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"with little positive effects to show for it" It's an efficient store of value. Here is a dilemma - you have 10 million dollars. You need somewhere to park you

"with little positive effects to show for it" It's an efficient store of value. Here is a dilemma - you have 10 million dollars. You need somewhere to park your money. Do you follow the Chinese businessman pattern and buy real estate in Toronto? That seems complicated - picking a property, being subject to the real estate market, etc. Often these houses sit empty, since you are on the topic of wasted resources. Do you buy gold? Gold is as useless as Bitcoin, in terms of intrinsic value, your special snowflake "industrial applications" of coating McLaren F1 engines as a heatshield and superconductivity aside. Buy stocks? How do you pick them? A financial advisor certainly won't do it properly for you. And the fed is pumping out USD. Of course USD is going to deflate. So, Bitcoin suddenly doesn't seem so useless. "is the huge energy waste" Gold takes a lot to store, secure, and transport. BTC replaces that with mining. "The second one is that it makes illegal activities easier, and at a larger scale. It's quite common right now for companies to be coerced pay millions of dollars to anonymous criminals, all enabled with cryptocurrencies." Every single transaction is on the chain. At this point they are worried that Monero is insecure. There are even conspiracy theorists saying that "the man" wants blockchain currencies as the norm due to the "nowhere to hide" policy. And yes, you can create a wallet on some hotspot, and it is "anon". But let's be honest. "Unless equally sized positive effects would emerge" It's a secure place to park cash that doesn't deflate by nature. edit: If you downvote, try to explain what you disagree with.

