[grandalf]

These are all good points except for the idea that it won't be used like normal money. The speculative environment and price volatility resulting from that, is all by design. The mining incentive creates a "boom" environment to help bootstrap the currency.

Now, a few years later, BTC is blessed by regulators. The next phase of world domination is for the governance model of Bitcoin to start to seem far better than fiat governance models. This is just a matter of time.

[blowski]

That seems like wishful thinking. You might end up in being correct, but I've yet to see firm evidence that suggests that will be the case.

[psyc]

How often does one get "firm evidence" about how future human affairs unfold?

[blowski]

We quite often get firm evidence, and the evidence turns out to be wrong. But I'm a sceptic, which is why I never bought any Bitcoins for $1 in 2012.

[grandalf]

I have no idea whether that will happen, just trying to express what I think the rational case is for investing in Bitcoin today.

Goldbugs / conspiracy theorists have a line of argument where they describe all the fiat currencies that have ultimately experienced corruption and hyper-inflation. So I think it's fair to say that running a fiat currency successfully for more than 500 years is something that is unprecedented in the history of the world.

So over a long time horizon this makes Bitcoin extremely interesting. It's not a question of whether 1 BTC will one day be worth millions of USD, it's a question of when. There is a good chance it will be hundreds of years from now if at all.

Much financial risk is in fact sovereign risk in one form or another. This doesn't mean it's rational to hoard gold or BTC, but for entities that have a long-term view of their own future, it makes sense to care a little bit and to diversify.

Even if 10% of the long-term entities diversify into Bitcoin, that alone will drive the price up substantially. It's far too soon for that to have happened.

We are also entering an era where politics are once again a bit part of international exchange, which adds additional sovereign risk for many areas of international business and financial planning.

But Bitcoin faces the same kinds of risks as governments for corruption, mismanagement, etc. The genius of it is that the governance model makes it a lot harder for one party to really control what happens with it.

[keithnoizu]

You're assuming BTC will appreciate in value. There is no guarantee it will eventually become worth millions of US or equivalent dollars.

Even with a fixed qty; uncovered exploits, technological breakthroughs, change in crypto trends (aka a move to another platform), or change in society could halt an increase of value.

Technically the same is true of gold. Even with out a massive change in qty, something as simple as a better gold like alloy for jewelry, an alternative for electronics, or a sudden cultural aversion to gold ownership could reduce the value.

[grandalf]

Those are all valid points. I don't disagree at all. My comment was meant to present the hypothetical case where Bitcoin's governance model turns out to have better longevity than the USD governance model.

[UncleEntity]

> So I think it's fair to say that running a fiat currency successfully for more than 500 years is something that is unprecedented in the history of the world.

That's actually an indisputable fact.

The Chinese managed it for a hundred years or so back in the day, we're on year 46 since The Nixon Shock.

[RobertoG]

>"Goldbugs / conspiracy theorists have a line of argument where they describe all the fiat currencies that have ultimately experienced corruption and hyper-inflation"

And they are, practically in all the cases wrong. What we see is in history is a mismanagement of the real economy or external factors affecting the currency. They confound the symptom with the cause.

When the 'real' economy goes wrong, never mind if you have bit-coins, or whatever. In a desert, a bag with a million dollars buy you nothing. Of course, you can make a case for gold or similar because it could make easy run away to another place, but that it's not the argument they are pushing normally.

[grandalf]

> Of course, you can make a case for gold or similar because it could make easy run away to another place, but that it's not the argument they are pushing normally.

I think this is the aspect of it that applies to Bitcoin. All of the steps along the road to hyper-inflation in a fiat currency may be quite reasonable and may constitute the smartest move using the available tools.

There is also the question of whether currencies should be tied to governments. The risks that (frequent) government failures pose to one of the core purposes of money (storing value) are not costless. Society bears the costs of those risks even though they are hard to measure.

Of course many of the same problems could apply equally (or more) to Bitcoin depending on how the governance process proceeds.