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Buying Bitcoin is becoming similar to buying gold. It’s a Store of Value. Why is gold an investment? Because it’s scarce and we have, as a society, decided it’

Buying Bitcoin is becoming similar to buying gold. It’s a Store of Value. Why is gold an investment? Because it’s scarce and we have, as a society, decided it’s an investment. There may be nuances here, but that’s the basic idea. Bitcoin is digital gold. Most other tokens are similar buying fiat currencies which can help if you local fiat currency is hyper-inflating. But then some tokens give access to de-fi which a whole other rabbit hole.

postingpals 6y ago
A store of value is just one aspect to what makes money, money. It also has to be a medium of exchange and a standard of value. Bitcoin's value changes so wildly that it cannot be a standard (right now) and no one uses it to buy things. Everyone is investing in bitcoin on the promise that its going to be so much more useful than dollars, in the hopes that they will make a lot of... dollars? Do you see the contradiction? If they think it's going to be so much better than dollars what are they going to do with their long term investment dollars if, in the long run, bitcoin surpasses them? Don't use economics terms to explain the usefulness of bitcoin when economics itself disagrees.
- Erlich_Bachman 6y ago
  Your logic stumbles when you consider gold. "no one uses it" either to "buy things", and yet it is valueable and has been so for eons. Store of value is a very important function in itself.
  - deleted 6y ago
    [deleted]
  - postingpals 6y ago
    The gold standard was abandoned precisely because it was inferior. It was pretty useful up until early 20th century as a medium of exchange too. People used to use gold coins to buy things, didn't they?
    - Erlich_Bachman 6y ago
      Now it's not, and yet it's still valueable.
      - notreallytrue 6y ago
        Honest question: in 20 years would you prefer to own a 21 milionth of bitcoin (1 bitcoin) or 21 milionth of gold (~8kgs of gold)? Not thinking about the value of it, but of its future usefulness as value store and as mean of payment
        ZephyrBlu 6y ago
        Bitcoin 100%, because of the optionality and network effects. I don't believe you can separate the value of Bitcoin and it's usefulness because the more valuable Bitcoin is, the more useful it becomes. The more people who hold Bitcoin, the more scarce it becomes and therefore the more valuable it becomes. In 20 years, Bitcoin could go to 0, or become a widely used currency and skyrocket in value. Once the number of Bitcoin holders reaches equilibrium then the value would remain stable, but we are definitely not at that point yet.
        notreallytrue 6y ago
        Gold value will never go to zero though For the simple reason that it exist in the physical space and can't disappear, unless the laws that regulate our existence change, which is quite improbable Gold will also work and retain a value even if society suddenly shuts down and reset to a "sticks and stones" state Bitcoin advocates have this weird tendency to completely ignore decades of game theory That's why people don't trust them
- themodelplumber 6y ago
  > Everyone is investing in bitcoin on the promise that its going to be so much more useful than dollars I doubt this is true in every case, maybe even most cases. Though this sentiment does seem to become more rigid toward the core of the crypto community, a huge swath of other investors are playing price action. There are tons of technical traders in crypto, and they tend to care much more about MA deviations, gaps, pennants, and candlestick forms than what's going to replace USD. You can also think of it as a play by (people who don't have as many concerns about the dollar) off the fears of (people who are afraid about the future of the dollar). IMO there is a lot of room in a speculative ecosystem for non-value, non-traditional-economics, and even hugely irrational viewpoints. They can all meet with success by using their own sets of strategies.
root_axis 6y ago
Cryptocurrency isn't actually scarce though, it may be "scarce-like" but the scarcity is an artificial property that can be arbitrarily changed, unlike gold's scarcity which is an unalterable property of reality.
- Erlich_Bachman 6y ago
  In all practical senses it is scarce. It is the protocol and consensus of the people using it that makes it scarce. If you disagree, go ahead just make your own BTC and see how "easy" it is to convince other people to use it instead of BTC or some other mainstream coin. (Some people even tried exactly that...)
  - kinakomochidayo 6y ago
    It's easier for those with the funds, and connections to manipulate, and censor discussions about other forks - and some pro-Segwit people did exactly that with the 2017 hard fork, like on /r/bitcoin, bitcointalk, etc.
  - root_axis 6y ago
    You can't really know how easy it might be for me. For example, if my name was Vitalik Buterin or Elon Musk or even Donald Trump, I could trivially create my own cryptocurrency and a lot of people would use it.
    - ball_of_lint 6y ago
      Sure - you can make another cryptocurrency if you want. That currency will not be bitcoin. Some people tried this before by branching off the bitcoin blockchain. That was called bitcoin cash, and it failed. Bitcoins, meaning not any cryptocurrency but just actual bitcoins, are scarce and will almost certainly remain so.
      - root_axis 6y ago
        I never said it would be bitcoin.
Erlich_Bachman 6y ago
Yep, store of value is actually a useful function for many indivudals and companies, and we are betting on that storing of value will become more and more valueable as we progress. Storing of value is not just "hoarding", useless activity. It is an important ingredient in making many of the business processes and just things work in general. It is a very impotant function. And thus if we have tools that make that function work well, - they will be valueable. And as it turns out, there aren't that many things that work well as a store of value. It's not like you can take any thing or instrument or contract or whatever else, and make it work as a store of value. In some sense, the ability to act as a store of value is scarce in itself. We already have some instruments, like gold, properties, land, etc. Stocks and ETFs and such are also kinda a store of value, but have a lot problems (but also other functions besides just storing the value). So yes, we welcome another way to store value, this market is by no means saturated as it turns out. Gold has it's own problems.
- allendoerfer 6y ago
  If I am investing and seeking returns I will tolerate a certain level of risk and volatility, if they are justified by the returns I am getting. If I want to store value, what I am looking to avoid at all costs is volatility and risk. That's why instituations are even accepting to lose a little bit of value in return for security by buying bonds from Northern European countries. It's kind of in the definition of the word "storing": If you want to store water you won't put your bucket of water on to a race car, even though it might drive through a heavy rain.
mrlala 6y ago
Honestly that is just bs. Gold is a physical thing that is scarce and has real uses other than being treated as 'money'. We have only mined a cube with 28 meter sides of gold from the dawn of time! It's useful- that's why it has value. If it wasn't useful (pretty for jewelry and an essential industry product) then it would be fairly worthless. You say crypto is scarce? The scarcity is artificial, and you can create an infinite number of crypto currencies...
- Erlich_Bachman 6y ago
  They already have created an infinite number of them. Nobody is buying them. BTC and a couple of others have the property of being valueable (which is decided in consensus by the users in the real world), while also being scarce. Nobody cares if some shitcoin on the bottom of coinmarketcap is not scarce. It is irrelevant. So yes, useful cryptocurrencies are scarce.
  - the_gastropod 6y ago
    > BTC and a couple of others have the property of being valueable I'm not sure this is a rock-solid argument. Ponzi schemes also have value (until they don't). MLM's are often massively valuable, too. But most people would acknowledge they're little more than scams to the huge majority of people "invested" in them.
itsoktocry 6y ago
>It’s a Store of Value A 10 year old asset that has wild price fluctuations is a "store of value"? By what measure?
- qes 6y ago
  As long as you waited 4 years between storing value in Bitcoin and removing it you _always_ got more value out, no matter what point in time in Bitcoin's entire history you stored it. And not just a little bit more value.. Is an index fund a store of value? Would you recommend someone store their value there if they wanted it back out in less than 4 years? Gold? Property? Or would you suggest those stores of value are only suitable for longer time frames? How much more value does someone who stored it in Bitcoin 10 years ago have now?