dmitriid 6y ago
> It's an efficient store of value. Here is a dilemma - you have 10 million dollars It's not a dilemma. At all. If you have 10 million dollars just lying around, chances are, uo already know what to do with your money. So your entire premise is based on a combination of assumptions that make it entirely laughable: - that if you have 10 million dollars, you have a problem with storing them - that in order to defend bitcoin you have to come up with an example involving no less than 10 million dollars > Do you buy gold? Gold is useless. Buy stocks? How do you pick them? Of course USD is going to deflate. Ah, I feel so sad for people who have 10 million dollars which they have to just "park". How did they ever manage to do that in the past? Oh, right. Stocks, property, securities, bonds, investments, diversified portfolios.
- throw1234651234 6y ago
  Dimas, I already clearly listed the problems with those investments, in case you didn't understand, I will repeat: Stocks - all time high during COVID-19, propped up by fed printing money. Very risk invesment atm. Property - buying real estate of any form is a very complicated process, where you get burned if you don't understand the market. Securities - same thing as stocks - unless you are trading options, features, interest rate swaps, etc. The same arguments apply, with more complexity. bonds - aka padding for mutual funds to reduce their risk with, on paper. Near-zero yields. Investments - are you going to repeat the same words that mean the same thing ad nauseum and act like it's an argument? Diversified portfolios - oh, I guess you are. Next you are going to say "Index funds" - what do I win?
  - dang 6y ago
    Please don't post in the flamewar style to HN. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - throw1234651234 6y ago
      Genuinely not my intent. This topic is bound to be controversial, but it also seems to be worth discussing for the people who are willing to take a little heat for their opinions.
      - dang 6y ago
        Ok, but intent isn't enough. You need to post in a way that isn't likely to lead to flamewars, and that responsibility grows as the topic gets more controversial. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=%22expected%20value%22%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
  - dmitriid 6y ago
    > Dimas, I would appreciate if you called me by the nickname I specifically chose for the purpose of online communication > Dimas, I already clearly listed the problems with those investments, in case you didn't understand, I will repeat: In case yo didn't understand, I will repeat: - If a person has a spare 10 million dollars they want to "park", it most likely means they already know how to manage their own money - Ask yourself: how did people manage to "park" their 10 million dollars in the ancient era of 10 years ago, before blockchain. > Diversified portfolios - oh, I guess you are. Next you are going to say "Index funds" - what do I win? You win exactly nothing. Diversified portfolios is the way to "park" money: "don't put all your eggs in one basket" and all that.
postingpals 6y ago
I disagree with the 'store of value' argument. I got into a similar argument with someone on here before, and I believe it is an insufficient economic principle to justify a currency. A good currency serves as a medium of exchange or a standard of value. Are people using bitcoin to replace USD in general? No, not really. It's not a very good medium of exchange not because of the illegal stuff but because no one knows how it works and it's messy, that's why no one buys stuff with it. They also don't know how much it's worth on average and therefore struggle to use it, bringing me to my next point... Are people using it as a standard of value? No, if I tell you a car costs 15k USD you know what that means. If I tell you it costs 1 BTC, you have no tangible idea of how to relate that to the real world because BTC's value changes sporadically. I am sure this will stabilise as crypto matures, but i dont think people should invest this much effort into something that is just going to be used as a value measurement. So back to the 'store of value' thing, why do I want people not to invest their money? Is wealth hoarding not a problem now, or do you believe that just by virtue of it existing as BTC, it's doing something good?
- chapium 6y ago
  I'd argue its storage value is capped by how efficiently you can convert it to other currencies.
- throw1234651234 6y ago
  First of all, thank you for the coherent argument. Going to start with what I think your central argument is at first. "why do I want people not to invest their money" You don't - you absolutely don't want someone to park their money in BTC and avoid spending it. It's an economic inefficiency. It's also the nature of people to hoard wealth - that's why they buy land to "sit on" and why they buy gold. Both do not have the world OR wealth distribution. That's also why in the US, we have a property tax - to keep the wealthy from hoarding all the land without generating a profit on it (assuming they aren't living on the property. Conclusion - we need, or at the very least have used stores of value throughout history that are not "investments" in the sense of efficient use of resources. "What are the benefits of BTC over existing stores of value?" ("USD" in a bank account, USD (cash), gold, and property). The ones I listed above - USD depreciates. It's trite but it's also true - you cannot hold USD without losing wealth. Gold has no intrinsic value, you have less control over the asset unless you store it in your basement (managed by third party), you cannot easily move it or transact in it. Real estate is entirely too complicated for a non-professional to invest in. Same with land. BTC does what cash was supposed to - you buy it, it sits there, it doesn't depreciate. Now, you will correctly say "No, I buy BTC at $20,000 and tomorrow it's $3,000". Completely correct and true, but the bet is that as it becomes more established it will become a more reliable store of value than a nationally backed currency, kind of like currency was when it was backed by the gold standard. Hopefully that helps you understand my viewpoint without thinking I am trying to shove my opinion down your throat, as most crypto debates go that way, and it's definitely not my intent. I don't even hold crypto, nor do I necessarily think it's "changing the world".
dralley 6y ago
A single bitcoin transaction (that is, literally one) uses as much electricity as a house consumes in several weeks. The entire system uses roughly the same amount of electricity as the country of Ireland, or Denmark. For ~300k transactions per day. No, the "huge energy waste" is so vast as to be nearly inconceivable. It cannot reasonably be compared to anything else. Even shipping literal gold around by helicopter might be more efficient.
- throw1234651234 6y ago
  I had to source check you on that. To be honest, I never really looked into it and thought the numbers were sensationalized: "Bitcoin uses as much energy as the whole of Switzerland, a new online tool from the University of Cambridge shows." https://www.bbc.com/news/technology-48853230 https://www.bbc.com/news/technology-48853230 Anyway, the BTC-enthusiast argument to that is "Well, if BTC replace banks, imagine how much money that would save." That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system. Of course, BTC is not going to replace cash/gold fully in the near future, if ever, and the cost is absurd. Nor is there a solution to this, as transaction demand will just continue driving up price. The environmental argument is one that I concede.
  - dralley 6y ago
    > Anyway, the BTC-enthusiast argument to that is "Well, if BTC replace banks, imagine how much money that would save." > That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system. There are very good counterarguments to that as well. The idea that the "banking system" functions primarily by shipping cash and gold around is nonsense. 99.9% of traditional banking nowadays happens on computer networks. The Visa network for example handles 150 million transactions per day (that is, 500x more than bitcoin) while using a tiny fraction of the electricity. When a bank in London wants to send money to a bank in New York, they don't ship a container full of gold, they send the money electronically using the SWIFT network. To the extent that cash is still physically shipped around, it's only because people still sometimes use cash to pay for things, and banks collect and distribute this cash and replace damaged bills. And your estimate of labor is similarly flawed. To begin with, the "banking system" includes an enormous amount of services that Bitcoin doesn't provide (loans, mortgages, securities), and retail banks are part of that as well. The transactional parts of banking can be (and are being) largely replaced with mobile apps and ATMs. The other aforementioned parts of banking aren't replaced by Bitcoin, so all of that labor still needs to exist. So the efficiency argument shouldn't be "what if BTC replaced banks", it should be "what if BTC replaced SWIFT, ACH, BACS, Visa network, etc." there is a value proposition here but it is much smaller than the one originally proposed.

