This right there is exactly why long term it's doomed and cannot be a reliable store of value. You don't see banks and random geeks inventing new precious metals out of thin air. So you have gold, silver, platinum and palladium and that's about it as far as store of values are concerned.
I mean, I suppose anyone can create a currency out of thin air. In fact, I'd wager there's hundreds of currencies, as nearly every sovereign state has one. It's not meant to be a store of value, which is why this bubble will burst, but that doesn't mean it's doomed. It has the characteristics of a currency: 1. scarce. 2. useful.
But not 3. fast and easy to transfer ownership of or 4. stable in value over time. Plenty of things (houses, human toes, pre-release copies of films, etc.) Are both scarce and useful without also being good candidates for a medium of exchange.
Fair enough, but Bitcoin certainly can be either of those things, even if it's not right now. History shows us any currency can have those problems. Inflation can become so high that as a medium of exchange it's pointless. It can become so unstable in value that people use something else.
Bitcoin is no panacea, but the "fake money" argument seems misplaced to me. It's current failings are not failings of crypto-currency in general.
Paying for a $5 cup of coffee with a debt card takes about 10 seconds and invites about $0.10 in transaction fees. Paying in physical currency is even faster and costs approximately $0.
I've heard plenty of ideas to make the Bitcoin network a little cheaper or a little faster. Occasionally both! I've yet to hear a good theory for how the Bitcoin network can ever get both 500x cheaper and 500x faster.
Same is true about Facebook. Someone could clone the features and create facebook2.com, and everyone would flock to it. That's why Facebook stock is a Ponzi scheme. Anyone who thinks Facebook has a value above $0 is insane.
Look, i'm not convinced that bitcoin is worth the price it's at right even right now either, but that's just not true.
The network effect is extremely strong in the cryptocurrency space. Everything in the cryptocurrency space supports bitcoin, and fractions of everything support anything else. Payment processors, exchanges, hardware wallets, software wallets, secure storage and backup systems, etc... All of it is focused on bitcoin first, and adds others later (if ever).
If you want to buy or sell bitcoin, you've got tons of repudible options, you want to buy or sell monero? You've got 1/3 of the options, and most of them are small and shady or don't deal with fiat currencies in any way.
If that's not a network effect, I don't know what is.
One could argue the exact opposite - that all the infrastructure around Bitcoin makes it an inferior store of value. For example, the fact that Litecoin does not (yet) have ETFs and other financial vehicles that can be used to manipulate its price without actually dealing with "physical" Litecoins, makes it a more stable store of value.
It took a while for 28.8K modems to catch up with bandwidth needs, and that's part of the reason people thought the internet sucked and was a joke compared to all its promises. I think even today people snort about pets.com as the poster child of the dot-com boom. Then their Amazon Pantry order arrives, which they consume without irony.
Maybe. Or the modem is part of Bitcoin's infrastructure that needs to be replaced. Bitcoin's architecture is reasonably modular, so that is a possible outcome.
I can't read tea leaves better than anyone else, but I do agree with Hal Finney's Bitcoin-or-bust observation. If another cryptocurrency besides Bitcoin takes hold, it's likely that all cryptocurrencies will fail. This is because the scarcity argument proves false -- yes, any individual currency is perfectly scarce, but technological improvements in newer currencies will effectively inflate the entire ecosystem and devalue existing currencies.
That's the weak version of the prediction. The stronger version is that those already in the ecosystem (and thus who have an interest in preserving existing wealth) will see the weak version of the prediction, conclude it's undesirable, and try to prevent it from coming true. Thus they will integrate technological improvements into Bitcoin rather than supporting a separate chain.
The question is whether there is enough momentum already behind Bitcoin to support the strong version of the Finney theory. I think there is; Bitcoin supporters will eventually address its technological weaknesses, and future improvements in cryptocurrency will be implemented in terms of Bitcoin rather than by forking the ecosystem.
You might disagree, and maybe you're right. Maybe Bitcoin is just the modem. Maybe it's the internet. I'm betting it's the internet.
You could say that about any company that doesn't have crucial IP. It doesn't seem like you understand the value of a brand.
>Someone could clone the features and create facebook2.com, and everyone would flock to it.
This is flat out false. if it was actually that easy don't you think we would have seen it happen already? There are numerous social media platforms that have tried to dethrone Facebook and none of them have succeeded.
in addition, Facebook practically prints money through advertising, which very clearly has value (multiple billions of dollars a year).
I don't really use Facebook anymore and I don't work there but to think it's value is $0 is insane. I'm not sure how you can conflate a multi-billion dollar company with proven profit streams and the current hype in the current crypto market
Perhaps you would have benefited from an explicit /s in this conversation. We're in agreement. I was taking OP's point and extending it to demonstrate its weakness.
A little. It is somewhat like Bitcoin Cash, which I'll admit surprised me by not dying immediately. The way I reconciled it with my view of the world is that it's a different feature set (larger ledger pages) that was too hard to integrate with the main product (Bitcoin), so they did a market test with a different brand and found out it resonated with some people. ("they" is an odd term to use because it was actually two viciously opposed groups, but the same kind of infighting happens in corporations as well, and people on the outside think corporations are all singular hive minds, so oh well).
I continue to view Bitcoin Cash as a prototype for different features that validates the need for Bitcoin to address that market segment, either by fixing the block size problem outright, or by the lightning network. I don't see a world where both BTC and BCH coexist long-term.
I can't explain why Instagram coexists with Facebook. It does feel like one is a superset of the other. Maybe Instagram's simplicity and ease of use is simply inconsistent with Facebook's engulfing experience, and they truly are two distinct features of a larger whole. If that's the case, then I'm looking at BTC/BCH the wrong way, and they're also part of a larger whole, and both will survive. So my original facetious point that Facebook is cloneable (which of course it isn't, because its value is in network effects, not its source code) would actually be somewhat true, except that it's different products serving the same overall network, just overlapping but distinct parts of it.