Considering that it hasn't produced any value of note in 13 years, I'm gonna go out a limb here and say I don't think it's worth 2% of the entire world's wealth - and certainly not 3% of the world's energy.
In this comment, I'm assuming you are talking about Bitcoin.
> I don't think it's worth 2% of the entire world's wealth
Taken literally, if 2% of the world's wealth is in Bitcoin, so isn't that its value, by definition?
I'm not trying to nitpick. I'm trying to push back on what seems to be a glossing over of the fundamentals.
I wonder if what you mean is that you don't think it is _wise_ for people to put so much of their assets in the form of Bitcoin.
Now, if we want to have the discussion of "how has Bitcoin affected the economy?" it is not enough to only look at a snapshot of how wealth is allocated at one instant of time. We should be looking at a differential view; i.e. before and after.
In particular, an economist would ask questions such as...
1. How has Bitcoin changed transaction costs? Who bears these costs? Over what time frame?
2. To what degree does the structure of Bitcoin provide advantages relative to other assets?
3. How does the development of Bitcoin factor into a longer-term view of experimentation and innovation?
4. To what degree has wealth been reallocated due to Bitcoin? To what degree did it disrupt existing wealth patterns?
People paid a lot of money for Enron stock before it exploded. Did that mean it was worth $70B the day before it exploded and suddenly it was worth nothing when people found out it was actually all a fraud?
Enron wasn't actually producing any value. Neither are self-replicating Byzantine fault tolerant systems.
Anything they can do can be done hundreds of orders of magnitude more efficiently. And nothing they are doing /requires/ the inefficiencies.
I mean, obviously people at Enron were doing /something/ in the same way Bitcoin is. And obviously investors were paying a lot of money for that at one point and then stopped paying for it when it became clear that /something/ was mostly fraud.
There are some pitfalls in comparing a particular stock (e.g. Enron) against a class of cash-like assets (e.g. Bitcoin).
If you want to make the comparison, perhaps you could lay out your logic?
So far, I haven't found a clear, direct, fundamental argument in your comments. I see some loosely related examples and some rhetorical questions. I am interested in your justification and terminology.
Various pyramid-like enterprises sprung up in the new, underregulated markets. At their peak, the schemes were worth upwards of half Albania's GDP, were participated in by 1/3 to 1/2 of the population, and enjoyed support from the government.
For a time, all investors enjoyed good interest payments. But all the popular adoption and shared belief in value couldn't fix their underlying insolvency and the ensuing collapse once new deposits dried up.
Whatever quantifiable value, if any, Bitcoin produces for being a BFT ledger is not nearly enough to offset the constant, massive value drag require to pay for mining costs. That x% of the world's wealth is currently tied up in it is not proof against its fundamental insolvency.
From what I can tell, much of this discussion seems to be characterized by people miscommunicating.
> Considering that _it_ hasn't produced any value of note in 13 years...
What do you mean by "it"? Do you mean (a) Bitcoin in particular; (b) some/many/most/all cryptocurrencies; (c) a distributed self replicating Byzantine tolerant state machine? Or something else?
The comment by tzumby meant (c). Generally, the HN thread was about (b), best I can tell.
> I don't think it's worth 2% of the entire world's wealth
Taken literally, if 2% of the world's wealth is in Bitcoin, so isn't that its value, by definition?
I'm not trying to nitpick. I'm trying to push back on what seems to be a glossing over of the fundamentals.
I wonder if what you mean is that you don't think it is _wise_ for people to put so much of their assets in the form of Bitcoin.
Now, if we want to have the discussion of "how has Bitcoin affected the economy?" it is not enough to only look at a snapshot of how wealth is allocated at one instant of time. We should be looking at a differential view; i.e. before and after.
In particular, an economist would ask questions such as...
1. How has Bitcoin changed transaction costs? Who bears these costs? Over what time frame?
2. To what degree does the structure of Bitcoin provide advantages relative to other assets?
3. How does the development of Bitcoin factor into a longer-term view of experimentation and innovation?
4. To what degree has wealth been reallocated due to Bitcoin? To what degree did it disrupt existing wealth patterns?
And so on...