postingpals 6y ago

A store of value is just one aspect to what makes money, money. It also has to be a medium of exchange and a standard of value. Bitcoin's value changes so wildly that it cannot be a standard (right now) and no one uses it to buy things. Everyone is investing in bitcoin on the promise that its going to be so much more useful than dollars, in the hopes that they will make a lot of... dollars? Do you see the contradiction? If they think it's going to be so much better than dollars what are they going to do with their long term investment dollars if, in the long run, bitcoin surpasses them? Don't use economics terms to explain the usefulness of bitcoin when economics itself disagrees.

Erlich_Bachman 6y ago
Your logic stumbles when you consider gold. "no one uses it" either to "buy things", and yet it is valueable and has been so for eons. Store of value is a very important function in itself.
- deleted 6y ago
  [deleted]
- postingpals 6y ago
  The gold standard was abandoned precisely because it was inferior. It was pretty useful up until early 20th century as a medium of exchange too. People used to use gold coins to buy things, didn't they?
  - Erlich_Bachman 6y ago
    Now it's not, and yet it's still valueable.
    - notreallytrue 6y ago
      Honest question: in 20 years would you prefer to own a 21 milionth of bitcoin (1 bitcoin) or 21 milionth of gold (~8kgs of gold)? Not thinking about the value of it, but of its future usefulness as value store and as mean of payment
      - ZephyrBlu 6y ago
        Bitcoin 100%, because of the optionality and network effects. I don't believe you can separate the value of Bitcoin and it's usefulness because the more valuable Bitcoin is, the more useful it becomes. The more people who hold Bitcoin, the more scarce it becomes and therefore the more valuable it becomes. In 20 years, Bitcoin could go to 0, or become a widely used currency and skyrocket in value. Once the number of Bitcoin holders reaches equilibrium then the value would remain stable, but we are definitely not at that point yet.
        notreallytrue 6y ago
        Gold value will never go to zero though For the simple reason that it exist in the physical space and can't disappear, unless the laws that regulate our existence change, which is quite improbable Gold will also work and retain a value even if society suddenly shuts down and reset to a "sticks and stones" state Bitcoin advocates have this weird tendency to completely ignore decades of game theory That's why people don't trust them
themodelplumber 6y ago
> Everyone is investing in bitcoin on the promise that its going to be so much more useful than dollars I doubt this is true in every case, maybe even most cases. Though this sentiment does seem to become more rigid toward the core of the crypto community, a huge swath of other investors are playing price action. There are tons of technical traders in crypto, and they tend to care much more about MA deviations, gaps, pennants, and candlestick forms than what's going to replace USD. You can also think of it as a play by (people who don't have as many concerns about the dollar) off the fears of (people who are afraid about the future of the dollar). IMO there is a lot of room in a speculative ecosystem for non-value, non-traditional-economics, and even hugely irrational viewpoints. They can all meet with success by using their own sets of strategies.

