[goat_whisperer]

Bitcoin made a lot of sense when I first read about it in 2011. Back then I feel like it was primarily used as an anonymous payment method. Think dark web/silk road type stuff. I certainly don't endorse that behavior, but bitcoin as a payment method made a lot of sense.

Bitcoin makes 0 sense to me as an investment. It's pure speculation with no underlying intrinsic value. It's the Dutch Tulips 10.0 basically.

And now because the value of bitcoin is unbelievably volatile, it now makes 0 sense as a means of payment.

[silentsea90]

At what point either in years or market cap or price per coin will you start to question your mental model of Bitcoin?

[chadash]

Not OP, but also a skeptic and here are my thoughts:

- Market cap is sort of a misleading stat. Microsoft's market cap is ~1.75 trillion, but it's p/e ratio is 34. So if they stopped reinvesting in their business, I'd be making 3% yearly on that investment with a hedge against inflation since they can just raise prices. A lot more goes into their valuation than that, but my point is that even if you are a huge skeptic of Microsoft's current valuation, the company is still worth a ton of money. I don't have a number, but I'd imagine that at $500 billion, pretty much every investor on the planet would think that Microsoft is a crazy steal. On the other hand, bitcoin's value is based on perception of its value and nothing else. The fact that some people are willing to buy in at $50k doesn't mean that every investor on the planet would think that bitcoin is a steal at 10k. There'd still be plenty of people who consider that price to be way to high as well. Since market cap is determined entirely by people willing to pay the most, it's hard to say what market cap means for something like bitcoin.

- I agree that there comes a point in time where even a skeptic has to give in. BTC really started to explode about 3 years ago. For me, that's just not enough time. Subjectively, after 10 years at reasonably high values, I'd probably have to reconsider, assuming it gets less volatile over time.

- The volatility is the main concern for me. Gold had a low around 100 and a high close to 200 in the past year of craziness, so it almost doubled. BTC went up about 10x from it's 2020 low to its recent high. Even Zoom and Peloton are only up ~4x from a year ago and this pandemic has fundamentally changed their businesses. I think if BTC got to a point where it didn't change more than 25% value in a year with a normal-ish economy, I'd have to reevaluate.

[tcoff91]

By the time the volatility is gone so is the opportunity. Bitcoin would need to expand its userbase massively to be stable. Stability can't happen unless the price goes up massively.

[vmception]

wow you have so many conflicting views, irrelevant comparisons between two types of markets and asset class, and don't seem to realize it?

equities markets cant be compared to a commodity. so that invalidates your entire first paragraph, the longest one. as a corollary to that, don't derive your confidence from equities investors opining about commodities for the first time in their lives. you have equities investors that never traded tech and never traded commodities talking about bitcoin, you cant call that insight. bitcoin is looked at in market cap terms because it has a more transparent supply than any other commodity. this is completely new to the universe of assets and the market likes that. it removes a risk with gold, oil, etc.

paragraph two and three: you want high price for a longer period of time, but are turned off by the exact and only mechanism in which it gets there - large % and large $ amount price increases. fascinating.

more tech equities comparisons. mmmmk

I’d like to leave you with an alternative tool for valuing, and its just scarcity. if thats not good enough for you, then just stay out of the market. retail investors en masse never got married to commodities markets for the exact reason that they are not buy and hold outside of some metals. volatility is not controversial in the commodities markets, its termed as seasonality, as supply and demand ends up having a frequency in some markets. A lot of the equites market style comparisons to bitcoin is because it started with retail (non-institutional) who never traded anything else. But don't be like them. Bitcoin’s not a company so dont use company comparisons.

[chadash]

> commodity

It's not really a commodity. More of a currency.

> you want high price for a longer period of time, but are turned off by the exact and only mechanism in which it gets there - large % and large $ amount price increases. fascinating.

I'm not saying it's worth nothing. If bitcoin stays above 5k for a long time, i'm willing to say it's worth at least 5k. If it stays above 50k for a long time, i'll come around and say it's worth at least 50k.

