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So, if bitcoin has no value in illegal trade, what is the intrinsic value bitcoin has left (other than speculative value, that is)? Honest question. To me, a co

So, if bitcoin has no value in illegal trade, what is the intrinsic value bitcoin has left (other than speculative value, that is)? Honest question. To me, a couple of transactions per second with high fees compared to the competition does not sound attractive. Is it the optionality that the devs _may_ sort out the scalability issues and transform bitcoin to something big? Even then you still have the issue of volatility left which dramatically lessens the usability of bitcoin as a currency.

darawk 9y ago
Volatility is something that will (and has) settle over time. All currencies are volatile at first. Volatility is not really a criticism of a currency, unless that volatility is somehow intrinsic to it.
- beefield 9y ago
  But that is _exactly_ what is the case with bitcoin. It by design has no mechanism to manage supply, so only thing that affects price is demand, and as demand varies, there is volatility. So volatility _is_ intrinsic to bitcoin. (And to be clear, I do not mean volatility against other currencies, but volatility against your consumption basket, bread, butter etc.)
- Retric 9y ago
  Only if you turn Volatility into a meaningless phrase. The euro may as well be flat from conception vs. Bitcoin which has been around for a long time and still ridiculously volatile. IMO, most fan-fiction is worse than the original, the best fan-fiction is often better.
homero 9y ago
I use it as a store of value
- beefield 9y ago
  I would somehow think that an entity that has no intrinsic value, but only speculative value is quite bad store of value? (Of course, you are more than welcome to correct my hypothesis by indicating what is the intrinsic value bitcoin has. I thought that illegal trade was one of the major ones, but the parent told me that even that is there no more.)
  - homero 9y ago
    That's true if that's what people believe. But Bitcoin is transforming into a store of value vs a currency right now and if more people begin believing that then it's true. It's like that for gold, except gold is losing that with millennials.
    - beefield 9y ago
      Now, a good store of value to me means that the value is stable. And yes, also gold is really bad store of value by that measure. https://commons.wikimedia.org/wiki/File:Gold_price_in_USD.png https://commons.wikimedia.org/wiki/File:Gold_price_in_USD.pn...
  - kypro 9y ago
    If you want an asset to maintain it's current value, then its demand and supply must also maintain their values. People talk about Bitcoin as "digital gold", but in reality it's not even close, and no crypto ever will be. Gold is valuable because there is a fixed natural supply, and throughout human history, across many civilisations and societies, gold has always been worth something - unlike our fiat currencies who's supply can be altered and made valueless. The problem with Bitcoin isn't it's supply, it's that it's value relies on it's demand remaining high (or at least maintaining current levels). Problem is there is no historic reason or intrinsic value to bitcoin to assume it will continue to have steady demand like gold. More worryingly in my opinion is that bitcoin's current demand isn't really for bitcoin at all. The demand is to make USD fast. The moment people realise Bitcoin might not give them returns similar to other safe investments, it will crash like all other bubbles do. I'm not saying people who get in early won't make loads of money, plenty of people made money from the dotcom bubble too, but you need to be smart about it and understand the risk. At $6,500 bitcoin's market cap is far beyond PayPal's which provides a genuinely useful service and processes millions of dollars of transactions every day.
55555 9y ago
Bitcoin is gold for millennials.
pmorici 9y ago
The intrinsic value is in all the trade going on that isn’t illegal. It is a huge deal for the FX markets for example among other things. Cross boarder trade as well. The transaction rate issue is 99% political in fighting and that has basically been solved or will be by mid November.
- beefield 9y ago
  Sorry, I have not been following Bitcoin news lately. Could you give a comparison of the expected transaction capacity, expected fees and expected time to confirm a transaction by mid November against typical credit card company? That would give some basis to estimate the value bitcoin is creating against the competitors.
  - pmorici 9y ago
    They are doubling transaction capacity. Pennies to move millions for a simple transaction.
    - beefield 9y ago
      and doubling the capacity solves all scalability problems? That is still minuscule capacity to enable any serious use of bitcoin as means of payment. And if the simple transaction is me purchasing a pizza instead of transferring a million from one speculator to another? How much does it cost and how much it takes time?
      - once_inc 9y ago
        Bitcoin doesn't easily scale in its current form. For that, people have invented the Lightning Network (https://lightning.network https://lightning.network). LN is a layer 2 solution which sacrifices a modicum of trustlessness in favor of fewer on-chain transactions. Suppose you want to buy a cup of coffee every day with the same vendor. You could agree to do all transactions in the Lightning Network, reducing the number of on-chain transactions from 30 to 2. This cuts fees and increases usability.
deleted 9y ago
[deleted]
banderman 9y ago
People use bitcoin to buy the other coins that are used for illegal trade.
- beefield 9y ago
  Well, that sounds like a long term value proposal...
ghostbrainalpha 9y ago
My housekeeper spends almost $40 to wire $500 to her family in Bogota. I can transfer $5,000 to my brother in Ukraine for, essentially 0 using Bitcoin. You are correct that the fees may be too high for typical consumer transactions like buying a soda from a vending machine. But for large transactions, and institutions moving money around Bitcoin provides a big advantage.
- beefield 9y ago
  Can you explain me what is the current status in dollar terms if I want now to send 5000 dollars from my bank account to your brother in ukraine, when does he have usable it in his local currency, how much disappears on the way in transaction costs and how long exposure I have to BTC price? How does that compare to e.g. paypal?
  - ghostbrainalpha 9y ago
    Paypal is great. The transfer would be instant, but the price is 2.9%, which is pretty high. The cost to transfer from wallet to wallet, is about $4.00 right now. This destroys Pay Pal where the cost which would be $145.00, if you do this wallet to wallet transfer at night it could take 30 minutes to move from person to person. This is fine for us, but obviously will never work for transactions in a store. He can then use a site like Coinbase, to sell the Bitcoin and then withdraw the Bitcoin into his local bank/currency. This can happen in as fast as 4 days, but as much as a week. I'm not sure if that's on Coinbase or his local bank, but it actually has nothing to do with Bitcoin. But the amount being transferred is fixed before the withdrawal starts, so it the time he is exposed to Bitcoin price fluctuations is only a few hours. Basically it comes down to this. If you can afford to wait a week to access your funds Bitcoin is a great way to transfer large sums of money. If you need the money immediately you still need to pay a high fee to Pay Pal, or an even higher fee to Western Union to the less technically inclined. http://mashable.com/2017/08/28/bitcoin-transaction-fees/#.7bGtldN0kqQ http://mashable.com/2017/08/28/bitcoin-transaction-fees/#.7b...
    - beefield 9y ago

