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I’m no bitcoin maximalist, but boy was that a lazy write-off: “Economists define a currency as something that can be at once a medium of exchange, a store of v

I’m no bitcoin maximalist, but boy was that a lazy write-off: “Economists define a currency as something that can be at once a medium of exchange, a store of value and a unit of account. Lack of adoption and loads of volatility mean that cryptocurrencies satisfy none of those criteria... as things stand there is little reason to think that cryptocurrencies will remain more than an overcomplicated, untrustworthy casino.“ That bitcoin is a poor medium of exchange and unit of account is hard to argue against at this stage of adoption. But store of value? I’m more confident in the maintained value of Bitcoin than that of a Venezuelan Bolívar. That’s not a strong enough reason for me to hold bitcoin, but if I lived in Venezuela it sure as hell would be! Moving from the realm of currency to usefulness, there’s no faster & cheaper way to transfer money across national borders. Viewed in this light it’s just a younger, more easily stored, more fungible, more easily transferable gold. Now I do hold more gold than bitcoin (in USD, combined about 6% of my portfolio atm) because certainly risks remain. But to say it has no utility is just crazy! I guess precious metals are useless too. What’s their market cap again?

inimino 8y ago
Precious metals look cool and have held value in human society for thousands of years. Bitcoins are immaterial numbers in a distributed database that a tiny fraction of humanity has been interested in for a tiny fraction of human history. That the best use cases for cryptocurrencies found in ten years of trying are illegal doesn't say much for its utility.
- hd4 8y ago
  What other use cases are you expecting at this stage of adoption, considering it has been derided by all "serious concerns" as a fad and all established financial institutions have blockaded it? You are parroting the same dismissive media tune made by the people with a vested interest in the status quo remaining the status quo. The bitcoin logo also looks cool.
  - inimino 8y ago
    The use cases of cryptocurrencies are the same as any currency: paying for stuff. If enthusiasts think that paying for stuff with cryptocurrencies is going to become popular, I don't think it's just a "dismissive media tune" to point out that after ten years, it hasn't happened.
callalex 8y ago
It seems like every discussion of cryptocurrency has at least one proponent use the Bolivar as an example. That argument is the equivalent of us judging every cryptocurrency based on Dogecoin. It just doesn’t make any sense.
- antidesitter 8y ago
  I assume the point is that if it's useful against the Bolivar it's not useless.
  - roywiggins 8y ago
    But almost anything is better as money than the Bolivar. Gold coins. Dollars. The Mexican peso. Chunks of coal. Eggs. Kalashnikovs. Laundry detergent. It's not exactly an exclusive club.
    - PacifyFish 8y ago
      This is true, but importantly bitcoin is easy to obtain (assuming internet access), validate, and store/transport. If you’re in Venezuela it’s hard to get your hands on $5000 USD and convince other people it’s legitimate. $5000 USD in eggs will go bad before you can trade them all. $5000 USD in laundry detergent is several truckloads! Gold coins might be a good option but A) You’d better keep them well protected and B) Why not keep $2500 in gold coins and $2500 in bitcoin?
      - bb88 8y ago
        So simply put, you're moving the goalposts. It used to be the argument for Bitcoin was this vast thing that could fix US Centralized Banking once and for all. And now, your best argument appears to be fixing an inflationary economy run by a dictator. While it may give people the ability to use a new currency without government approval, at some point a person has to convert a Bolivar to a Bitcoin and back. And a dictator can make most of those conversions illegal, if he so chooses. So no. Your argument doesn't sway me. Particularly because Brazil went through something similar a few years ago as well and didn't require the use of bitcoin to fix it's inflationary spiral. https://www.npr.org/sections/money/2015/12/02/458222801/episode-216-how-four-drinking-buddies-saved-brazil https://www.npr.org/sections/money/2015/12/02/458222801/epis...
WtfRuSerious 8y ago
Yeah, but gold is real, it's a real metal here in the physical universe, not only does it look good, it doesn't tarnish or rust ( to any real degree under normal circumstances ) with many niche uses beyond ornamental, just think about how much gold foil goes into something that's going to space... it is also one of the heaviest, most uniquely workable metals that isn’t dangerously radioactive. My point is that it has an INTRINSIC value, not just an arbitrary value we've assigned to it, but a natural value that comes only to things that are actually naturally valuable... that statement may seem to be self referential, i.e. wet because not dry, but I think it makes the point I'm trying to get across, which is: there's a difference between that which IS valuable, and that which has value because WE assign it value. Like tulips in pre-crash 1637, "bitcon" only has the value we assign to it, in reality it's nothing but numbers and we've plenty of those. That it can and probably will decrease in value drastically when a majority of people realize it has no INTRINSIC value... well that should be warning enough to those wise enough to think about critically. It's not like "market cap" really even applies to it here, yes each "coin" is assigned some value and the multiplication applied methodically does seem to come up with a giant number, but there are no REAL assets... it's not like it's a share of stock in a company that makes anything, it's all ethereal, there's absolutely nothing of value except the fact that somebody else is willing to exchange something of REAL value for it... when that's gone, the whole thing will be another story on Wikipedia...
