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Like most posts critical of Bitcoin it ignores that - Bitcoin becomes less volatile over time - Bitcoin was less volatile than TLSA, AMZN or AAPL in 20

Like most posts critical of Bitcoin it ignores that - Bitcoin becomes less volatile over time - Bitcoin was less volatile than TLSA, AMZN or AAPL in 2020 (3-month realised volatility) [0] - Bitcoin becomes less risky over time (since despite increased incentives to "hack" it, no exploits happened) It also repeats typical nocoiner fallacies like "it has no intrinsic value" and "gold is used for jewelry", ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. New in this post was the author's stance to trust the Fed to keep inflation predictable: "as long as the Fed isn’t run by spider monkeys stacked in a trench coat, the inflation is likely to be within reasonable bounds" "well-run currencies like the USD, GBP, CAD, EUR, etc. all lose their value at a low and most importantly fairly predictible rate" However, the Fed increased M1 money supply by ~20% just in the 2 months following that blog post and by ~70% in the total of 2020 - an increase unprecedented in the history of the US dollar. 2 of the 3 dollars in your pocket have been created out of thin air in 2020. Believing that inflation rates in the next years won't spike as a result requires an amount of trust even more artificially inflated than the USD today. [0]: Daily %-change of TSLA,BTC,NFLX,AAPL,AMZN: https://imgur.com/a/mE7bSI4 https://imgur.com/a/mE7bSI4 (TSLA is green)

