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Its valuable because of how much money people have put into it. All the ASICs, from the development to patterning to everyone who bought them and all those who
by zanny 9y ago
Its valuable because of how much money people have put into it. All the ASICs, from the development to patterning to everyone who bought them and all those who pay money to keep them running to mine blocks all constitute an immense amount of capital and time investment in bitcoin that gives others confidence nobody is going to abandon it overnight.
In many ways its more reliable than regular stocks - governments can break businesses up, change the law to make the business less favorable, the company can be bought out, the behavior of a few specific individuals involved can usually wildly swing the consensus valuation, etc.
What I've learned through these years of cryptohype is that it doesn't matter what I think, because I'm not the one throwing billions of dollars at it. People believe bitcoin will make them rich, and thus bitcoins price has gone up absurdly high considering its adoption and usage for its originally stated purpose. Of course, stated and intended purposes can be quite different - I honestly think bitcoin is working out exactly as it was designed and has been architected to do. Its not supposed to change the world and usher in an era of transparent and seamless exchange between all humans anywhere, its just meant to be a pyramid scheme. It has succeeded wildly at that.
Now I don't want to leave bitcoin off in isolation - in practice its just like almost any tech company. You rapidly gain market without a business model or revenue stream, accrue an insanely large userbase, IPO or get bought out, and then either the shareholders or buyer realize there is no way to actually profit off what you did. But it doesn't matter, you ran off wealthy - the same can be said of the bitcoin whales of today. It doesn't matter if bitcoin itself ever actually functions as a currency because everyone in the insider club is already rich.
- Retric 9y agoSunk cost is completely unrelated to current value. https://en.m.wikipedia.org/wiki/Sunk_cost https://en.m.wikipedia.org/wiki/Sunk_cost Bitcoin is down what 70%? That's hardly a great track record even if it made someone rich, it's running out of greater fools while burning though insane amounts of capital for Mining. Remember, negative sum game means the average person loses. Aka Pointing at lottery winners does not make the lottery a good investment.
- dharma1 9y agoAgreed. If it doesn't generate new value beyond speculation, it will eventually run out of steam. To those who say digital gold, I think the recent price swings in response to regulation show that bitcoin is not a safe store of value. Ethereum or others after it could prove to provide enough value to justify the valuation, and I am positive something will, but we are still some time away from that being real and not super speculative. Still, I can easily see how crypto currencies appeal to a young crowd who perhaps have anecdotal evidence of someone in their circle who made a significant return in a short space of time. I think the interest is primarily driven by this narrative rather ideals of decentralisation or actual usefulness of crypto currencies - for now anyway
- vinceguidry 9y agoCurrencies aren't intended to generate value. They're intended to be circulated. So long as people feel safe to circulate it, it can keep going forever.
- will_brown 9y ago>So long as people feel safe to circulate it, it can keep going forever. I mention in my “stock analogy” the thing Bitcoin really has going if considered a stock would be that it is easily transferable. But where it begins to get tricky is others being able to offer that same function but faster and cheaper than bitcoin.