[hamstercat]

They had support for Bitcoin a few years back, merchants could accept Bitcoin in addition to whatever currency they already supported. The feature was killed because they didn't find Bitcoin useful for transactions (can read more about the why here https://stripe.com/blog/ending-bitcoin-support).

[the_arun]

Aren’t cryptocurrencies more like stock rather than a currency? Only difference may be is stocks cannot be exchanged 24 hrs a day?

[tharne]

They're most similar to a commodity, like gold, or lumber. There's a supply, a demand, and price. Unlike stocks, there's no underlying asset, you just own the crypto currency and that IS the asset.

[eloff]

Except those other commodities have intrinsic value, while cryptocurrency has no intrinsic value or legal practical applications after nearly a decade. At this point I don't see that changing. They're the tulips of our age, sold from speculator to speculator until the music stops and someone is left holding the bag.

[CydeWeys]

So what? I feel like these objections about "intrinsic value" are missing the point. There are lots of things out there that have little to no intrinsic value (like currency) that are nevertheless very useful. You are acting like there is some inviolable law of the world where things without intrinsic value will inevitably become worthless, but there isn't. There's lots of things with fundamentally no intrinsic value that have nevertheless commanded a very high market price for many centuries now.

I'm not saying Bitcoin is necessarily on that path, but there's also no reason it couldn't be, and whether it is or isn't isn't related to any intrinsic value it might or might not have. And lots of things that do have intrinsic value, like grain, are terrible investments because they're easy to make more of and because they don't store indefinitely. "Intrinsic value" is just an orthogonal concern.

[eloff]

You're right.

Fiat currency has no intrinsic value itself, but it can be exchanged for things that do. As long as people treat it like it has value, then it does have value.

The same can be sort of be said for crytocurrency. But it's a lot less liquid, mostly the only thing you can do with it is trade it for other cryptocurrencies or sell it. It's on much shakier ground that people will continue to view it as having value.

My advice, for what it's worth, until people find a practical application for it, stay away from it.

[ilammy]

> Fiat currency has no intrinsic value itself

Fiat currency emitted by governments has intrinsic value: you can pay taxes to the emitting government with it. That's its ultimate value.

In the same vein, some cryptocurrencies have value: you pay with Ether for distributed computations performed by Ethereum network, you way with Bitcoin for your data being permanently recorded on the Bitcoin chain.

[CydeWeys]

Yes, that's one approach. It's a very conservative approach though, to stay far away from new technologies until they're firmly established. There's a lot of money to be made by getting into things when they're still on the bleeding edge though, and the entire startup community exists to take advantage of that fact.

The real question is, is it still early days for Bitcoin, in which case it would make sense to get into it now (albeit still risky)? Or are the early days over and all those gains have already been realized? You'd need a crystal ball to know for sure.

[jariel]

The USD is backed by the US governments ability to pay it's debts, which is a legit financial instrument of value. It's not a 'fiat' currency in the sense being described here.

[jariel]

"There are lots of things out there that have little to no intrinsic value (like currency)"

??? Most currencies are backed by something. USD's are backed by TBills, Euros are backed by some kind of asset.

"There's lots of things with fundamentally no intrinsic value " like what?

Gold and Diamonds people wear as jewelry, and they have other uses.

Platinum, were it plentiful, means we might have all shifted to fuel cells 2 decades ago.

Gold probably has an inflated price due to it's historical value as 'money' - but outside of that, there's basically nothing that people put significant amounts of money in without some kind of intrinsic value.

[CydeWeys]

> ??? Most currencies are backed by something. USD's are backed by TBills, Euros are backed by some kind of asset.

Oh yeah? And what assets are these exactly? It sounds to me like you're just describing things without intrinsic value that are "backed" by other things without intrinsic value. There is no economist that would tell you that government currencies or bonds have "intrinsic value"; they're just paper. Their value can go entirely to zero (and this has happened many times in the past).

> "There's lots of things with fundamentally no intrinsic value " like what?

Anything collectible has no inherent value. Think baseball cards, art, whatever. They're worth money only because they're rare and people are willing to pay big for them. But the actual intrinsic value of the materials in a rare painting worth hundreds of millions of dollars might be a few bucks at best.

And yes, precious metals do have intrinsic value as defined by economists. Currency doesn't.

[tharne]

No commodity has "intrinsic value". It's worth whatever someone else is willing to pay for it. There's nothing intrinsically valuable about gold, for instance. It's worth what it's worth because people believe it will be worth something in the future and are willing to pay a price for it.

[eloff]

Gold has practical applications. At minimum people are willing to pay considerable sums for it for use in personal adornments. It's also an instrument used as a hedge and traded by speculators, but there's a fundamental underlying value, that is a demand for it apart from speculation. If all the speculation stopped, the price would drop but not to zero.

