6 ms·

Why Is Bitcoin Valuable?

66 points by nnx 9y ago

oskarla 9y ago
Bitcoin and other cryptocurrencies are currently the perfect products to sell to people who want to get rich, preferably quickly. That will always be a huge market in our economic system.
- qeternity 9y ago
  "But this time, it's different!" - Every scam victim ever
MsMowz 9y ago
The most interesting part of the cryptocurrency phenomenon has been the rise of pseudo-academic writing to support individual coins or the concept itself. Every time a new coin emerges, there's a detailed advertisement that's styled like an economics journal article. At the same time, there's low-level sophistry like this article to assert that cryptocurrency is going to solve social problem X. People who believe cryptocurrency is going to prevent autocracy have lost all grasp on reality.
- deleted 9y ago
  [deleted]
- kjullien 9y ago
  You should check out a project like Cardano then, they make their research go through academic peer review before they do anything. They also write their code in a way that you can prove it is an actual implementation of what the paper said (if I'm remembering correctly,but I'm not very familiar on the topic so I won't say much more about that, you can research it if you want).
  - bamazizi 9y ago
    Cardano is the perfect example of hot air blurring the lines of sales vs. science.
roma1n 9y ago
OK, so Bitcoin is censorship-resistant. Good. But a practical alternative that would allow high-volume, cheap transactions could blow it off the water. This is weird; I keep seeing 'justifications' of Bitcoin's current value and future success that, to me, can simply be reduced to a sunk-cost fallacy. I have read for instance that Bitcoin's worth 'is the area under curve of the energy expense of the miners' (sunk-cost fallacy) or that it has a "pareto-like" quality, being the first largely capitalized cryptocurrency, that would make it immune from failure. Are there any justifications for Bitcoin that cannot be explained by a cognitive bias?
- erikb 9y ago
  > Are there any justifications for Bitcoin that cannot be explained by a cognitive bias? Are you aware that you can put nearly everything in this sentence instead of Bitcoin and it still holds just as true? Free markets haven't really made the world totally fair. Democracy hasn't really given all people the ability to choose. Your job hasn't really paid you as much as you've produced value for your boss. Marrying your wife was a questionable choice, to some degree. And your parents also don't really love each other anymore. Your life isn't really meaningful to anything but the fantasy you run yourself in your head to explain it. We live off of the cognitive biases that we are able to believe in. Enjoy having some cognitive biases left as long as you still have some.
foepys 9y ago
Why do all crypto currency enthusiasts assume that when a government cannot guarantee monetary stability there will still be reliable, always on, high bandwidth internet connections to sync distributed ledgers across the globe? Also: Does any crypto currency have anything in store to protect itself against bad nodes? I don't mean nodes that send invalid packages but nodes that act like real nodes but just eat transactions and blocks without relaying them. Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually.
- xiphias 9y ago
  The internet you're talking about doesn't exist (have you been to rural Africa?), but Blockstream satellites do ( https://blockstream.com/satellite/ https://blockstream.com/satellite/ )
- nsomaru 9y ago
  > Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually. Could you direct me to the theory supporting this assertion? Was considering doing a simulation of this but need some kind of model.
  - foepys 9y ago
    That's a thought I came up with a couple of months ago but I wasn't able to find time to test it out myself. From my point of view this seems like a very viable, albeit expensive attack vector without any potential to make money. The only result is destroying confidence in the network, so state level attacks might be the only reason to apply it.
    - jebeng 9y ago
      I think there are a few viable, but expensive attack vectors that have been well known within the community for years. But one thing that's always bugged me is how many people out there seem to think that a cryptocurrency could survive being an actual target by a sufficiently powerful state. The economic damage alone just by the whisper of an actual 'war on Bitcoin' would be devastating, without anyone actually lifting a finger. Let alone putting resources into actual attacks on technical, economic, and social levels. Doesn't really matter if a few enthusiast cypherpunks around the world can keep a few nodes going and technically say 'bitcoin is not dead, see!' when the economic model and security is fundamentally based on continued demand for BTC. I've been really interested in Bitcoin and have followed it closely since Satoshi was still active, and consider myself a pretty big fan of it in general. But the general arrogance and delusion about the reality of where real power is in the world is a bit cringeworthy. And it's always been that way in the community. It might get interesting in the future if two or more states have competing interest in Bitcoin(or whatever). I can imagine some hypothetical situation where the US political tide turns very anti-BTC, but say China has enough money tied up in it that it's incentivized to attempt to defend it. Like say if enough people in positions of political power have significant portions of their wealth tied up in it. That's possible, I guess. Sounds messy though for something that relies on economic confidence. Either way, so far all the luck has been on the side of Bitcoin, as really there's been little to no political pushback against the technology itself. That's pretty awesome, and it's made for a very interesting 7 years or so since BTC really woke up and people around here and elsewhere started seriously discussing it. But the political risk is very real and understated imo. The technical risk is interesting in theory for sure, but just knowing a sufficiently powerful state has the ability to attack is probably more than enough to cause massive economic damage without actually pulling any technological triggers.