mrlala 6y ago
>Bitcoin becomes less volatile over time >Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) Not sure what you are smoking. Bitcoin literally just went between about 27k and 34k today. That's about a 20% swing. Ethereum had a 60% swing. Not volatile at all! Nope, nope, nope not at all.
- Bjartr 6y ago
  You have a point, but so does he, considering today took place in 2021, not 2020.
- frankenst1 6y ago
  I was talking about 3-month volatility in 2020, you are talking about daily volatility today. But even on daily %-change in 2020, BTC doesn't look different to other stocks: https://imgur.com/a/mE7bSI4 https://imgur.com/a/mE7bSI4 (the green one is TSLA by the way). Since we are talking about a company putting $400M of BTC in their balance sheets, I doubt they are worried by daily volatility.
  - incrudible 6y ago
    If Bitcoin is supposed to be a currency like the dollar, its volatility is ridiculous. If it is supposed to be a store of value, like gold, its volatility is ridiculous. Now you are retreating to stocks for a comparison. Indeed, if Bitcoin is supposed to be treated like individual stock, volatility of Bitcoin becomes reasonable, but it is still very high. That is why you do not put all your money into a single stock. You diversify, like in an index fund. Compared to an index fund, Bitcoin volatility is ridiculous. Unlike with stock, there is no index fund for cryptocurrency that is substantially less volatile than Bitcoin itself.
  - deleted 6y ago
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whimsicalism 6y ago
> Believing that inflation rates in the next years won't spike as a result requires an amount of trust even more artificially inflated than the USD today. Or just a basic understanding of monetary economics... the Fed's actions aren't an exogenous variable, they were taken precisely because of deflationary expectations in the market.
- arcticbull 6y ago
  It's really just this. All the crypto maximalism comes from people who forgot to attend ECON-101. They see the big scary market, they don't understand it, and are trying to re-invent it from first principals. As such they're just speedrunning the history of finance, and quickly finding themselves exactly where they started. They are the anti-vaxxers of finance.
  - VBprogrammer 6y ago
    If there were any greater signal that bitcoin is not a safe bet right now, my dad has started buying it. He keeps saying thinks like "if I'd have put in £100 4 years ago". I keep trying to tell him that if he'd tell me tomorrow's lottery numbers we'd be much better off but alas I think he's a lost cause.
    - hanniabu 6y ago
      "If there were any greater signal that gold is not a safe bet right now, my dad has started buying it."
      - arcticbull 6y ago
        Is gold a safe bet? Seems pretty speculative to me.
    - moonbug 6y ago
      hoo boy. I hope you aren't counting on an inheritance.
arcticbull 6y ago
- Bitcoin becomes less volatile over time - Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) - Bitcoin becomes less risky over time (since despite increased incentives to "hack" it, no exploits happened) My dude bitcoin dropped 20% last night. I'd run those numbers again if I were you.
- deleted 6y ago
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- andreygrehov 6y ago
  Here is the daily chart [1]. Can you point me at a 20% drop? [1] https://ibb.co/YpYqxH9 https://ibb.co/YpYqxH9
  - arcticbull 6y ago
    Come on, you can do better than that. Volatility isn't measured exclusively on a, what is that, weekly chart? Did you really need me to zoom in for you? https://imgur.com/a/tPV0CVa https://imgur.com/a/tPV0CVa
    - crypt1d 6y ago
      its certainly not measured on 15minute candles either ;)
      - arcticbull 6y ago
        It most certainly is. The upward movement on the daily chart is also volatility. Volatility isn't exclusively toward gravity.
    - hinkley 6y ago
      To be fair, that's a 10% drop for the day, but for me at least the argument still holds. 10% in one day is a pretty big swing, doubly so if that's a regular occurrence.
mfenniak 6y ago
> ..., ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. So, here's what I don't get about Bitcoin. Those capabilities are great. But those capabilities exist whether a Bitcoin is priced at $1 or $25,000. Why are those capabilities enough to drive the price of a Bitcoin up? To me the "value" and the "price" of Bitcoin seem to be completely unrelated, and that makes me skeptical that it is an investment. It feels like investing in a hammer -- I love what a hammer can do for me when I want to hit a nail, but that doesn't mean that the price of a hammer should be related to the house I can build with it. What am I missing?
- hisabness 6y ago
  you're missing scarcity and the idea of it at a store of value longer term. i.e. that it won't be devalued by additional printing.
  - sjsharkie 6y ago
    It's only scarce when it isn't very useful and the market has little real adoption, as now, where the only real reason 99% of people have it is speculation. If we actually needed a lot of cross border transfers, you can print an infinite amount of different coins/systems to duplicate that function (this is ignoring BTC actually has more money printing via Tether than any other "currency"). This isn't even including just having new systems for moving electronic US dollars around in Apple wallets etc, and cashing into local currency as needed through other services. Bitcoins "real" value is a storage of value, which is currently based on speculation desires of holders, which in theory could hold forever (or at least longer than you can remain solvent as a short or long enough for you to 10x or 100x so who cares) but could also disappear forever and not be missed once gone. The only moat is belief, which really who knows if that is sticky or not. There is no tangible functional moat.
    - jerry1979 6y ago
      >you can print an infinite amount of different coins/systems to duplicate that function But what does it take to bootstrap trust? The idea of conjuring instruments to move money has a long history. I found value in knowing that such a system already exists: Hawala[0] which means "transfer" or "trust". Its existence clamps, in my mind, the possibilities of the "how do we make value transfer systems" question. The Bitcoin network with its proof of work clamps the other side of that question. In some way, the altcoins and other various systems of payments exist somewhere between these two systems. [0] https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala
clarkmoody 6y ago
> 2 of the 3 dollars in your pocket Well, they're probably not in your pocket, since most of the new money goes to well-connected special interests (banks, megacorps, etc).
mbesto 6y ago
> Bitcoin becomes less volatile over time > Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) Have you got a source for both of these statements?
ForHackernews 6y ago
> Bitcoin becomes less volatile over time This is stated as an article of faith. Is there anything about bitcoin that would make this be true?
littlestymaar 6y ago
> 2 of the 3 dollars in your pocket have been created out of thin air in 2020. Dollars in your pocket (not 70%, but 100% of them) have been created out of paper, after a swap of figures on a balance sheet (that you call “thin air”). The number of paper dollar didn't increase by ~70% this year, what did is an economic aggregate called M1 which is a conventional (since the sixties) way of counting certain things. It ISN'T some fundamental value of what-money-is®. Most of the dollar every American own (their bank account, and their savings) have never been part of M1, so this money wasn't affected either. The monetary system is a complex thing, and the landscape is changing at a fast pace since 2008, which makes it even harder to graps. Unfortunately, most cryptofans didn't even try to understand it, and they keep parroting the almost 100 years-old Autrian critique of central-banking without any kind of cognitive effort: “It's obviously broken, so I'm not going to try understanding it”. For people without prejudices, interested in understanding the subject, I strongly recommend Perry G Mehrling's lecture on the Economics of Money and banking on coursera: https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking
- gnusty_gnurc 6y ago
  > and they keep parroting the almost 100 years-old Autrian critique of central-banking without any kind of cognitive effort Just naming something doesn’t invalidate it.
  - yaacov 6y ago
