7 ms·

Why can't people in Latin America just buy gold or dollars to store value ? I mean it's a circular argument. To say bitcoin is a store of value, there has to b

Why can't people in Latin America just buy gold or dollars to store value ? I mean it's a circular argument. To say bitcoin is a store of value, there has to be an apriori reason why it has value. It can't be a store of value because it is. Right ?

anonymous5133 9y ago
It can get seized by the government. Any traditional assets or physical assets that is. Bitcoin and crypto is significantly harder to do that. You basically need to get the private key. IMO, this is the main reason that it is a a superior store of value compared to gold, dollars or traditional assets. If your government is corrupt then it is reasonable that the police will seize your gold. Not much of a store of value if it can just be taken away from you.
- vasilipupkin 9y ago
  Understood, but that doesn't explain why it's a store of value meaning why can't bitcoin cost 5k vs 10k
  - hw 9y ago
    supply vs demand. More and more people are getting introduced to bitcoin, understanding it and buying into it. There's also a cap on the total number of bitcoins, so scarcity is another factor. Just like why gold is worth X instead of X/2
    - vasilipupkin 9y ago
      ok, but gold sometimes is worth X and sometimes X/2, if you actually plot the chart of gold. Gold is not exactly a great investment
    - geezerjay 9y ago
      > More and more people are getting introduced to bitcoin, understanding it and buying into it. That's pretty much the definition of a pump-and-dump scheme.
seibelj 9y ago
Uh... you have to physically store those things? Easy to steal? Can't send to someone across the country instantly? Bitcoin is way better than gold or dollars when you are in an unstable country. People in Venezuela are huge crypto-heads for that reason
- vasilipupkin 9y ago
  Right, but you could create a crypto thingie that is tied to gold or dollars. I agree with what you said but it doesn't tell me how to calculate the price of bitcoin
- jonknee 9y ago
  > Easy to steal? Bitcoin is perhaps the most commonly stolen store of value the world has ever seen. It has its advantages, but being difficult to steal (or lose permanently!) is not one of them.
  - seibelj 9y ago
    Perhaps it's easier to steal in different ways. Computer-based hacks, bugs, social based attacks (phishing, etc.) sure... but harder to break into a house and steal, as the private key can be hidden better. Easy to assume the safe is where 20 gold bars are.
  - pfisch 9y ago
    Pretty sure cash is the most commonly stolen store of value in the world.
  - lunchables 9y ago
    Source please.
ericb 9y ago
It is like if you and I took turns paying for lunch periodically and we used a ledger to track who paid what, and who owes who. The ledger itself is bitcoin. The ledger paper is worthless, but the entries on it "have value." For you and I, the ledger "has value" because that's where the history is. If you printed 50 new blank ledgers, they wouldn't have value because they don't have the history and our mutual agreement. Bitcoin is the worldwide ledger (WWL).
- matt_wulfeck 9y ago
  Except it takes usually 2 to 3 days for the ink to dry in the ledger, and costs you $3 every time you wrote in it, and consumed more electricity than your house does in a week, and you do it this way because you want it to be trustless.
  - lunchables 9y ago
    His analogy isn't perfect with all respect to bitcoin, but it is for that explanation. And transaction fees doesn't really matter when it's used as long term value storage for a significant amount of money. The small transaction fee is basically irrelevant.
    - vasilipupkin 9y ago
      I don't get it. why is it a store of value? what makes it have value? For example, suppose I just got paid and I buy bitcoin today. What is the force that will make my bitcoins not be worth 0.5X over the next 20 years ?
- vasilipupkin 9y ago
  ok, so I had an upsight, to borrow Neil Stephenson's terminology. Speficifcally, that POW coins are inherently flawed. There is no fundamental reason to own one of them. POS coins on the other hand, are a different animal. If you own a POS coin, you get paid transaction fees for helping verify transactions. Thus, POS coins make fundamental sense, can be valued accordingly and create a reason to actually own the coin - and should, therefore, prove a better store of value than POW coins. Of course, POS is somewhat theoretical, but if Ethereum can pull it off, it should supersede bitcoin. Now, ELI5 why I am wrong, please.
jcoffland 9y ago
Why are you easily able to see gold as having intrinsic value but not Bitcoin? Both are valuable because a lot of people say so. There is no other value but utility and most currencies, including the dollar, do not have any utility other than their ability to function as currency.
- vasilipupkin 9y ago
  Gold has physical value, right ? For example, used in electronics, jewelry, etc. but gold is a terrible investment so if bitcoin is like gold should we also assume it's a terrible investment like gold ?