orionblastar 9y ago
Supply and demand curves are what make things valuable or not. Bitcoin has a finite set of coins in its network. Most people only buy fractions of a bitcoin because one full bitcoin is too pricy for them. People used to earn Bitcoins using GPU mining rigs. ASIC miners made that obsolete. GPU mining is no longer profitable but the average person does not know or understand that. I've seen stores like Microcenter sell out of expensive GPUs and expensive power supplies to power them. My son last year had to build a new gaming PC after his old one blew out. His GTX video card was $240 last year, but now sells for $640. If Bitcoin is the new gold rush, the people selling shovels and supplies to miners at higher than normal prices will sell GPUs power supplies and high end Clubs and motherboards. I am using Coinbase since the new year. I invested $1 in Bitcoin and $1 in Litecoin. They are only worth 75% as much now. It was just dipping my toe in the waters before jumping in. I am not going to jump in until I learn more about it. Buy low and sell high and don't invest any money you can't afford to lose or do without before it raises back up to sell for a profit.
- erikb 9y ago
  > I am using Coinbase since the new year. Why put money in a gold rush after the rush? Can you explain the logic behind it? Like, have you never heard about it before 2018? Honestly if Bitcoin stabilizes around $300/coin it's still a huge profit to the people who started it and invested early (I bout around $90/coin). $12k/coin certainly is ridiculous. But I don't understand why people would even put a single dollar into something at such a point.
  - sumedh 9y ago
    > But I don't understand why people would even put a single dollar into something at such a point. because they think it will go higher
  - wereHamster 9y ago
    $x/coin is no more ridiculous than $y/coin. I'll leave it up to you to substitute x and y for random numbers.
- makomk 9y ago
hal9000xp 9y ago
Back in 2004, I lived in shithole country called Uzbekistan, I wanted to buy some US stocks but my bank refused to transfer MY money because of strict currency control in Uzbekistan. This was probably the first time in my life I realized that I don't actually own money stored at bank, it's just bank temporarily allows me to use my money and at any whim bank would reject to do so. In 2010, I lived in a little bit better but still crappy country called Russia, I returned to my old idea to buy US stocks. This time is was possible but I had to make high-quality translation of agreement with US broker (i.e. Google translate wouldn't be accepted) and wait for a week to get permission to wire transfer my money to US brokerage account. In 2012, I wanted to do some small business and I wanted to do everything legally (I was still naive at that time) so I approached my bank in Russia and said that I want to setup website which accepts credit card payments from US. My bank said they wouldn't allow me to do this. Then I thought I can open foreign bank account. I tried to open bank account at HSBC in Hong Kong and was rejected for being Russian citizen (that's literally was a reason!). I also was rejected at every single bank in Europe. And even if I succeed to create shell company in some offshore islands and some account at some not very much reputable bank, I would still have great problems to legalize this money in Russia as I understood from talking to lawyers (again, I naively wanted to do everything legally). So being citizen of two wrong countries, I quickly realized how tightly government and banks control my money. At one hand Russia and Uzbekistan restrict me to move my capital abroad. On the other hand, even if you manage to move your capital abroad, western countries refuse your money. I could call this the Great Western Wall. So now, I highly appreciate cryptocurrencies. If you have BTC, ETH, XRP nobody would stop you to send money anywhere. It's so much valuable! The only drawback is extreme volatility of these currencies. But with creation decentralized stable cryptocurrency DAI, this changing game even more. I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is.
- erikb 9y ago
  > I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is. And the people who profit from the traditional system. Don't underestimate that group. And in some regards the group you talk about and the group I talk about are overlapping. In first world countries you are really rarely screwed by your bank (when it comes to international transactions at least). But that these countries populace is allowed to live so freely might be the reason of the banks being able to screw people from shithole countries even more than them. So a change for first world country citizens might very well go the negative way and it's reasonable for them not wanting to change as it is.
donpark 9y ago
It had potentials but none of that matters with lack of protection against overhyped valuation. It's not a currency if it what you paid for a cup of coffee could've bought a Ferrari the next day. And blockchain is more like plumbing than some star-fangled magic. Last time I got excited about plumbing is...never mind.
- ThomPete 9y ago
  Why people still make comparisons to bitcoin as a currency is beyond my understanding. It's more like gold than like a currency. Judging it as a currency makes no sense. The volatility will go down over time and even if we were to compare it to currencies go back in history and you will see plenty of fluctuating currencies. A stable currency is a fairly new phenomenon and it comes with a price (you have to grow the economy)