- 21 8y ago
  > there's a difference between that which IS valuable, and that which has value because WE assign it value. 10% of the price of gold IS valuable, the other 90% is WE valuable. What does that say to you? If you agree that bitcoin has at least 0.0001% IS valuable (for example for some collectors of digital artefacts), then where do you draw the line, what percentage of IS valuable do you require so that you would consider bitcoin having some INTRINSIC value as gold does?
  - WtfRuSerious 8y ago
    Yes, I agree with you that a portion of the value assigned to virtual currencies ( the IS value ) comes from the utility of the the thing... just like a portion of the value we assign to the U.S. Dollar comes from the utility ( you can carry it in your pocket and exchange it for stuff )... but understand that just like the dollar, we assign value to it because it's HARD to counterfeit ( and only because so ), you can't just make as many as you want easily. Bitcoin, and most other virtual currencies, are only "hard" to counterfeit because limitations in current technologies ( math included ) make it so... What happens when that goes away? What would the value of bitcoin be tomorrow if some scientist today, publishes a paper providing an easier way to factor large numbers? What about Moore's law? What about quantum computing and machine learning? What about breakthroughs in mathematics or cryptography? Start thinking about all the intellectual manpower working every day on any number of things that could make the very basis for bitcoin obsolete, and you start thinking that maybe the value we assign it is a bad bet. As far as gold goes, until someone creates a philosopher's stone, or starts 3d printing gold atoms, I think we're safe to assume you would still have to mine the stuff and refine it, and that amount of work isn't going away anytime soon... and therefore the "value" of it isn't going to zero soon either.
maxerickson 8y ago
Are Bitcoin easier to get in Venezuela than other Bolivar alternatives?
- roywiggins 8y ago
  That's really the question. How do people in Venuzuela even buy Bitcoin? What do they buy it with? Nobody will swap Bitcoin for their Bolivars, since (as we've decided) Bitcoin is better money than Bolivars.
  - solveit 8y ago
    They will for enough Bolivars.
  - diegocerdan 8y ago
    Price inflation happens daily. You can store your value on Bitcoin and exchange it for enough bolivars just before you go to the supermarket.
- PacifyFish 8y ago
  This is something I assume to be true (based on the assumption that most of Venezuela’s population has open internet access), but it probably only applies to people with at least cursory technical knowledge. Maybe ~5% of the population, optimistically. But you can extrapolate from present-day Venezuela to future runaway-inflation crises, at which time (again, making an assumption here) bitcoin and the internet will be more accessible/prevalent.
  - maxerickson 8y ago
    But who do the savvy internet users purchase the Bitcoin from and what do they exchange? Someone in country will likely be happy to exchange the Bitcoin for Bolivars at some discounted exchange rate, but that doesn't solve the problem of how they get Bitcoin. You can have a few people working remotely for Bitcoin and the like, but that isn't going to support other people moving lots of money out of Bolivars.
acdha 8y ago
As a pure fiat currency Bitcoin has neither intrinsic value nor an invested community of users, which makes the value proposition very risky. If a cryptocurrency did start to become useful for mainstream use, everyone who isn’t heavily invested in Bitcoin would have a strong incentive to use something else where they could capture the profits which would otheraise go to the Bitcoin early adopters, and if that starts happening the floor for BTC is zero as everyone cuts their losses and moves on. Yeah, there’d be some HODLers trying to recruit users but that’d die off over time since nobody new would have that sunk cost.
- PacifyFish 8y ago
  Yep, the current state of bitcoin is far from fiat. I hope it does make strides as a currency, but if it never evolves past a deflationary store of value it’s still an attractive asset.
- bb88 8y ago
  The advantage that the Dollar has over Bitcoin is that when dealing with the US Government, it requires dollars to be used. So the banks get FDIC insurance on US Currency deposits, and taxes to the government must be paid in dollars. So in essence, there's a legal requirement to use dollars when dealing with the federal government. So while the dollar is technically currency by fiat, it's also currency by legislation.

