[anonisko]

Every store of value that has ever existed and will ever exist is just a game of speculation that it will continue to be valued when you're ready to withdraw your money to do things you've saved for.

Gold was the best portable and fungible speculative bet for a very long time.

Bonds are speculation that a country will continue to be productive and well managed enough to pay their debts without resorting to massive inflation.

Stocks are a speculation that a company will continue to be competitive and profitable for long enough to recoup your investment.

Real estate is a speculation that an area will continue to be a desirable place to live or useful for some industry.

Rare art is a speculation that people will still be willing to pay millions for your original Picasso and that we won't be able to produce undetectable copies with better technology.

Bitcoin is a speculation that people want a digital, neutral store of value like gold was that they can park excess money in that they don't have a better use for right now.

[ForHackernews]

I disagree with this: there's a genuine difference between non-productive assets like bitcoin (and gold) and productive ones like companies.

> Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

> Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

> ...

> A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

--Warren Buffett https://www.berkshirehathaway.com/letters/2011ltr.pdf

(emphasis added in the final paragraph)

[briefcomment]

That's not really a useful comparison. Of course a cube of the world's gold wouldn't really do anything. But a cube of soil and gas stations would be pretty useless too, without some work by humans. If humans worked the gold, it would return to being used for a purpose. That purpose is "trustless" accounting, which is certainly valued by some. Instead of relying on ledgers, and paper, and accountants and bankers, gold provides you some control of the money you have saved.

[anonisko]

Farmland is a speculation that we won't completely degrade the topsoil that makes it useful for agriculture.

Exxon Mobile is a speculation that they'll be able to pivot their business out of carbon fuel long term. Even monster companies falter and fail. Exxon in particular is down 50% from its peak in 2014.

Income generating assets are fantastic, but owning them requires work to constantly re-assess the landscape that makes them capable of generating income. Some people like Buffett are really good at that game. Winners like him start to win even more when they have hundreds of billions of wealth to slosh around which gives them the power to create self fulfilling prophecies with their investments that you and I don't have individually.

This is why people have started using passive index funds as savings accounts, which seems to be starting to distort the market and has a lot of people worried that it will lead to a housing bubble like crash, especially with Boomers withdrawing their retirement savings from the market while Millennials and Gen X might not earn enough to outpace the withdrawals. A demographic bomb.

Do we really want a world where doctors feel compelled to waste valuable time and attention playing the stock market game because a savings account doesn't even pretend to protect your money from inflation anymore? People from all walks of life with money to protect are increasingly riddled with anxiety that the wealth they've worked hard to save is getting washed out from under them, and it's making us all a neurotic mess of a society.

[imtringued]

> Farmland is a speculation that we won't completely degrade the topsoil that makes it useful for agriculture.

That merely reduces the potential return, it doesn't eliminate the potential for return entirely, which is something Bitcoin suffers from.

>Exxon Mobile is a speculation that they'll be able to pivot their business out of carbon fuel long term. Even monster companies falter and fail. Exxon in particular is down 50% from its peak in 2014.

Or I can just buy their stock with the expectation that they pay dividends or engage in stock buyback programs that return value to investors. Bitcoin has no potential for returns.

>Income generating assets are fantastic, but owning them requires work to constantly re-assess the landscape that makes them capable of generating income.

The inability to generate a return reduces the potential for gains significantly.

>This is why people have started using passive index funds as savings accounts, which seems to be starting to distort the market

There are thousands of index funds using completely different strategies. I don't know how you expect that to distort the market. The reason why small retail investors should just stick with a standard index is that they simply do not have high enough capital and thus returns to justify spending money or time on complex analysis or engage in manual rebalancing of their portfolio which involves taxes and order fees. Index replicating ETF are just a cost saving strategy for small investors. If you believe that small investors are distorting the market then institutional funds would rejoice and take advantage of the greater volatility and deploy more capital because of the almost risk free return that such a "distortion" would bring with itself. Since the return of a managed fund exceeds the return of an algorithmic fund people would switch their strategy until both strategies have an equal return on investment.

>and has a lot of people worried that it will lead to a housing bubble like crash

If a lot of people are worried about a crash then why are they investing in a way that perpetuates a crash? They would have to blame themselves for their risky strategies. Stop getting interest only mortgages. Stop buying GME. Stop buying Bitcoin and so on.

