[waqasx]

The article basically concludes that it doesnt have any inherent value other than the fact that "a lot of people seem to be using it". We return to the same argument again and again, bitcoin needs to get the fundamentals right. Whenever a question about 'store of value' is raised, btc proponents start yelling about how awesome it is as a 'medium of exchange'. I for one will not buy btc until it gets the fundamentals right.

[oleganza]

Bitcoin does not need "to get the fundamentals right" because Bitcoin is just a protocol, not a person. And the protocol works pretty well for those who use it and does not care if BTC is worth $700 or $10.

Here are the fundamentals if you want them:

1. You can really own bitcoins while you never really own dollars or gold. You can move them, store them, shuffle around, for a very small price and always have an ultimate control of where they go. http://blog.oleganza.com/post/67362431718/you-can-own-bitcoi...

2. Blockchain allows registering all sorts of proofs for many different kinds of protocols. It can replace DNS+SSL in a single solution where you really own your username like you own a bitcoin.

3. Bitcoin allows to program complex contracts to be enforced by the whole network thus reducing need for vaults, audits, lawers, laws, police force etc. If I lock up my savings in a time-locked transaction for 10 years which needs any 3 signatures out of 5 of my friends and relatives to redeem, there's nothing in the whole planet that can steal this money from me. Or, I can make a bilateral 200% deposit with a total stranger and trade under whatever rules we agreed upon without having reputation systems: http://blog.oleganza.com/post/58240549599/contracts-without-...

There's a lot more to it. It's not just a "payment network".

[waqasx]

see same old arguments. the question is what gives btc "value", not "is it programmable, secure etc etc etc"

[oleganza]

Ah, sorry. Bitcoin is a collective bet that more and more people will be using it. Like a pyramid scheme, but without a fraudulent promise from anyone that you will buy a share in some particular activity. More people make this bet — more valuable Bitcoin becomes. If one day everyone decides that it's not a worthy bet, the value will collapse to zero.

Pyramid lottery schemes can work the same way, but they always collapse because the only use of such scheme is to sell everything to later coming people. Because otherwise the tokens you bought are useless. Bitcoin has interesting fundamentals that allow your tokens to be incredibly useful without ever "cashing out". Thus it can theoretically be stable money like gold. Fundamentals ("programmable", "secure" etc.) are important because without them people either would not make such bet, or those who will try, will only play like in a good old pyramid: selling out before others.

Bitcoin as an investment today is a combination of long-term believers with short-term players. Each run-up in price has both groups there and short-term players sell off when they feel the top is reached. Then other, less lucky short-term players are selling in panic, thinking that pyramid has collapsed. All the long-term investors ("believers") simply put their coins under the mattress to be slowly spent on various goods in the future. Without fundamentals, there wouldn't be any long-term believers, only a single bubble and a single crash.

http://blog.oleganza.com/post/69887761276/bitcoin-value-prop...