darawk 9y ago

Volatility is something that will (and has) settle over time. All currencies are volatile at first. Volatility is not really a criticism of a currency, unless that volatility is somehow intrinsic to it.

beefield 9y ago
But that is _exactly_ what is the case with bitcoin. It by design has no mechanism to manage supply, so only thing that affects price is demand, and as demand varies, there is volatility. So volatility _is_ intrinsic to bitcoin. (And to be clear, I do not mean volatility against other currencies, but volatility against your consumption basket, bread, butter etc.)
Retric 9y ago
Only if you turn Volatility into a meaningless phrase. The euro may as well be flat from conception vs. Bitcoin which has been around for a long time and still ridiculously volatile. IMO, most fan-fiction is worse than the original, the best fan-fiction is often better.

homero 9y ago

I use it as a store of value

beefield 9y ago
I would somehow think that an entity that has no intrinsic value, but only speculative value is quite bad store of value? (Of course, you are more than welcome to correct my hypothesis by indicating what is the intrinsic value bitcoin has. I thought that illegal trade was one of the major ones, but the parent told me that even that is there no more.)
- homero 9y ago
  That's true if that's what people believe. But Bitcoin is transforming into a store of value vs a currency right now and if more people begin believing that then it's true. It's like that for gold, except gold is losing that with millennials.
  - beefield 9y ago
    Now, a good store of value to me means that the value is stable. And yes, also gold is really bad store of value by that measure. https://commons.wikimedia.org/wiki/File:Gold_price_in_USD.png https://commons.wikimedia.org/wiki/File:Gold_price_in_USD.pn...
- kypro 9y ago
  If you want an asset to maintain it's current value, then its demand and supply must also maintain their values. People talk about Bitcoin as "digital gold", but in reality it's not even close, and no crypto ever will be. Gold is valuable because there is a fixed natural supply, and throughout human history, across many civilisations and societies, gold has always been worth something - unlike our fiat currencies who's supply can be altered and made valueless. The problem with Bitcoin isn't it's supply, it's that it's value relies on it's demand remaining high (or at least maintaining current levels). Problem is there is no historic reason or intrinsic value to bitcoin to assume it will continue to have steady demand like gold. More worryingly in my opinion is that bitcoin's current demand isn't really for bitcoin at all. The demand is to make USD fast. The moment people realise Bitcoin might not give them returns similar to other safe investments, it will crash like all other bubbles do. I'm not saying people who get in early won't make loads of money, plenty of people made money from the dotcom bubble too, but you need to be smart about it and understand the risk. At $6,500 bitcoin's market cap is far beyond PayPal's which provides a genuinely useful service and processes millions of dollars of transactions every day.