root_axis 6y ago

Cryptocurrency isn't actually scarce though, it may be "scarce-like" but the scarcity is an artificial property that can be arbitrarily changed, unlike gold's scarcity which is an unalterable property of reality.

Erlich_Bachman 6y ago
In all practical senses it is scarce. It is the protocol and consensus of the people using it that makes it scarce. If you disagree, go ahead just make your own BTC and see how "easy" it is to convince other people to use it instead of BTC or some other mainstream coin. (Some people even tried exactly that...)
- kinakomochidayo 6y ago
  It's easier for those with the funds, and connections to manipulate, and censor discussions about other forks - and some pro-Segwit people did exactly that with the 2017 hard fork, like on /r/bitcoin, bitcointalk, etc.
- root_axis 6y ago
  You can't really know how easy it might be for me. For example, if my name was Vitalik Buterin or Elon Musk or even Donald Trump, I could trivially create my own cryptocurrency and a lot of people would use it.
  - ball_of_lint 6y ago
    Sure - you can make another cryptocurrency if you want. That currency will not be bitcoin. Some people tried this before by branching off the bitcoin blockchain. That was called bitcoin cash, and it failed. Bitcoins, meaning not any cryptocurrency but just actual bitcoins, are scarce and will almost certainly remain so.
    - root_axis 6y ago
      I never said it would be bitcoin.

Erlich_Bachman 6y ago

Yep, store of value is actually a useful function for many indivudals and companies, and we are betting on that storing of value will become more and more valueable as we progress. Storing of value is not just "hoarding", useless activity. It is an important ingredient in making many of the business processes and just things work in general. It is a very impotant function. And thus if we have tools that make that function work well, - they will be valueable. And as it turns out, there aren't that many things that work well as a store of value. It's not like you can take any thing or instrument or contract or whatever else, and make it work as a store of value. In some sense, the ability to act as a store of value is scarce in itself. We already have some instruments, like gold, properties, land, etc. Stocks and ETFs and such are also kinda a store of value, but have a lot problems (but also other functions besides just storing the value). So yes, we welcome another way to store value, this market is by no means saturated as it turns out. Gold has it's own problems.

allendoerfer 6y ago
If I am investing and seeking returns I will tolerate a certain level of risk and volatility, if they are justified by the returns I am getting. If I want to store value, what I am looking to avoid at all costs is volatility and risk. That's why instituations are even accepting to lose a little bit of value in return for security by buying bonds from Northern European countries. It's kind of in the definition of the word "storing": If you want to store water you won't put your bucket of water on to a race car, even though it might drive through a heavy rain.

mrlala 6y ago

Honestly that is just bs. Gold is a physical thing that is scarce and has real uses other than being treated as 'money'. We have only mined a cube with 28 meter sides of gold from the dawn of time! It's useful- that's why it has value. If it wasn't useful (pretty for jewelry and an essential industry product) then it would be fairly worthless. You say crypto is scarce? The scarcity is artificial, and you can create an infinite number of crypto currencies...

Erlich_Bachman 6y ago
They already have created an infinite number of them. Nobody is buying them. BTC and a couple of others have the property of being valueable (which is decided in consensus by the users in the real world), while also being scarce. Nobody cares if some shitcoin on the bottom of coinmarketcap is not scarce. It is irrelevant. So yes, useful cryptocurrencies are scarce.
- the_gastropod 6y ago
  > BTC and a couple of others have the property of being valueable I'm not sure this is a rock-solid argument. Ponzi schemes also have value (until they don't). MLM's are often massively valuable, too. But most people would acknowledge they're little more than scams to the huge majority of people "invested" in them.

itsoktocry 6y ago

>It’s a Store of Value A 10 year old asset that has wild price fluctuations is a "store of value"? By what measure?

qes 6y ago
As long as you waited 4 years between storing value in Bitcoin and removing it you _always_ got more value out, no matter what point in time in Bitcoin's entire history you stored it. And not just a little bit more value.. Is an index fund a store of value? Would you recommend someone store their value there if they wanted it back out in less than 4 years? Gold? Property? Or would you suggest those stores of value are only suitable for longer time frames? How much more value does someone who stored it in Bitcoin 10 years ago have now?