[67868018]

The number of people commenting who completely misunderstand Bitcoin and crypto is astounding.

Bitcoin will never be used directly for payments, it's a value store. Immutable deflationary digital gold.

I wrote it off for years too because it was too slow and the fees were too expensive. That was the dream they had, but they couldn't realize it at the base layer. I was still walking around last year believing that's the scam they were still peddling, but once you take time to investigate you'll see it will become a major part of the world economy.

COVID helped push this over as bailouts and printing money in the US and the ECB is going to drive a massive movement of money out of the markets and fiat.

Normally you'd see momentum go to bonds when the stocks burst but the bonds situation is unsalvagable.

Also expect a ton of movement to crypto when wealth taxes get implemented to fix economies. They'll use it to hide assets, guaranteed. Form an LLC, siphon the money out that way and into crypto.

[Priem19]

>Also expect a ton of movement to crypto when wealth taxes get implemented to fix economies. They'll use it to hide assets, guaranteed.

Money corrupts; bitcoin corrupts absolutely. Disregarding all of bitcoin's shortcomings, a financial instrument that brings out the worst in people—greed—won't change the world for the better. https://www.cynicusrex.com/file/cryptocultscience.html.

I used time-travel to uncover three secret messages hidden in a popular Bitcoin meme – “This meme is designed to exploit a number of weaknesses in our understanding of money, and to play on our fears. I’m going to show you how it does it, and why.” https://brettscott.substack.com/p/bitcoin-meme-time-travel.

[Priem19]

By which I mean to say: the greedy rich wanting to preserve or increase their wealth at all costs is what got us into this mess. Bitcoin or any other cryptocurrency pyramid scheme is going to do bugger all to improve that. No amount of wealth or technology will turn vice into virtue because: “If you have selfish, ignorant citizens, you're gonna get selfish, ignorant leaders.” —George Carlin

Prosperity boils down to good policy and governance. Thus, good people. Unfortunately, as far as I've seen, cryptocurrencies have produced some of the worst kind of people.

[FridgeSeal]

To add to this, crypto communities _appear_ (I’d be pleased to be wrong here if anyone has examples) to be filled with people who are absolutely opposed to any kind of economic governance, if it’s not “let the magic hand of the market decide” they’re seemingly not interested.

[seibelj]

You have an entire world full of governments and fiat currencies. If they are so superior then there should be no problem with competition from Bitcoin.

[Priem19]

“Simply because cancer occurs naturally doesn't mean we shouldn't treat it. In the same vain, sometimes the “free market” just screws up, requiring intervention.” —https://www.cynicusrex.com/file/cryptocultscience.html

Bitcoin and cryptocurrencies in general are pyramid schemes. They deserve no place in the economy.

[kortilla]

Yes, they are opposed to having their assets diluted by a government they have no say in.

[X6S1x6Okd1st]

If you want to challenge that belief look into governance by DAOs and some of the airdrops like UNI.

There's def crypto communities that dream of paying everyone a basic income in their currency, identifying each individual and not completing devaluing the coin are big problems though

[matheusmoreira]

I'm not convinced this "economic governance" offers any benefits.

[matheusmoreira]

Even if it's used for corrupt purposes, it's not really any worse than the current system. The subversiveness of cryptocurrency is a feature. Governments are as corrupt as can be. They screw up the economy and make ordinary citizens pay for it by raising taxes while refusing to touch billionaires. Maybe it'd be a good thing if they went bankrupt for once.

[Priem19]

I think you seriously underestimate how ugly society would get if the government went bankrupt, and how quickly bitcoin would be rendered useless. Moreover, if governments are corrupt on fiat, they'll be corrupt on bitcoin as well.

[briefcomment]

Bitcoin is just an asset that has some interesting traits, that make it more attractive to some people vs. other assets. Other assets will still exist. Other monies will probably exist too - they’ll have some benefits over Bitcoin in some use cases.

I don’t see why governments wouldn’t tax Bitcoin income and transactions the same way as fiat income and transactions. Me paying someone a hundred dollar bill is even less taxable than Bitcoin.

Obviously everything will sound dystopian if you take it to the extreme.

[lmm]

> Even if it's used for corrupt purposes, it's not really any worse than the current system. The subversiveness of cryptocurrency is a feature. Governments are as corrupt as can be.

Disagree. In the current system it takes an enormous effort for the majority to suppress individually profitable but socially harmful activities (like bribery), but it can be done; many developed countries achieve quite low levels of corruption. Bitcoin makes that a lot harder, by design.