    Naming something tells you what to look for in the academic literature (or even Wikipedia), where you will find in this case that the academic consensus has mostly moved on from the view named here
    - gnusty_gnurc 6y ago
      > the academic consensus The academic consensus is a proxy for cultural elite; the condescending narcissists and effete. Nothing reeks of moral superiority like brushing away opposition as "uneducated."
prettygood 6y ago
- Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) He discusses volatility when it comes to currencies, and the impact a volatile currency has. It doesn't really have anything to do with the stock market.
Daniel_sk 6y ago
But you are comparing stocks to a (digital currency). Compare USD or EUR volatility to Bitcoin.
- mminer237 6y ago
  For reference, here is a chart of the last year's prices of USD, GBP, JPY, and BTC compared to the Euro: https://i.imgur.com/7OHdaWw.png https://i.imgur.com/7OHdaWw.png Bitcoin is far too volatile ever be used as money.
JamesBarney 6y ago
> Believing that inflation rates in the next years won't spike as a result requires an amount of trust even more artificially inflated than the USD today. I think I've been hearing this for the last 11 years, and haven't seen any spikes in inflation.
- Supermancho 6y ago
  There's a handy set of compounded effects at play. The inflation is pretty evident in the stock market and real-estate, which are the assets being bought up. Consumerism and efficiency in delivering consumer goods has kept pace with inflation. It's there (from QE), just not where you're measuring. It will seep into others over time (like agri) as food supply needs to increase. Luckily, with global warming, land that was good for farming and living has been affected negatively (floods, droughts, etc) allowing people, farmers and meat to move farther north. eg The cattle that now sit on the California central valley land instead of southern CA like the city of Corona. The land is relatively cheap north, much to the chagrin of Idaho natives and such, who face a deluge of immigrants with relatively vast wealth. Food subsidies and the aforementioned weather have kept food prices relatively low...although you might notice that non-McDonalds food will cost you about 10$ a meal, as food prices have doubled in 11 years. Give it a bit more time. Now that the QE has ramped up to ridiculous levels, you can sit back and watch the inflation continue at 4x instead of 2x for the most affected verticals.
  - JamesBarney 6y ago
    So inflation is usually used to describe how the reduced purchasing power of a dollar with respect to goods and services. The stock market and real estate aren't goods and services, they are assets. The price of assets can vary quite wildly based on the interest rates (Looking at a net present value calculation explains why). But these fluctuations are unrelated to fluctuations in the prices of goods and services.(i.e. inflation) Food prices definitely haven't doubled in the last 10 years. https://www.ers.usda.gov/data-products/food-price-outlook/food-price-outlook/#Consumer%20Price%20Index https://www.ers.usda.gov/data-products/food-price-outlook/fo... People complaining about inflation are usually asking us to trade a very real current harm-underemployment for a hypothetical harm that hasn't materialized in the last 13 years despite repeated warnings-inflation. This seems like a bad trade especially since mainstream macro theory says the risks of rampant surprise inflation are low.
joshspankit 6y ago
> the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV This is the (imo) fundamental intrinsic value of Bitcoin, and something that very few people seem to understand (or understand the value of).
- evouga 6y ago
  Let’s say Xi wakes up cranky (maybe somebody embeds criticism of him in the blockchain) and bans BTC throughout China. It is now illegal to operate an exchange, buy or sell Bitcoin, or run a Bitcoin node anywhere in China. ... now what? How do you “transfer money across political boundaries without censorship” into or out of China?
  - joshspankit 6y ago
    It’s also illegal to access many of the sites on this list (https://en.wikipedia.org/wiki/List_of_websites_blocked_in_mainland_China https://en.wikipedia.org/wiki/List_of_websites_blocked_in_ma...), but it still happens.
  - Sargos 6y ago
    Are you not aware that China has already done that? Multiple times in fact.
- ashtonkem 6y ago
  I get it, I also understand that the legitimate demand for that is nowhere high enough to command such prices. If you’re a Venezuelan, then Bitcoin is great for you. But there aren’t that many Venezuelans, and it seems like most of the speculators are American.
BenoitEssiambre 6y ago
"Bitcoin becomes less volatile over time" No, like gold, the more it is used as a savings asset, the more it gets tied to the real economy, the more it becomes unstable. When gold had too much ties to the real economy, it became unstable enough to cause the great depression. This happens because, people, businesses and banks start hording tokens instead of investing in building and maintaining production capacity of consumables and the ratio of value of tokens meant to buy consumables vs actual production of consumables gets out of wack. When the music stops, people realize that people are sitting on tons of seemingly valuable tokens but stuff to buy with them is getting scarce because capacity is not being maintained, they reverse their trade, prices of stuff go up, volatility ensues, and the destructive cycle resets. Savings being tied to too popular tokens instead of assets that create real value results in a massive coordination failure, a terrible Nash equilibrium, a prisoner's dilemma where the first to invest in production are disadvantaged so everyone hoards tokens instead. Companies hoarding Bitcoin is the first sign that this might be happening now. This is what central banks and sound currencies are designed to prevent.
- ionwake 6y ago
  I believe you are making incorrect extrapolations. Gold did not cause the great depression, people invested in gold after the economy crashed. If people are hoarding Bitcoin, again it will be as a hedge against the inflation that is occurring.
- chucknthem 6y ago
  fascinating take on the economic incentives, do you have any books or studies you can share if I want to learn more about it?
  - BenoitEssiambre 6y ago
    I'm not an economist but David Beckworth's blog, especially posts during and after the global financial crisis is a good starting point: https://macromarketmusings.blogspot.com/ https://macromarketmusings.blogspot.com/
justinzollars 6y ago
The huge risk that I see with Bitcoin is the introduction of capital controls. The United States, if we have a crisis may not allow capital flight. It could move against companies such as coinbase, that provide a means to move capital out of the country. These ideas are already being discussed with limits on how much and to whom you may send bitcoin to from coinbase.
- thinkmassive 6y ago
  That sounds like more of a risk with Bitcoin IOUs that are held on central exchanges, rather than with Bitcoin itself. "not your keys, not your coins"
  - rebelos 6y ago
    I think a lot of people very fond of crypto for its more anarchist features overestimate the mainstream's willingness to break from "the system". If regulations come down on exchanges or the crypto space more broadly, it will send prices into a catastrophic downward spiral. This is likely to happen earliest in vulnerable developing nations like Venezuela.
virgilp 6y ago
> ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. That BTC is not (yet?) money should again be non-controversial, since the vast majority of economic agents anywhere won't accept it directly (so you need to exchange BTC for cash first). It does have a decent claim at "store of value". But, where is the "intrinsic value"? You claim two of them: 1. ability to independently verify the money supply 2. being able to transfer money across political boundaries without censorship I don't understand either, to be honest: 1. You can verify the supply of other things (e.g. company shares) at an independent body. I'm pretty sure that's true for "money in circulation", too. Ok, the verification is not distributed, but is that distribution so valuable? Or do you actually mean "The supply is naturally-limited and nobody can easily produce tons of BTC out of thin air"? Then, yes, BTC has that property... but, tons of other things do! E.g. why not invest in amber, it's probably one of the rarest things in the universe. 2. Transfer across political boundaries: is there ANY inherent guarantee? Say US decides tomorrow that trading BTC is illegal, how would BTC protect you from that? Using existing anti-money-laundering laws & global institutions, you'd be effectively banned from getting back any value from your BTCs (or, doing so would expose you to all the associated risks).