>especially with Boomers withdrawing their retirement savings from the market while Millennials and Gen X might not earn enough to outpace the withdrawals. A demographic bomb.

You mean well deserved inflation and full employment? Who is going to shed a tear because of that? Are Millenials going to complain to Boomers that they gave them too many jobs and too much pay?

>Do we really want a world where doctors feel compelled to waste valuable time and attention playing the stock market game because a savings account doesn't even pretend to protect your money from inflation anymore? People from all walks of life with money to protect are increasingly riddled with anxiety that the wealth they've worked hard to save is getting washed out from under them, and it's making us all a neurotic mess of a society.

You can send your complaints to your central bank. They are following a pretty stupid strategy that is counterproductive to their own declared goals. It's pretty simple, if the supply side is saturated simply stimulate the demand side (fiscal policy). Supply and demand have to be kept in balance. It's pretty ironic how Bitcoin anti inflation warriors complain how inflation erodes savings yet they are eroding even faster in a low inflation economy.

[jokethrowaway]

The problem with bitcoin is that it's not exclusive - there are tons of alternatives.

Some even have better features (think Ethereum or Monero or Zcash).

Nothing is stopping people from launching bitcoin2,bitcoin3, etc and having the same technology available - yet BTC is the major player skyrocketing.

This is an example of the market being irrational longer than expected, in my book.

[a9h74j]

Still kicking myself for hearing of Bitcoin and not repeating to myself for the next two days: [To succeed] You can be the first or you can be the best. You can be the first or you can be the best. You can be the first or you can be the best.

[anonisko]

  The problem with Facebook is that it's not exclusive - there are tons of alternatives.
  Some even have better features (think Twitter or TikTok or Discord).
  Nothing is stopping people from launching Facebook2, Facebook3, etc and having the same technology available - yet Facebook is the major player skyrocketing.
  This is an example of the market being irrational longer than expected, in my book.

The value of bitcoin is not in the code, it's in the network. Arguing that the code that runs the network can just be copied is not a very compelling argument.

[UncleMeat]

There is some speculation involved with stocks, but they are fundamentally different from gold, btc, or art because they are productive assets. They aren't just a thing that sits on the ground and does nothing. They represent some small portion of actual factual work done by human beings to produce goods or services. This is why buying the diversified stock market is investing and buying the diversified crypto market is speculating.

There is risk involved in both, but they aren't identical.

[cromwellian]

According to the USGS, 37% of gold is used in electronics. So gold is also a part of productive assets, and its use in electronics is only increasing.

Bitcoin by contrast isn't a productive asset, has no fundamental property like gold does, that exists outside of its original purpose, and its maintenance requires constant usage of energy just to jog in place. Switch off the BTC network, and value goes to zero, which isn't true for gold.

[ldbooth]

You are conflating a commodity with a cash producing asset like a farm. Show me the cash flows from your gold nugget and I'll show you the cash flows from a farm that produces a usable product in the market.

[anonisko]

A farm is an income generating asset. Farmland is a commodity that does nothing on its own.

An electronics manufacturer that uses gold is an income generating asset. Gold is a commodity that does nothing on its own.

[cromwellian]

Gold contacts on my money producing cloud servers are just as cash producing as tractors on your farm.

[ldbooth]

Your cloud servers:the inputs are irrelevant, the cash flow is from the business services provided.

[UncleMeat]

Gold is a material used in productive assets. But if it sits in your vault it won't do anything. Stocks do, even if they sit in your vault.

[guilamu]

You've made some excellent points here, mate, thanks.

[imtringued]

They are pretty weak points. By his logic, when you join a company and work you are speculating that you will get paid a salary. At that point everything is speculation and nothing is certain. By writing this comment I am speculating that a HTTP call will be made that results in a database entry. Since humans are not perfect and never have complete information about a system they engage in speculation in every single moment of their life. The comment is effectively value neutral or maybe even net negative and merely criticizes terminology and semantics, not the actual topic itself.