elyobo 9y ago
Interesting article, but more an argument for why a large class of cryptocoins might be valuable, or even more so, why an ecosystem of cryptocoins might collectively value, rather than an argument for why Bitcoin specifically is valuable.
velcro 9y ago
I don't understand people who cite current network speed/overload, transaction problem/cost and co as the reason why Bitcoin (or any crypto) will fail in the future. Nothing is set in stone - its software, all of these things are fixable and are being worked on. Its still so very early in the game. If you compare crypto to a traditional startup project - I'd say user engagement and growth is more valuable than a perfect product from the start.
- zerostar07 9y ago
  > user engagement and growth I wouldn't compare those. Most of the altcoin trading is completely speculative, not even in the sense that they "believe in the future of the coin", a lot is purely speculative profit-making (e.g xrp), pump-and-dump chasing and herdish behavior. Very few coins have substantial engaged followers (e.g. raiblocks) and only the top 2 have actual users. I 'm a believer in the technologies but they are in such early alpha stage that it's not justified to expect that most of them will even prove to work. The biggest issue for me is the distribution of coins, with most ICOs unashamedly aiming to make the founders and investors billionaires from day 2. Even if their products prove succesful, i think a forked, clean chain will win over more followers.
fleitz 9y ago
Bitcoin is valuable because demand currently outstrips supply. If this happens for a long enough period of time it will become like gold, pretty much useless but wanted by lots of people.
ThomPete 9y ago
Bitcoin and any other interpretation of the blockchain is valuable because they create a physical fabric in the digital space. It will take time to implement but its going to be commonplace for the next generations. It allows for an increased complexity regardless of how the individual creator is doing. There is a lot of scams and snakeoil salesmen a lot of fools gold, just like there were in the golddigger years and the wil get booted out sooner or later, but the value of this decentralized fabric especially with regards to bitcoin is invaluable for any future decelopment of infrastructure.
dnate 9y ago
I don't really understand all the negativity towards bitcoin on HN these days. Back when it was new nobody would shame or outright insult people who invested in it. But somehow that's totally the norm now. Why does it matter whether the coin is worth 10$ or 10000$? It was and still is a disruptive concept that solves many issues with our current centralized currency system. Sure it also has a lot of issues itself. But can't we simply appreciate the technology for what it is: a Proof Of Concept.
rhapsodic 9y ago
Bitcoin is no different than any other non-commodity currency. It's only valuable because people believe they can, or will eventually, be able to use it to acquire something with intrinsic value. Without that confidence, it's worthless. Personally, I have lots of confidence that the USD in my bank account will one day, at a time of my choosing, get me intrinsically valuable things like cars, a home, food, cloths, etc. With bitcoin, I have very little confidence that will occur. So it's not very valuable to me. Nor do I have confidence that there will always be a "greater fool" handy to purchase any bitcoin I might buy for more than I paid for it. I think bitcoin will inevitably collapse. TFA talks about "citizens protecting themselves from irresponsible or malicious governments and companies", but that's not a problem I'm aware that I have. If it were, then I might be interested in owning bitcoin.
- nefitty 9y ago
  Do you have the same mindset in regards to physical gold? Gold has very little, if any, intrinsic or practical value, yet generations of humans have been motivated to acquire more of it. With digital currencies like Bitcoin, I think we're seeing the birth of a new type of scarce resource that will motivate generations of people to come.
  - rhapsodic 9y ago
    >Do you have the same mindset in regards to physical gold? Gold has very little, if any, intrinsic or practical value, yet generations of humans have been motivated to acquire more of it. That statement is self-contradicting. If people covet gold for reasons other than what they might exchange it for, that means it has intrinsic value. And in addition to the satisfaction some people get from decorating their bodies with gold, it has many other practical uses. It's used in all types of electronic devices, including the computer you're reading this on. And as a medium of exchange, gold does not rely on a global computer network being available. (But in a post-apocalyptic world, gold probably would not have as much intrinsic value as it does currently. Whiskey, guns and cartridges would probably be a better bet.) The only thing scarce about crypto-currency is the energy it consumes, and the world's tolerance for its environmental impact. Aside from that, what prevents anyone from creating a new one? It's all about the mindset. As long as enough people believe bitcoin is valuable, it will be valuable. I could be wrong, but I don't think that will continue to be the case long term. I think crypto-currencies will continue to exist and will have some practical uses, but, IMO, their values relative to USD are going to be, shall we say, "adjusted" to a more sane level sometime in the future.
mygo 9y ago
Why is it valuable? Because we keep talking about it. Because we hear about people who made their wealth using the inter webs and we want to make money and we have credit cards and we speculate. Oh well. Since the dollar must circulate, we have to give monetary value to things. And if not bitcoin it would be something else.

