[smokeyj]

Is currency ever a good store of value? If you're a billionaire you're certainly not storing it in fiat.

Bitcoin being a globally distributed ledger has the ability to represent shares of commodities and equities. It's why Delaware is considering incorporating blockchain tech.

You could imagine merchants pricing in shares of Apple - and customers paying in shares of oil and Google - to be settled at PoS. Check out shapeshift.io to see how fluid crypto-to-crypto trades can be.

http://www.wsj.com/articles/delaware-considers-using-blockch...

[mikeash]

Stable currencies are a good short to medium term store of value. If I withdraw $100 from the ATM, I can spend it a week or a month later and be fairly confident that it'll be worth essentially the same. I'm not rushing to the stores on payday to buy all of my supplies before fluctuations wreck my money.

This is not the case for BTC or AAPL. If I get 1BTC today, some new MtGox story might wreck its value before I buy groceries with it tomorrow. AAPL is unlikely to move as much, but it moves around by several percent on a fairly regular basis, and some huge negative news could send it plunging.

I could imagine your scenario of pricing in AAPL and paying in oil and GOOG in a technological sense, but I have a hard time imagining anyone actually doing it.

[smokeyj]

> I could imagine your scenario of pricing in AAPL and paying in oil and GOOG in a technological sense, but I have a hard time imagining anyone actually doing it.

In Kenya people trade in cell phone minutes (MPESA). It's not a huge stretch to imagine trading in units of energy or other commodities.

It seems to me that having an instant settlement layer challenges the need for currency as an intermediary.

[TheSpiceIsLife]

Which reinforces @mikeash's point.

1 cell phone minute today is 1 cell phone minute tomorrow - it's a real thing with real utility. Not so with BTC.

[smokeyj]

Each bitcoin is divisible up to 8 digits and can be used to represent certificates - potentially representing cell phone minutes, or certificates to equity or commodities - for the cost of .000000001 satoshi.

Now the kicker is, the bitcoin transaction fee is increasing rapidly due to (self-induced, political and totally fixable) bottlenecks in the network. I foresee an alternative taking over bitcoin if this isn't resolved soon.

[mikeash]

The other kicker is that if 0.00001 (whatever the actual number would be) buys one cell phone minute today, it might buy two tomorrow, or one half. Short-term volatility makes it difficult to use as currency.

[smokeyj]

You're missing my point. You don't ever have to use bitcoin as a currency. Instead of holding say - 1 bitcoin - you could own a certificate for oil (or a diversified basket) - represented on the blockchain (still .000000001 satoshi).

So when you want to buy cell phone minutes, you simply convert your oil certificate to cell minute certificates through a settlement layer. This means merchants can denominate prices in whatever they'd like - and buyers can pay in whatever currency/asset they'd like.

[dragontamer]

> Is currency ever a good store of value? If you're a billionaire you're certainly not storing it in fiat.

What? Do you change all of your savings into stocks or bonds each month?

Currency is the best short-term store of value. And "short term" means anything I plan to use in the next 6 months (My emergency fund will last 6 months without me being forced to touch my bonds or stocks, giving me breathing room for when to liquidate my long-term savings.)

I trust cash to be stable in the short term, even if it loses value long-term. I can't trust BTC as either long-term or even short-term storage.

BTC utterly fails at "6-month" storage due to its volatility. BTC has no history for growing (stocks are based on company profits. So as long as companies are profitable, they'll grow). Bonds are strong guarantees for growing: only bankruptcy can prevent me from getting me money promised through a bond.

What guarantees do I have for long-term BTC storage? Nothing. Absolutely nothing.

Short term? Well, again, stability is more important than gains in the short term (which is why my short-term is cash... not stocks).

[smokeyj]

I never suggested storing your savings in bitcoin. I'm saying the future of storing value is in commodities and equities represented on a blockchain - along with a real time settlement layer allowing people to charge and pay in any denomination of their hearts desire. Heck, you could even pay in certificates of USD represented on the Blockchain if you like.

[dragontamer]

Without the value aspect of it, what would incentivize people to perform proof of work?

Work costs money: like electricity isn't free at the scale of the BTC Network. It costs thousands of dollars of electricity to run those BTC mining rigs to verify the ledger.

----------

If you're saying the future of "blockchains" is just a cryptographically signed ledger, without any proof of work or BTCs being assigned, I think I can agree with you on that.

But at the moment, "blockchain" is the new cloud. No one really knows what a "blockchain" is anymore, aside from a new electronic ledger of some kind. BTC is clearly a blockchain, but a lot of the "blockchain-based technologies" are nothing like BTC at all.

A lot of these "blockchains" are just centralized banks electronically verifying transactions. Like a notarized bill of sale, except the 'notarized' portion is electronic. Proof of work and all that stuff just don't exist in a lot of the "blockchain" solutions coming out.

[smokeyj]

In theory users could pay a transaction fee denominated in a commodity. Once mined the miner can convert to another asset type. But say you're saving in terms of kegs of beer and can't pay a fraction of a keg - you could keep an energy fund so you can pay a highly granular transaction fee. Now, if the miner doesn't think the certificate is valid or reputable it won't be included.

[james0001]

Hey smokey, you seem to have a good grasp of practical blockchain applications. Was wondering if you think it is feasible to use Blockchain for organic agricultural commodities? The idea being that the transparency blockchain can bring could help more accurately price organic ag commodities, which still are undervalued at that level (no transparency in this market, still getting lumped in with regular ag commodities). Just curious, like a organic commodities exchange using blockchain for significantly faster settlement and ability to audit the identity of a commodity (quantity, quality, location/logistics). Wondering if you think blockchain could have a use in something like that?

[smokeyj]

One problem with organic produce is the shelf-life making speculation potentially tricky. I could see a role for futures and prediction markets to hedge risk and better find the market rate. Check out Augur for example https://www.augur.net/

[makomk]

For billionaires or even mere millionaires, currency isn't some fungible thing anymore. Remember that bank deposit insurance is capped at a few hundred thousand.