- as300 6y ago
  > Then, yes, BTC has that property... but, tons of other things do! E.g. why not invest in amber, it's probably one of the rarest things in the universe. Yes but the amount of amber, gold, silver, etc. on Earth is a known unknown. There are presumably deposits of gold that we don't yet know about. The amount of BTC is known. You seem to be conflating rarity with fixed scarcity. > Using existing anti-money-laundering laws & global institutions, you'd be effectively banned from getting back any value from your BTCs (or, doing so would expose you to all the associated risks). While this is true, this is sort of the whole point of bitcoin. Like, it's a currency that is independent of any nation-state and acts as a sort of systemic-hedge against governmental incompetence/malfeasance. So the fact that it could even be banned by any particular country is kind of part of its value proposition. And, similar to VPN's, just because an IP-based technology is banned doesn't mean that it'd become impossible to use.
mcguire 6y ago
"Bitcoin becomes less volatile over time" Why? What is the mechanism?
- jerry1979 6y ago
  When the price of bitcoin goes up, it becomes harder for smaller amounts of money to move the market. I like to think of seeing the water rise when I step in to a bathtub versus stepping into a lake.
- nostrademons 6y ago
  More people trading it. Less liquid investments tend to be a lot more volatile, because there are fewer people with orders in the order book and fewer people paying attention to take advantage of market inefficiencies. With some altcoins you can cause a 10x increase in price with a few thousand dollars. Why? Because with a few thousand dollars, you've bought up all the supply in the order book, become the monopoly provider, and can name your price for anyone that comes around after you wanting to buy. With more participants, there's going to be someone out there that undercuts your 10x ask and offers a more reasonable price. For the statistically inclined, you could look at this as an application of the central limit theorem. One random variable (the price you're asking for an asset) could be all over the place. A million random variables (each a market participant) added together tend toward a normal distribution with the sample mean converging to the population mean.
300bps 6y ago
Other than inflation I’m not sure how the U.S. maintains let alone pays off their > $27.5 trillion in debt. Considering total tax revenue is about $3.5 trillion per year, even at ridiculously low interest rates we are spending 10% of total revenue on interest. If interest rates come anywhere near historical norms we will be spending all revenue just to pay interest.
- 542458 6y ago
  "Can the US pay it's debt?" is the wrong question. The US can pay off any amount of debt, because their debt is measured in USD and congress can issue new USD as needed. "How does the debt actually effect the economy? (Does it?)" and "What is the long-term impact of various debt-maintenance strategies?" and "Will political deadlocks prevent effective management of the debt?" (among many others) are better questions.
  - cortesoft 6y ago
    Congress can't issue USD directly.
    - 542458 6y ago
      https://constitution.congress.gov/browse/essay/artI-S8-C5-1/ALDE_00001066/ https://constitution.congress.gov/browse/essay/artI-S8-C5-1/... The constitution always congress can if they want to.
- lifty 6y ago
  The US Gov will never have an issue paying their debt because they are sovereign over the currency they use (USD). Furthermore, they have an extra advantage because the USD is the most popular reserve currency and because of this demand around the world, it's easier to maintain its value or relative strength to other currencies. That being said, long term it's not looking good for the USD. If you check the DXY index, the USD has been trending lower against a basket of currencies, and the FED had to buy a lot of treasury bills in 2020, because of lower demand from other entities. Another bad thing for the USD is the long term liabilities of the US Gov, which will only be able to be satisfied by printing dollars. (https://www.youtube.com/watch?v=YpgfIfD_cRs https://www.youtube.com/watch?v=YpgfIfD_cRs)
xiphias2 6y ago
Bitcoin has 4 year cycles because of the halvings, and it's extremely volatile, I don't think it changed. At the same time it has the best Sharpe ratio amongst all assets (gain rescaled by volatility).
cryptica 6y ago
Agreed, it's quite ridiculous seeing people who need a store of value using corporate stocks as a store of value... It's like if you need to sit and decide to use a table as a chair.
jl6 6y ago
> since despite increased incentives to "hack" it, no exploits happened Bitcoin really has been absurdly resistant to security flaws given the immense and growing incentive to break it. How is it this good when every other major software vendor in the world has to issue weekly security patches?
- Sargos 6y ago
  Bitcoin is not a software program it's a protocol. It's better to compare it to HTTP which also hasn't had exploits.
  - jl6 6y ago
    Since we’re interested in security features, an even better comparison would be with SSL, which has had many exploits. But Bitcoin also has a primary implementation which is software and that hasn’t had any major heists either.
EpicEng 6y ago
>It also repeats typical nocoiner fallacies like "it has no intrinsic value" and "gold is used for jewelry", ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. They're not fallacies; you _hope_ that someday it will be able to accomplish the goal you've described, but it certainly doesn't today, and it's price is completely based on the greater fool theory. Gold is desirable; crypto is not. It's a "currency" that isn't one and has ZERO intrinsic value.
- Siira 6y ago
  > Gold is desirable > completely based on the greater fool theory
  - EpicEng 6y ago
    >completely based on the greater fool theory No, it's not. People desire it for what it can be used for. It has some intrinsic value. Crypto has exactly zero value outside of being a store of value, and because it cannot be used as currency, it's value is determined by what it can be exchanged for in actual currency. By your logic I would think everything trades on the greater fool theory because it's only worth what someone will pay. Well, yeah, that's true across the board, but people pay for things because they see value in it. Crypto's value is only what it can be sold for.
kelchqvjpnfasjl 6y ago
I don't think the comparison to TSLA et al makes sense. Companies don't move their cash into stocks like that so it isn't something that was an alternative for this use case.
jedberg 6y ago
It's not gold that gives fiat currency value. It's the courts and their enforcement arm, the US military, that do. The reason the US dollar is valuable worldwide is because if you run into trouble, you can use the US courts to be made whole, and if that doesn't work, assuming the dollar amount is high enough, the US military or Secret Service will use violence to make you whole again. Same thing with the Euro and all the other major currencies (and even a lot of the minor ones). They have the threat of legal recourse and military violence back them. Bitcoin does not have that. If someone takes your Bitcoin, there is little recourse to be made whole again. Now maybe if the US government decided to buy up a significant amount of bitcoin, they would have an interest in using the courts and military to enforce it. But the US government doesn't like competition, so most likely they would be buying up bitcoin to get people to exchange bitcoin for dollars, making the dollar even stronger.
- likpok 6y ago
  Bitcoin does have a source of value: money laundering. That could be enough to prop up the value as new crime generates new dirty money which ensures new demand (you can include "evading capital controls" as "crime" but that won't generate dollars). That would peg the value of bitcoin with the general "dark economy", making bitcoin sort of Stripe-for-crime. The speculative and tech aspects of it provide enough of a veneer to keep authorities from entirely cracking down (though banks really really don't like touching it!). I dunno how long that can go on, it seems like eventually someone will start making stricter KYC rules and the whole thing will come tumbling down. The feds are currently sniffing around Tether, which might be the start. That or the bitcoin system invents another part of traditional finanical systems, the bank run (tether is already backed by loans and crypto neither of which will assuage depositors looking for dollars).