[young_unixer]

I'll take greed over institutionalized theft any day of the week.

[xvector]

The stateless, subversive nature of Bitcoin and especially Monero is a feature, not a bug.

[throw0101a]

> Bitcoin will never be used directly for payments, it's a value store. Immutable deflationary digital gold.

The usefulness of gold itself is questionable:

* https://www.pwlcapital.com/will-gold-save-the-day/

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2078535

[audunw]

Why do people still claim Bitcoin is a store of value? It has none of the properties of a good store of value IMO.

- Boom/bust cycles means you’re at high risk of not being able to withdraw without losing most of your value - There’s no regulation of reserves in other more tangible values behind the currency - Bitcoin has no value to others not holding Bitcoin. Gold and art still has value to others not holding it. That is, I’d be willing to buy gold or art at a certain price for their practical or esthetical use, not just as an investment scheme. This puts a more solid barrier for how low the price of these assets can go. - The future regulation of cryptocurrencies is highly uncertain. Just look at India. I have no doubt that other countries will follow. Most likely there will be regulations requiring reserves behind cryptocurrencies. There’s not much reason to think that governments will be cool with printing money with zero reserves in the long term just because they’re printed by algorithms. It’s not allowed for banks, why should cryptocurrencies be treated differently?

Bitcoin is a high-risk high-reward investment scheme. A pretty good one so far. Nothing wrong with that. It’s absolutely not a store of value.

[dlubarov]

> I’d be willing to buy gold or art at a certain price for their practical or esthetical use

For esthetical use, wouldn't an inexpensive fake gold work just as well, as long as its appearance was substantially the same? Not many people are interested in buying fake gold, of course, but I think that's a matter of wealth/status rather than aesthetics.

I think the demand for white gold and rose gold also suggests that interest in gold jewelry is largely about wealth/status. Even "gold gold" jewelry is usually mixed with lighter metals in order to intentionally change its appearance. (Of course it's also to strengthen the material, but that could be done while maintaining the approximate color if people truly liked the color.)

[Aunche]

If you actually wanted to store value you would buy gold. You can't store value in Bitcoin because it has no inherent value. It's a distributed ledger on the internet. If I hoard 100% of the world's gold bullion, there's a good chance that people would want to buy it from me at a price similar to today's spot. If I hoard 100% of bitcoins, it loses all of its value. Moreover, if hyperinflation does occur, there's a good chance you'll face power and internet outages, which makes Bitcoin useless because you can't access it.

[imtringued]

The reason why gold is at least acceptable (as opposed to worthless) is that you cannot create another competitor element. Meanwhile Bitcoin is effectively a highly advanced piece of paper that has numbers written on it. It can be replaced by any other highly advanced piece of paper. Heck Bitcoin could even be replaced by its own clones.

[goodoldneon]

What’s gold’s inherent value?

[Aunche]

Aside from its industrial applications, it's dense, rare, chemically stable, and very easy to recognize. These are all qualities that make for a good store of value. You can't replace gold with any other element.

[strgcmc]

By this argument, you'd think we'd still be using CDs and Walkmans, instead of moving to mp3s and iPods/iPhones.

Gold will have its place as an analog store of value. But you are simply missing the point about how to evaluate a digital store of value. Think about which digital properties a digital store of value would need to have, since concepts like density and chemical stability are literally useless to evaluate a digital entity against; once you have a list of digital characteristics that define what a digital store of value would need to have, you can start to check your checklist against the properties of Bitcoin (or other cryptocurrency if you want)... I'm not saying you'll automatically be convinced, but you should at least use the right checklist to compare.

[Aunche]

Gold has obvious aesthetic and industrial uses, but as a store of value, its utility is very low to begin with. The only use for storing gold is that it could be used as an emergency medium of exchange in the event of a global economic collapse. Meanwhile, even if you had stable internet access, by some miracle, very few people would have enough spare energy to mine for blocks for Bitcoin transactions.

Outside of this extreme case, a currency is much better store of value because it comes with the bonus of liquidity. Sure fiat currency may lose its value to inflation, and Bitcoin may rise 50x, but that's actually a benefit of fiat.

Money is really just a credit for your contributions to society that society now owes back to you. The value of your contribution to society decays over time, so it makes sense that the value of your money should do so as well. You're now incentivized to "rent out" the credit society owes back to you to someone who needs it more than you, for example, a young family buying their first house. This is in essence what a loan is.

