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Your dollars lose value every year because the government creates money out of thin air (aka inflation). Some assets like gold or Bitcoin are much harder to cr

Your dollars lose value every year because the government creates money out of thin air (aka inflation). Some assets like gold or Bitcoin are much harder to create, and so there is no indefinite, limitless increase in supply. This allows them to function better as stores of value than dollars. See hyperinflation to better understand why some people fear government spending deficits and the spiral of money creation that follows: https://www.investopedia.com/terms/h/hyperinflation.asp https://www.investopedia.com/terms/h/hyperinflation.asp

x87678r 6y ago
I understand money, inflation and finance very well. I understand that BTC has limited supply. In 10 years why would anyone want BTC though? Why would I want to buy it when I could buy BTC2 or whatever else? Its like yes there is a limited supply, but there is unlimited supply of cryptocurrencies, why is BTC more valuable than the others?
- karanbhangui 6y ago
  Was initially my argument against bitcoin also. The flaw in this reasoning imo is the power law distribution of attention. Bitcoin and Ethereum get the vast majority of the attention (and hence trade volume). Everything else pales in comparison.
- anythingdude321 6y ago
  because it was first and has proven itself to be both immutable and highly secure. this leads to network effects. and money is the ultimate network effect. people want money because they know others want money and will therefore accept it in exchange for other things.
- doggosphere 6y ago
  The existence of a cryptocurrency does not give it value. Its network gives it value (users, wallets, hardware, aka usage and adoption). Ex: Facebook is the most valuable social network on the internet. Forking FB's source code and starting my own social network does not mean anyone will use it. FB is valuable because it works, and because users are there.
- SuoDuanDao 6y ago
  No one would use a Model T as a car, but if you had one in mint condition a collector would pay a lot for it.
- jimmysong 6y ago
  Because Bitcoin is credibly scarce. In 10 years, Bitcoin will have 20+ years of history behind it. Your BTC2 will be much younger, probably have had a creator, a foundation that directs where it goes, possibly changed the proof-of-work and supply schedule a few times and possibly picked winners and loser on their ecosystem. In other words, your other currency won't be that different than normal fiat money. Most people don't really get that Bitcoin is unique in this regard. Literally every other coin has less credibility and more intervention and a shorter history. That's why BTC will be more valuable.
- mindcandy 6y ago
  You could spin up your own Bitcoin fork in an afternoon. The difference between Bitcoin and x87678rCoin is confidence. No one knows or cares about x87678rCoin. x87678rCoin has no track record or evidence that it will be maintained and supported by any ecosystem in the long run. Until x87678rCoin proves itself, it is contributing nothing to the supply of cryptocurrencies. Zero.
audunw 6y ago
> Your dollars lose value every year because the government creates money out of thin air (aka inflation). I'm pretty sure it's not the government that creates most of the money. It's mostly the banks right? When you borrow money, they don't need to go to the government to create the money for that loan in your account. And this is a mostly a good thing. I know a lot of people think it's not, but what it really does is democratise borrowing. Your ability to borrow money is mostly only limited to your own ability to make regular payments. A slight inflation also incentivises people to borrow and invest, so it's often good for economic growth. Maybe it won't be so good in the future when the population and economy starts to shrink consistently. But I'm not convinced that cryptocurrencies is the answer there either.
- doggosphere 6y ago
  The central bank / federal reserve controls monetary policy. Explaining the path of money creation to consumer is beyond my scope, but basically it always starts with the feds. The power to create money is indeed useful at times. However, there are problems with it that eventually arise over time. Cryptocurrencies/blockchains simply provide infrastructure outside the control of the government or any single entity. The applications we decide to use with it is ultimately up to us.

x87678r 6y ago

I understand money, inflation and finance very well. I understand that BTC has limited supply. In 10 years why would anyone want BTC though? Why would I want to buy it when I could buy BTC2 or whatever else? Its like yes there is a limited supply, but there is unlimited supply of cryptocurrencies, why is BTC more valuable than the others?

karanbhangui 6y ago
Was initially my argument against bitcoin also. The flaw in this reasoning imo is the power law distribution of attention. Bitcoin and Ethereum get the vast majority of the attention (and hence trade volume). Everything else pales in comparison.
anythingdude321 6y ago
because it was first and has proven itself to be both immutable and highly secure. this leads to network effects. and money is the ultimate network effect. people want money because they know others want money and will therefore accept it in exchange for other things.
doggosphere 6y ago
The existence of a cryptocurrency does not give it value. Its network gives it value (users, wallets, hardware, aka usage and adoption). Ex: Facebook is the most valuable social network on the internet. Forking FB's source code and starting my own social network does not mean anyone will use it. FB is valuable because it works, and because users are there.
SuoDuanDao 6y ago
No one would use a Model T as a car, but if you had one in mint condition a collector would pay a lot for it.
jimmysong 6y ago
Because Bitcoin is credibly scarce. In 10 years, Bitcoin will have 20+ years of history behind it. Your BTC2 will be much younger, probably have had a creator, a foundation that directs where it goes, possibly changed the proof-of-work and supply schedule a few times and possibly picked winners and loser on their ecosystem. In other words, your other currency won't be that different than normal fiat money. Most people don't really get that Bitcoin is unique in this regard. Literally every other coin has less credibility and more intervention and a shorter history. That's why BTC will be more valuable.
mindcandy 6y ago
You could spin up your own Bitcoin fork in an afternoon. The difference between Bitcoin and x87678rCoin is confidence. No one knows or cares about x87678rCoin. x87678rCoin has no track record or evidence that it will be maintained and supported by any ecosystem in the long run. Until x87678rCoin proves itself, it is contributing nothing to the supply of cryptocurrencies. Zero.

audunw 6y ago

> Your dollars lose value every year because the government creates money out of thin air (aka inflation). I'm pretty sure it's not the government that creates most of the money. It's mostly the banks right? When you borrow money, they don't need to go to the government to create the money for that loan in your account. And this is a mostly a good thing. I know a lot of people think it's not, but what it really does is democratise borrowing. Your ability to borrow money is mostly only limited to your own ability to make regular payments. A slight inflation also incentivises people to borrow and invest, so it's often good for economic growth. Maybe it won't be so good in the future when the population and economy starts to shrink consistently. But I'm not convinced that cryptocurrencies is the answer there either.

doggosphere 6y ago
The central bank / federal reserve controls monetary policy. Explaining the path of money creation to consumer is beyond my scope, but basically it always starts with the feds. The power to create money is indeed useful at times. However, there are problems with it that eventually arise over time. Cryptocurrencies/blockchains simply provide infrastructure outside the control of the government or any single entity. The applications we decide to use with it is ultimately up to us.