[knownothing]

> As long as you don't buy in at one of the speculative bubbles

I'm not so sure about that. You could have bought BTC anytime before the past week or so and it would have appreciated significantly, regardless of whether you bought it in a peak or trough. It's just a question of magnitude. E.g. if you bought 1 BTC at the lowest or highest price in 2015 you would still have outrageous returns on it today.

This is not to say it will continue being the case going forward but it's crazy to look back at.

[krrrh]

Let’s see how everyone feels after the next correction. The headlines today seem to change every time I load google news. Up 10%, down 20%. There’s no way to know where it will go from here.

[heurist]

I had bought about $50 worth of BTC a year ago and it's now worth $800. Did the bitcoin economy grow that much in the last year? I've heard of increasing adoption by banks and governments but I don't know to what extent they're investing. I don't follow it closely and at this valuation, I have no idea whether it's a good investment or not. Should I sell it now before the inevitable crash? Should I buy more? I don't trust myself to understand this kind of speculation yet.

[ChrisRazzzz]

Ask yourself first, why did the value climb 16x? If you cant answer that then I caution purchasing more. I would also spend some time understanding what "investing" is vs what speculating\gambling is.

This is gambling.

[Frogolocalypse]

> Ask yourself first, why did the value climb 16x?

Oh I can do that. I expect it to be 100x or more greater than what it is today. The reason why it is 16 as opposed to 8 or 32 is simply the speed of the uptake. It is going up in value because it is in the process of deflating the fixed-asset debt bubble. The only real question is, how big is that bubble.

> I would also spend some time understanding what "investing"

Investing is understanding what the value proposition is, and investing accordingly. You don't, and that's fine. Don't assume that other people have your understanding of the asset class in question though.

The question you should be asking is, why do you think it's important when other people invest in things that you don't understand.

[pryelluw]

Since you are clearly very well informed (no sarcasm intended), do you mind helping me with something Ive been struggling with?

In your opinion, what is the intrinsic value of Bitcoin?

[Frogolocalypse]

> In your opinion, what is the intrinsic value of Bitcoin?

I use the 1:10000 rule (https://xkcd.com/1053/) for this argument. It is my opinion that the intrinsic value of bitcoin is far far greater than anyone really comprehends. People generally are too focused on people just buying and selling the asset, but not about the cryptographic proof, and incentive structure that perpetuates the network functioning. So when people like to ask what the intrinsic value of bitcoin is, I say :

You are thinking of the store of value property without the cryptographic property that secures it. You are talking about it as one would talk about valuable shells, and even shell sellers, and not the security that separates it from all forms of value exchange before it. To understand the intrinsic value of bitcoin it is good to use the analogy of an envelope. So i ask you : does an envelope have intrinsic value?

If I have a letter that I need to send securely, would I prefer to send it open, and ready to be read? Or would I prefer for it to be sent within the confines of an envelope? Now let's think... would I prefer to just leave an open envelope, or would I think it necessary to put some seal across it to ensure that it isn't opened, and read whilst en-route. Does a sealable envelope have more intrinsic value than an unsealable one? Hmm... but what if someone can counterfeit the seal? I need some method of ensuring that the message I want to get to that person isn't read, and preferably, isn't even identified as a message. That's when you need to get lawyers involved. Sounds expensive. There's obviously something intrinsically valuable about such a service, because many people pay oh-so-very-much money for it.

Now let's imagine we're not talking about letters, we're talking about money. Would you address a $100 note through the mail to your child for their birthday? You'd pay for a stamp at least. Would you encase it in an envelope that you paid for at the local post-shop? Hmm... bill in the envelope. Anyone will be able to see that it is money. Perhaps encase it in a card? What if it is $1000? $10,000? $10 million? Does the protection service of an envelope somehow decrease because the value of the contents of the package increases? It's the opposite, isn't it? Bitcoin is both the cryptographically sealed envelope, and the network to deliver it.

What say you? Is an envelope intrinsically valuable?

[pointsphere]

There is no "intrinsic value", but the subjective value of Bitcoin is that could be a better money than any money that has existed so far.

Strictly speaking "intrinsic value" does not exist, there is only subjective value placed on things based on their properties and usefulness to humans.

Gold only has "intrinsic value" because we value that we can use it to build machines or shiny jewellery. But that is only valuable because we value machines and shiny things. Even air is only valuable to us because we require it to survive, but anaerobic lifeforms don't care. So the value is not intrinsic, but only subjectively "intrinsic" because most people value staying alive.

So the subjective value of Bitcoin is based on its its properties. Humans happen to use money, and the properties of Bitcoin could theoretically make it "better" money than any money that has existed so far.

