or a virgin, in return for the promise of some reward down-the-line. As long as people “believed” in the promise, that God was valuable.

Most religions started with no believers. At their peak they had 100% believers. More believers in a God, the more powerful he became. Not every God made it. There were sometimes just too many of them. If a God wasn’t going to draw in the crowds, his best bet was to affiliate himself with the one who was. Then he could call himself a messenger, prophet, priest, or whatever was needed to get holy status. He could become an “Alt-God”, just like the real one, but promising faster results.

There were many competing Gods. The ancient Greeks seemed to invent them all the time. We had Gods of fire, wind, stars, rivers and the sea amongst dozens of others. It was tough to choose which one to worship. A God with no believers was worthless. The safest strategy was to believe in the most valuable God. As a general rule, it made sense to go with the crowd. Believe in the same one that everyone else believed in.

Worshipping the wrong God could mean death. When a religion got going, it generally didn’t do you any good to say, “It’s a crock of shit. I don’t believe”.

The early believers were the survivors. The trick was to get on the bandwagon early, and start preaching. Better still, make sure you are the one who had a vision. Be the one hears God’s messages. Get in the loop so you can pass the messages backwards and forwards between the people and God.

Whether the Gods of our ancestors were invisible or intangible didn’t matter to our them. All they had to do was believe. Some may have called it irrational. Some thought the God to be useless. Some dared to call him a “fraud”. Generally they were put to death.

Belief is all they needed to make their God valuable. The belief could be exchanged for future salvation or a more immediate blessing.

Believing in the intangible today.

Today we believe in the value of a lot of irrational, intangible or fairly useless things. Examples are rare paintings, gold bars or a fistful of paper dollars. All of them are intrinsically worthless. We can’t eat them. They won’t keep us warm. If you were the only person on a desert-island, these things would be worthless.

Leonardo da Vinci’s “Mundi” painting.

Recently a painting supposedly by Leonardo da Vinci sold for nearly half a billion dollars? What made that piece of canvas and paint worth more than the lifetime of pleasure that half a billion dollars could buy? What made the buyer or the seller want to own those worthless dollars in the first place? The’re only digits in a bank balance. What’s the point of a bank balance? It’s only digits in the ether.

What makes a painting worth £45 in 1958, $10’000 in 2005 and nearly half a billion dollars in 2017? Did the value of money decline that much? Or did the number of believers in the painting’s value rise?

The seller of Leonardo’s “Mundi” only needed only two believers with deep pockets. He found them both. The auction winner was the one with the deepest pockets.

There are only 200 da Vinci works of art in existence. Not everyone can own one. The number of believers in his value just went up. It’ll cost you more than the price of a palace to buy the next one. At least that’s what I believe.

Gold

Why is gold so valuable? We dig it out of one hole, only to bury it in another. The Krugerrands above may look like money, but you’d never buy a cup of coffee with one. Is it the cost of mining which makes it valable? Or is it simply the “belief” that it’s a store of value?

If you can exchange it, then it’s valuable.

The value, today, lies in exchangeability. We “believe” we can exchange those dollars, the Leonardo, or a bar of gold for something we need or want. We “believe” that everyone else – or at least someone “believes” in it. Like the ancient Gods, as long as there are believers, there is value in these useless assets. You only need just one person to “believe” in the value of your asset.

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Bitcoin

Now to bitcoin. It’s like your bank balance. It has no intrinsic value. You can’t touch it, eat it or wear it. You can’t even look at it. It’s as worthless as that fistful of dollars, – unless you can find someone who wants them.

Bitcoin only has a value if the next guy believes it has value, and if he will take it off you, giving you something you want in exchange. If nobody believes in it, then it’s worthless.

As of today, bitcoin does not have very many believers – only one in 800 adults own any bitcoin. The unanswered question is “Will it stop here?”.

Will bitcoin be like the trees the druids worshipped? When the believers died out, they burned the tree to keep warm.

Will bitcoin become gold 2.0? Will people start to “believe” that it is a store of value?

If, like some of the ancient religions, this bitcoin is a big one, if it will become gold 2.0, then it will pay to get on the band-wagon early.

There is only a limited number of bitcoins. There will never be more than 21 million of them. Nearly 17 million have already been mined. It will take 100+ years to mine the remaining 4 million.

Do you believe that all millionaires will eventually want to own a bitcoin? There are less coins than there are millionaires. They can’t all have one. Just like the Leonardo, they can’t all own one.

If, tomorrow, the government decides they don’t like that millionaire, they can freeze his bank account. They can’t freeze his bitcoin. Does that make bitcoin more valuable than the bank balance?

What about you? Do you want to own a bitcoin?. If you “believe” that there will always be others who “believe” in it, then you had better hurry up while you can still afford it and while you can still get one.

If the number of people believing it is a store of value grows, so will its value.