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decent chance it's worth 100x by the time you retire. At this point it almost seems like bitcoin is a cult. It's a piece of software running a database/blockc

decent chance it's worth 100x by the time you retire. At this point it almost seems like bitcoin is a cult. It's a piece of software running a database/blockchain. There's now several hundred blockchain service networks up and running. Why should anyone pay more than a few cents for a bitcoin or database-backed-blockchain-token where the supply was produced for minimal effort and is now being artificially inflated by unregulated exchanges suckering in people who don't know what they're buying? Maybe blockchains will someday be efficent, but as they stand the only proven use case is speculation due to psychological assumption that the supply is limited . In economics, the Gini coefficient is the standard measure of how inequitable a society is. This is tricky to determine for Bitcoin, as it's not quiet a "society" in the Gini sense, one person may have multiple addresses and many addresses have been used only once or a few times. (The commonly-cited figure of 0.88 is based on one small exchange in 2011.) However, a Citigroup analysis from early 2014 notes: "47 individuals hold about 30 percent, another 900 a further 20 percent, the next 10,000 about 25% and another million about 20%"; and distribution "looks much like the distribution of wealth in North Korea and makes China's and even the US' wealth distribution look like that of a workers' paradise Dorit Ron and Adi Shamir found in a 2012 study that only 22% of then-existing Bitcoins were in circulation at all, there were a total of 75 active users or businesses with any kind of volume, one (unidentified) user owned a quarter of all Bitcoins in existence, and one large owner was trying to hide their pile by moving it around in thousands of smaller transactions. (Shamir is one of the most renowned cryptographers in the world and the "S" in "RSA encryption")" [1] via https://news.ycombinator.com/user?id=davidgerard https://news.ycombinator.com/user?id=davidgerard

vasilipupkin 9y ago
why should anyone pay more than 50-100 bucks for a shiny metal that carries no value beyond the fact that it's shiny and maybe is used in some industries? why should that metal cost 1000 plus dollars an ounce?
- lukasb 9y ago
  you need it to pay taxes.
  - stale2002 9y ago
    No, you don't need yellow pieces of rock to pay your taxes. Gold is quite a good comparison to bitcoin. Gold has very little "intrinsic" value and isn't backed up by the government.
- will_brown 9y ago
  For starters the shiny metal does, as you acknowledge, have industrial application. Moreover, you wouldn’t be able to post that comment nor would I be posting this comment without that shiny metal in our respective devices. Additionally the shiny metal is limited in supply, that is there is a finite amount and you nor I are going to make anymore of it. As OP suggested bitcoin is manmade, it may be artificially limited (21M coins) but anyone can just create a new blockchain and/or cryptocoin for next to nothing. I myself learned how to create smart contracts and deploy them on the Ethereum blockchain and I have created YC Coin; Reddit Coin; Facebook Coin and Instagram Coin. For just a few fractions of an Ethereum Coin I have decentralized karma and likes across networks with billions of users combined. Separately, I have created tokens backed by real life assets allowing users to buy/sell/trade interest in actual assets on exchanges. I’ve even begun offering coin/token creation as a service so anyone or any business who wants it’s own community cryptocoin can have one. Now I don’t question why my coins/tokens are worth less than bitcoin, but at the end of the day “why is bitcoin worth more than other coins when they are both artificially finite stores of value functioning on immutable blockchain technologies, providing the same functions” is a fair question. Once precious metals can be reproduced for next to nothing, like blockchains and cryptocoins, then it’s fair to challenge their worth until then I think it’s easy to argue their worth as a store of value.
  - colordrops 9y ago
    The price of the shiny metal does not match the industrial usage of it though. Why isn't a store of value considered useful in itself? Don't we gain something by moving away from trading with wampum and sheep?
Beejeepa 9y ago
Bitcoin is being monetized. It holds far more value than its intrinsic value, just as a $100 US paper bill is worth far more than it costs to create. A blockchain is not a database - you're just trolling.
wyldfire 9y ago
Inequity doesn't mean much wrt Bitcoin IMO. However, it's good data regarding how much of the currency being held is put to use and how much is just hold-and-pray/FOMO. As a supporter of bitcoin, I recognize that there's so little backing its value. Once some piece of devastating news would be released, it could send bitcoin tumbling all the way down to zero. There would not necessarily be any residual value to the currency if the news were bad enough. The only thing I could imagine that would obliterate all the value might be "algo for PoW is vulnerable to trivial double-spend, no software workaround available". The next most significant thing would be "global consensus among UN member states to outlaw cryptocurrency transactions, transactions to carry criminal penalties including imprisonment." But then it would just slip to merely black market use, which would likely preserve some residual value. Bitcoin's power/lure is: invulnerability+deflationary+novelty+utility+ubiquity. Invulnerability: its value will fluctuate as demand cycles, but the network will continue to churn out new transactions regardless. Deflationary: yes, as everyone says this is a bad quality for a currency, but it helps explain why people keep investing. Novelty: there's some things that you can do with bitcoin that you can't/couldn't ever do before. Utility: it's a truly useful technology and there's innovation going on to find new ways to leverage it. Ubiquity: why bitcoin and not other cryptocoins? Its marketing/brand/ubiquity is its strength. Admittedly it is not irresistibly strong. Support for some other coin could easily overtake it (and that's why there's some investors hedging on other coins).
- 659087 9y ago
  > Novelty: there's some things that you can do with bitcoin that you can't/couldn't ever do before. You can do the same things with a variety of other cryptocurrencies for a fraction of the cost, though.. and it will usually be a lot faster, too.
- craftyguy 9y ago
  > there's so little backing its value What exactly is backing its value? Is it just marketing fluff?
  - rublev 9y ago
    the USD, public perception and its subsequent psychology, and mining. or did i read the question wrong.
AndrewKemendo 9y ago
Despite what you hear, don't look for rationality in human action.

