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Then we have cheap bitcoin and people hop right back on. It's not going to go to 0 ever, unless its replaced by another de facto crypto as the face of the enti

by nrhk 9y ago

Then we have cheap bitcoin and people hop right back on. It's not going to go to 0 ever, unless its replaced by another de facto crypto as the face of the entire industry. It's a deflationary, uncontrolled currency in a world that prints wealth, its easy to see why people want to hold some money here.

vasilipupkin 9y ago
Sure, I am not saying it will be worth zero ever. I am saying it can become worth a lot less than today in a matter of days. Part of the problem that I have is I have no idea how to value bitcoin. I can sort of understand how to roughly value a company. But bitcoin I have no idea.
- jaggederest 9y ago
  There's something of a practical floor on price at the cost of the electricity to mine a coin times the lowest rate of electricity available at the moment. (Somewhere in the realm of $500 AFAIK) Now, since the difficulty changes over time I could imagine that not being as high as people think (e.g. if mining companies abandon bitcoin for other currencies), but there is a real world equivalent to book value.
  - vasilipupkin 9y ago
    that argument makes no sense to me personally. For example, if I rented a warehouse, filled up that warehouse with iphones and hired workers to systematically destroy those iphones with hammers, there would be a cost to that activity. but it wouldn't a price floor on anything. The thing itself has to have value, the cost of the thing is not a price floor
    - fleitz 9y ago
      You should make a blockchain based on smashing an iPhone taking a picture of it and then hashing the picture. You could probably make a lot of money and drive up the value of old iPhones. Revolutionary new proof of work algorithm. Call it Instachain or something.
      - vasilipupkin 9y ago
        On a completely serious note, I am happy to pay 1 or more developers to help me create a bitcoin fork. why not?
- fleitz 9y ago
  It's like gold, it's an asset (technically a ledger) not a currency, it's an asset because people want it, and like gold has practically no uses other than being shiny. If the history of technology is any indication it will become obsolete before becoming devalued as cryptofinance people move on to better scams / technology.
pedrocr 9y ago
>in a world that prints wealth Where else, besides the crypto-currency market itself, is "wealth" being "printed"? Fiat currencies may be inflationary but they're only used to price wealth not actually hold it. Actual wealth, unlike crypto-curency "wealth", is held in stocks/bonds/land/etc which are actual assets backed by some kind of economic activity or physical scarcity. Comparing "Bitcoin as a store of value" with fiat currencies is a strawman, you need to compare it with gold if that's what you want it for. If you want to compare Bitcoin to fiat currencies you need "Bitcoin as a means of transactions" and at that it's become terribly inefficient and underused compared to expectations.
- georgecarlin 9y ago
  No. "stocks/bonds/land/etc" are not actual assets backed by anything OTHER than scarcity. Land has value due to scarcity and utility (everyone needs somewhere to live). Stocks have value almost exclusively due to capital appreciation. You don't get anything for owning non-dividend-paying stocks. And owning dividend paying stocks just means money is not being reinvested (notice that Berkshire Hathaway has never paid dividends out). Bitcoin is EXACTLY like land and stocks, except much, much, much more liquid and useful.
  - vasilipupkin 9y ago
    I am not against bitcoin but bitcoin is not like stocks and land. stocks in aggregate pay dividends, sometimes in the form of stock buybacks, something that Berkshire does do. Non-dividend paying stocks are priced today due to expected future dividends. In other words, they may not pay dividends now, but they generate expected future profits. Land is physically scarce. Bitcoin is software, so scarcity of software is not the same as physical scarcity.
  - pedrocr 9y ago
    >No. Starting replies like this is getting to be a theme online. It adds nothing to the discussion except make people argue in extreme and entrenched ways. >"stocks/bonds/land/etc" are not actual assets backed by anything OTHER than scarcity. I specifically said they were backed by scarcity (land) and by economic activity (stocks and bonds). >Stocks have value almost exclusively due to capital appreciation. You don't get anything for owning non-dividend-paying stocks. And owning dividend paying stocks just means money is not being reinvested (notice that Berkshire Hathaway has never paid dividends out). I have no idea what you're trying to say. Stocks generate value out of an economic activity. That's the value that underlies them. If the company then has enough opportunities to continuously reinvest or if it just gives up and returns value through share buybacks or dividends is not really important to the point that what makes stocks valuable is that the company has some form of economic activity. If you find a stock that doesn't have an underlying economic activity and is just driving up price through scarcity that's not a company it's a Ponzi scheme like Enron used to run. >Bitcoin is EXACTLY like land and stocks, except much, much, much more liquid and useful. Bitcoin is digital gold. Useful yes, but wow, you really think its value dwarfs the asset classes responsible for representing the available physical area of the planet and the current economic activity of the planet?
walrus1066 9y ago
It's certainly possible, it has no practical use, it is not backed by any 'buyer of last resort', its value is solely derived from faith that it will keep increasing in value. If the holders of coin lose this faith, nobody will want to buy it, so it would effectively become worthless.