66 points by nnx 9y ago

Bitcoin and other cryptocurrencies are currently the perfect products to sell to people who want to get rich, preferably quickly. That will always be a huge market in our economic system.

qeternity 9y ago
"But this time, it's different!" - Every scam victim ever

MsMowz 9y ago

The most interesting part of the cryptocurrency phenomenon has been the rise of pseudo-academic writing to support individual coins or the concept itself. Every time a new coin emerges, there's a detailed advertisement that's styled like an economics journal article. At the same time, there's low-level sophistry like this article to assert that cryptocurrency is going to solve social problem X. People who believe cryptocurrency is going to prevent autocracy have lost all grasp on reality.

deleted 9y ago
[deleted]
kjullien 9y ago
You should check out a project like Cardano then, they make their research go through academic peer review before they do anything. They also write their code in a way that you can prove it is an actual implementation of what the paper said (if I'm remembering correctly,but I'm not very familiar on the topic so I won't say much more about that, you can research it if you want).
- bamazizi 9y ago
  Cardano is the perfect example of hot air blurring the lines of sales vs. science.

roma1n 9y ago

OK, so Bitcoin is censorship-resistant. Good. But a practical alternative that would allow high-volume, cheap transactions could blow it off the water. This is weird; I keep seeing 'justifications' of Bitcoin's current value and future success that, to me, can simply be reduced to a sunk-cost fallacy. I have read for instance that Bitcoin's worth 'is the area under curve of the energy expense of the miners' (sunk-cost fallacy) or that it has a "pareto-like" quality, being the first largely capitalized cryptocurrency, that would make it immune from failure. Are there any justifications for Bitcoin that cannot be explained by a cognitive bias?

erikb 9y ago
> Are there any justifications for Bitcoin that cannot be explained by a cognitive bias? Are you aware that you can put nearly everything in this sentence instead of Bitcoin and it still holds just as true? Free markets haven't really made the world totally fair. Democracy hasn't really given all people the ability to choose. Your job hasn't really paid you as much as you've produced value for your boss. Marrying your wife was a questionable choice, to some degree. And your parents also don't really love each other anymore. Your life isn't really meaningful to anything but the fantasy you run yourself in your head to explain it. We live off of the cognitive biases that we are able to believe in. Enjoy having some cognitive biases left as long as you still have some.

