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"The utility as a currency is at best secondary, or even tertiary. It's only a matter of time until those bubbles burst." The value as a currency is what would
by alexasmyths 9y ago
"The utility as a currency is at best secondary, or even tertiary. It's only a matter of time until those bubbles burst."
The value as a currency is what would give them existential staying power.
The USD is not hugely valuable because it's backed by US treasuries - it's valuable because it's extremely liquid and can be used ubiquitously.
BTC etc. bubbles may not 'pop' like tulips, because there are a) institutional holders of major blocks that can do things to keep the price up, b) speculative holders have no need to liquidate and I think will want to 'hold' so as to avoid losses and c) there is a small 'actual' area wherein BTC is a currency, which is the black market. There is, globally enough of a 'general black market' to create some demand for BTC as a currency.
I think those 3 things combined means that it's possible BTC can hold it's 'paper value' for quite a long time.
Two other existential factors:
1) The BTC mania has yet to truly hit mainstream, and it's making it's way globally.
2) The press is still piling on the hyper. A lot of bloggers have positions in BTC they do not disclose.
But it's all ridiculous and fake speculation.
Jaimie Dimon is technically correct, this BTC 'makes no sense' - but if enough people believe in it enough, then it will exist.
- vasilipupkin 9y agoyeah. Why do people buy gold for their portfolios? for the same reason BTC will exist.
- Nursie 9y agoAs a backup, so that if the shit hits the fan they have something that's held value and fascination for thousands of years?
- vasilipupkin 9y agoright. So why does it hold value when shit hits the fan? you can't eat it, you can't treat a disease with it. Will it hold value in the future? My point is, it's really just convention. So, the same logic applies to bitcoin.
- Nursie 9y agoBitcoin hardly has convention on its side at this point! It has (artificial) scarcity. I think you'd have to be very ... optimistic to view BTC as a long term hedge like gold right now.
- vasilipupkin 9y agoright. It has less convention than gold and less valuation. Bitcoin market cap is what 50-70 billion?. What is the non-industrial fraction of gold's market cap? 1 trillion? so, if bitcoin permanently stays at 10% of gold's hedging value, it justifies a valuation of 100 billion. that's not counting at all usefulness of bitcoin for money transfers.
- Nursie 9y agoUgh, methinks you are deliberately missing my point. There is no reason to think bitcoin is a good long term hedge.
- vasilipupkin 9y agothere is no reason yet to think that. But my point is it could become that hedge. Because there is no fundamental reason for gold to be treated as that hedge. So, my point is, the fact that there is no fundamental reason to use bitcoin is not really a great argument against it. Because there is no fundamental reason to use gold and it is used anyway.
- Nursie 9y agoThere's no fundamental reason, no, however it has proven desirable and valuable over thousands of years. By your logic anything could be a hedge in future. Which is strictly speaking true, but not very useful. You may wish to consider the ~25% drop we've seen in the last couple of weeks when deciding on how well bitcoin holds its value through the ages...
- alexasmyths 9y ago"For the same reason BTC will exist." Gold and BTC are not nearly the same thing.