> I’d like to leave you with an alternative tool for valuing, and its just scarcity.

Scarcity alone doesn't mean anything. I can create a cryptocurrency any time that's scarce. Doesn't make it valuable.

> Bitcoin’s not a company so dont use company comparisons.

The only commodity that it is comparable to is gold and maybe a few other precious metals that serve as value stores. And gold, for one, has held high value for thousands of years. Maybe it doesn't have intrinsic value in the way that canned beans do, but the chances of it being near worthless tomorrow are very very low since it has a 5000+ year track record. On the other hand, yes, there's seasonality and volatility in things like oil and pigs, but there are also real world use cases for those.

[vmception]

scarcity and liquidity then?

there’s nothing wrong with low float assets, really seems like you are making a separate higher standard for bitcoin

yes all cryptocurrencies inherit that capability to an extent, just have to convince others to share the same view, with the security of the database becoming the limiting factor

the future value of bitcoin are the drivers of its scarcity, if all of those drivers are too intangible for you then they wont become so

[chadash]

> scarcity and liquidity

So it's valuable because it's scarce and it's liquid because it's valuable? I imagine you can see how a skeptic might view this. I would be skeptical of gold coins too, but for the fact that a gold coin today would have been valuable in ancient Rome as well. So I don't really understand why gold is so valuable, but the fact that it's been very valuable (to varying degrees) for 5000 years leads me to think that that will hold for at least for the rest of my life.

I agree that Bitcoin has advantages as a store of value over gold. But it's value is only as high as people value it for, so the trillion dollar question is whether it's just a fad. For those of us who are skeptical, there are definitely things that could bring us to the other side, such as sustained value for a longer period of time.

[graeme]

> equities markets cant be compared to a commodity.

But BTC advocates do so all the time by using an equity markets term, market cap. As far as I know that isn’t a term applied to commodities.

Also commodities have a use value. In what way is bitcoin a commodity?

[vmception]

they shouldn’t either. and I address that.

bitcoin’s use value is what it brings to the market that people like and dont have elsewhere. transparent supply and emission schedule, 24/7 trading, faster settlement times, borderless self-custody in unlimited amounts, upgradable asset class with some attributes of multiple asset classes (commodities, currencies).

let me guess, you were looking for industrial applications and drastically undervalue speculation as a use value?

[philosopher1234]

What is the use value of speculation? It doesn’t seem useful to me. The problem I have with Bitcoin is I have no confidence in its demand. For all I can tell, tomorrow people could get bored of Bitcoin and it would plummet. There doesn’t seem to be a good reason, beyond hype, to want to own Bitcoin.

[mattm]

> if BTC got to a point where it didn't change more than 25% value in a year with a normal-ish economy, I'd have to reevaluate

You could probably cherry-pick some dates between Q2 2018 and end of 2019 that would come pretty close to this criteria.

[graeme]

Not OP, but for me it would be about when crypto actually starts doing something. Smart contracts and NFTs show the hint of a possible future use case.

But Bitcoin seems to have no use case, and it takes more and more energy as the price goes up.

The higher price absent any use case or advantage seems like it only has speculative value. It could become a religious thing where it has value because people value it: a lot of gold’s value exists for this same reason.

But I’ll wait to see how things play out with Tether before thinking that is likely. They are under pretty severe reporting requirements for the next two years and if they can’t show reserves for the $30 billion they printed last year they are in trouble.

[silentsea90]

BTC is digital gold for now. I think an asset class that holds value and can't be printed at whim is a powerful idea. Yes it completely relies on our belief in its valuation and programmed scarcity and decentralization. It is a powerful hedge esp in current times where fiat is printed like there's no tomorrow.

Please share which asset class has value without humans valuing it? If earth was to be wiped out of its human inhabitants, would any asset have any value in human terms? The Indian Rs 500 note lost value instantly as soon as it was banned, just as the German Reichsmark did through inflation. Tribal humans used seashells and beads as currencies. Their belief was no different than your belief in Apple or USD, and my belief in Bitcoin :)

Energy : The power that nation states derive from printing money aka foreign interventionism, military, inefficiency in all processes etc. is likely orders of magnitude higher. BTC energy consumption is concerning but shouldn't be viewed in a void.