- Siira 6y ago
  > The reason the US dollar is valuable worldwide is because if you run into trouble, you can use the US courts to be made whole, and if that doesn't work, assuming the dollar amount is high enough, the US military or Secret Service will use violence to make you whole again. I have heard dollars are popular with crime orgs all the world over, who are unlikely to use or be able to use the dollars in US courts. Dollars are valued by people (and they exchange goods/services for it), and Americans need them to pay their taxes. > If someone takes your Bitcoin This is one big if, and it will still be prosecutable by courts, as evidenced by all the current legal cases about crypto theft. > Same thing with the Euro and all the other major currencies (and even a lot of the minor ones). They have the threat of legal recourse and military violence back them. Military might matters only so far as it defends the country and makes it possible to produce stuff that other people want. A lot of countries with good military might (e.g., North Korea) don't have valuable currencies.
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908087 6y ago
Every time I see the term "nocoiner" used in response to criticism, I automatically stop reading the rest of whatever the person who said it wrote.
tima101 6y ago
Let's see what happens when there are less people who want to buy bitcoin than people who want to sell bitcoin. Sellers without buyers will end up holding a bag of excrement. Almost no one buys it to use as a currency (except criminals) but because of fear of missing out and desire to make a quick buck.
cwkoss 6y ago
> 2 of the 3 dollars in your pocket have been created out of thin air in 2020. I'd wager a guess that most of those new dollars didn't end up in our pockets.
wbl 6y ago
Are you long TIPS spread?
lend000 6y ago
Not to mention, if you look at inflation rates by decade, the Fed has historically done a terrible job of keeping inflation rates at the 2% target level since Bretton Woods [0]. That isn't even considering that most government inflation figures don't include investment vehicles, which certainly can absorb inflation. Take the 2020 stock market for example, after the Fed injected trillions directly. Eventually some of that will trickle out into more expensive food, materials, etc. (and it already is to some extent) but for now their policy is still assuming there has only been a small amount of inflation this year. And because of the fascinating link between the mortgage market and the Fed Funds rate, commercial interest rates are shockingly low, resulting in a tremendous increase in borrowing which will further increase inflation over the next couple years. [0] https://inflationdata.com/Inflation/Inflation/DecadeInflation.asp https://inflationdata.com/Inflation/Inflation/DecadeInflatio...
Rury 6y ago
> the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. This is opinion, not a fact. The problem with bitcoin as a currency (and arguably all currencies) is that its value isn't stable, and can never be, because value is arbitrary and subject to opinion. But if you don't agree, just look at how it's deflationary. Most don't realize it, but deflationary currencies are equally problematic to inflationary currencies in that both deflation and inflation are natural drivers of inequality. Generally speaking, with inflationary currencies, the rich who get richer are those who own assets, and/or those who control the money printer. Those who are at a disadvantage, are people without a money printer who hold onto the devalued currency, and those who have fewer or no assets. With deflationary currencies it's the opposite. The rich who get richer are the hoarders and earlier adopters of the currency. Those at a disadvantage are those who own other things, and those with fewer or no amounts of the currency. As so, if the world mass adopted bitcoin, society would be no better off in terms of the problems people behold to inflationary fiat... (problems regarding inequality). But that's not to say, it wouldn't solve some problems as your statement suggests, but it also introduces new problems. As an example, your very argument above could be changed to "the inability to exchange money without a computer is probably amongst the worst intrinsic value one could hope for". Is it worse/better - again, that's subject to opinion. In short, the only reason to grab bitcoin, is so you can trade it to someone else later who thinks it has value, which means it only has or holds value because people thinks it does or will - same as anything else.
- doggosphere 6y ago
  With deflationary currencies it's the opposite. The rich who get richer are the hoarders and earlier adopters of the currency. Those at a disadvantage are those who own other things, and those with fewer or no amounts of the currency. I don't follow; how does real estate and stock become less valuable in a Bitcoin world? Or do you just mean relative to the returns on owning Bitcoin?
  - bb88 6y ago
    In a deflationary economy, holding money becomes more valuable over time, so why would anyone spend it or invest it if you're guaranteed 5% - 20% more per year by leaving it in the bank? One way to think of the economy is by money flowing between people and industries. The more the money flows the healthier the economy, as it becomes easier to create companies, get a job, etc. When the money is stagnant, it becomes harder to convince people to spend it.
benlivengood 6y ago
What can't be ignored is the ludicrous energy waste that goes into bitcoin and its speculative nature. The energy cost may go down over time as the block reward decays, but the economics of transaction fees taking over isn't totally clear yet. Block difficulty still hasn't reached stability. The speculative bubbles are a bigger problem. Bitcoin looks like at best a $5K-$10K thing in the long term (just look at the 2018 bubble). The argument was always "with limited supply bitcoin price will go to infinity!" but there isn't limited supply because bitcoin isn't the only cryptocurrency. The Bitcoin-cash split doubled the supply. Every new cryptocurrency product increases the available supply. Smart investors will diversify cryptocurrency holdings and bitcoin will eventually be priced accordingly; the cryptocurrencies that can grow appropriately with the economy will have the most stable prices. At least difficulty adjusts more frequently than the block reward decays so that it's very unlikely to have a giant crash where over-invested miners all go bankrupt on a downturn and no one bothers to mine the next block.
- Siira 6y ago
  Energy "waste" is in the eye of the beholder. The energy is doing useful work by making the system more secure (at a rough rate of 50%, which is actually rather efficient as energy consumption goes). Of course, having some better solution that doesn't need energy as its source of trust would be great, and perhaps proof-of-stake will one day work. But the fact of the matter is that there is no better alternative today, and the traditional governmental currencies don't count.
  - benlivengood 6y ago
    > But the fact of the matter is that there is no better alternative today, and the traditional governmental currencies don't count. I can spend USD almost anywhere I want at maybe a 1.5% transaction fee depending on merchant, with 1%-2% cash back (I calculated a 1.67% rebate for 2019). Technically this is only nominally government currency since it's just bank credit denominated in USD. Bitcoin's blockchain does around ~100K BTC in volume a day at ~100 BTC in fees and ~1000 BTC mined (since May) which both are effectively costs going to the miners' electricity. 1.1% vs 1.5% with cash back isn't a huge argument for bitcoin. If transaction fees stay around .1% until the block reward hits .05% then the efficiency argument eventually goes away because miners will be competing on transaction efficiency and not block rewards any more. I like the technology; it's cool and the fact that it works at all is amazing. If overall costs were closer to .1% and speculators were not the primary users it would be revolutionary.
mrnobody_67 6y ago
Anybody wanting to understand inflation vs. the CPI index should familiarize themselves with the concept of "hedonic adjustment" - The Chapwood index offers a good alternative view as to the actual cost of living - https://chapwoodindex.com https://chapwoodindex.com