dmitriid 6y ago

> It's an efficient store of value. Here is a dilemma - you have 10 million dollars It's not a dilemma. At all. If you have 10 million dollars just lying around, chances are, uo already know what to do with your money. So your entire premise is based on a combination of assumptions that make it entirely laughable: - that if you have 10 million dollars, you have a problem with storing them - that in order to defend bitcoin you have to come up with an example involving no less than 10 million dollars > Do you buy gold? Gold is useless. Buy stocks? How do you pick them? Of course USD is going to deflate. Ah, I feel so sad for people who have 10 million dollars which they have to just "park". How did they ever manage to do that in the past? Oh, right. Stocks, property, securities, bonds, investments, diversified portfolios.

throw1234651234 6y ago
Dimas, I already clearly listed the problems with those investments, in case you didn't understand, I will repeat: Stocks - all time high during COVID-19, propped up by fed printing money. Very risk invesment atm. Property - buying real estate of any form is a very complicated process, where you get burned if you don't understand the market. Securities - same thing as stocks - unless you are trading options, features, interest rate swaps, etc. The same arguments apply, with more complexity. bonds - aka padding for mutual funds to reduce their risk with, on paper. Near-zero yields. Investments - are you going to repeat the same words that mean the same thing ad nauseum and act like it's an argument? Diversified portfolios - oh, I guess you are. Next you are going to say "Index funds" - what do I win?
- dang 6y ago
  Please don't post in the flamewar style to HN. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - throw1234651234 6y ago
    Genuinely not my intent. This topic is bound to be controversial, but it also seems to be worth discussing for the people who are willing to take a little heat for their opinions.
    - dang 6y ago
      Ok, but intent isn't enough. You need to post in a way that isn't likely to lead to flamewars, and that responsibility grows as the topic gets more controversial. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sort=byDate&type=comment&query=%22expected%20value%22%20by:dang https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
- dmitriid 6y ago
  > Dimas, I would appreciate if you called me by the nickname I specifically chose for the purpose of online communication > Dimas, I already clearly listed the problems with those investments, in case you didn't understand, I will repeat: In case yo didn't understand, I will repeat: - If a person has a spare 10 million dollars they want to "park", it most likely means they already know how to manage their own money - Ask yourself: how did people manage to "park" their 10 million dollars in the ancient era of 10 years ago, before blockchain. > Diversified portfolios - oh, I guess you are. Next you are going to say "Index funds" - what do I win? You win exactly nothing. Diversified portfolios is the way to "park" money: "don't put all your eggs in one basket" and all that.

postingpals 6y ago

I disagree with the 'store of value' argument. I got into a similar argument with someone on here before, and I believe it is an insufficient economic principle to justify a currency. A good currency serves as a medium of exchange or a standard of value. Are people using bitcoin to replace USD in general? No, not really. It's not a very good medium of exchange not because of the illegal stuff but because no one knows how it works and it's messy, that's why no one buys stuff with it. They also don't know how much it's worth on average and therefore struggle to use it, bringing me to my next point... Are people using it as a standard of value? No, if I tell you a car costs 15k USD you know what that means. If I tell you it costs 1 BTC, you have no tangible idea of how to relate that to the real world because BTC's value changes sporadically. I am sure this will stabilise as crypto matures, but i dont think people should invest this much effort into something that is just going to be used as a value measurement. So back to the 'store of value' thing, why do I want people not to invest their money? Is wealth hoarding not a problem now, or do you believe that just by virtue of it existing as BTC, it's doing something good?