inimino 8y ago

Precious metals look cool and have held value in human society for thousands of years. Bitcoins are immaterial numbers in a distributed database that a tiny fraction of humanity has been interested in for a tiny fraction of human history. That the best use cases for cryptocurrencies found in ten years of trying are illegal doesn't say much for its utility.

hd4 8y ago
What other use cases are you expecting at this stage of adoption, considering it has been derided by all "serious concerns" as a fad and all established financial institutions have blockaded it? You are parroting the same dismissive media tune made by the people with a vested interest in the status quo remaining the status quo. The bitcoin logo also looks cool.
- inimino 8y ago
  The use cases of cryptocurrencies are the same as any currency: paying for stuff. If enthusiasts think that paying for stuff with cryptocurrencies is going to become popular, I don't think it's just a "dismissive media tune" to point out that after ten years, it hasn't happened.

callalex 8y ago

It seems like every discussion of cryptocurrency has at least one proponent use the Bolivar as an example. That argument is the equivalent of us judging every cryptocurrency based on Dogecoin. It just doesn’t make any sense.

antidesitter 8y ago
I assume the point is that if it's useful against the Bolivar it's not useless.
- roywiggins 8y ago
  But almost anything is better as money than the Bolivar. Gold coins. Dollars. The Mexican peso. Chunks of coal. Eggs. Kalashnikovs. Laundry detergent. It's not exactly an exclusive club.
  - PacifyFish 8y ago
    This is true, but importantly bitcoin is easy to obtain (assuming internet access), validate, and store/transport. If you’re in Venezuela it’s hard to get your hands on $5000 USD and convince other people it’s legitimate. $5000 USD in eggs will go bad before you can trade them all. $5000 USD in laundry detergent is several truckloads! Gold coins might be a good option but A) You’d better keep them well protected and B) Why not keep $2500 in gold coins and $2500 in bitcoin?
    - bb88 8y ago
      So simply put, you're moving the goalposts. It used to be the argument for Bitcoin was this vast thing that could fix US Centralized Banking once and for all. And now, your best argument appears to be fixing an inflationary economy run by a dictator. While it may give people the ability to use a new currency without government approval, at some point a person has to convert a Bolivar to a Bitcoin and back. And a dictator can make most of those conversions illegal, if he so chooses. So no. Your argument doesn't sway me. Particularly because Brazil went through something similar a few years ago as well and didn't require the use of bitcoin to fix it's inflationary spiral. https://www.npr.org/sections/money/2015/12/02/458222801/episode-216-how-four-drinking-buddies-saved-brazil https://www.npr.org/sections/money/2015/12/02/458222801/epis...

WtfRuSerious 8y ago

Yeah, but gold is real, it's a real metal here in the physical universe, not only does it look good, it doesn't tarnish or rust ( to any real degree under normal circumstances ) with many niche uses beyond ornamental, just think about how much gold foil goes into something that's going to space... it is also one of the heaviest, most uniquely workable metals that isn’t dangerously radioactive. My point is that it has an INTRINSIC value, not just an arbitrary value we've assigned to it, but a natural value that comes only to things that are actually naturally valuable... that statement may seem to be self referential, i.e. wet because not dry, but I think it makes the point I'm trying to get across, which is: there's a difference between that which IS valuable, and that which has value because WE assign it value. Like tulips in pre-crash 1637, "bitcon" only has the value we assign to it, in reality it's nothing but numbers and we've plenty of those. That it can and probably will decrease in value drastically when a majority of people realize it has no INTRINSIC value... well that should be warning enough to those wise enough to think about critically. It's not like "market cap" really even applies to it here, yes each "coin" is assigned some value and the multiplication applied methodically does seem to come up with a giant number, but there are no REAL assets... it's not like it's a share of stock in a company that makes anything, it's all ethereal, there's absolutely nothing of value except the fact that somebody else is willing to exchange something of REAL value for it... when that's gone, the whole thing will be another story on Wikipedia...

