[drcode]

> I am presently incapable of seeing how any token other than Bitcoin will be the one that wins.

In some sense, Bitcoin has already "won" in that it currently has a non-zero value. Anyone who says "Bitcoin can't possibly exist or hold value" already is known to be wrong, simply by Bitcoin's existence.

In the same way, I don't understand people like OP who say "No other cryptocurrency but Bitcoin can have value" because many of them already have a value and have "won" by some measures- Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?

Near as I can tell, there will be (and already are) multiple "winners" in the cryptocurrency competition, filling different niches, just like there are multiple species on planet earth filling different niches.

[nunyabuizness]

> Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?

B/c the majority of them care more about their investment than they do about cryptocurrencies as a technology and fear that competition of coins will hinder a successful (aka profitable) exit strategy.

[greendestiny]

Yeah I thought r/bitcoin was a good place to argue against the idea that any altcoin is automatically subsumable by bitcoin. Needless say the downvotes came pretty quick. I think the chance that Bitcoin simply changes to match any competitors is ludicrous. Only consensus changes are possible whilst preserving the Blockchain. Any controversial change that has enough merit will split the market between Bitcoin and an altcoin and divide supporters along those lines. Meaning the holders of Bitcoin become more resistant to change as the altcoin becomes more successful. Its definitely not clear that scenario ends in a change to Bitcoin early enough to defeat the altcoin.

I also think the OPs point about the highlander effect isn't well made - a coins mining pool only needs to be strong enough to protect itself from attacks that it's value incentivises.

[codexon]

Just because something is bought for money doesn't mean it actually has value.

Ask anyone that has been in a ponzi scheme or stocks that went to 0.

[ttctciyf]

I think (think!) that in view of "people trade them for other currencies every day on open markets?" it's pretty clear what's meant is "exchange value"[1], though since "value" can be taken a few different ways and it would probably be better to be explicit about which one is intended.

In particular, exchange value or market value can diverge considerably from utility[2], or "use value"[3] - pathologically so in cases like that of the tulip bubble and so on.

[1] http://en.wikipedia.org/wiki/Exchange_value [2] http://en.wikipedia.org/wiki/Utility [3] http://en.wikipedia.org/wiki/Use-value

[baddox]

You gave examples of assets that did not turn out to have positive value in the future. They absolutely had value at the time they were purchased.

[drcode]

I disagree- The value of something is "what you can get someone to pay for it." That is the only concrete, objective, and rational way to determine value.

> Ask anyone that has been in a ponzi scheme/stock that went to 0

Well, given that you're stipulating a value of zero then clearly you are unable to get someone to pay for it and it's value is zero, by definition.

[CPLX]

To unpack this claim:

> The value of something is "what you can get someone to pay for it." That is the only concrete, objective, and rational way to determine value.

Most if not all traded financial assets have conditional values, values that are fixed only at discrete points in time by actual transactions, and only in retrospect. Outside of that there's no guarantee that a stated value is concrete, objective, or rational at all.

The value of a given share of Bill Gates's MS stock for example is X if he attempts to sell a token amount today, and it's Y if he attempts to sell a large amount today. And X < Y all else being equal, a LOT less.

So tell me then, what is the concrete, rational, and objective value of Bill Gate's MS stock? The "correct" answer has to include a version of "well, it depends".

You claim that the value of something is "what you can get someone to pay for it" without realizing that by definition your measure of value is vague, indistinct, and subjective.

You could make an argument that the value of something is "what you actually got someone to pay for it at a specific date and time" but you didn't say that.

[bildung]

> I disagree- The value of something is "what you can get someone to pay for it." That is the only concrete, objective, and rational way to determine value.

That's perfectly fine, after all value, whatever definition we use, is just a model, nothing that exists outside of humankind. The problem with the definition you prefer, though, is the substantial subset of the economy that will not be available on a market. An economy consists of significantly more production and consumption than what gets sold on a market and therefore gets a price. Examples: Producing free software in your free time, creating music, training kids in a sports club, raising your own kids, teaching for free via youtube channels or moogs or locally etc. All these thing create, well, value, I'd say. They boost both wealth and efficiency of the economy.