mrlala 6y ago

>Bitcoin becomes less volatile over time >Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) Not sure what you are smoking. Bitcoin literally just went between about 27k and 34k today. That's about a 20% swing. Ethereum had a 60% swing. Not volatile at all! Nope, nope, nope not at all.

Bjartr 6y ago
You have a point, but so does he, considering today took place in 2021, not 2020.
frankenst1 6y ago
I was talking about 3-month volatility in 2020, you are talking about daily volatility today. But even on daily %-change in 2020, BTC doesn't look different to other stocks: https://imgur.com/a/mE7bSI4 https://imgur.com/a/mE7bSI4 (the green one is TSLA by the way). Since we are talking about a company putting $400M of BTC in their balance sheets, I doubt they are worried by daily volatility.
- incrudible 6y ago
  If Bitcoin is supposed to be a currency like the dollar, its volatility is ridiculous. If it is supposed to be a store of value, like gold, its volatility is ridiculous. Now you are retreating to stocks for a comparison. Indeed, if Bitcoin is supposed to be treated like individual stock, volatility of Bitcoin becomes reasonable, but it is still very high. That is why you do not put all your money into a single stock. You diversify, like in an index fund. Compared to an index fund, Bitcoin volatility is ridiculous. Unlike with stock, there is no index fund for cryptocurrency that is substantially less volatile than Bitcoin itself.
- deleted 6y ago
  [deleted]

whimsicalism 6y ago

> Believing that inflation rates in the next years won't spike as a result requires an amount of trust even more artificially inflated than the USD today. Or just a basic understanding of monetary economics... the Fed's actions aren't an exogenous variable, they were taken precisely because of deflationary expectations in the market.

arcticbull 6y ago
It's really just this. All the crypto maximalism comes from people who forgot to attend ECON-101. They see the big scary market, they don't understand it, and are trying to re-invent it from first principals. As such they're just speedrunning the history of finance, and quickly finding themselves exactly where they started. They are the anti-vaxxers of finance.
- VBprogrammer 6y ago
  If there were any greater signal that bitcoin is not a safe bet right now, my dad has started buying it. He keeps saying thinks like "if I'd have put in £100 4 years ago". I keep trying to tell him that if he'd tell me tomorrow's lottery numbers we'd be much better off but alas I think he's a lost cause.
  - hanniabu 6y ago
    "If there were any greater signal that gold is not a safe bet right now, my dad has started buying it."
    - arcticbull 6y ago
      Is gold a safe bet? Seems pretty speculative to me.
  - moonbug 6y ago
    hoo boy. I hope you aren't counting on an inheritance.

arcticbull 6y ago

- Bitcoin becomes less volatile over time - Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) - Bitcoin becomes less risky over time (since despite increased incentives to "hack" it, no exploits happened) My dude bitcoin dropped 20% last night. I'd run those numbers again if I were you.

deleted 6y ago
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andreygrehov 6y ago
Here is the daily chart [1]. Can you point me at a 20% drop? [1] https://ibb.co/YpYqxH9 https://ibb.co/YpYqxH9
- arcticbull 6y ago
  Come on, you can do better than that. Volatility isn't measured exclusively on a, what is that, weekly chart? Did you really need me to zoom in for you? https://imgur.com/a/tPV0CVa https://imgur.com/a/tPV0CVa
  - crypt1d 6y ago
    its certainly not measured on 15minute candles either ;)
    - arcticbull 6y ago
      It most certainly is. The upward movement on the daily chart is also volatility. Volatility isn't exclusively toward gravity.
  - hinkley 6y ago
    To be fair, that's a 10% drop for the day, but for me at least the argument still holds. 10% in one day is a pretty big swing, doubly so if that's a regular occurrence.

mfenniak 6y ago

> ..., ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. So, here's what I don't get about Bitcoin. Those capabilities are great. But those capabilities exist whether a Bitcoin is priced at $1 or $25,000. Why are those capabilities enough to drive the price of a Bitcoin up? To me the "value" and the "price" of Bitcoin seem to be completely unrelated, and that makes me skeptical that it is an investment. It feels like investing in a hammer -- I love what a hammer can do for me when I want to hit a nail, but that doesn't mean that the price of a hammer should be related to the house I can build with it. What am I missing?

hisabness 6y ago
you're missing scarcity and the idea of it at a store of value longer term. i.e. that it won't be devalued by additional printing.
- sjsharkie 6y ago
  It's only scarce when it isn't very useful and the market has little real adoption, as now, where the only real reason 99% of people have it is speculation. If we actually needed a lot of cross border transfers, you can print an infinite amount of different coins/systems to duplicate that function (this is ignoring BTC actually has more money printing via Tether than any other "currency"). This isn't even including just having new systems for moving electronic US dollars around in Apple wallets etc, and cashing into local currency as needed through other services. Bitcoins "real" value is a storage of value, which is currently based on speculation desires of holders, which in theory could hold forever (or at least longer than you can remain solvent as a short or long enough for you to 10x or 100x so who cares) but could also disappear forever and not be missed once gone. The only moat is belief, which really who knows if that is sticky or not. There is no tangible functional moat.
  - jerry1979 6y ago
    >you can print an infinite amount of different coins/systems to duplicate that function But what does it take to bootstrap trust? The idea of conjuring instruments to move money has a long history. I found value in knowing that such a system already exists: Hawala[0] which means "transfer" or "trust". Its existence clamps, in my mind, the possibilities of the "how do we make value transfer systems" question. The Bitcoin network with its proof of work clamps the other side of that question. In some way, the altcoins and other various systems of payments exist somewhere between these two systems. [0] https://en.wikipedia.org/wiki/Hawala https://en.wikipedia.org/wiki/Hawala

clarkmoody 6y ago

> 2 of the 3 dollars in your pocket Well, they're probably not in your pocket, since most of the new money goes to well-connected special interests (banks, megacorps, etc).

mbesto 6y ago

> Bitcoin becomes less volatile over time > Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) Have you got a source for both of these statements?