anonymous5133 9y ago

It can get seized by the government. Any traditional assets or physical assets that is. Bitcoin and crypto is significantly harder to do that. You basically need to get the private key. IMO, this is the main reason that it is a a superior store of value compared to gold, dollars or traditional assets. If your government is corrupt then it is reasonable that the police will seize your gold. Not much of a store of value if it can just be taken away from you.

vasilipupkin 9y ago
Understood, but that doesn't explain why it's a store of value meaning why can't bitcoin cost 5k vs 10k
- hw 9y ago
  supply vs demand. More and more people are getting introduced to bitcoin, understanding it and buying into it. There's also a cap on the total number of bitcoins, so scarcity is another factor. Just like why gold is worth X instead of X/2
  - vasilipupkin 9y ago
    ok, but gold sometimes is worth X and sometimes X/2, if you actually plot the chart of gold. Gold is not exactly a great investment
  - geezerjay 9y ago
    > More and more people are getting introduced to bitcoin, understanding it and buying into it. That's pretty much the definition of a pump-and-dump scheme.

seibelj 9y ago

Uh... you have to physically store those things? Easy to steal? Can't send to someone across the country instantly? Bitcoin is way better than gold or dollars when you are in an unstable country. People in Venezuela are huge crypto-heads for that reason

vasilipupkin 9y ago
Right, but you could create a crypto thingie that is tied to gold or dollars. I agree with what you said but it doesn't tell me how to calculate the price of bitcoin
jonknee 9y ago
> Easy to steal? Bitcoin is perhaps the most commonly stolen store of value the world has ever seen. It has its advantages, but being difficult to steal (or lose permanently!) is not one of them.
- seibelj 9y ago
  Perhaps it's easier to steal in different ways. Computer-based hacks, bugs, social based attacks (phishing, etc.) sure... but harder to break into a house and steal, as the private key can be hidden better. Easy to assume the safe is where 20 gold bars are.
- pfisch 9y ago
  Pretty sure cash is the most commonly stolen store of value in the world.
- lunchables 9y ago
  Source please.

ericb 9y ago

It is like if you and I took turns paying for lunch periodically and we used a ledger to track who paid what, and who owes who. The ledger itself is bitcoin. The ledger paper is worthless, but the entries on it "have value." For you and I, the ledger "has value" because that's where the history is. If you printed 50 new blank ledgers, they wouldn't have value because they don't have the history and our mutual agreement. Bitcoin is the worldwide ledger (WWL).

matt_wulfeck 9y ago
Except it takes usually 2 to 3 days for the ink to dry in the ledger, and costs you $3 every time you wrote in it, and consumed more electricity than your house does in a week, and you do it this way because you want it to be trustless.
- lunchables 9y ago
  His analogy isn't perfect with all respect to bitcoin, but it is for that explanation. And transaction fees doesn't really matter when it's used as long term value storage for a significant amount of money. The small transaction fee is basically irrelevant.
  - vasilipupkin 9y ago
    I don't get it. why is it a store of value? what makes it have value? For example, suppose I just got paid and I buy bitcoin today. What is the force that will make my bitcoins not be worth 0.5X over the next 20 years ?
vasilipupkin 9y ago
ok, so I had an upsight, to borrow Neil Stephenson's terminology. Speficifcally, that POW coins are inherently flawed. There is no fundamental reason to own one of them. POS coins on the other hand, are a different animal. If you own a POS coin, you get paid transaction fees for helping verify transactions. Thus, POS coins make fundamental sense, can be valued accordingly and create a reason to actually own the coin - and should, therefore, prove a better store of value than POW coins. Of course, POS is somewhat theoretical, but if Ethereum can pull it off, it should supersede bitcoin. Now, ELI5 why I am wrong, please.

jcoffland 9y ago

Why are you easily able to see gold as having intrinsic value but not Bitcoin? Both are valuable because a lot of people say so. There is no other value but utility and most currencies, including the dollar, do not have any utility other than their ability to function as currency.

vasilipupkin 9y ago
Gold has physical value, right ? For example, used in electronics, jewelry, etc. but gold is a terrible investment so if bitcoin is like gold should we also assume it's a terrible investment like gold ?