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I understand how Bitcoin works and I understand how the technology itself is useful and valuable + has some interesting use cases. However, with the exception

I understand how Bitcoin works and I understand how the technology itself is useful and valuable + has some interesting use cases. However, with the exception of a few use cases e.g. countries with high and/or hyperinflation, what I don't understand is why the currency Bitcoin has any value at all. Frankly, if anything, it still looks more like a massive bubble to me. Unless you already own Bitcoin, why would I ever consider paying for something through Bitcoin? Why would I ever transfer EUR or USD into Bitcoin? Then again, maybe I'm missing something here, because gold also does not hold the value it generally trades at. I don't see how it makes sense to hold either gold or Bitcoin.

jstanley 9y ago
If you don't already own USD, why would you ever consider paying for something in USD? Because the person you're trying to pay only wants USD. And eventually, if you start getting paid in USD, it becomes only natural to pay others in USD.
- charlesdm 9y ago
  Right. But fiat currency will never disappear in favour of Bitcoin, nor will it be replaced by Bitcoin. Taxes will also have to be paid in fiat, etc. The comparison is akin to someone in Europe exchanging EUR to USD as an investment, because he's betting on the fx rate. But why would the average European ever need to hold USD? Not that many situations that make sense either.
  - jstanley 9y ago
    I hear what you're saying, but I personally think you're wrong. I think fiat currency will disappear in favour of bitcoin (or similar), and I think it will happen within only a small number of generations. It will happen because bitcoin (or similar) is a superior form of money.
    - charlesdm 9y ago
      Maybe. I don’t know. I can see fiat currencies ending up being completely digital within the next 50 years or so, in a continued effort to combat tax evasion. But I’m pretty sure central banks (or well, the elected politicians behind them) can’t and won’t give up control of their respective currency, because they use it as a way to adjust and regulate the economy. If you look at what is happening in the Eurozone with the ECB and the previous discussions about Eurobonds, it's a one approach fits all solution, but it doesn't work for all. What is great for Germany sucks for Greece, and that is because goals are not aligned. If you have, say, one "global" cryptocurrency, then I think there are some inherent flaws to that approach. And if you go the full currency route, you essentially end up with a digital equivalent of fiat? Look: honestly, I want to believe, but no one has managed to convince me with proper arguments what would drive it to that outcome. Most people that I've met are just excited because they've turned $10k into $1M (or more) and now think they're the best investors in the world. So, why would it happen? You need to give me more than its a superior form of money. I'm not saying it's not. I just don't see how we can get there from where we are now.
      - jstanley 9y ago
        My theory is that Fiat currencies and their central banks are beneficial only to the state, and not to individuals. And that for any system to be viable in the long-term, it needs to benefit individuals else they won't use it. 1.) To a first approximation, central bank policy consists of creating lots more money, all the time. That is a bad thing for anybody holding the currency (everyone). Therefore these people (everyone) are incentivised not to hold the currency, and instead to hold a currency that can not be inflated away from them. For example, bitcoin. 2.) We're heading towards a cashless society. If the manifestation of a cashless society is one based on fiat currency, that means every single transaction and all money are subject to surveillance, censorship, and even seizure. By the state and by private companies. Anybody who doesn't want those things to happen to them (everyone) is therefore incentivised to use a currency which is not subject to those things. For example, bitcoin.
        charlesdm 9y ago
- deleted 9y ago
  [deleted]
csuwldcat 9y ago
Bitcoin is a store of value that will long-term net-increase as true monetary bubbles, like this: http://imgur.com/a/0ZoDu http://imgur.com/a/0ZoDu, pop and cause their base currencies to long-term net-decrease.
- charlesdm 9y ago
  Aren't you just transferring from one asset (bubble) into another? Holding your wealth in shares of a company is a way to combat that, so is holding real estate and other assets (e.g. IP rights). Something can't be a reliable store of value if it can drop (or increase) 50-100-200% in a day. That is, in the best case, a speculative instrument. If I had $50m, why wouldn't I invest it in property rather than in Bitcoin?
  - csuwldcat 9y ago
    Property is subject to bubbles, and in almost any economic recession prices of real estate tend to fall (demand drops, and sellers/supply grows). Bitcoin is a far better asset hedge, as it possesses almost every property of commodities, like gold, without almost all of their negatives.
    - charlesdm 9y ago
      Property is indeed subject to bubbles, but why wouldn't / couldn't Bitcoin be? Gold is prone to bubbles as well. Personally I'm not a gold bug and I don't really see why (in the current day and age) it still acts as a safe haven asset. Ultimately, it has little economic use, meaning most of its value is just derived from it "being gold". Land, that I get, that makes total sense. You can't make more, and you definitely can't make more land in good locations. But gold -- that seems very artificial to me as well. But you're right, if I had to a pick, Bitcoin probably makes more sense over gold.

