--

# Bitcoin: A Game of Trust, Scarcity, and Value

Bitcoin, the world's first decentralized digital currency, has often been compared to a game. This comparison is not about Bitcoin being a form of entertainment, but rather about the psychological and economic mechanisms that drive its use and value.

## Bitcoin as a Game

The game-like aspects of Bitcoin are rooted in its design and the psychological factors that influence user behavior. Cryptocurrencies often contain various incentive mechanisms that motivate users to specific actions. For instance, the concept of rewards plays a significant role in shaping the motivation of users. Holding and maintaining a certain amount of cryptocurrency can lead to rewards, a system based on positive incentives influencing users’ psyche[1].

Moreover, the fear of missing out (FOMO) is a strong psychological factor that appears to influence crypto-trading[4]. This fear can lead to a rush of investment when prices are rising, creating a game-like scenario where people feel hooked onto it.

## Bitcoin Halving

Bitcoin halving is a key event that adds to the game-like scenario. The halving policy was written into Bitcoin's mining algorithm to counteract inflation by maintaining scarcity[2]. Historically, the price of Bitcoin has followed a four-year cycle believed to be associated with each halving. There has been a pattern of rallies, pullbacks, and blow-off tops before and after the halving[5]. This cyclical nature of Bitcoin's price can create anticipation and excitement among investors, similar to the buildup to a major event in a game.

## Intrinsic Value, Fungibility, Scarcity, and Ability to Transact

Bitcoin's value comes from multiple factors. Its security, scarcity, portability, and other attributes make BTC valuable as both a currency and a store of value[12]. Bitcoin is finitely scarce, and it is more easily divisible and more easily transferable than its incumbent competitors[9].

The idea of Bitcoin having no intrinsic value is a holdover myth from mainstream economic thinking. Bitcoin's intrinsic value is that it as a network provides true scarcity and true sovereignty. Any individual using Bitcoin can be guaranteed these properties[3].

Bitcoin's scarcity is also enhanced by its halving events, which reduce the rate of new Bitcoin creation, causing scarcity and potentially driving up the price[11].

In conclusion, Bitcoin does create a game-like scenario, driven by psychological factors, its design, and economic mechanisms. The recent halving events, its intrinsic value, fungibility, scarcity, and ability to transact all contribute to this game-like nature. However, it's important to remember that while it may resemble a game, the stakes are real, and the outcomes can have significant financial implications.

Citations:
[1] Psychology and Trust in the Cryptocurrency Market https://kanga.exchange/psychology-in-cryptocurrency-design-the-impact-of-psychological-aspects-on-cryptocurrency-design
[2] Bitcoin Halving 2024 – What You Need To Know https://www.forbes.com/uk/advisor/investing/cryptocurrency/bitcoin-halving/
[3] No Intrinsic Value https://www.reddit.com/r/Bitcoin/comments/18oszqr/no_intrinsic_value/?rdt=37848
[4] The psychology of cryptocurrency trading: Risk and protective factors https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8996802/
[5] A Historical Look at BTC Price Post-Halving + Predictions Roundup | BitPay https://bitpay.com/blog/analyzing-past-btc-halvings/
[6] Does Bitcoin Have Intrinsic Value? https://kinesis.money/blog/does-bitcoin-have-intrinsic-value/
[7] ! Are You A Robot? https://www.sciencedirect.com/science/article/abs/pii/S074756322200259X
[8] Bitcoin Halving: How it works and Why it matters https://cointelegraph.com/learn/bitcoin-halving-how-does-the-halving-cycle-work-and-why-does-it-matter
[9] Bitcoin is Not Backed by Nothing - Unchained https://unchained.com/blog/bitcoin-is-not-backed-by-nothing/
[10] Examining the Psychological State Analysis Relationship Between Bitcoin Prices and COVID-19 https://www.frontiersin.org/articles/10.3389/fpsyg.2021.647691
[11] What is Bitcoin Halving & How Does it Affect BTC's Price? / Axi https://www.axi.com/int/blog/education/cryptocurrencies/bitcoin-halving
[12] Why Does Bitcoin Have Value? | Binance Academy https://academy.binance.com/en/articles/why-does-bitcoin-have-value
[13] TEM Journal. Volume 12, Issue 1, pages 482-493, ISSN 2217-8309, DOI: 10.18421/TEM121-58, February 2023. https://www.temjournal.com/content/121/TEMJournalFebruary2023_482_493.pdf
[14] What Is Bitcoin Halving? How Does It Affect Bitcoin Price? https://crypto.com/bitcoin/what-is-bitcoin-halving
[15] Can Bitcoin move beyond technology to become a real currency? https://www.linkedin.com/pulse/can-bitcoin-move-beyond-technology-become-real-currency-andrew-levin
[16] The psychology of cryptocurrency trading: Risk and protective factors https://akjournals.com/view/journals/2006/10/2/article-p201.xml
[17] What Is Bitcoin Halving? Definition, How It Works, Why It Matters https://www.investopedia.com/bitcoin-halving-4843769
[18] Bitcoin Vs. Gold https://blog.injective.com/en/bitcoin-vs-gold/
[19] Examining the Psychological State Analysis Relationship Between Bitcoin Prices and COVID-19 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8019715/
[20] What Is Bitcoin Halving and How Does It Affect BTC Price? | Crypto.com https://crypto.com/university/what-is-bitcoin-halving
[21] Why Do Bitcoins Have Value? https://www.investopedia.com/ask/answers/100314/why-do-bitcoins-have-value.asp
[22] ! Are You A Robot? https://www.sciencedirect.com/science/article/abs/pii/S0191886921008321
[23] The Bitcoin Halving Explained: Why It Matters For Investors https://www.forbes.com/sites/digital-assets/2023/11/01/the-bitcoin-halving-explained-why-it-matters-for-investors/
[24] [PDF] F.18 The Recording of Fungible Crypto Assets in Macroeconomic ... https://www.imf.org/external/pubs/ft/bop/2022/pdf/39/22-05.pdf

--

--

Software Engineers Blog (TheGeneralAICo.)

For software consulting join us on :- https://thegeneralaico.carrd.co. Join the world's biggest online learning project, The STEM University on Udemy.