ForHackernews 6y ago

> Bitcoin becomes less volatile over time This is stated as an article of faith. Is there anything about bitcoin that would make this be true?

littlestymaar 6y ago

> 2 of the 3 dollars in your pocket have been created out of thin air in 2020. Dollars in your pocket (not 70%, but 100% of them) have been created out of paper, after a swap of figures on a balance sheet (that you call “thin air”). The number of paper dollar didn't increase by ~70% this year, what did is an economic aggregate called M1 which is a conventional (since the sixties) way of counting certain things. It ISN'T some fundamental value of what-money-is®. Most of the dollar every American own (their bank account, and their savings) have never been part of M1, so this money wasn't affected either. The monetary system is a complex thing, and the landscape is changing at a fast pace since 2008, which makes it even harder to graps. Unfortunately, most cryptofans didn't even try to understand it, and they keep parroting the almost 100 years-old Autrian critique of central-banking without any kind of cognitive effort: “It's obviously broken, so I'm not going to try understanding it”. For people without prejudices, interested in understanding the subject, I strongly recommend Perry G Mehrling's lecture on the Economics of Money and banking on coursera: https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking

gnusty_gnurc 6y ago
> and they keep parroting the almost 100 years-old Autrian critique of central-banking without any kind of cognitive effort Just naming something doesn’t invalidate it.
- yaacov 6y ago
  Naming something tells you what to look for in the academic literature (or even Wikipedia), where you will find in this case that the academic consensus has mostly moved on from the view named here
  - gnusty_gnurc 6y ago
    > the academic consensus The academic consensus is a proxy for cultural elite; the condescending narcissists and effete. Nothing reeks of moral superiority like brushing away opposition as "uneducated."

prettygood 6y ago

- Bitcoin was less volatile than AMZN or AAPL in 2020 (3-month realised volatility) He discusses volatility when it comes to currencies, and the impact a volatile currency has. It doesn't really have anything to do with the stock market.

Daniel_sk 6y ago

But you are comparing stocks to a (digital currency). Compare USD or EUR volatility to Bitcoin.

mminer237 6y ago
For reference, here is a chart of the last year's prices of USD, GBP, JPY, and BTC compared to the Euro: https://i.imgur.com/7OHdaWw.png https://i.imgur.com/7OHdaWw.png Bitcoin is far too volatile ever be used as money.

JamesBarney 6y ago

> Believing that inflation rates in the next years won't spike as a result requires an amount of trust even more artificially inflated than the USD today. I think I've been hearing this for the last 11 years, and haven't seen any spikes in inflation.

Supermancho 6y ago
There's a handy set of compounded effects at play. The inflation is pretty evident in the stock market and real-estate, which are the assets being bought up. Consumerism and efficiency in delivering consumer goods has kept pace with inflation. It's there (from QE), just not where you're measuring. It will seep into others over time (like agri) as food supply needs to increase. Luckily, with global warming, land that was good for farming and living has been affected negatively (floods, droughts, etc) allowing people, farmers and meat to move farther north. eg The cattle that now sit on the California central valley land instead of southern CA like the city of Corona. The land is relatively cheap north, much to the chagrin of Idaho natives and such, who face a deluge of immigrants with relatively vast wealth. Food subsidies and the aforementioned weather have kept food prices relatively low...although you might notice that non-McDonalds food will cost you about 10$ a meal, as food prices have doubled in 11 years. Give it a bit more time. Now that the QE has ramped up to ridiculous levels, you can sit back and watch the inflation continue at 4x instead of 2x for the most affected verticals.
- JamesBarney 6y ago
  So inflation is usually used to describe how the reduced purchasing power of a dollar with respect to goods and services. The stock market and real estate aren't goods and services, they are assets. The price of assets can vary quite wildly based on the interest rates (Looking at a net present value calculation explains why). But these fluctuations are unrelated to fluctuations in the prices of goods and services.(i.e. inflation) Food prices definitely haven't doubled in the last 10 years. https://www.ers.usda.gov/data-products/food-price-outlook/food-price-outlook/#Consumer%20Price%20Index https://www.ers.usda.gov/data-products/food-price-outlook/fo... People complaining about inflation are usually asking us to trade a very real current harm-underemployment for a hypothetical harm that hasn't materialized in the last 13 years despite repeated warnings-inflation. This seems like a bad trade especially since mainstream macro theory says the risks of rampant surprise inflation are low.

joshspankit 6y ago

> the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV This is the (imo) fundamental intrinsic value of Bitcoin, and something that very few people seem to understand (or understand the value of).

evouga 6y ago
Let’s say Xi wakes up cranky (maybe somebody embeds criticism of him in the blockchain) and bans BTC throughout China. It is now illegal to operate an exchange, buy or sell Bitcoin, or run a Bitcoin node anywhere in China. ... now what? How do you “transfer money across political boundaries without censorship” into or out of China?
- joshspankit 6y ago
  It’s also illegal to access many of the sites on this list (https://en.wikipedia.org/wiki/List_of_websites_blocked_in_mainland_China https://en.wikipedia.org/wiki/List_of_websites_blocked_in_ma...), but it still happens.
- Sargos 6y ago
  Are you not aware that China has already done that? Multiple times in fact.
ashtonkem 6y ago
I get it, I also understand that the legitimate demand for that is nowhere high enough to command such prices. If you’re a Venezuelan, then Bitcoin is great for you. But there aren’t that many Venezuelans, and it seems like most of the speculators are American.

