[vasilipupkin]

Why can't people in Latin America just buy gold or dollars to store value ? I mean it's a circular argument. To say bitcoin is a store of value, there has to be an apriori reason why it has value. It can't be a store of value because it is. Right ?

[ericb]

It is like if you and I took turns paying for lunch periodically and we used a ledger to track who paid what, and who owes who. The ledger itself is bitcoin. The ledger paper is worthless, but the entries on it "have value." For you and I, the ledger "has value" because that's where the history is.

If you printed 50 new blank ledgers, they wouldn't have value because they don't have the history and our mutual agreement.

Bitcoin is the worldwide ledger (WWL).

[matt_wulfeck]

Except it takes usually 2 to 3 days for the ink to dry in the ledger, and costs you $3 every time you wrote in it, and consumed more electricity than your house does in a week, and you do it this way because you want it to be trustless.

[lunchables]

His analogy isn't perfect with all respect to bitcoin, but it is for that explanation. And transaction fees doesn't really matter when it's used as long term value storage for a significant amount of money. The small transaction fee is basically irrelevant.

[vasilipupkin]

I don't get it. why is it a store of value? what makes it have value? For example, suppose I just got paid and I buy bitcoin today. What is the force that will make my bitcoins not be worth 0.5X over the next 20 years ?

[vasilipupkin]

ok, so I had an upsight, to borrow Neil Stephenson's terminology. Speficifcally, that POW coins are inherently flawed. There is no fundamental reason to own one of them.

POS coins on the other hand, are a different animal. If you own a POS coin, you get paid transaction fees for helping verify transactions. Thus, POS coins make fundamental sense, can be valued accordingly and create a reason to actually own the coin - and should, therefore, prove a better store of value than POW coins. Of course, POS is somewhat theoretical, but if Ethereum can pull it off, it should supersede bitcoin. Now, ELI5 why I am wrong, please.

[droffel]

Try this article from Paul Sztorc:

http://www.truthcoin.info/blog/pow-cheapest/

Definitely not ELI5 material though.

[vasilipupkin]

ok, I skimmed through it. I admit, I didn't get it. However, I don't think it addresses my fundamental point: there is no reason beyond speculation to own a POW coin. There is a reason, independent of speculation, to own a POS coin.

[Frogolocalypse]

> there is no reason beyond speculation to own a POW coin.

The incentives of a pow coin align with the users, not the owners, so there's no reason any user would prefer to use another incentive structure.

> There is a reason, independent of speculation, to own a POS coin.

It is not trustless. You are reliant upon the owners not re-writing the consensus rules to your detriment.

[ericb]

POW relies on self-interest, though.

For example, if you own the most of a particular POW coin, it is not in your interest to corrupt the ledger because you will suffer the loss of faith in the currency worse than anyone.

[vasilipupkin]

but if you are one of the owners, how can owners rewrite the rules to your detriment? or, why would they? whether you own $10k worth of coins, or $10 million, in the case of POS, the incentives are aligned and the coin owners earn transaction fees. In the POW case, what underpins the value of the coin?

[throwaway413]

WWL, now that’s good...checks domains

[seibelj]

Uh... you have to physically store those things? Easy to steal? Can't send to someone across the country instantly? Bitcoin is way better than gold or dollars when you are in an unstable country. People in Venezuela are huge crypto-heads for that reason

[jonknee]

> Easy to steal?

Bitcoin is perhaps the most commonly stolen store of value the world has ever seen. It has its advantages, but being difficult to steal (or lose permanently!) is not one of them.

[seibelj]

Perhaps it's easier to steal in different ways. Computer-based hacks, bugs, social based attacks (phishing, etc.) sure... but harder to break into a house and steal, as the private key can be hidden better. Easy to assume the safe is where 20 gold bars are.

[pfisch]

Pretty sure cash is the most commonly stolen store of value in the world.

[lunchables]

Source please.

[vasilipupkin]

Right, but you could create a crypto thingie that is tied to gold or dollars. I agree with what you said but it doesn't tell me how to calculate the price of bitcoin

[anonymous5133]

It can get seized by the government. Any traditional assets or physical assets that is. Bitcoin and crypto is significantly harder to do that. You basically need to get the private key. IMO, this is the main reason that it is a a superior store of value compared to gold, dollars or traditional assets. If your government is corrupt then it is reasonable that the police will seize your gold. Not much of a store of value if it can just be taken away from you.

[vasilipupkin]

Understood, but that doesn't explain why it's a store of value meaning why can't bitcoin cost 5k vs 10k

[hw]

supply vs demand. More and more people are getting introduced to bitcoin, understanding it and buying into it. There's also a cap on the total number of bitcoins, so scarcity is another factor. Just like why gold is worth X instead of X/2

[geezerjay]

> More and more people are getting introduced to bitcoin, understanding it and buying into it.

That's pretty much the definition of a pump-and-dump scheme.

[vasilipupkin]

ok, but gold sometimes is worth X and sometimes X/2, if you actually plot the chart of gold. Gold is not exactly a great investment

[jcoffland]

Why are you easily able to see gold as having intrinsic value but not Bitcoin? Both are valuable because a lot of people say so. There is no other value but utility and most currencies, including the dollar, do not have any utility other than their ability to function as currency.

[vasilipupkin]

Gold has physical value, right ? For example, used in electronics, jewelry, etc. but gold is a terrible investment so if bitcoin is like gold should we also assume it's a terrible investment like gold ?