Had your money/store of value been sitting idly, it wouldn't be able to help anyone. This is the problem with Bitcoin. Loans and investment become extremely risky. It's impossible for everyone to pay back interest successfully when there are a fixed number of Bitcoins, so instead people are incentivized to hoard them. In a broader sense, by "holding value," you're holding back societal contributions for the future when these contributions could reap benefits right now. That's not something anyone should be rewarded for.

Given that storing value is a net negative for society, there's the question of where the additional value of Bitcoin is coming from. Part of it was due to the devaluation of the dollar, but that can't explain all of it. Maybe it has some unrealized potential to become a currency outside of government control, but that's something that was rejected in the original comment I replied to. This means that the value of Bitcoin is being leeched from outside. I think that people will collectively realize this, which will cause Bitcoin to crash.

[epa]

What is a tech stock's inherent value? They typically lose money and have a ton of employees. How is bitcoin different? You are investing in a technology with a group of people who are supporting it. As more people agree it is useful, the price goes up. Same thing as a stock.

[Aunche]

Tech stocks aren't stores of value either. They're investments. No matter how speculative they are, the company is expected to return its profits back to the shareholders.

[epa]

Now we are just playing with semantics.

[Aunche]

From an purchaser's perspective, Bitcoin may be indistinguishable from a meme stock, but behind the scenes it's entirely different. You can't store wealth in a company because the company requires wealth the operate.

[benhurmarcel]

> If you actually wanted to store value you would buy gold

Who actually buys gold to store value?

[kart23]

I agree that Bitcoin is never going to be used for payments again. But I still don't know about value store. Its hard to convert back to fiat (without paying taxes) unless you're going completely P2P with cash, which likely isn't feasible for large scale transactions. Is bitcoin's value negatively affected by difficulty cashing out, or am I overthinking it?

[briefcomment]

Overthinking imo. Compared to a bar of gold, it’s a breeze.

Convertibility to fiat is kind of a low priority for a store of value. Auditability, barriers to rehypothication, and ability to self custody are probably much more important for a store of value.

[benhurmarcel]

But virtually no individual puts his money into bars of gold. Gold isn't a good store of value for most people, and it's not because it's inconvenient. It's just that there are much better options out there.

So being a better store of value than gold isn't hard.

[briefcomment]

Gold stores $10 trillion. If only half of that moved to Bitcoin, a Bitcoin would be worth a quarter million.

Housing is sometimes a store of value. Bitcoin is probably more liquid, and way less of a hassle than some housing. Expect some of that to move over.

Fine art is primarily a store of value. A lot of it sits in airport warehouses. Bitcoin is just as scarce, but much more convenient.

Stocks are certainly being used as stores of value for many people. At some point, Bitcoin will become more reliable than index funds.

Idk much about bonds, but I'm sure some of that will flow to Bitcoin, as bonds become a less attractive investment.

[tootahe45]

> Is bitcoin's value negatively affected by difficulty cashing out

If people can't sell isn't that positive for the price? The whole 'hodl' thing is to stop people cashing out. Since crypto has no inherent value, the price is reliant on more people cashing in than out.

[nonameiguess]

This is an amazingly cynical take. I mean, I wish you all the luck in the world in your attempt to get rich, but you're making a bet that the global economy is going to collapse, in part aided by a pandemic, and rather than doing anything to help, the world's wealthy are going to opt out of using their wealth to help anyone in favor of hoarding bit patterns on hard drives in their dragon caves. I don't think I want to live in a world where the rich are inventing new ways of evading taxes as their countries collapse from ecological disaster, especially when those ways of evading taxes are contributing to ecological disaster.

This seems destined to go about as well as all the Spanish and Portuguese who plundered the New World for centuries in their attempts to hoard real gold as their empire faded into the dustbin of history and mercantilism and then capitalism took over and the world realized actual wealth involved making useful things, not holding onto deflationary fixed supply assets for dear life.

[67868018]

I don't like where the world is heading either, but let's get real:

JP Morgan is on board, now advising their investors to join in (and the bank behind Coinbase)

Fidelity is on board

Morgan Stanley is on board

Visa, MasterCard

AMEX has been using crypto to get best possible currency exchange rates for a couple years

Coinbase has a healthy relationship with the SEC and is about to get their banking charter approved for their own direct FDIC insurance, as well as IPO soon

Getting money out is NOT hard.

