Important to remember that while income and wealth inequality is at record highs, the trillions of dollars injected into the economy are still floating around among the top. People are getting more and more creative with investments (see luxury watches, sneakers, trading cards, collectibles, meme stocks all seeing a significant bump in value in recent years). Bitcoin's price is simply another symptom of this.
What I find new about this recent bull run is that the usual "crypto will upend global financial systems/crypto will change the world" hype is conspicuously missing. All the "Blockchain startups" have basically disappeared. NFTs are worthless. There is little/no VC money going into the space. I think people are finally coming to terms with the fact that it is a speculative investment and nothing more.
> the usual "crypto will upend global financial systems/crypto will change the world" hype is conspicuously missing
That hype is nothing compared to the current hype, the idea that the US Government is going to buy a significant amount of Bitcoin to create a "strategic" reserve.
Every hype cycle gets bigger and bigger even as past ones never amount to anything
Bitcoin is a store of value. Nothing more or less. DAOs and NFTs were just distractions trying to ride the wave. The fundamentals remain strong. It really hasn't changed much in 15 years. The Hacker News comments certainly haven't either. Salty as ever.
By definition store of value means "its ability to purchase other assets in the future without rapidly losing its purchasing power" yet bitcoin has in instances halved it's value. So, no not a store of value.
Meaningless point. All stores of value fluctuate in value relative to each other. Homes and stocks go through periods of doubling and halving in value. Its the entire reason why diversification across asset classes is fundamental to managing your finances.
It’s true that, due to its volatility, Bitcoin is currently not a good store of value, at least in the short term. There’s an underlying truth, though, which is that Bitcoin is a potential store of value. In particular, it has all the necessary qualities of a monetary good, among them durability, divisibility, portability, verifiability, and above all scarcity.
Buying Bitcoin right now involves speculating that others will also see this potential, which is why it’s accurate to describe it for the moment as a speculative asset. The reason buying Bitcoin is a smart bet is that its monetary properties are so good that it has the potential to store a significant percentage of the world’s savings. Once that happens, its volatility will be much lower, so it will be a good store of value. And of course its purchasing power in current U.S. dollars will be much, much higher, which is why it’s a good idea to buy some now.
This is hysterical because four years ago everyone was clamoring on about how the non-fungability of NFTs was the secret sauce to why they’d accrue monetary value.
Taking arguments from the most delusional crypto bros at the time and trying to sell them as something that "everyone" was saying about NFTs in general isn't a way to engage in good faith discussion.
Some NFTs/art might appreciate in value, but most NFTs/"art" are worthless on the open market.
Bitcoin has maintained its fundamentals for 15 years. People place value on mature things. Lindy’s law. It’s fair to speculate Bitcoin will be around for a long time to come.
Not all speculative assets are neccesarily securities. Bitcoin's value fluctuates in a way that makes it's store of value absolutely resemble a stock, albeit with fewer legal protections and guarantees.
BTC is volatile but one can argue has more guarantees than stocks. There's no counterparty risk. No company that can go bankrupt or entity that can fail. BTC is property.
Definitely. Value of life is estimated and changes all the time across cultures, in wars, life insurances, technological tradeoffs like cars that kill people but we accept the cost…
There’s no universal, intrinsic value to life. It’s us that give it value.
Thanks.
I agree with you, although question the usefulness of going into what I perceive as a more metaphysical direction. In this sense it is trivial that nothing has intrinsic value. But putting on my more pragmatist hat, I would say that there is a sense in which basic survival is very much universal and unquestionable value. "I don't want to die", "I want to be happy", are pretty much safe assumptions to make across cultures and history (yeah, people commit suicide, hence it is not universal, but still a pretty safe bet and worth to consider 'universal' for all practical purposes).
You could say any currency is just a bunch of numbers, the US dollar isn’t backed by gold anymore and hasn’t been for a long time.
The question is more like: Would you let everyone dictate the value of a currency and leave it decentralized? Or would you rather a government controlled centralized currency.
I'm not sure people care much about the debt repayment thing? If I rack up a bill at a bar, I can technically force them to accept a sack of pennies as repayment, but most people use digital payments like credit cards. At that point it doesn't really matter if my bank account holds USD, GBP, BTC or any other liquid asset, as long as the payment infrastructure can handle any necessary conversions.