[TeMPOraL]

That's not the only way, though it is not bad (as proven by the prosperity big parts of the world now enjoy). Mostly, it's easy and self-balancing. But as a way for solving the problem of resource allocation, it has some really bad failure modes - like creating tons of useless, wasteful work (zero-sum games like advertising) and steering us towards making our planet uninhabitable for humans.

[codexon]

A ponzi scheme has a net value of 0 or less at any point in time.

Just because some people can get out more than they put in doesn't mean a ponzi scheme has created any value for the economy as a whole.

[prawn]

"value for the economy as a whole"

You've shifted the goalposts there from "has value" to "value for the economy as a whole".

If I have money in a ponzi and can exit at that point in time, my stake has value. Later it might not, but at that point it does.

[codexon]

So you are saying that drcode means cryptocurrency has value as a ponzi scheme?

[prawn]

?!? No.

[darkmighty]

Actually if a wide market will pay for a good at a certain moment, it certainly has momentary value. The future of the good doesn't preclude that.

[Terr_]

The way you're defining "value" makes for a pretty meaningless "victory", unless you believe Dutch Tulips were a true benefit to mankind.

http://en.wikipedia.org/wiki/Tulip_mania

[hueving]

The way you're defining value is meaningless if you think the tulip bulbs didn't have value during that time. You could trade one for a house during their peak, sounds pretty valuable to me.

[TeMPOraL]

Thus highlighting the difference between monetary value and what is actually useful. It's a difference people get confused about too often - thinking that the most important thing on the planet is the economy; thinking that everything is fungible because it has dollar value. It's all fun and games until we hit resource limits of the planet. Or kill someone. Our economy sucks at pricing in the fact that while we can safely run out of tullips, we can't safely run out of clean air.

[hueving]

Your definition of 'actually useful' is going to be different than everyone else's. Economic value is the only objective value we have.

[exo762]

Assuming that humans make rational economic decisions. Which is false.

[hueving]

The only way to define an economic decision as rational is if it optimizes for the market value. The rational thing to do in the bulb mania was to produce tulip bulbs.

[gutnor]

Hmm, that got me thinking, I think I get your point generally that bitcoin is more an investment than a value storage and that you would be a fool ( at this stage anyway ) to talk about it as if it was.

However, in general what currency has a value proportional to its benefit to mankind ? Any fiat currency are going to be out for the same reason than bitcoin is out, any traditional currency based on gold/silver/shells is out too for the same reason as Dutch Tulips: eg. value of gold is recursively determined by its own use as a currency, not by any actual industrial use for example - so its value is as much virtual as a fiat currency, with just a different behavior and control lever.

Other financial asset are more directly related to useful human activities, especially commodities, but at the end of the day they get traded and valued based on their capacity to generate one of the currency above rather than objective benefit to mankind. (eg. Amnesty International "shares" would not be based on its efficiency at improving human rights, but by its capacity to convert it into currency )

The only thing that I can think of, would the slaves as additional useful human being are objectively beneficial to mankind. I guess body part, blood, ... is a less gloomy alternative ?

I'm overthinking this :-)

[jasonisalive]

Money is always overvalued, because money is the technology we use to delay the completion of an economic trade. Money is where we "store" our pending transfers of value. Money is the bubble that does not burst.

[lmm]

Fiat is just an IOU, it's worth exactly what it's worth. There's a small admin cost to e.g. printing notes, but it's tiny in proportion to the overall currency value. Bitcoin is unique because it has a big negative externality - a huge amount of energy is simply thrown away, powering computers to do something non-worthwhile. A bitcoin is an IOU for something that's already been spent.

[joe_coin]

I would point out that you're not making a fair comparison to the cost of administering a fiat system. In the US, it includes the cost of the entire Federal Reserve apparatus dedicated to managing the supply of FRNs. Treasury's printing of them is only one small part. The Fed has buildings to maintain, support employees to pay, behind-the-scenes political processes that play out and who knows what changes hands there in exchange for appointments and other policy stances.

You're right that Bitcoin by nature includes a huge energy cost, but when you take the narrow view that it's simply being thrown away, it's both short-sighted that it ignores the theoretical possibility that its heat "waste" could be channeled into something economically desirable (e.g. steam to drive turbines), as well as not an even-handed to comparison to the true costs of its alternatives.