This is not a meme.

[ac29]

JP Morgan: has released a laughable whitepaper, and purchased zero bitcoin

Fidelity: Provides custody services for a fee, hasnt directly invested

Morgan Stanley: Provides custody services for a fee, hasnt directly invested

Visa, MasterCard: have made some press releases, but dont appear to actually do anything yet

AMEX has been using crypto to get best possible currency exchange rates for a couple years: source? couldnt find any evidence of this

Coinbase has a healthy relationship with the SEC: healthy enough to earn them a $6.5M fine for illegal wash trading yesterday

[rednerrus]

What is the value add? How does it store value? How do you get your money (in large volume), into or out of BTC with a transaction associated with you or your company? It's not even a good anonymous store of wealth anymore. It can't handle transaction volume at any kind of reasonable scale. It also doesn't have an order book deep enough to facilitate large transactions in the market. You'll have to figure out a deal with a sketchy OTC broker.

[briefcomment]

The value add is marginal, but people will choose something that’s a little bit better if it exists.

That value add is that it’s scarce, and its scarcity is unlikely to be tampered with. This means people don’t have to jump through hoops to keep up with inflation. That’s it.

[rednerrus]

Why is scarcity a value add? The difficulty and costs associated with getting money into and out of the ecosystem have to offset the scarcity value add. I'm still not convinced that scarcity is valuable. It surely benefits the people who were early adopters but what is the value to new investors? Not to mention how incredibly inefficient all of this is.

[briefcomment]

Scarcity simply means that someone can't print more units of the store of value, or dig it out of the ground. When someone other than you is doing something like that, your share of wealth is being whittled away. With scarcity, you can maintain your purchasing power indefinitely. You don't have to jump through hoops to find the best rates, or find the best return, etc. Your wealth is simply preserved

[rednerrus]

Why is the underlying asset valuable? If I create a crypto that only has ten tokens is it more valuable than BTC? It's scarcer than BTC...

[peteretep]

As Ethereum has shown the immutable part is up to developer whim. The “hard limit” is literally a config value.

[gruez]

...assuming you can get consensus. That's harder than you think. On ethereum it might be easy because the creator is still around, but on bitcoin it's very hard. See the whole segwit2x controversy.

[dehrmann]

At least for Bitcoin, don't miners effectively control consensus? And they're less concerned with you using Bitcoin to store wealth and more concerned with recovering the cost of their single-purpose hardware. Your interests are actually less aligned with the people running than Bitcoin show than with central banks.

[gruez]

>At least for Bitcoin, don't miners effectively control consensus?

They completely control consensus when it comes to transaction ordering, but for other network parameters like emission rate, they don't have any control. If they decided to bump block rewards by 2x none of the blocks would be accepted by exchanges or merchants, and it would effectively be a hard fork. Segwit2x had majority miner support but failed because it couldn't get enough community support.

[bostonsre]

Not too hard to get consensus if you're an authoritarian regime in china. All of the largest miners are in china. https://www.statista.com/statistics/731416/market-share-of-m...

[gruez]

Segwit2x had the miners support, yet it still failed.

[bostonsre]

It sounded like they required support from the developer community but they didn't have it. Not sure if that support would be needed for a 51% attack, would it?

[gruez]

Depends on the attack you're pulling off. A 51% attack won't allow you to change the coin generation rate (what peteretep was talking about).

[joreto]

hide assets with a publicly traceable and immutable ledger? you'd have to be a complete idiot to try that. Bitcoin is useless as a store of value if everyone can see how much you hold, where you acquired it, and how you've spent it..

but yes, there are other (actual) cryptocurrencies* that don't broadcast every detail about your transactions, which can be used for that.

*crypto- comes from the Greek kryptós, meaning “hidden.”

[globular-toast]

Rubbish. Bitcoin had a unique selling point when it was digital cash. We don't need digital gold. Real gold is fine and better. Bitcoin is purely about speculation now.

[Mc_Big_G]

Give it up man. You’d think HNers would get it but they don’t. Most likely because they hate that they missed the bus. You’ll never convince them. We should just stop trying.

[elevaet]

Some of the brightest minds on the internet, and some of the earliest adopters of crypto on here... it would be a mistake to dismiss the very rational critiques here because "they hate that they missed the bus".

[Mc_Big_G]

Time will tell. If we’re going all “brightest minds” then I guess I can use Elon as my anecdote.