55555 9y ago

Bitcoin is gold for millennials.

pmorici 9y ago

The intrinsic value is in all the trade going on that isn’t illegal. It is a huge deal for the FX markets for example among other things. Cross boarder trade as well. The transaction rate issue is 99% political in fighting and that has basically been solved or will be by mid November.

beefield 9y ago
Sorry, I have not been following Bitcoin news lately. Could you give a comparison of the expected transaction capacity, expected fees and expected time to confirm a transaction by mid November against typical credit card company? That would give some basis to estimate the value bitcoin is creating against the competitors.
- pmorici 9y ago
  They are doubling transaction capacity. Pennies to move millions for a simple transaction.
  - beefield 9y ago
    and doubling the capacity solves all scalability problems? That is still minuscule capacity to enable any serious use of bitcoin as means of payment. And if the simple transaction is me purchasing a pizza instead of transferring a million from one speculator to another? How much does it cost and how much it takes time?
    - once_inc 9y ago
      Bitcoin doesn't easily scale in its current form. For that, people have invented the Lightning Network (https://lightning.network https://lightning.network). LN is a layer 2 solution which sacrifices a modicum of trustlessness in favor of fewer on-chain transactions. Suppose you want to buy a cup of coffee every day with the same vendor. You could agree to do all transactions in the Lightning Network, reducing the number of on-chain transactions from 30 to 2. This cuts fees and increases usability.

deleted 9y ago

[deleted]

banderman 9y ago

People use bitcoin to buy the other coins that are used for illegal trade.

beefield 9y ago
Well, that sounds like a long term value proposal...

ghostbrainalpha 9y ago

My housekeeper spends almost $40 to wire $500 to her family in Bogota. I can transfer $5,000 to my brother in Ukraine for, essentially 0 using Bitcoin. You are correct that the fees may be too high for typical consumer transactions like buying a soda from a vending machine. But for large transactions, and institutions moving money around Bitcoin provides a big advantage.

beefield 9y ago
Can you explain me what is the current status in dollar terms if I want now to send 5000 dollars from my bank account to your brother in ukraine, when does he have usable it in his local currency, how much disappears on the way in transaction costs and how long exposure I have to BTC price? How does that compare to e.g. paypal?
- ghostbrainalpha 9y ago
  Paypal is great. The transfer would be instant, but the price is 2.9%, which is pretty high. The cost to transfer from wallet to wallet, is about $4.00 right now. This destroys Pay Pal where the cost which would be $145.00, if you do this wallet to wallet transfer at night it could take 30 minutes to move from person to person. This is fine for us, but obviously will never work for transactions in a store. He can then use a site like Coinbase, to sell the Bitcoin and then withdraw the Bitcoin into his local bank/currency. This can happen in as fast as 4 days, but as much as a week. I'm not sure if that's on Coinbase or his local bank, but it actually has nothing to do with Bitcoin. But the amount being transferred is fixed before the withdrawal starts, so it the time he is exposed to Bitcoin price fluctuations is only a few hours. Basically it comes down to this. If you can afford to wait a week to access your funds Bitcoin is a great way to transfer large sums of money. If you need the money immediately you still need to pay a high fee to Pay Pal, or an even higher fee to Western Union to the less technically inclined. http://mashable.com/2017/08/28/bitcoin-transaction-fees/#.7bGtldN0kqQ http://mashable.com/2017/08/28/bitcoin-transaction-fees/#.7b...
  - beefield 9y ago