[lmm]

> In the US, it includes the cost of the entire Federal Reserve apparatus dedicated to managing the supply of FRNs. Treasury's printing of them is only one small part. The Fed has buildings to maintain, support employees to pay, behind-the-scenes political processes that play out and who knows what changes hands there in exchange for appointments and other policy stances.

Sure - the physical printing is just one of the many overheads of the monetary system. But the point is that these costs are small and, importantly, more-or-less constant. Whereas with Bitcoin the costs scale up (and inherently have to scale up) with the Bitcoin economy. Indeed, if we assume rational miners with accurate price predictions, then the amount wasted on mining Bitcoin always exactly equals the total value of bitcoins in circulation.

(So far we don't see this because the price is much higher now than it was when most of the coins in circulation were mined. On the other hand, if the Bitcoin price drops to e.g. $10, then the current expenditure on ASICs is going to look even more extravagantly wasteful).

> You're right that Bitcoin by nature includes a huge energy cost, but when you take the narrow view that it's simply being thrown away, it's both short-sighted that it ignores the theoretical possibility that its heat "waste" could be channeled into something economically desirable (e.g. steam to drive turbines)

Even if you find a way to use the heat, you're wasting the computational power that could be allocated to something more productive e.g. protein folding.

But even more importantly, and what I expected to be half the point of the article, the work put into validating the blockchain inherently has to be wasteful. If it isn't, the economic incentives against cheating no longer apply - you can just do a leveraged buyout of a huge turbine company, put their heat generators to work doing a 51% attack, and double-spend all your bitcoins.

Whenever someone comes up with a way to do hashing for half the energy, the Bitcoin network doesn't start using half as much energy - it starts doing twice as much hashing. The wastefulness is built-in and unavoidable.

[Terr_]

To play with that idea and rephrase it: Fiat-currency is backed by a potentially-repayable debt held by a government, the original credit having been spent on infrastructure, social services, weapons, etc.

Bitcoin is backed by an irrecoverable debt held by... an abstract math problem, because the original credit spent on computing answers (of no external use) to that arbitrary problem.

[martindale]

Except the tulip bubble wasn't caused by speculation. It was caused by a change in contract law.

[joe_coin]

To be clear, I don't claim that non-Bitcoin cryptocurrencies do not have value. You're right that their de facto value is revealed through trading activity on exchanges. I view value as subjectively revealed by market prices, not through any sort of labor theory of value or other nonsense.

I'm arguing that non-Bitcoin CCs don't really add any marginal value to the CC ecosystem, and that it's inherently unstable for multiple CCs to coexist. Whatever rationalizations people are making to justify mining Litecoin and holding onto it (ignoring sunk costs of Scrypt ASICs) are inconsistent with reality.

[jdbiggs]

Hey, can we get you on our TechCrunch bitcoin podcast this or next week? email me at john @ techcrunch dotter com

[crazychrome]

Value and price are different things in lots of economic theories, e.g. Maxisim

[IkmoIkmo]

> Why do people keep trying to argue that dogecoin/litecoin/etc/etc don't have value, when people trade them for other currencies every day on open markets?

They have value but it's much more based on speculation. If you look at Bitcoin, there's an ecosystem of millions of users, over 100 thousand merchants including some of the world's biggest companies like Microsoft, hundreds of bitcoin-focused VC-backed startups of which one had a valuation nearing half a billion dollars etc etc.

While it's obvious that bitcoins are overvalued in relation to this ecosystem (i.e. a substantial part of its price is based on speculation that the ecosystem will become massively important in the future), there already is a genuine ecosystem out there with decent growth rates.

