Dustin.I wrote above about my perspective on Cryptocurrency with no experience. I think it was TLDR so here's my question (because I can't make sense of it still).
Can anyone tell me why they value these coins? What's the future in it, especially since they don't really seem to act like currencies and some of them are wildly inflated. Do you think it's a test of survival? I still can't find a way to justify any value in them and I'm having trouble making sense of them.
There's value because people think there is value, that's it. It's not rational
Originally, cryptocurrencies were set to be an alternative to fiat money without the traditional pitfalls of free banking systems, namely fraud and valuation issues thanks to supply/demand.
However, that has since failed and cryptocurrencies no longer act like currencies like you said.
Why is that? Well, let me explain.
To be a currency it is generally agreed upon that the something must have 3 important characteristics.
1. Store of value-Must have some sort of intrinsic value that makes it worth something.
2. Unit of Account-It must be easily used to complete a transaction
3. Medium of exchange-It is widely used and accepted.
BTC and other cryptos fails almost every single one of these classifications.
1. Store of value-Have you seen the exchange rate fluctuations? No currency acts like that short of a banking or international crisis.
2. Unit of account-For some cryptocurrencies, the transaction costs are extremely high/time-consuming. Therefore, people are not using them as a medium of exchange.
3. Medium of exchange-Look back at reason 2, and you will see why it isn't a medium of exchange. It isn't widely used because the costs are too high.
So, what you have then is an asset that has no stable value, is costly to use, and is not widely used. As a result of #1 and #2, people have turned to holding cryptos as a speculative asset.
The market for cryptos is not rational which makes it hard to understand why there is value behind them.
Sorry for the verbal spew, hopefully that makes some sense.