chapium 6y ago
I'd argue its storage value is capped by how efficiently you can convert it to other currencies.
throw1234651234 6y ago
First of all, thank you for the coherent argument. Going to start with what I think your central argument is at first. "why do I want people not to invest their money" You don't - you absolutely don't want someone to park their money in BTC and avoid spending it. It's an economic inefficiency. It's also the nature of people to hoard wealth - that's why they buy land to "sit on" and why they buy gold. Both do not have the world OR wealth distribution. That's also why in the US, we have a property tax - to keep the wealthy from hoarding all the land without generating a profit on it (assuming they aren't living on the property. Conclusion - we need, or at the very least have used stores of value throughout history that are not "investments" in the sense of efficient use of resources. "What are the benefits of BTC over existing stores of value?" ("USD" in a bank account, USD (cash), gold, and property). The ones I listed above - USD depreciates. It's trite but it's also true - you cannot hold USD without losing wealth. Gold has no intrinsic value, you have less control over the asset unless you store it in your basement (managed by third party), you cannot easily move it or transact in it. Real estate is entirely too complicated for a non-professional to invest in. Same with land. BTC does what cash was supposed to - you buy it, it sits there, it doesn't depreciate. Now, you will correctly say "No, I buy BTC at $20,000 and tomorrow it's $3,000". Completely correct and true, but the bet is that as it becomes more established it will become a more reliable store of value than a nationally backed currency, kind of like currency was when it was backed by the gold standard. Hopefully that helps you understand my viewpoint without thinking I am trying to shove my opinion down your throat, as most crypto debates go that way, and it's definitely not my intent. I don't even hold crypto, nor do I necessarily think it's "changing the world".

dralley 6y ago

A single bitcoin transaction (that is, literally one) uses as much electricity as a house consumes in several weeks. The entire system uses roughly the same amount of electricity as the country of Ireland, or Denmark. For ~300k transactions per day. No, the "huge energy waste" is so vast as to be nearly inconceivable. It cannot reasonably be compared to anything else. Even shipping literal gold around by helicopter might be more efficient.

throw1234651234 6y ago
I had to source check you on that. To be honest, I never really looked into it and thought the numbers were sensationalized: "Bitcoin uses as much energy as the whole of Switzerland, a new online tool from the University of Cambridge shows." https://www.bbc.com/news/technology-48853230 https://www.bbc.com/news/technology-48853230 Anyway, the BTC-enthusiast argument to that is "Well, if BTC replace banks, imagine how much money that would save." That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system. Of course, BTC is not going to replace cash/gold fully in the near future, if ever, and the cost is absurd. Nor is there a solution to this, as transaction demand will just continue driving up price. The environmental argument is one that I concede.
- dralley 6y ago
  > Anyway, the BTC-enthusiast argument to that is "Well, if BTC replace banks, imagine how much money that would save." > That argument holds some ground - think of all the armored cars, shipping containers, and facilities that serve to move and store cash and gold, as well as all the labor involved in maintaining the system. There are very good counterarguments to that as well. The idea that the "banking system" functions primarily by shipping cash and gold around is nonsense. 99.9% of traditional banking nowadays happens on computer networks. The Visa network for example handles 150 million transactions per day (that is, 500x more than bitcoin) while using a tiny fraction of the electricity. When a bank in London wants to send money to a bank in New York, they don't ship a container full of gold, they send the money electronically using the SWIFT network. To the extent that cash is still physically shipped around, it's only because people still sometimes use cash to pay for things, and banks collect and distribute this cash and replace damaged bills. And your estimate of labor is similarly flawed. To begin with, the "banking system" includes an enormous amount of services that Bitcoin doesn't provide (loans, mortgages, securities), and retail banks are part of that as well. The transactional parts of banking can be (and are being) largely replaced with mobile apps and ATMs. The other aforementioned parts of banking aren't replaced by Bitcoin, so all of that labor still needs to exist. So the efficiency argument shouldn't be "what if BTC replaced banks", it should be "what if BTC replaced SWIFT, ACH, BACS, Visa network, etc." there is a value proposition here but it is much smaller than the one originally proposed.