Dogecoin or litecoin don't have that. They have communities that keep them alive but there doesn't seem to be a long term viability. This is different from bitcoin's early days (which didn't have any real ecosystem either at one point) in that bitcoin actually offered something radically new, while litecoin for example isn't innovative, it was the first me-too that didn't totally screw over its early investors in a pump & dump scheme so it's stayed around but it doesn't offer anything special. Does that mean they have no value? Absolutely not. They do. But 'me-too' companies also have value in the short-term. In the long term they usually don't survive. We're already seeing that, litecoin for example dropped insanely in price (like 90%) in the past year and that's not just because bitcoin readjusted after late 2013's hype cycle, it crashed against bitcoin itself, too, i.e. the market is already identifying that litecoin versus just bitcoin doesn't have a future in the long-run. And if there's ANYTHING you have to know about bitcoin is that it's almost always spoken about in a long-term frame of reference. If we purely look at the short term then yes, we can say dogecoin & litecoin have value and so does bitcoin, but we would also have to say that all three combined are absolutely insignificant, a drop in the ocean, the size of a mid-cap fund of which there are thousands. The short-term isn't interesting, in the short-term me-toos exist, in the long-run they don't.

In short, the reason people say litecoin has no value is not because it's not being traded: that's speculation. It's that it is said to have no utility value over bitcoin. Bitcoin can power any utility litecoin can, with more liquidity, more market participants, more open-source libraries & development, more funding, more security etc.

I don't think we'll all be using bitcoins necessarily, but I do believe we'll all be using bitcoin (or no cryptocurrency at all, of course, that's very possible, too). i.e. yes there are niches in digital currency, but the cryptocurrency niches will, I think, if they exist in the long-term, be served by products running on top of the bitcoin network. Anything litecoin or dogecoin can do, a bitcoin treechain or sidechain or payment channel can do but with the above mentioned benefits. It's like saying there are different niches in internet protocols, as if to say the internet may run on many different protocols that serve different niches in the long-term, instead of saying TCP/IP powers the internet and it has higher-level protocols that serve niches like http or smtp. Within that line of thinking, anything but TCP/IP has no long-term value and any niche in internet technology will be built on top of that one protocol. Similarly many who say 'litecoin has no value' think of bitcoin as being the protocol for value transfer, and anything having to do with transferring value (or titles, contracts etc) will be built on top of it, rather than along side it.

In short, the claim that litecoin has no value (despite having a market value) makes a lot of sense depending on what you believe about the future of cryptocurrency.

[lmm]

Dogecoin offers innovation in the form of a more equitable long-term mining curve and lower transaction fees.

[IkmoIkmo]

Transaction fees: no, again anything dogecoin can do can be built on top of bitcoin. You can build sidechains, treechains or indeed off-chain payment systems on top of bitcoin that are cheaper than Dogecoin or even free.

Dogecoin is not cheaper because of some innovation, it's cheaper because there are fewer mining revenues and thus it's less secure. That's not a pure benefit, it's a cost-benefit, bitcoin could be set to have 0 transaction fees tomorrow if it was wanted. Instead a dynamic pricing system is in development, a free market for transaction fees, which is the best and most elegant system of pricing conceived. Dogecoin doesn't have that innovation.

As for long-term equitable mining, that's not really an innovation, is it? It's just another choice. Today Dogecoin's inflation is 5% or so, for bitcoin it's 10% or so. A larger percentage of bitcoins are newly distributed than dogecoin, which I assume is what you consider more equitable. And this will remain true for years.

And in the long-term? In the long term they want to have a fixed supply forever, but if you have 100 coins and you add 5 per year, in 50 years that's less than 0.4% yearly inflation, i.e. next to nothing. A few decades later it's puny, it might as well not be there. In the long term their inflation is approaching that of bitcoin's long-term inflation: 0%. It's not all that much different.

To say it's more equitable because long-term dogecoin has slightly higher inflation than bitcoin is like saying Kenyan shilling are more equitable than dollars, and dollars more equitable than dogecoins.

If those are the two best examples of innovation of the 1st or 2nd most popular cryptocurrency after bitcoin, I think that's very telling on the lack of long-term value for anything but bitcoin.

[lmm]

> Transaction fees: no, again anything dogecoin can do can be built on top of bitcoin. You can build sidechains, treechains or indeed off-chain payment systems on top of bitcoin that are cheaper than Dogecoin or even free.

In theory, sure. But defaults are important, simplicity is important.

> To say it's more equitable because long-term dogecoin has slightly higher inflation than bitcoin is like saying Kenyan shilling are more equitable than dollars, and dollars more equitable than dogecoins.

Both those things are true. Look at the Gini coefficient for wealth held in each currency. (There are downsides to high inflation, but not at the USD level).