There are no assets for digital currencies so the words you're using to describe it are ontologically nonsensical. It's numbers, binary sequences, in databases. The only thing that makes it all work is your belief and faith that the numbers mean something other than the electricity and infrastructure necessary to maintain the databases. The only real assets in the entire scheme are the computers and power plants with the spinning dynamos necessary for maintaining the illusion of "value".
This is why the masses are always dazed and confused. Your water and food are full of poisons but the numbers in databases are what get the most airtime. Bitcoin is the purest distillation of fiat currencies because there is no longer any actual physical manifestation of it anywhere other than whatever paper key you keep on you as a reminder that there is a database with some numbers which you and those like you collectively believe to be "valuable".
The fact that it is not physical makes Bitcoin more valuable. Why? Because I can store millions of it in my pocket. I can move millions around the world in less than an hour. 24/7. No banks or approvals or intermediaries required. I can keep it in my own custody safety. It is easy and fast to exchange. It is easy to validate its authenticity. The supply is fixed and near impossible to dilute. Etc.. Etc..
that is why Bitcoin is valuable. It’s valuable because it stores value with all the important properties I listed above. Those properties are intrinsic to Bitcoin. Say that for any other asset.
If you’re worried about civilization crashing and Bitcoin becoming worthless. Fair enough, you should diversify into guns and toilet paper.
Well, with toilet paper I can wipe my ass. Even a dollar bill will do the trick but I'm not sure what I can do with a number in a database disconnected from the spinning magnets that make it functional.
I'm not here to convince you that bitcoin is worthless because clearly there are enough people who think it is worth more than $100k so you'd be better off convincing those people to offer you services in exchange for bitcoins instead of arguing with a random stranger about the collapse of civilization.
Fiat can be minted easily. Bitcoin cannot any faster than the rate that it is mined. Massive difference. And the key reason why the dollar continually depreciates.
Fiat means faith and that's all you have with bitcoin, faith in the algorithms that make the ledger very hard to mutate without spending the required "effort" to "mint" the entries on the ledger. You can believe whatever you want but as I said previously you're better off convincing people to sell you services for your bitcoins instead of arguing with random strangers on the internet about cryptographic hashing functions.
All of our assets are denominated with depreciating dollars. It’s nice because our assets always look like they’re going up. Of course a big part of that is just the dollar going down.
The US Dollar is quite the meme! If you’re a US citizen and you have an income in any currency whatever, you have to acquire US Dollars to pay taxes with, or else you’ll eventually wind up in jail :)
North Korea makes significant money through crypto because it’s not possible to regulate at the international level.
The US gov has put a lot of effort into controlling the exchange to USD, but that doesn’t put the brakes on the ability to pay anyone in the world with BTC regardless of sanctions.
Yet the dollar is at record highs, and commodities are at record highs, and the stock market is at record highs, and real estate is at record highs, and Bitcoin is at record highs. So who is hedging what exactly?
If commodities are at record highs, then the dollar is at record lows. Just because other currencies are inflating more, doesn’t mean the USD is getting stronger.
> Yet the dollar is at record highs, and commodities are at record highs, and the stock market is at record highs, and real estate is at record highs, and Bitcoin is at record highs.
I'm not even sure what this means and what you're trying to say.
One can compare two things, say bitcoin and dollar. Dollar is at record lows compared to bitcoin. It's at record lows also compared to the stock market, commodities, real estate, etc.
If people don't care about the dollar, then why is "Bitcoin is over $100k" a headline?
You know why it is a headline?
Because the $ symbol in the headline is what people ACTUALLY care about. You don't even need to ask people: simply watch what people do, and you will learn what they care about.
And what they do is they buy nice things, like Lamborghinis, yachts, homes — and they do so using US dollars.
It definitely has utility but it is at the same time overhyped IMO. Some examples of utility:
1. Cross-border transfers without needing permission from banks or identification
2. A fungible digital asset you can hoard and nobody can physically take from you if you secure the keys.
3. If you are a business in a gray or black market industry, you can accept payments from customers online without needing permission from payment processors. Many types of businesses are effectively banned by the banking system.
