[msbarnett]

He's saying that the characteristics of bitcoins make it a lousy currency (people have little incentive to spend or loan it).

Whether or not it's an asset worthy of investing in is a separate question. (I'd argue that it isn't, but that's a separate issue from the characteristics that make it a bad currency).

[jarek]

As an investment, it's like gold but without the intrinsic value part and the "historically used as an investment for the past couple of millenia" part.

[guelo]

The intrinsic value of bitcoin is as an uncensorable way to transfer money, for example to donate to Wikileaks when Visa and Paypal won't let you. It becomes more valuable the more governments try to stop transactions. This is why I'm bullish on it.

[jarek]

Oh, uncensorable? You mean as long as the government permits both parties to be connected to the internet. When they block either of you, it's about as good as a hundred dollar bill.

[caf]

The intrinsic value of gold is quite a bit less than its market value, though - it's very hard to separate that from the "historically desired" aspect.

If you want intrinsic value, you're probably better off investing in good quality rifles.

[jarek]

Well, of course. But bitcoin doesn't have even that.

Though I would suggest that you would have to time your entry into the quality rifle investment market well to avoid getting hit by a speculative markup caused by people's expectations of their future intrinsic value.

[Amincd]

But this contradicts itself. If it makes it a lousy currency, then people wouldn't expect its value to rise, and hence would have an incentive to spend it, hence it would be a good currency and its value would rise.