foepys 9y ago

Why do all crypto currency enthusiasts assume that when a government cannot guarantee monetary stability there will still be reliable, always on, high bandwidth internet connections to sync distributed ledgers across the globe? Also: Does any crypto currency have anything in store to protect itself against bad nodes? I don't mean nodes that send invalid packages but nodes that act like real nodes but just eat transactions and blocks without relaying them. Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually.

xiphias 9y ago
The internet you're talking about doesn't exist (have you been to rural Africa?), but Blockstream satellites do ( https://blockstream.com/satellite/ https://blockstream.com/satellite/ )
nsomaru 9y ago
> Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually. Could you direct me to the theory supporting this assertion? Was considering doing a simulation of this but need some kind of model.
- foepys 9y ago
  That's a thought I came up with a couple of months ago but I wasn't able to find time to test it out myself. From my point of view this seems like a very viable, albeit expensive attack vector without any potential to make money. The only result is destroying confidence in the network, so state level attacks might be the only reason to apply it.
  - jebeng 9y ago
    I think there are a few viable, but expensive attack vectors that have been well known within the community for years. But one thing that's always bugged me is how many people out there seem to think that a cryptocurrency could survive being an actual target by a sufficiently powerful state. The economic damage alone just by the whisper of an actual 'war on Bitcoin' would be devastating, without anyone actually lifting a finger. Let alone putting resources into actual attacks on technical, economic, and social levels. Doesn't really matter if a few enthusiast cypherpunks around the world can keep a few nodes going and technically say 'bitcoin is not dead, see!' when the economic model and security is fundamentally based on continued demand for BTC. I've been really interested in Bitcoin and have followed it closely since Satoshi was still active, and consider myself a pretty big fan of it in general. But the general arrogance and delusion about the reality of where real power is in the world is a bit cringeworthy. And it's always been that way in the community. It might get interesting in the future if two or more states have competing interest in Bitcoin(or whatever). I can imagine some hypothetical situation where the US political tide turns very anti-BTC, but say China has enough money tied up in it that it's incentivized to attempt to defend it. Like say if enough people in positions of political power have significant portions of their wealth tied up in it. That's possible, I guess. Sounds messy though for something that relies on economic confidence. Either way, so far all the luck has been on the side of Bitcoin, as really there's been little to no political pushback against the technology itself. That's pretty awesome, and it's made for a very interesting 7 years or so since BTC really woke up and people around here and elsewhere started seriously discussing it. But the political risk is very real and understated imo. The technical risk is interesting in theory for sure, but just knowing a sufficiently powerful state has the ability to attack is probably more than enough to cause massive economic damage without actually pulling any technological triggers.

orionblastar 9y ago

Supply and demand curves are what make things valuable or not. Bitcoin has a finite set of coins in its network. Most people only buy fractions of a bitcoin because one full bitcoin is too pricy for them. People used to earn Bitcoins using GPU mining rigs. ASIC miners made that obsolete. GPU mining is no longer profitable but the average person does not know or understand that. I've seen stores like Microcenter sell out of expensive GPUs and expensive power supplies to power them. My son last year had to build a new gaming PC after his old one blew out. His GTX video card was $240 last year, but now sells for $640. If Bitcoin is the new gold rush, the people selling shovels and supplies to miners at higher than normal prices will sell GPUs power supplies and high end Clubs and motherboards. I am using Coinbase since the new year. I invested $1 in Bitcoin and $1 in Litecoin. They are only worth 75% as much now. It was just dipping my toe in the waters before jumping in. I am not going to jump in until I learn more about it. Buy low and sell high and don't invest any money you can't afford to lose or do without before it raises back up to sell for a profit.