vasilipupkin 9y ago

why should anyone pay more than 50-100 bucks for a shiny metal that carries no value beyond the fact that it's shiny and maybe is used in some industries? why should that metal cost 1000 plus dollars an ounce?

lukasb 9y ago
you need it to pay taxes.
- stale2002 9y ago
  No, you don't need yellow pieces of rock to pay your taxes. Gold is quite a good comparison to bitcoin. Gold has very little "intrinsic" value and isn't backed up by the government.
will_brown 9y ago
For starters the shiny metal does, as you acknowledge, have industrial application. Moreover, you wouldn’t be able to post that comment nor would I be posting this comment without that shiny metal in our respective devices. Additionally the shiny metal is limited in supply, that is there is a finite amount and you nor I are going to make anymore of it. As OP suggested bitcoin is manmade, it may be artificially limited (21M coins) but anyone can just create a new blockchain and/or cryptocoin for next to nothing. I myself learned how to create smart contracts and deploy them on the Ethereum blockchain and I have created YC Coin; Reddit Coin; Facebook Coin and Instagram Coin. For just a few fractions of an Ethereum Coin I have decentralized karma and likes across networks with billions of users combined. Separately, I have created tokens backed by real life assets allowing users to buy/sell/trade interest in actual assets on exchanges. I’ve even begun offering coin/token creation as a service so anyone or any business who wants it’s own community cryptocoin can have one. Now I don’t question why my coins/tokens are worth less than bitcoin, but at the end of the day “why is bitcoin worth more than other coins when they are both artificially finite stores of value functioning on immutable blockchain technologies, providing the same functions” is a fair question. Once precious metals can be reproduced for next to nothing, like blockchains and cryptocoins, then it’s fair to challenge their worth until then I think it’s easy to argue their worth as a store of value.
- colordrops 9y ago
  The price of the shiny metal does not match the industrial usage of it though. Why isn't a store of value considered useful in itself? Don't we gain something by moving away from trading with wampum and sheep?

Beejeepa 9y ago

Bitcoin is being monetized. It holds far more value than its intrinsic value, just as a $100 US paper bill is worth far more than it costs to create. A blockchain is not a database - you're just trolling.

wyldfire 9y ago

Inequity doesn't mean much wrt Bitcoin IMO. However, it's good data regarding how much of the currency being held is put to use and how much is just hold-and-pray/FOMO. As a supporter of bitcoin, I recognize that there's so little backing its value. Once some piece of devastating news would be released, it could send bitcoin tumbling all the way down to zero. There would not necessarily be any residual value to the currency if the news were bad enough. The only thing I could imagine that would obliterate all the value might be "algo for PoW is vulnerable to trivial double-spend, no software workaround available". The next most significant thing would be "global consensus among UN member states to outlaw cryptocurrency transactions, transactions to carry criminal penalties including imprisonment." But then it would just slip to merely black market use, which would likely preserve some residual value. Bitcoin's power/lure is: invulnerability+deflationary+novelty+utility+ubiquity. Invulnerability: its value will fluctuate as demand cycles, but the network will continue to churn out new transactions regardless. Deflationary: yes, as everyone says this is a bad quality for a currency, but it helps explain why people keep investing. Novelty: there's some things that you can do with bitcoin that you can't/couldn't ever do before. Utility: it's a truly useful technology and there's innovation going on to find new ways to leverage it. Ubiquity: why bitcoin and not other cryptocoins? Its marketing/brand/ubiquity is its strength. Admittedly it is not irresistibly strong. Support for some other coin could easily overtake it (and that's why there's some investors hedging on other coins).

659087 9y ago
> Novelty: there's some things that you can do with bitcoin that you can't/couldn't ever do before. You can do the same things with a variety of other cryptocurrencies for a fraction of the cost, though.. and it will usually be a lot faster, too.
craftyguy 9y ago
> there's so little backing its value What exactly is backing its value? Is it just marketing fluff?
- rublev 9y ago
  the USD, public perception and its subsequent psychology, and mining. or did i read the question wrong.

AndrewKemendo 9y ago

Despite what you hear, don't look for rationality in human action.