[JakeTheAndroid]

Bitcoin innovated through a blockchain years ago and the world has already adopted that. But the current state of bitcoin makes it bad at its other 'innovation', digital currency.

Bitcoin is far too volatile to be a widespread, standard currency which seems to be the "reason" people say it's worth as much as it is. But it will never be a widespread currency until it has stability. So it's a chicken/egg situation, one of the two has to come first for the other, and both ideas rely on each other.

Most people that hold bitcoin today are doing so because they think it will increase in value, NOT because they care about the stability or viability of currency. That's pretty selfish insofar there are plenty of developing nations that would benefit greatly from a stable currency. Bitcoin might still be more stable than some countries, but that doesn't negate the issues.

So, because many people look at bitcoin as a wealth generator that produces tons of heat and waste, and it starts to look like a perfect marriage of shitty human behaviors.

[mancerayder]

How do you explain banks and hedge funds putting their money into it? Your explanation is that they want a digital currency, which you're saying is impossible. But it seems like the BTC advocates aren't arguing that, but instead that it's a store of value as a hedge against inflation?

[JakeTheAndroid]

No, I would argue hedge funds and banks are treating BTC like any other investment; They believe it will make money.

Banks and hedge funds don't inherently care about currencies. They care about the currency that governs their lives but beyond that everything is an investment. Banks don't provide mortgages because homes provide a stable economy or a stable currency. They do so because they will make money back on what they lend through interest. The fact that you store your dollars there is just one way for them to collect tons of assets for lending (among other things). This doesn't means banks care much about the volatility or exchange rate of the currency itself.

Hedge funds would only care about currencies insofar that it's an investment vehicle and investing in currencies can be a good investment. Bonds or other currency investments can increase over time without the volatility of BTC. A hedge fund is literally just an investment group, so it's pretty obvious they don't NEED to care about BTC stability or any stability at all.

Now, the question could be why would banks and hedge funds be willing to invest into such a volatile currency when they are usually risk adverse (banks more than hedge funds). And that would be a good question, except BTC has kept going up and now crypto as a whole is just another ETF market. So there are plenty of safe ways to hedge your bets on BTC or crypto generically without actually believing in the underlying philosophical justifications.

EDIT: Also, I don't think that it's impossible to have a crypto currency that is viable and stable. I think Ethereum has a fairly logical approach to their core issues that could solve the issues down the road. We'll see. I do think it'll be hard for BTC to become a viable currency because of how pumped up it is, and people treat it like an infinite money machine. Until the systemic issues of the BTC ethos are solved, I don't see a promising future for BTC as a widespread currency. But, it might have value in setting up the infra that the future crypto that IS viable will use.

[foobarian]

I wonder if more mainstream investors waited a while to make sure BTC is liquid. I don't know the details of this - I guess there must be reliable enough exchanges now to serve customers of that caliber.

[zepto]

> How do you explain banks and hedge funds putting their money into it?

Banks and hedge funds put money into cigarette companies and arms manufacturers and all manner of scam companies.

Their decisions are based on estimated risks and rewards over different time periods.

Taking a position in Bitcoin doesn’t imply anything about it’s nature or long term prospects.

Only that there is a perceived path to potential gains over a time period known to the investor, and not to us.