jstanley 9y ago

If you don't already own USD, why would you ever consider paying for something in USD? Because the person you're trying to pay only wants USD. And eventually, if you start getting paid in USD, it becomes only natural to pay others in USD.

charlesdm 9y ago
Right. But fiat currency will never disappear in favour of Bitcoin, nor will it be replaced by Bitcoin. Taxes will also have to be paid in fiat, etc. The comparison is akin to someone in Europe exchanging EUR to USD as an investment, because he's betting on the fx rate. But why would the average European ever need to hold USD? Not that many situations that make sense either.
- jstanley 9y ago
  I hear what you're saying, but I personally think you're wrong. I think fiat currency will disappear in favour of bitcoin (or similar), and I think it will happen within only a small number of generations. It will happen because bitcoin (or similar) is a superior form of money.
  - charlesdm 9y ago
    Maybe. I don’t know. I can see fiat currencies ending up being completely digital within the next 50 years or so, in a continued effort to combat tax evasion. But I’m pretty sure central banks (or well, the elected politicians behind them) can’t and won’t give up control of their respective currency, because they use it as a way to adjust and regulate the economy. If you look at what is happening in the Eurozone with the ECB and the previous discussions about Eurobonds, it's a one approach fits all solution, but it doesn't work for all. What is great for Germany sucks for Greece, and that is because goals are not aligned. If you have, say, one "global" cryptocurrency, then I think there are some inherent flaws to that approach. And if you go the full currency route, you essentially end up with a digital equivalent of fiat? Look: honestly, I want to believe, but no one has managed to convince me with proper arguments what would drive it to that outcome. Most people that I've met are just excited because they've turned $10k into $1M (or more) and now think they're the best investors in the world. So, why would it happen? You need to give me more than its a superior form of money. I'm not saying it's not. I just don't see how we can get there from where we are now.
    - jstanley 9y ago
      My theory is that Fiat currencies and their central banks are beneficial only to the state, and not to individuals. And that for any system to be viable in the long-term, it needs to benefit individuals else they won't use it. 1.) To a first approximation, central bank policy consists of creating lots more money, all the time. That is a bad thing for anybody holding the currency (everyone). Therefore these people (everyone) are incentivised not to hold the currency, and instead to hold a currency that can not be inflated away from them. For example, bitcoin. 2.) We're heading towards a cashless society. If the manifestation of a cashless society is one based on fiat currency, that means every single transaction and all money are subject to surveillance, censorship, and even seizure. By the state and by private companies. Anybody who doesn't want those things to happen to them (everyone) is therefore incentivised to use a currency which is not subject to those things. For example, bitcoin.
      - charlesdm 9y ago
deleted 9y ago
[deleted]

csuwldcat 9y ago

Bitcoin is a store of value that will long-term net-increase as true monetary bubbles, like this: http://imgur.com/a/0ZoDu http://imgur.com/a/0ZoDu, pop and cause their base currencies to long-term net-decrease.

charlesdm 9y ago
Aren't you just transferring from one asset (bubble) into another? Holding your wealth in shares of a company is a way to combat that, so is holding real estate and other assets (e.g. IP rights). Something can't be a reliable store of value if it can drop (or increase) 50-100-200% in a day. That is, in the best case, a speculative instrument. If I had $50m, why wouldn't I invest it in property rather than in Bitcoin?
- csuwldcat 9y ago
  Property is subject to bubbles, and in almost any economic recession prices of real estate tend to fall (demand drops, and sellers/supply grows). Bitcoin is a far better asset hedge, as it possesses almost every property of commodities, like gold, without almost all of their negatives.
  - charlesdm 9y ago
    Property is indeed subject to bubbles, but why wouldn't / couldn't Bitcoin be? Gold is prone to bubbles as well. Personally I'm not a gold bug and I don't really see why (in the current day and age) it still acts as a safe haven asset. Ultimately, it has little economic use, meaning most of its value is just derived from it "being gold". Land, that I get, that makes total sense. You can't make more, and you definitely can't make more land in good locations. But gold -- that seems very artificial to me as well. But you're right, if I had to a pick, Bitcoin probably makes more sense over gold.