4. It provides a way to obfuscate your wealth which can help protect against asset seizures. Similar to #2.
These are all true but far and away the dominant use case is long term (10+ year) store of value/dollar inflation hedge- which sometimes implies #2, but many entities are happy to hold on exchanges. Total BTC market cap at $2T- would guess from how relatively little transaction activity there is that at least $1.5T is due to this use case.
It isn't fungible at all since every coin has a history which in some cases makes it unspendable, so it is highly risky to accept transfers without a third party chain analysis report, otherwise i agree
Report which you don't get from centralized exchanges. So you have to trust them and they should somehow be liable for the provenance of what they sell to you.
Probably most CEX don't allocate UTXOs upon buying, but only for withdrawals
It is scarce, novel, transferable, passed critical mass of popularity long ago, uncensorable to some degree for now. That's all that's needed, it makes it better money than perhaps anything else
Its utility is similar to that of cash. But unlike cash it's (1) less fungible (2) much easier to transport (3) harder to secure from theft and/or destruction * (4) value is more volatile than USD/EUR/CAD/AUD (5) incredibly resource intensive to maintain (and growing!).
It's not an equity, it's a currency.
The Bitcoin network is nigh "indestructible" as long as some folks still consider it useful. This delivers credibility towards the faith required to support some value. If its value dropped by 99% tomorrow (maybe from aggressive global legislation and cooperation among governments), it would still function (but perhaps primarily maintained by sanctioned countries).
I think there's significant pros and cons to cryptocurrency in general and Bitcoin specifically. As the emission rate continues to decrease, I suspect its value will stay relatively high relative to what it is now.
EDIT: I said in (3) above that it's harder to secure bitcoin from destruction (than cash) but in some ways it's remarkably more robust than cash. You can make as many copies of the keys securing your bitcoins as you like (and/or use multi-sig). Your home burning down would destroy cash, but if you have a backup your bitcoins are preserved. However this is in tension with "secure from theft".
New coins are minted with every block. But perhaps you mean to suggest that it's "stable" or "predictable." The emission rate of bitcoin is predictable - but this is predicated on the stability/predictability of the community of miners/stakers. It seems extremely irrational now, but if something were to change such that the community decided to drastically increase or decrease the block reward, they could indeed do so if they found consensus.
> its supply is not responsive to price.
While this is probably true, the value of mining equipment is directly related to the exchange rate of bitcoin (and perhaps its recent rate of increase/decrease). This doesn't impact supply, but it does impact the network OpEx.
Well, not just predictable but hard capped at 21M, about 19.8M (or ~94%) of which have already been mined. So in some sense, inflation tax can't exceed ~6% over all time.
(I don't think it's a sustainable model, as security essentially decays over time, unless fees become extremely high which doesn't seem like a great outcome either. But that's another matter...)
There are a few answers to the long-term security budget:
1) We could maintain fees through compression, that is, by making each on-chain transaction representative of many off-chain transactions. This is beginning to happen with the lightning network, and other technologies are in the works to advance this concept.
2) Mining will become more integrated with other industrial and residential processes, which will reduce the cost of security, from a compensation standpoint. Think bitcoin miner water and space heaters in many homes, etc.
3) It's also likely that in the future institutions that rely heavily on bitcoin will voluntarily subsidize security to some extent, for the same reason they invest in vaults for other instruments. Personally I'm planning to start running a lottery miner at home just for the fun of it.
(2) is interesting, but I'm not sure if resistance heaters will remain common in the long term, as heat pumps become more widely available?
Also this seems like a sort of free-electricity scenario (mining with electricity that was going to be used anyway), but I'm not sure free electricity would reduce mining costs? Wouldn't hardness adjust so that it then becomes all about hardware CapEx (assuming amortized CapEx remains significant)?
I figure mining costs are around 1% of the market cap, and can't go that much lower without serious security risks. So the ecosystem needs to fund that in some way, whether it's through inflation, fees, or donations.
With fees, I also worry they'll be too unpredictable. Like there might be enough demand to justify $20B/year in fees, but it's a function of supply as well, and if scaling solutions like Lightning Network work "too well" (with people rarely needing to settle on-chain) we might end up with way lower fees.
Transacting bitcoin via the lightning network is instant.
Capital gains is a matter of policy and is likely to change at some point as bitcoin succeeds.
