[wpietri]

It surprises me to see this downvoted.

One fundamental of investing is that stocks represent an economically productive asset. In contrast, commodities just sit there. If I buy a chunk of a company, that company is working to become a bigger, more effective, more value-generating company. If I buy an ounce of gold, it stays an ounce of gold.

Index funds represent a broader bet still. Because they're composed of many things, volatility is lower and you're betting on whatever the common factors of the index are. So buying an SP500 index fund could easily be said to be a bet on the American economy.

And in many ways, Bitcoin is worse than gold. The historical value of gold is known. Bitcoin is new. Gold's floor price is set by the practical use value of it, both industrial and decorative. Bitcoin's floor price is that of bits. That is, zero. The gold market is broad, with producers and consumers all over the world, and open markets in many countries. Bitcoin is effectively controlled by a relatively small number of people and requires careful long-term cooperation of those people.

So it seems pretty obvious to me that Bitcoin is much higher risk. Which can mean higher reward. But as anybody who has shares in a failed startup knows, higher risk doesn't guarantee higher reward.

[Fjolsvith]

I beg to differ with regards to your valuation of Bitcoin. It, like gold, has a practical use value. It, also like gold, has a value attributed to it due to it's rarity. However, Bitcoin has an advantage over gold, in that it can be traded without having to be transported _at cost_. This is why so many people are bullish on it.

Oh, and so many people "who are in control of it" have too much of their own money invested into it to allow it to fail.

[saalweachter]

The advantage of gold over Bitcoin is that you can evaluate the non-"it's gold!" uses of gold and make a good guess of its floor value, what it'd be worth if people weren't hoarding it, and say something like "it might be 2-3x overpriced right now, but probably not more than 10x overpriced right now". So you can say, worst case, you probably won't lose more than half the money you put in gold, and almost certainly not all of it.

What is the floor price of Bitcoin, once you eliminate all speculation/hoarding?

[wpietri]

Sorry, I missed this in all the noise.

Gold has use value in that even if the commodity speculation activity drops to zero, I can still turn the gold into jewelery and sell that. Or I could sell it to somebody who needs it for industrial purposes. Heck, I could sell it to the people who put gold leaf on candy.

Bitcoin has no such intrinsic floor. It only has exchange value. If people stop accepting it as a medium of exchange, you're left with bits. Bits are approximately free.

[alexasmyths]

Ya. As per my comment below, it's a) the dissonance between a 'tech view of BTC' and an 'economic/financial' view of BTC and b) the religious nature of BTC hype. And by 'religious' I don't actually mean 'religious' rather, the old 'religious arguments over programming languages and frameworks' kind of trope.

Commenting against BTC is sure to get you down-voted.

It's ok though, it's just one of many HN quirks we're all used to :)

[brianwawok]

It doesn't surprise me. HN is very pro tech, even when they don't understand the foundation of what they are betting on.

I own 1 share of a SP500 ETF. That gives me an actual fractional ownership of Apple. That gives me an actual cut of the dividends of real american companies. It has an actual meaning of what you own.

What does 1 BTC give you? What is the fundamental purpose of a BTC?

Tulips went up in price too, but they were not a very smart investments. Tulip chases do not win in the long term.

[Fjolsvith]

What if you owned a US dollar (an actual dollar bill)? That gives you an actual fractional ownership of what? An American government? No. You have a currency, a store of value that can be used to pay a debt.

Owning a BTC is the same as owning a dollar, functionally. The main difference is that dollars, on the whole, tend to lose value, and that BTC tends to gain.