Tether afaik is a nothing burger and will not hurt BTC valuation.

[capeterson]

For me personally, my belief in bitcoin is not tied to its monetary value at all. In fact, it's likely inversely related, as the more that it gains value, the more publicity it gets as a money-maker, which draws in more speculators.

I'm overall "just fine" with Ethereum though. There's a lot of speculation going on, but it's also a rather productive idea that I hope takes off in the future.

I'm a fan of cryptocurrency in general, just not really Bitcoin.

edit: Thinking about your question though, maybe it could be interpreted as "if the market cap/price of BTC was more stable, would you like it?" and the answer to that is yes, however still I don't believe that it provides much utility compared to other cryptocurrencies.

[silentsea90]

My question was trying to probe at Op's belief in value of btc being 0 and at what point they'd question it.

If BTC was more stable and you'd like it then, it implies you are likely a late stage investor here. Volatility comes with price discovery. The publicity and speculation come and go but build on each other over time. We're conflating the short term volatility and hype cycles with long term value, and if you only focus on the former it is like missing the forest for the trees (my opinion).

I am not a BTC purist, and think Eth has its place too. If that connects with you better, cool! Who knows if BTC will die and ETH is the future of crypto. ETH is more volatile objectively, but if your belief in ETH makes you hold through the cycles, more power to you.

[goat_whisperer]

Ironically, as the market cap and price per coin increase, I grow more and more skeptical of bitcoin!

[silentsea90]

Why so?

[hntrader]

"no underlying intrinsic value"

How does that differ to investing in fine art, scarce wine, old/rare stamps and coins, limited edition/novelty items, historical artefacts, or even gold?

There's loads of things that have kept value for centuries despite having no intrinsic value.

[cmdli]

All of those things have intrinsic value in that they bring people some measure of joy. Bitcoin, by comparison, brings people very little joy in and of itself (you might argue it provides entertainment value, it certainly does for me).

Not saying Bitcoin is worthless; it's a currency and it has it's uses, which makes it worth something. However, I think the belief that "it's scarce, therefore its worth something" is a false one and leads a lot of people to speculate wildly on it.

[hntrader]

"it's scarce, therefore its worth something"

That's not the argument being made. My paintings are scarce but they're worthless. Lots and lots of scarce things are worthless, and rightfully so.

"bring people some measure of joy."

Right, so there's some aesthetic value there. Why can't BTC be like the Ancient Egyptian artefact that's valued purely on aesthetic grounds? I could plausibly see it as a historical artefact in 200 years time, given its novelty and role in tech history. I have an old stamp collection and some BTC, and I get much more pleasure from the crypto due to its novelty, role in culture, etc.

[catmanjan]

Artefacts and stamps bring joy by being able to show your friends, maybe your friends like looking at your wallet, but mine wouldn't...

[smabie]

My BTC brings me joy.

[goat_whisperer]

Yeah but no one uses these things as a form of payment/currency. Those are non-monetary assets.

[hntrader]

Rare coins that are now valued as artefacts were once monetary assets. So I'm not sure that this distinction is meaningful.

BTC's value now could come from it acting as a store of value for example. Or its value could come from the novelty aspect. Or that it facilitates online gambling (leveraged bets on crypto exchanges) in countries where such activity is heavily restricted. BTC's value in the future could come from it being a historical artefact. Lots of subjective reasons investors may have for holding it (just like they hold a piece of art) beyond its use as a currency.

[goat_whisperer]

Well the value of any asset depends on the value that people assign to it -- it's all subjective if you really get in it.

However, I wouldn't accept bitcoin as a method of payment because I'm not confident that people will agree to a completely different value in a very short time frame. Meaning will it be 50k next week? 5k? Who knows!

[kleer001]

@Travis_Kling: "Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It's an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally."