11 ms·

The comparison with the internet of 20 years ago is a good one. Much like the internet did then, crytpo-currencies now draw an assortment of technologists, ana

by xiaoma 9y ago

The comparison with the internet of 20 years ago is a good one. Much like the internet did then, crytpo-currencies now draw an assortment of technologists, anarchists, bankers and futurists. There's also a wildly optimistic bull case to be made and it's very difficult to determine a reasonable valuation. In contrast, tulips weren't a new technology, they had no power to change the world's business or social graph and a radically new tools couldn't be build on top of them.

dade_ 9y ago
Tulip bulbs aren't liquid, don't fit in my wallet and only last 12 months.
- pishpash 9y ago
  But they have inherent utility unlike Bitcoins.
  - RealityVoid 9y ago
    Really? What is their inherent utility? Looking pretty? I'm pretty sure a stronger case can be made for bitcoin's utility than than.
    - armed10 9y ago
      They're edible and a common source of food in the Netherlands during world war 2.
      - JoachimSchipper 9y ago
        ... the Dutch (in northern cities) turned to eating tulips - and everything else - in the desperate "hunger winter" of 1944; that's very different from "a common source of food (...) during world war 2". (Tulips are obviously not an efficient food source; don't expect to see people eating tulips except in unplanned-for emergencies.)
    - lmm 9y ago
      What's the case for Bitcoin's inherent utility? I could place some tulips around my flat and they would make me a little happier, for a little while - and that's what utility to humans ultimately boils down to.
    - TeMPOraL 9y ago
      Maybe you could point to various ways people try to abuse bitcoin blockchain as the utility. But then you still have to offset the disutility of wasting huge amounts of electricity.
    - saalweachter 9y ago
      The difference between Bitcoins and tulips is that someone can like tulips, and assign a value to a really cool tulip based on that. They can weigh the benefits of a tulip versus a rose or a painting of a tulip, and buy one based on whether it gives a good return of enjoyment for the price. On top of that, you get tulip traders, who seek to buy tulips from people who value them less and sell them to people who value them more, and speculators who acquire and hold tulips on an expectation that they will be worth more in the future. From there the market can explode and the price can rise far beyond whatever the primary users of tulips are willing to pay. The weird thing about Bitcoins is there is no floor to their value - their value as a unit of exchange or a store of value depends entirely on how many people are willing to accept them. A Bitcoin is not a tulip that some people want to simply admire or a corporation that has revenue or a parcel of land which has potential. With all those things, you might just want the thing for the thing. With Bitcoin, you only ever want it, either as a store of value or a medium of exchange, because other people also want it. This is where everything becomes weird. With other markets, tulip or stock or real estate, you can speak of the commodity as being over-valued when speculation drives the price above what the people who want the thing itself are willing to pay. With Bitcoin, you cannot. You can't call Bitcoin overpriced or underpriced because it has no grounding, no price that is independent of demand.
  - jikachu2 9y ago
    Nothing has inherent utility. Utility/value is relative - maybe a tulip is worth something to you, but it's not worth anything to me.
    - RealityVoid 9y ago
      I disagree, I mean, food has inherent utility. Food is valuable for everyone and even though you might not like certain foods, you _need_ food in general. Some things are more usefull for us as a society than others. I do agree with OP that certain things might not be usefull even tough they currently hold commercial value, I just think Bitcoin is usefull. And I also believe that BTC is usefull in an infectious way.
      - coderzach 9y ago
        What if someone is allergic to your food. What if there's a virus that makes everyone allergic to a specific food. The value isn't inherent.
        pishpash 9y ago
        The argument is not that everybody sees the same value in everything, but where that value comes from. I think the value of the food comes from the food (to the extent that somebody eats it). I don't think it comes from a thought.
        RealityVoid 9y ago
        The value for that speciffic food is nil (for you), but food in general is still valuable and has intrinsic value. There are people alergic to peanuts but peanuts still add value and nurture for lots of people. Regardless, I fell like you're begging the issue. Not all value is relative, some thing are more practically valuable than others and sone, if you look at them objectively, are almost worthless.
        dwaltrip 9y ago
        > The value for that specific food is nil (for you), but food in general is still valuable and has intrinsic value. I'm not understanding this argument. How can value be dependent on the context and intrinsic at the same time? If peanut allergy spread to the entire population, would peanuts still have intrinsic value?
  - Jhsto 9y ago
    I get what you mean but for some people, Bitcoin has utility value when it comes to buying altcoins. For the less popular coins, the only way to acquire them is by first converting fiat into either ETH or BTC.
  - EthanHeilman 9y ago
    Do you disagree that there is no inherent utility in the ability to create a digitally-signed global timestamp? What is your argument against the inherent utility of owning Bitcoins?
  - tcoff91 9y ago
    Bitcoin has inherent utility as a store of value that cannot be frozen at the whim of a government agent or a banker.
    - pishpash 9y ago
      That's a function that we ascribe. A potato can inherently store (some) value because you can eat it and be nourished. A house has inherent value because it is shelter. A bitcoin has no inherent value, only ascribed value.
      - colordrops 9y ago
        What does "ascribed" vs "inherent" mean to you?
        jellicle 9y ago
        I would describe the distinction like Gresham's law. Suppose we have two units of currency, each with identical face value: a real tulip bulb, and a certificate worth 1.0 tulip bulbs, or a silver coin marked $1 and an iron coin marked $1. In each case, the face value is identical but one of the units has an additional possible area of value, extrinsic to the marked face value. You can melt down the silver coin, eat the potato, plant the tulip. This puts a floor on the value of the item - it's worth min(facevalue, extrinsicvalue). Something worth min(facevalue,extrinsicvalue) should be worth more than something worth min(facevalue, 0). Bitcoin doesn't seem to be something that can be planted, eaten, etc. It doesn't have another area of value, other than being bitcoin.
        valuearb 9y ago
        Much of the world lives under repressive regimes that can confiscate your assets at the drop of a hat. There is nothing other than cryptocurrencies that can protect them. That's a super valuable utility.
        9y ago
- gwern 9y ago
  The last one isn't right. You can get multiple generations out of a single tulip bulb. Thompson's book goes into more detail about how early tulip markets functioned and the role of tulip-breaking virus, but the key part is that specific tulip varieties (created by the virus) would be continually introduced and be grown and spread but each generation was weaker and eventually the variety died out entirely. So they had built-in scarcity, leading to initial high prices (as only a few bulbs existed) and then declines as they became popular and investors cultivated them, eventually disappearing and making room for new varieties. So not quite money, but not quite individual artworks/collectibles either; maybe more like prints with limited runs? (In a similar way, woodblocks wear out so scarcity for a particular print series is enforced.)
qwtel 9y ago
> In contrast, tulips weren't a new technology. Depends on your definition of 'technology'. From wikipedia: > The tulip was different from every other flower known to Europe at that time, with a saturated intense petal color that no other plant had. The appearance of the nonpareil tulip as a status symbol at this time coincides with the rise of newly independent Holland's trade fortunes. In any case, they were certainly new, and there was reason to believe that lots of people would want to buy them.
lmm 9y ago
I'd compare to Second Life. Huge hype, huge investment, but no-one can quite connect it with doing something useful. And that's what I expect to happen to cryptocurrency: no big bust, just a gradual fading from view as it turns out there's no there there.
- CyberDildonics 9y ago
  Second life wasn't a new technology, it was just a video game by a single company. It wasn't decentralized, it wasn't even made for anything other than entertainment. If you think cryptocurrencies have no utility at this point, you have your head in the sand. To use money electronically right now, you need a bank, you can't do it yourself.
  - root_axis 9y ago
    If I have zero bitcoin at the moment, how do I go about attaining some without a bank account?
    - xiaoma 9y ago
      Invest in the appropriate hardware and mine it. Another alternative would be to trade goods or altcoins for fractional BTC.
      - elsonrodriguez 9y ago
        Is mining still a viable path to obtaining bitcoin?
        MR4D 9y ago
        That's the $64,000 question. Seems Fidelity is interested in the answer, too. https://www.reuters.com/article/us-fidelity-bitcoin-idUSKBN18J20P https://www.reuters.com/article/us-fidelity-bitcoin-idUSKBN1...
    - CyberDildonics 9y ago

by xiaoma 9y ago

dade_ 9y ago

Tulip bulbs aren't liquid, don't fit in my wallet and only last 12 months.

pishpash 9y ago
But they have inherent utility unlike Bitcoins.
- RealityVoid 9y ago
  Really? What is their inherent utility? Looking pretty? I'm pretty sure a stronger case can be made for bitcoin's utility than than.
  - armed10 9y ago
    They're edible and a common source of food in the Netherlands during world war 2.
    - JoachimSchipper 9y ago
      ... the Dutch (in northern cities) turned to eating tulips - and everything else - in the desperate "hunger winter" of 1944; that's very different from "a common source of food (...) during world war 2". (Tulips are obviously not an efficient food source; don't expect to see people eating tulips except in unplanned-for emergencies.)
  - lmm 9y ago
    What's the case for Bitcoin's inherent utility? I could place some tulips around my flat and they would make me a little happier, for a little while - and that's what utility to humans ultimately boils down to.
  - TeMPOraL 9y ago
    Maybe you could point to various ways people try to abuse bitcoin blockchain as the utility. But then you still have to offset the disutility of wasting huge amounts of electricity.
  - saalweachter 9y ago
    The difference between Bitcoins and tulips is that someone can like tulips, and assign a value to a really cool tulip based on that. They can weigh the benefits of a tulip versus a rose or a painting of a tulip, and buy one based on whether it gives a good return of enjoyment for the price. On top of that, you get tulip traders, who seek to buy tulips from people who value them less and sell them to people who value them more, and speculators who acquire and hold tulips on an expectation that they will be worth more in the future. From there the market can explode and the price can rise far beyond whatever the primary users of tulips are willing to pay. The weird thing about Bitcoins is there is no floor to their value - their value as a unit of exchange or a store of value depends entirely on how many people are willing to accept them. A Bitcoin is not a tulip that some people want to simply admire or a corporation that has revenue or a parcel of land which has potential. With all those things, you might just want the thing for the thing. With Bitcoin, you only ever want it, either as a store of value or a medium of exchange, because other people also want it. This is where everything becomes weird. With other markets, tulip or stock or real estate, you can speak of the commodity as being over-valued when speculation drives the price above what the people who want the thing itself are willing to pay. With Bitcoin, you cannot. You can't call Bitcoin overpriced or underpriced because it has no grounding, no price that is independent of demand.
- jikachu2 9y ago
  Nothing has inherent utility. Utility/value is relative - maybe a tulip is worth something to you, but it's not worth anything to me.
  - RealityVoid 9y ago
    I disagree, I mean, food has inherent utility. Food is valuable for everyone and even though you might not like certain foods, you _need_ food in general. Some things are more usefull for us as a society than others. I do agree with OP that certain things might not be usefull even tough they currently hold commercial value, I just think Bitcoin is usefull. And I also believe that BTC is usefull in an infectious way.
    - coderzach 9y ago
      What if someone is allergic to your food. What if there's a virus that makes everyone allergic to a specific food. The value isn't inherent.
      - pishpash 9y ago
        The argument is not that everybody sees the same value in everything, but where that value comes from. I think the value of the food comes from the food (to the extent that somebody eats it). I don't think it comes from a thought.
      - RealityVoid 9y ago
        The value for that speciffic food is nil (for you), but food in general is still valuable and has intrinsic value. There are people alergic to peanuts but peanuts still add value and nurture for lots of people. Regardless, I fell like you're begging the issue. Not all value is relative, some thing are more practically valuable than others and sone, if you look at them objectively, are almost worthless.
        dwaltrip 9y ago
        > The value for that specific food is nil (for you), but food in general is still valuable and has intrinsic value. I'm not understanding this argument. How can value be dependent on the context and intrinsic at the same time? If peanut allergy spread to the entire population, would peanuts still have intrinsic value?
- Jhsto 9y ago
  I get what you mean but for some people, Bitcoin has utility value when it comes to buying altcoins. For the less popular coins, the only way to acquire them is by first converting fiat into either ETH or BTC.
- EthanHeilman 9y ago
  Do you disagree that there is no inherent utility in the ability to create a digitally-signed global timestamp? What is your argument against the inherent utility of owning Bitcoins?
- tcoff91 9y ago
  Bitcoin has inherent utility as a store of value that cannot be frozen at the whim of a government agent or a banker.
  - pishpash 9y ago
    That's a function that we ascribe. A potato can inherently store (some) value because you can eat it and be nourished. A house has inherent value because it is shelter. A bitcoin has no inherent value, only ascribed value.
    - colordrops 9y ago
      What does "ascribed" vs "inherent" mean to you?
      - jellicle 9y ago
        I would describe the distinction like Gresham's law. Suppose we have two units of currency, each with identical face value: a real tulip bulb, and a certificate worth 1.0 tulip bulbs, or a silver coin marked $1 and an iron coin marked $1. In each case, the face value is identical but one of the units has an additional possible area of value, extrinsic to the marked face value. You can melt down the silver coin, eat the potato, plant the tulip. This puts a floor on the value of the item - it's worth min(facevalue, extrinsicvalue). Something worth min(facevalue,extrinsicvalue) should be worth more than something worth min(facevalue, 0). Bitcoin doesn't seem to be something that can be planted, eaten, etc. It doesn't have another area of value, other than being bitcoin.
        valuearb 9y ago
        Much of the world lives under repressive regimes that can confiscate your assets at the drop of a hat. There is nothing other than cryptocurrencies that can protect them. That's a super valuable utility.
        9y ago
gwern 9y ago
The last one isn't right. You can get multiple generations out of a single tulip bulb. Thompson's book goes into more detail about how early tulip markets functioned and the role of tulip-breaking virus, but the key part is that specific tulip varieties (created by the virus) would be continually introduced and be grown and spread but each generation was weaker and eventually the variety died out entirely. So they had built-in scarcity, leading to initial high prices (as only a few bulbs existed) and then declines as they became popular and investors cultivated them, eventually disappearing and making room for new varieties. So not quite money, but not quite individual artworks/collectibles either; maybe more like prints with limited runs? (In a similar way, woodblocks wear out so scarcity for a particular print series is enforced.)

qwtel 9y ago

> In contrast, tulips weren't a new technology. Depends on your definition of 'technology'. From wikipedia: > The tulip was different from every other flower known to Europe at that time, with a saturated intense petal color that no other plant had. The appearance of the nonpareil tulip as a status symbol at this time coincides with the rise of newly independent Holland's trade fortunes. In any case, they were certainly new, and there was reason to believe that lots of people would want to buy them.

lmm 9y ago

I'd compare to Second Life. Huge hype, huge investment, but no-one can quite connect it with doing something useful. And that's what I expect to happen to cryptocurrency: no big bust, just a gradual fading from view as it turns out there's no there there.

CyberDildonics 9y ago
Second life wasn't a new technology, it was just a video game by a single company. It wasn't decentralized, it wasn't even made for anything other than entertainment. If you think cryptocurrencies have no utility at this point, you have your head in the sand. To use money electronically right now, you need a bank, you can't do it yourself.
- root_axis 9y ago
  If I have zero bitcoin at the moment, how do I go about attaining some without a bank account?
  - xiaoma 9y ago
    Invest in the appropriate hardware and mine it. Another alternative would be to trade goods or altcoins for fractional BTC.
    - elsonrodriguez 9y ago
      Is mining still a viable path to obtaining bitcoin?
      - MR4D 9y ago
        That's the $64,000 question. Seems Fidelity is interested in the answer, too. https://www.reuters.com/article/us-fidelity-bitcoin-idUSKBN18J20P https://www.reuters.com/article/us-fidelity-bitcoin-idUSKBN1...
  - CyberDildonics 9y ago