Other commodities like timber have much more intrinsic value because they are mostly used, not speculated on. If people stopped speculating in the timber market there would be less liquidity but the price wouldn't change much, people still want to build things with it.

Cryptocurrency has no fundamental value, it's a digital good without practical applications and no fundamental demand. if the speculation stopped, the price would go to zero.

[ClumsyPilot]

>"[for gold] there's a fundamental underlying value"

The fundamental value for it's technical applications is probably < 1/10 of it's real value.

If people wake up tomorrow and stop using it as reserves/ investment /savings, you would loose virtually all your money, down to a few percent. So yeah, that 5% or whatever of value is secure, but how nuch does that help?

Timber is obviously not a usefull store of value because it does not last, it is not fungiable, is expensive to store - imagine 100 million dollars worth of timber, and you would store that.

[rabuse]

It's intrinsic value is that it's a digital asset, decentralized throughout the globe, computationally secured by mathematics, that nobody can counterfeit or spend without your key.

[em3rgent0rdr]

Bitcoin does has an intrinsic ability: transacting in bitcoin gives the user power to make secure, irreversible updates on a trust-less distributed ledger.

That ability gives it value for people who need that. For some people and use-cases, that ability is comparable to how gold is valuable for its ascetic and chemical properties.

[bildung]

Isn't that true for any kind of barter? If two parties barter with lumber and gold, the transaction is also irreversible. The ledger is just an implementation detail.

[lottin]

From what I gather, the ledger is what makes it possible for bitcoins to be owned. Without a ledger anyone could claim any bitcoin their own. If my understanding is correct, you're basically saying that bitcoins have the ability to be owned, an ability most physical assets already have. Not comparable at all with the actual intrinsic properties of gold.

[thaumasiotes]

> No commodity has "intrinsic value".

Anything you can use directly has intrinsic value. Intrinsic value is a negligible part of the total value of gold. But it's a significant part of the total value of e.g. cereal grain, which is historically a common monetary commodity.

[jariel]

This is splitting hairs.

It has an 'intrinsic value' in the context of this discussion if it's useful as something other than a currency, obviously.

[erikpukinskis]

Tulips have intrinsic value, so there’s something wrong with your metaphor.

But you are right to realize Bitcoin has no intrinsic value. That makes it very similar to something like a dollar bill.

That said, intrinsic value isn’t really what makes currency valuable. It’s a nice feature... if the bottom drops out of the market and your currency is cigarettes... at least you can smoke them! And trade them for some other currency at the price of smokes.

But that’s a very special circumstance. Intrinsic value only matters under one very special circumstance: Total market collapse. Under normal circumstances, what matters is use value.

And Bitcoin has some very unique use value. For example, it is a thing that can be exchanged for gold that can be stored in your head. That’s a very unique use. I think those kinds of uses, if you can add up their utility, are the best way to calculate Bitcoin’s long term value.

[eloff]

I feel like I shouldn't have to explain this one:

"Tulip mania was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637. It is generally considered the first recorded speculative bubble in history." - Wikipedia

Yes tulips have intrinsic value, but not the value speculators were paying for them during the Dutch tulip bubble leading up to 1637. Cryptocurrencies are very similar to that.

[erikpukinskis]

> Yes tulips have intrinsic value, but not the value speculators were paying for them

Like gold?

[jonkho]

Money is a social construct. This social construct is valuable. Why? Because this construct solves the problems associated with bartering by allowing us to frictionlessly keep track of who owes what and how much to whom (claims on goods and services). This social construct can use tokens such as dollar bills or gold, for example, as the abstraction for the ledger of record. There are problems using dollars and gold as the abstraction. Dollars (or fiat) violates our common sensibilities as a record on claims on goods and services. The problem is it can be printed without regard and used to extract goods and labor from you (if you choose to accept it). Some people would consider this fundamentally unfair because they are trading their product of their efforts for something that is created infinitely without effort by the privileged few (i.e. something for nothing). Gold is better in this regard but as a money abstraction it is also leaky because it takes up physical space and has transportation and storage inconveniences. Bitcoin is better by having none of these issues which makes it more relatively suitable for the social construct of money (again, it is the social construct of money that is valuable - for which bitcoin happens to be better suited than the current alternatives).

[qppo]

The ability of fiat currency to enter the money supply at the discretion of a central authority is a feature, not a bug.

[jonkho]

Says you. Like all interventions, there are winners AND losers from this type of intervention.

[Udik]

The very notion of "intrinsic value" is nonsense. There is no such thing. The "intrinsic value" of a bucket of rice can be enormous if you're starving, and yet it's practically null now. The "intrinsic value" of gold is dependent on one of its extrinsic qualities, rarity (plus another, convention).