21 8y ago
> there's a difference between that which IS valuable, and that which has value because WE assign it value. 10% of the price of gold IS valuable, the other 90% is WE valuable. What does that say to you? If you agree that bitcoin has at least 0.0001% IS valuable (for example for some collectors of digital artefacts), then where do you draw the line, what percentage of IS valuable do you require so that you would consider bitcoin having some INTRINSIC value as gold does?
- WtfRuSerious 8y ago
  Yes, I agree with you that a portion of the value assigned to virtual currencies ( the IS value ) comes from the utility of the the thing... just like a portion of the value we assign to the U.S. Dollar comes from the utility ( you can carry it in your pocket and exchange it for stuff )... but understand that just like the dollar, we assign value to it because it's HARD to counterfeit ( and only because so ), you can't just make as many as you want easily. Bitcoin, and most other virtual currencies, are only "hard" to counterfeit because limitations in current technologies ( math included ) make it so... What happens when that goes away? What would the value of bitcoin be tomorrow if some scientist today, publishes a paper providing an easier way to factor large numbers? What about Moore's law? What about quantum computing and machine learning? What about breakthroughs in mathematics or cryptography? Start thinking about all the intellectual manpower working every day on any number of things that could make the very basis for bitcoin obsolete, and you start thinking that maybe the value we assign it is a bad bet. As far as gold goes, until someone creates a philosopher's stone, or starts 3d printing gold atoms, I think we're safe to assume you would still have to mine the stuff and refine it, and that amount of work isn't going away anytime soon... and therefore the "value" of it isn't going to zero soon either.

maxerickson 8y ago

Are Bitcoin easier to get in Venezuela than other Bolivar alternatives?

roywiggins 8y ago
That's really the question. How do people in Venuzuela even buy Bitcoin? What do they buy it with? Nobody will swap Bitcoin for their Bolivars, since (as we've decided) Bitcoin is better money than Bolivars.
- solveit 8y ago
  They will for enough Bolivars.
- diegocerdan 8y ago
  Price inflation happens daily. You can store your value on Bitcoin and exchange it for enough bolivars just before you go to the supermarket.
PacifyFish 8y ago
This is something I assume to be true (based on the assumption that most of Venezuela’s population has open internet access), but it probably only applies to people with at least cursory technical knowledge. Maybe ~5% of the population, optimistically. But you can extrapolate from present-day Venezuela to future runaway-inflation crises, at which time (again, making an assumption here) bitcoin and the internet will be more accessible/prevalent.
- maxerickson 8y ago
  But who do the savvy internet users purchase the Bitcoin from and what do they exchange? Someone in country will likely be happy to exchange the Bitcoin for Bolivars at some discounted exchange rate, but that doesn't solve the problem of how they get Bitcoin. You can have a few people working remotely for Bitcoin and the like, but that isn't going to support other people moving lots of money out of Bolivars.

acdha 8y ago

As a pure fiat currency Bitcoin has neither intrinsic value nor an invested community of users, which makes the value proposition very risky. If a cryptocurrency did start to become useful for mainstream use, everyone who isn’t heavily invested in Bitcoin would have a strong incentive to use something else where they could capture the profits which would otheraise go to the Bitcoin early adopters, and if that starts happening the floor for BTC is zero as everyone cuts their losses and moves on. Yeah, there’d be some HODLers trying to recruit users but that’d die off over time since nobody new would have that sunk cost.

PacifyFish 8y ago
Yep, the current state of bitcoin is far from fiat. I hope it does make strides as a currency, but if it never evolves past a deflationary store of value it’s still an attractive asset.
bb88 8y ago
The advantage that the Dollar has over Bitcoin is that when dealing with the US Government, it requires dollars to be used. So the banks get FDIC insurance on US Currency deposits, and taxes to the government must be paid in dollars. So in essence, there's a legal requirement to use dollars when dealing with the federal government. So while the dollar is technically currency by fiat, it's also currency by legislation.