erikb 9y ago
> I am using Coinbase since the new year. Why put money in a gold rush after the rush? Can you explain the logic behind it? Like, have you never heard about it before 2018? Honestly if Bitcoin stabilizes around $300/coin it's still a huge profit to the people who started it and invested early (I bout around $90/coin). $12k/coin certainly is ridiculous. But I don't understand why people would even put a single dollar into something at such a point.
- sumedh 9y ago
  > But I don't understand why people would even put a single dollar into something at such a point. because they think it will go higher
- wereHamster 9y ago
  $x/coin is no more ridiculous than $y/coin. I'll leave it up to you to substitute x and y for random numbers.
makomk 9y ago

hal9000xp 9y ago

Back in 2004, I lived in shithole country called Uzbekistan, I wanted to buy some US stocks but my bank refused to transfer MY money because of strict currency control in Uzbekistan. This was probably the first time in my life I realized that I don't actually own money stored at bank, it's just bank temporarily allows me to use my money and at any whim bank would reject to do so. In 2010, I lived in a little bit better but still crappy country called Russia, I returned to my old idea to buy US stocks. This time is was possible but I had to make high-quality translation of agreement with US broker (i.e. Google translate wouldn't be accepted) and wait for a week to get permission to wire transfer my money to US brokerage account. In 2012, I wanted to do some small business and I wanted to do everything legally (I was still naive at that time) so I approached my bank in Russia and said that I want to setup website which accepts credit card payments from US. My bank said they wouldn't allow me to do this. Then I thought I can open foreign bank account. I tried to open bank account at HSBC in Hong Kong and was rejected for being Russian citizen (that's literally was a reason!). I also was rejected at every single bank in Europe. And even if I succeed to create shell company in some offshore islands and some account at some not very much reputable bank, I would still have great problems to legalize this money in Russia as I understood from talking to lawyers (again, I naively wanted to do everything legally). So being citizen of two wrong countries, I quickly realized how tightly government and banks control my money. At one hand Russia and Uzbekistan restrict me to move my capital abroad. On the other hand, even if you manage to move your capital abroad, western countries refuse your money. I could call this the Great Western Wall. So now, I highly appreciate cryptocurrencies. If you have BTC, ETH, XRP nobody would stop you to send money anywhere. It's so much valuable! The only drawback is extreme volatility of these currencies. But with creation decentralized stable cryptocurrency DAI, this changing game even more. I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is.

erikb 9y ago
> I think the only people who hate cryptocurrencies are those bloody conformists, big brother lovers who never experienced first hand how shitty traditional financial system is. And the people who profit from the traditional system. Don't underestimate that group. And in some regards the group you talk about and the group I talk about are overlapping. In first world countries you are really rarely screwed by your bank (when it comes to international transactions at least). But that these countries populace is allowed to live so freely might be the reason of the banks being able to screw people from shithole countries even more than them. So a change for first world country citizens might very well go the negative way and it's reasonable for them not wanting to change as it is.

donpark 9y ago

It had potentials but none of that matters with lack of protection against overhyped valuation. It's not a currency if it what you paid for a cup of coffee could've bought a Ferrari the next day. And blockchain is more like plumbing than some star-fangled magic. Last time I got excited about plumbing is...never mind.

ThomPete 9y ago
Why people still make comparisons to bitcoin as a currency is beyond my understanding. It's more like gold than like a currency. Judging it as a currency makes no sense. The volatility will go down over time and even if we were to compare it to currencies go back in history and you will see plenty of fluctuating currencies. A stable currency is a fairly new phenomenon and it comes with a price (you have to grow the economy)

elyobo 9y ago

Interesting article, but more an argument for why a large class of cryptocoins might be valuable, or even more so, why an ecosystem of cryptocoins might collectively value, rather than an argument for why Bitcoin specifically is valuable.

velcro 9y ago

I don't understand people who cite current network speed/overload, transaction problem/cost and co as the reason why Bitcoin (or any crypto) will fail in the future. Nothing is set in stone - its software, all of these things are fixable and are being worked on. Its still so very early in the game. If you compare crypto to a traditional startup project - I'd say user engagement and growth is more valuable than a perfect product from the start.