Anything can be money, but is judged on how "good" a money it is depending on several criteria such as:

1.) Scarcity: Only a select group can create money.

2.) Durability: Should be resistant to aging and natural elements.

3.) Divisibility: Can be divided into smaller sub-units.

4.) Transportability: Easy to transport and transact in.

5.) Recognizability: Should be difficult to counterfeit.

6.) Fungibility: Any $1 bill is equal to any other $1 bill.

Bitcoin could theoretically be better in every category.

However, it is still suffering from lots of problems.

Currently "portability" is often suffering due to network congestion and high fees, which also impacts "divisibility" as it becomes impractical to move small amounts.

However, there's still a good chance that either Bitcoin Core or Bitcoin Cash or any other of the current cryptocurrencies will find a way to scale and retain good portability and divisibility.

tl;dr Bitcoin has no "intrinsic value", nothing does, but the subjective value is that it could be better money than any other.

[CodingGuy]

https://trends.google.com/trends/explore?q=bitcoin

This is the reason why the price is exploding.

[24gttghh]

I think this one is a bit more telling:

https://trends.google.com/trends/explore?date=all&geo=NG&q=b...

(it's for Nigeria)

And the global map for since 2004:

https://trends.google.com/trends/explore?date=all&q=bitcoin

With the search term being most popular in Nigeria.

[CodingGuy]

Actually Google AdWords says that you have an average of 40k searches per month for "bitcoin" in Nigeria and more than 1 mio. searches/month in the US.

[heurist]

That only indicates demand for botcoin, not the reason for demand. Though emerging markets adopting it might explain the growth. It doesn't help assess bitcoin's value except to indicate it might have additional stability as a currency in some small nations.

[knownothing]

Yes. But I already stated that in my response. We do not know the future and you shouldn't trust anyone who tells you differently.

My point is that there have been skeptics and people saying it's a bubble or too volatile for nearly all of Bitcoin's history. But if you bought BTC and held it--at any high or low, for any significant amount of time--you made a lot of money (either realized or unrealized, that doesn't matter).

[goodside]

> But if you bought BTC and held it--at any high or low, for any significant amount of time--you made a lot of money (either realized or unrealized, that doesn't matter).

This isn't entirely true. If you bought Bitcoin anywhere near the height of the late-2013 mania (which is of course a lot of people, since that's why the price was so high), you lost half your value within a month or two and then had to hold until 2017 before you started to break even. You lost 70% if you held for a year and a half and gave up.

The market from June to November 2011 was even more disastrous, falling from $29 to almost $2 and not recovering until February 2013.

These are obviously cherry-picked dates, and you'd clearly have made a profit eventually if you kept holding, but it's still very possible to hold Bitcoin for years and lose money.

[knownothing]

Right. You would had to have bought and held until today for my claim to be true (and it is only true at the time I write this). But it's still the case that you could have bought in any peak or trough in the periods you're referring to and still have significant realized/unrealized gains right now.

[krrrh]

Sure it’s true, but it’s a tautology to say it when something is at an all-time high.

[knownothing]

What's your point? I basically say that in my posts.

[csomar]

The difficult part is holding through the bear period. I'm pretty sure not so many investors can do that.

[knownothing]

Correct. The most difficult part of trading/investing/betting (call it what you want) is often confronting your own tolerance for risk and uncertainty.

[mirimir]

The thing is, for someone who bought a year or more ago, anything less than a 50% correction is small. Also, prudent folk take some of their winnings out of play.

[Frogolocalypse]

Bitcoin would have to drop 85% in value from where it is now to only have doubled in value over the past year. I'll take 100% yearly value growth any day of the week.

[geezerjay]

Your argument boils down to claiming that a pump and dump scheme is sound investment because those who enter early can still earn some cash when the bubble bursts.

Ponzi schemes are similarly profitable but for some reason they are frowned upon.

[mirimir]

I agree with you that Bitcoin price is hugely speculative. There have been many bubbles. Most notably, $100->$1000->$200, in late 2013 through 2014, and $500->$10000->??? in 2016-2017. The future is unknowable, but arguably much of the overall ~10^6 increase since 2010 reflects real growth in demand. I mean, only some thousands were fully aware of Bitcoin in 2010-2011. Now billions are.

Even so, I don't believe that it's a Ponzi scheme. Maybe someone controlling Mt Gox accounts orchestrated the 2013-2014 bubble. Mt Gox had huge market share back then. But now, I doubt that any player dominates enough to run a Ponzi scheme.

[Frogolocalypse]

No it doesn't. Bitcoin is money. It is sound money. The ponzi scheme is the fixed asset debt market, and bitcoin is its reckoning.

[lunchables]

That's the same as it's been for the last few years. This isn't even a huge correction (yet) in bitcoin terms.