There is a lot of utility in bypassing the credit card company cartel which have been abusing their position to create a pseudo government to shut down or kill the value of (maybe to make them easier to buy out?) targeted businesses. Or in some cases impose the christian ideology of the owners upon entire countries, most recently japan.
Cryptocurrency when not being used for speculation or investment nonsense has already successfully provided a pressure release valve for abuse by the credit card cartels. It still sucks, and isn't very convenient or good for most transactions or safety. But it works!
It would be more ideal to just regulate the credit card companies properly but that appears to be beyond current government bodies.
There's utility in being able to move both small and large amounts of value fairly easily. Moving value has high utility for criminals and non-criminals alike. There's utility in remittances, in protecting value from unlawful seizure, and protecting value from incompetent bureaucrats hyper-inflating your national currency.
An important point, whichever way you want to interpret it, is that you can now buy Bitcoin exposure via ETFs like IBIT. Those didn't exist in the last run. The upside is they enable more liquid investment, especially to non-native investors (e.g. those that don't know what a crypto wallet is). The downside is it could drive speculation or allow manipulation by big banks and hedge funds.
Important to remember that while income and wealth inequality is at record highs, the trillions of dollars injected into the economy are still floating around among the top. People are getting more and more creative with investments (see luxury watches, sneakers, trading cards, collectibles, meme stocks all seeing a significant bump in value in recent years). Bitcoin's price is simply another symptom of this.
this makes sense. price inflation is out of control . it's like everything is being inflated in the name of scarcity
> it is a speculative investment and nothing more.
Mostly yes. The only true value I see is that Bitcoin is the new Swiss banking. So if you don’t trust your government then you get yourself some Bitcoins. I realized this while reading a book about Swiss banking. It also used to involve elaborate schemes to preserve client privacy.
It's good in some ways - value goes up, independent of governments - but bad in others - too unstable in value for day to day transactions, wages, mortgages and the like.
L1 blockchains, Monad being a recent success. But blockchain = finance. That is what the use case for blockchain is. Anything will be either platforms to host financial assets, the assets themselves (interesting tokens), or applications to trade / lend / lever up on assets. It's protocolized, open-source finance.
Gambling, money laundering, and more gambling. This is just a repeat of all the companies that promised people could get rich using them, then the price collapsed and they all died.
I don’t think we’re real close to a “French revolution”, but an executed CEO today could be a symptom of the situation. (Of course, we don’t know the motive yet. But just the online discourse around it is telling).
To follow-up on my comment of “online discourse” about this: the Facebook post from the company (…deeply saddened…) has 20.6K laugh emojis vs ~4k in sympathy related)
I didn't go to Johannesburg because my friend had gotten car jacked the week before. In my 4 months in cape town I was the only member of my friend group that didn't get mugged (most with guns).
But Clifton and Camps Bay were super nice. One late night I made a sandwich for the security guard my friend's neighborhood had to hire to stand outside with a kalashankof at night, he was grateful.
Compare that to other more poor African nations, there isn't 1/1000 the tension in the air as there is in SA. The reason for that is the extreme difference in wealth tied to racial tensions.
Because money is power. If you believe in democracy, then extreme inequality is extremely un-democratic. (Note, there is, IMHO, a happy middle-ground: some amount of tolerable inequality, resulting in some amount of tolerable un-democratic-ness)
Money isn't power. Power is power. Money can sometimes be used like power, but not knowing the difference is a recipe for the situation we find ourselves in now.
Money is only powerful as long as it's useful. When the pitchforks come out, dollar bills won't stop them.
Not trying to make assumptions, but it appears he is trying to lean into the "greed is good" line of thinking where vices are actually spun to be virtues. Not only does it allow you to avoid empathy for your fellow man, it allows you to excuse your own excesses as necessary (or even good)
> the usual "crypto will upend global financial systems/crypto will change the world" hype is conspicuously missing. All the "Blockchain startups" have basically disappeared. NFTs are worthless. There is little/no VC money going into the space.
What I find new about this recent bull run is that the usual "crypto will upend global financial systems/crypto will change the world" hype is conspicuously missing. All the "Blockchain startups" have basically disappeared. NFTs are worthless. There is little/no VC money going into the space. I think people are finally coming to terms with the fact that it is a speculative investment and nothing more.