Value is just the measure of the willingness of people to give you something in exchange for something else. It's not in the objects themselves, but in the head of the people.

[imsd]

> you just own the crypto currency and that IS the asset.

This is beginning to change. In the DeFi space, the token often provides voting rights and a share in generated revenues.

[appleflaxen]

commodities have intrinsic value. crypto does not.

[MereInterest]

Yes, in that stock can fluctuate wildly in price, and can usually be exchanged for currency. No, in that stock represents ownership into a company, while cryptocurrency represents ... well ... nobody has been able to satisfactorily explain that one to me.

[cortic]

> No, in that stock represents ownership into a company, while cryptocurrency represents

Ownership into a cryptocurrency. Its not like you can borrow a PC from Bill cause you have shares in MS. The company and the cryptocurrency both perform a function that gives them value to people, the stock/coins reflect that value.

[JohnJamesRambo]

Cryptocurrency represents ownership or investment in the proof of work or proof of stake in the network used to validate the transactions in a decentralized and verifiable way.

[centimeter]

No. Stocks, roughly speaking, represent entitlements to corporate profits in the form of dividends. Bitcoin doesn’t represent any kind of entitlement. The closest analogy is gold - Bitcoin is a scarce commodity with good currency properties. It’s similar to gold in that it’s fungible, dense, etc. Its worse than gold in that it’s not shiny and something you can feel. It’s better than gold in that it’s orders of magnitude cheaper to store and transport security, and it’s vastly easier to ensure authenticity.

[imsd]

Another comparison: gold's annual rate of production is steadily increasing; bitcoin's is aggressively decreasing.

I've just started writing about this. Here's an interesting chart:

https://bitcoinflippening.gold/wp-content/uploads/2020/10/bi...

[tim333]

> orders of magnitude cheaper to store

Unless your exchange gets hacked, you lose your keys or similar

[ClumsyPilot]

Well its not like no-one ever steals actual money/gold/whatever

[tim333]

>Chainalysis, a research firm that analyzes activity across different cryptocurrency markets, estimates that between 2.78 and 3.79 million, or between 17 and 23 percent of all bitcoins have been lost.

It's more

[imsd]

Hmm, I think gold is a better comparison.

I've been writing about this topic; specifically, gold vs bitcoin.

You might find it interesting:

https://bitcoinflippening.gold/

[paulgb]

Has anyone written about how it would affect energy markets if Bitcoin reached the flippening price? If the price did hit $500k, as of the most recent halving it would be profitable to keep spinning up miners until aggregate mining costs reached $72 million. Even assuming 80% of marginal mining costs is energy, that's a lot of additional demand on energy markets.

(To say nothing of the climate impact!)

[thebean11]

That's assuming that the mining hardware doesn't get more power efficient (obviously, that ALSO means miners are profitable at higher hashrates, so more total miners).

I think there may be a future where energy is no longer the deciding factor in profitability vs the hardware itself and operational costs (land, employees etc). Which could mean less power consumption despite climbing hashrate.

[Nursie]

> That's assuming that the mining hardware doesn't get more power efficient

The efficiency of the mining equipment doesn't really matter.

It is always worth spending almost as much money on electricity as the cryptocurrency generated. If someone comes up with a more efficient miner, it is profitable for them to roll those out until the power equation levels out again.

Mining equipment efficiency affects the total network hashrate, but not the overall power consumption.

[thebean11]

That's assuming energy is the only bottleneck in rolling out more equipment.

I think so far you're right though, and this has been the case.

[paulgb]

> That's assuming that the mining hardware doesn't get more power efficient

If mining gets more power efficient, holding everything else the same, the difficulty will go up until the efficiency improvement is negated. Bitcoin is designed such that efficiency improvements are eaten up; otherwise every time there was en efficiency improvement it would become cheaper to attack the network.

> I think there may be a future where energy is no longer the deciding factor in profitability vs the hardware itself and operational costs (land, employees etc).

What would the catalyst be? If anything I see this going in the opposite directions: the more money at stake in mining, the more it makes sense to make big, efficiency-improving investments that take upfront capital but are amortized over time.

The one exception to this would be if there were a truly breakthrough improvement in hashing technology that was captured by a single miner, in which case that miner could essentially force everyone out of the market by pushing the difficulty above everyone else's break-even point.

[ClumsyPilot]

If there is a single miner, he/she controls the entire network and movement of money on it. Either he takes everyone's money.

Or everyone abandons a now worthless currency because it just became e-money controlled by a single entitu.

[aww_dang]

Agree that there's more focus on speculation. There are some that focus on actual usability and fast, efficient transactions.

[dotancohen]

Cryptocurrencies are not a derivative.