by nrhk 9y ago

vasilipupkin 9y ago

Sure, I am not saying it will be worth zero ever. I am saying it can become worth a lot less than today in a matter of days. Part of the problem that I have is I have no idea how to value bitcoin. I can sort of understand how to roughly value a company. But bitcoin I have no idea.

jaggederest 9y ago
There's something of a practical floor on price at the cost of the electricity to mine a coin times the lowest rate of electricity available at the moment. (Somewhere in the realm of $500 AFAIK) Now, since the difficulty changes over time I could imagine that not being as high as people think (e.g. if mining companies abandon bitcoin for other currencies), but there is a real world equivalent to book value.
- vasilipupkin 9y ago
  that argument makes no sense to me personally. For example, if I rented a warehouse, filled up that warehouse with iphones and hired workers to systematically destroy those iphones with hammers, there would be a cost to that activity. but it wouldn't a price floor on anything. The thing itself has to have value, the cost of the thing is not a price floor
  - fleitz 9y ago
    You should make a blockchain based on smashing an iPhone taking a picture of it and then hashing the picture. You could probably make a lot of money and drive up the value of old iPhones. Revolutionary new proof of work algorithm. Call it Instachain or something.
    - vasilipupkin 9y ago
      On a completely serious note, I am happy to pay 1 or more developers to help me create a bitcoin fork. why not?
fleitz 9y ago
It's like gold, it's an asset (technically a ledger) not a currency, it's an asset because people want it, and like gold has practically no uses other than being shiny. If the history of technology is any indication it will become obsolete before becoming devalued as cryptofinance people move on to better scams / technology.

pedrocr 9y ago

>in a world that prints wealth Where else, besides the crypto-currency market itself, is "wealth" being "printed"? Fiat currencies may be inflationary but they're only used to price wealth not actually hold it. Actual wealth, unlike crypto-curency "wealth", is held in stocks/bonds/land/etc which are actual assets backed by some kind of economic activity or physical scarcity. Comparing "Bitcoin as a store of value" with fiat currencies is a strawman, you need to compare it with gold if that's what you want it for. If you want to compare Bitcoin to fiat currencies you need "Bitcoin as a means of transactions" and at that it's become terribly inefficient and underused compared to expectations.

georgecarlin 9y ago
No. "stocks/bonds/land/etc" are not actual assets backed by anything OTHER than scarcity. Land has value due to scarcity and utility (everyone needs somewhere to live). Stocks have value almost exclusively due to capital appreciation. You don't get anything for owning non-dividend-paying stocks. And owning dividend paying stocks just means money is not being reinvested (notice that Berkshire Hathaway has never paid dividends out). Bitcoin is EXACTLY like land and stocks, except much, much, much more liquid and useful.
- vasilipupkin 9y ago
  I am not against bitcoin but bitcoin is not like stocks and land. stocks in aggregate pay dividends, sometimes in the form of stock buybacks, something that Berkshire does do. Non-dividend paying stocks are priced today due to expected future dividends. In other words, they may not pay dividends now, but they generate expected future profits. Land is physically scarce. Bitcoin is software, so scarcity of software is not the same as physical scarcity.
- pedrocr 9y ago
  >No. Starting replies like this is getting to be a theme online. It adds nothing to the discussion except make people argue in extreme and entrenched ways. >"stocks/bonds/land/etc" are not actual assets backed by anything OTHER than scarcity. I specifically said they were backed by scarcity (land) and by economic activity (stocks and bonds). >Stocks have value almost exclusively due to capital appreciation. You don't get anything for owning non-dividend-paying stocks. And owning dividend paying stocks just means money is not being reinvested (notice that Berkshire Hathaway has never paid dividends out). I have no idea what you're trying to say. Stocks generate value out of an economic activity. That's the value that underlies them. If the company then has enough opportunities to continuously reinvest or if it just gives up and returns value through share buybacks or dividends is not really important to the point that what makes stocks valuable is that the company has some form of economic activity. If you find a stock that doesn't have an underlying economic activity and is just driving up price through scarcity that's not a company it's a Ponzi scheme like Enron used to run. >Bitcoin is EXACTLY like land and stocks, except much, much, much more liquid and useful. Bitcoin is digital gold. Useful yes, but wow, you really think its value dwarfs the asset classes responsible for representing the available physical area of the planet and the current economic activity of the planet?

walrus1066 9y ago

It's certainly possible, it has no practical use, it is not backed by any 'buyer of last resort', its value is solely derived from faith that it will keep increasing in value. If the holders of coin lose this faith, nobody will want to buy it, so it would effectively become worthless.