Namely Bitcoin generates no returns but everyone expects it to. Since everything is speculation we are still allowed to rate the speculation by how risky it is. Surviving long enough to finish writing this comment has a 99.9999% chance or more. So this type of speculation isn't risky at all. Meanwhile betting that Bitcoin will go up or down is inherently risky since there is no driving force behind Bitcoin other than human behavior itself.

[anonisko]

Everything is speculation.

My ultimate point with the comment above, is that dismissing bitcoin as nothing more that a rampant speculative bubble is not a good argument against it.

Everything we value is a speculative bubble that can eventually pop if conditions that cause us to value it change. The bitcoin bubble can pop (and has many times) but so can the 'trust in the US government' bubble.

[ldbooth]

Bitcoin is a genius trust system. But if the price gains are based on demand created by financial leverage, it can be both genius and a bubble due to leverage and short term price distortion. If interest rates go up, BTC prices will fall despite the 'inflation protection' argument. Long term, the proponents make good point sans undermining US financial sanctions, the best no war big stick the US has.

[briefcomment]

> "there is no driving force behind Bitcoin other than human behavior itself"

That human behavior is more reliable than anything else when you're working with a Nash equilibrium

[krageon]

> everything is speculation

You've reduced his argument to ridiculousness. That's kind of low-effort, so in that spirit: It's true, nothing is in fact certain. Telling yourself otherwise is a convention that makes it easier to live and be resilient.

[hammock]

Do you think gold still has value?

[anonisko]

Of course.

It's a useful commodity resource. It can be use for industry, science, dentistry, jewelry, etc.

But I do think the store of value use case where you arbitrarily hoard this useful commodity in a vault so you can sell it later is starting to die. Nation states and companies that need it for it's actual utility will still hoard it as a strategic reserve, like we do with crude oil, helium, uranium, water, grain, maple syrup, etc. But that's a complex risk assessment decision that depends on a lot of variables from predictions of future supply flow to geopolitics that individuals won't be able to evaluate.

I think bitcoin will replace gold as the long term money battery, where you can arbitrarily store value that you don't know what to do with yet for a long time. It might take decades of continued volatility and growth to get to that steady state.

[vinger]

There is gold in that computer you are using. I would say gold has value.

Bitcoin as a working system has a value.

[bunfunton]

Great comment, thanks

[briefcomment]

Absolutely. Bitcoin is just of store of value that has some marginally better aspects than many other stores of value.

It won't inflate aways like fiat.

It requires no upkeep like buildings and other property.

It requires less intuition and research than fine art.

It is more portable and storable than gold.

It is more readily accessible than most things.

It is less dependent on products, market fit and changes, executive changes, etc. than companies.

It will take some value from each of the other stores of value based on investors' preferences and abilities.

[dafty4]

Fiat can deflate, though rarely. Just look at '08/'09.

The inflation/deflation curve of US fiat has been much more predictable than BTC. You're statement "just another store of value" is almost a tautology, as any tangible or intangible item in the universe can potentially fit that definition. What matters for a useful currency is that it is a stable store of value.

As long as you admit that BTC is a speculative commodity rather than a currency, we're fine. But this isn't how it was marketed to all of us for the past 10 years. "coin" == "item of currency". Now the narrative has changed to "digital gold" because that's what's selling right now.

And you should further admit that for the past 10 years we've been promised a decentralized currency with lower transaction fees than mastercard/visa/escrow/forex-fees and faster transaction times, and none of those things have happened.

[briefcomment]

Tbh, the market for Bitcoin doesn't care what it "promised" the people before, and doesn't care what the expectations for it are. If people want to put money in, they will. Clearly, enough people don't care about it's instability to store $1tril, and it'll probably get a lot more stable. Labels are one thing, but price and staying power are another.

[phatfish]

"It requires no upkeep like buildings and other property."

I suspect the physical footprint required to keep the Bitcoin network running is actually quite significant. Considering estimated power usage of all the "mining" operations.

[dehrmann]

This brings up an oddity of bitcoin: storing gold costs money, property has upkeep. Endgame (non-inflationary) bitcoin is free to store, at the cost of people actually using it. The other oddity is it's not clear what would happen if no one traded it for n days. At some point, miners shut down, and because of how specialized mining hardware is, the currency might collapse.

[briefcomment]

By upkeep, I mean that investor's would not have to deal with the inconvenience of maintaining an apartment, etc.