zerostar07 9y ago
> user engagement and growth I wouldn't compare those. Most of the altcoin trading is completely speculative, not even in the sense that they "believe in the future of the coin", a lot is purely speculative profit-making (e.g xrp), pump-and-dump chasing and herdish behavior. Very few coins have substantial engaged followers (e.g. raiblocks) and only the top 2 have actual users. I 'm a believer in the technologies but they are in such early alpha stage that it's not justified to expect that most of them will even prove to work. The biggest issue for me is the distribution of coins, with most ICOs unashamedly aiming to make the founders and investors billionaires from day 2. Even if their products prove succesful, i think a forked, clean chain will win over more followers.

fleitz 9y ago

Bitcoin is valuable because demand currently outstrips supply. If this happens for a long enough period of time it will become like gold, pretty much useless but wanted by lots of people.

ThomPete 9y ago

Bitcoin and any other interpretation of the blockchain is valuable because they create a physical fabric in the digital space. It will take time to implement but its going to be commonplace for the next generations. It allows for an increased complexity regardless of how the individual creator is doing. There is a lot of scams and snakeoil salesmen a lot of fools gold, just like there were in the golddigger years and the wil get booted out sooner or later, but the value of this decentralized fabric especially with regards to bitcoin is invaluable for any future decelopment of infrastructure.

dnate 9y ago

I don't really understand all the negativity towards bitcoin on HN these days. Back when it was new nobody would shame or outright insult people who invested in it. But somehow that's totally the norm now. Why does it matter whether the coin is worth 10$ or 10000$? It was and still is a disruptive concept that solves many issues with our current centralized currency system. Sure it also has a lot of issues itself. But can't we simply appreciate the technology for what it is: a Proof Of Concept.

rhapsodic 9y ago

Bitcoin is no different than any other non-commodity currency. It's only valuable because people believe they can, or will eventually, be able to use it to acquire something with intrinsic value. Without that confidence, it's worthless. Personally, I have lots of confidence that the USD in my bank account will one day, at a time of my choosing, get me intrinsically valuable things like cars, a home, food, cloths, etc. With bitcoin, I have very little confidence that will occur. So it's not very valuable to me. Nor do I have confidence that there will always be a "greater fool" handy to purchase any bitcoin I might buy for more than I paid for it. I think bitcoin will inevitably collapse. TFA talks about "citizens protecting themselves from irresponsible or malicious governments and companies", but that's not a problem I'm aware that I have. If it were, then I might be interested in owning bitcoin.

nefitty 9y ago
Do you have the same mindset in regards to physical gold? Gold has very little, if any, intrinsic or practical value, yet generations of humans have been motivated to acquire more of it. With digital currencies like Bitcoin, I think we're seeing the birth of a new type of scarce resource that will motivate generations of people to come.
- rhapsodic 9y ago
  >Do you have the same mindset in regards to physical gold? Gold has very little, if any, intrinsic or practical value, yet generations of humans have been motivated to acquire more of it. That statement is self-contradicting. If people covet gold for reasons other than what they might exchange it for, that means it has intrinsic value. And in addition to the satisfaction some people get from decorating their bodies with gold, it has many other practical uses. It's used in all types of electronic devices, including the computer you're reading this on. And as a medium of exchange, gold does not rely on a global computer network being available. (But in a post-apocalyptic world, gold probably would not have as much intrinsic value as it does currently. Whiskey, guns and cartridges would probably be a better bet.) The only thing scarce about crypto-currency is the energy it consumes, and the world's tolerance for its environmental impact. Aside from that, what prevents anyone from creating a new one? It's all about the mindset. As long as enough people believe bitcoin is valuable, it will be valuable. I could be wrong, but I don't think that will continue to be the case long term. I think crypto-currencies will continue to exist and will have some practical uses, but, IMO, their values relative to USD are going to be, shall we say, "adjusted" to a more sane level sometime in the future.

mygo 9y ago

Why is it valuable? Because we keep talking about it. Because we hear about people who made their wealth using the inter webs and we want to make money and we have credit cards and we speculate. Oh well. Since the dollar must circulate, we have to give monetary value to things. And if not bitcoin it would be something else.