BenoitEssiambre 6y ago

"Bitcoin becomes less volatile over time" No, like gold, the more it is used as a savings asset, the more it gets tied to the real economy, the more it becomes unstable. When gold had too much ties to the real economy, it became unstable enough to cause the great depression. This happens because, people, businesses and banks start hording tokens instead of investing in building and maintaining production capacity of consumables and the ratio of value of tokens meant to buy consumables vs actual production of consumables gets out of wack. When the music stops, people realize that people are sitting on tons of seemingly valuable tokens but stuff to buy with them is getting scarce because capacity is not being maintained, they reverse their trade, prices of stuff go up, volatility ensues, and the destructive cycle resets. Savings being tied to too popular tokens instead of assets that create real value results in a massive coordination failure, a terrible Nash equilibrium, a prisoner's dilemma where the first to invest in production are disadvantaged so everyone hoards tokens instead. Companies hoarding Bitcoin is the first sign that this might be happening now. This is what central banks and sound currencies are designed to prevent.

ionwake 6y ago
I believe you are making incorrect extrapolations. Gold did not cause the great depression, people invested in gold after the economy crashed. If people are hoarding Bitcoin, again it will be as a hedge against the inflation that is occurring.
chucknthem 6y ago
fascinating take on the economic incentives, do you have any books or studies you can share if I want to learn more about it?
- BenoitEssiambre 6y ago
  I'm not an economist but David Beckworth's blog, especially posts during and after the global financial crisis is a good starting point: https://macromarketmusings.blogspot.com/ https://macromarketmusings.blogspot.com/

justinzollars 6y ago

The huge risk that I see with Bitcoin is the introduction of capital controls. The United States, if we have a crisis may not allow capital flight. It could move against companies such as coinbase, that provide a means to move capital out of the country. These ideas are already being discussed with limits on how much and to whom you may send bitcoin to from coinbase.

thinkmassive 6y ago
That sounds like more of a risk with Bitcoin IOUs that are held on central exchanges, rather than with Bitcoin itself. "not your keys, not your coins"
- rebelos 6y ago
  I think a lot of people very fond of crypto for its more anarchist features overestimate the mainstream's willingness to break from "the system". If regulations come down on exchanges or the crypto space more broadly, it will send prices into a catastrophic downward spiral. This is likely to happen earliest in vulnerable developing nations like Venezuela.

virgilp 6y ago

> ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. That BTC is not (yet?) money should again be non-controversial, since the vast majority of economic agents anywhere won't accept it directly (so you need to exchange BTC for cash first). It does have a decent claim at "store of value". But, where is the "intrinsic value"? You claim two of them: 1. ability to independently verify the money supply 2. being able to transfer money across political boundaries without censorship I don't understand either, to be honest: 1. You can verify the supply of other things (e.g. company shares) at an independent body. I'm pretty sure that's true for "money in circulation", too. Ok, the verification is not distributed, but is that distribution so valuable? Or do you actually mean "The supply is naturally-limited and nobody can easily produce tons of BTC out of thin air"? Then, yes, BTC has that property... but, tons of other things do! E.g. why not invest in amber, it's probably one of the rarest things in the universe. 2. Transfer across political boundaries: is there ANY inherent guarantee? Say US decides tomorrow that trading BTC is illegal, how would BTC protect you from that? Using existing anti-money-laundering laws & global institutions, you'd be effectively banned from getting back any value from your BTCs (or, doing so would expose you to all the associated risks).

as300 6y ago
> Then, yes, BTC has that property... but, tons of other things do! E.g. why not invest in amber, it's probably one of the rarest things in the universe. Yes but the amount of amber, gold, silver, etc. on Earth is a known unknown. There are presumably deposits of gold that we don't yet know about. The amount of BTC is known. You seem to be conflating rarity with fixed scarcity. > Using existing anti-money-laundering laws & global institutions, you'd be effectively banned from getting back any value from your BTCs (or, doing so would expose you to all the associated risks). While this is true, this is sort of the whole point of bitcoin. Like, it's a currency that is independent of any nation-state and acts as a sort of systemic-hedge against governmental incompetence/malfeasance. So the fact that it could even be banned by any particular country is kind of part of its value proposition. And, similar to VPN's, just because an IP-based technology is banned doesn't mean that it'd become impossible to use.

mcguire 6y ago

"Bitcoin becomes less volatile over time" Why? What is the mechanism?

jerry1979 6y ago
When the price of bitcoin goes up, it becomes harder for smaller amounts of money to move the market. I like to think of seeing the water rise when I step in to a bathtub versus stepping into a lake.
nostrademons 6y ago
More people trading it. Less liquid investments tend to be a lot more volatile, because there are fewer people with orders in the order book and fewer people paying attention to take advantage of market inefficiencies. With some altcoins you can cause a 10x increase in price with a few thousand dollars. Why? Because with a few thousand dollars, you've bought up all the supply in the order book, become the monopoly provider, and can name your price for anyone that comes around after you wanting to buy. With more participants, there's going to be someone out there that undercuts your 10x ask and offers a more reasonable price. For the statistically inclined, you could look at this as an application of the central limit theorem. One random variable (the price you're asking for an asset) could be all over the place. A million random variables (each a market participant) added together tend toward a normal distribution with the sample mean converging to the population mean.

300bps 6y ago

Other than inflation I’m not sure how the U.S. maintains let alone pays off their > $27.5 trillion in debt. Considering total tax revenue is about $3.5 trillion per year, even at ridiculously low interest rates we are spending 10% of total revenue on interest. If interest rates come anywhere near historical norms we will be spending all revenue just to pay interest.

542458 6y ago
"Can the US pay it's debt?" is the wrong question. The US can pay off any amount of debt, because their debt is measured in USD and congress can issue new USD as needed. "How does the debt actually effect the economy? (Does it?)" and "What is the long-term impact of various debt-maintenance strategies?" and "Will political deadlocks prevent effective management of the debt?" (among many others) are better questions.
- cortesoft 6y ago
  Congress can't issue USD directly.
  - 542458 6y ago
    https://constitution.congress.gov/browse/essay/artI-S8-C5-1/ALDE_00001066/ https://constitution.congress.gov/browse/essay/artI-S8-C5-1/... The constitution always congress can if they want to.
lifty 6y ago
The US Gov will never have an issue paying their debt because they are sovereign over the currency they use (USD). Furthermore, they have an extra advantage because the USD is the most popular reserve currency and because of this demand around the world, it's easier to maintain its value or relative strength to other currencies. That being said, long term it's not looking good for the USD. If you check the DXY index, the USD has been trending lower against a basket of currencies, and the FED had to buy a lot of treasury bills in 2020, because of lower demand from other entities. Another bad thing for the USD is the long term liabilities of the US Gov, which will only be able to be satisfied by printing dollars. (https://www.youtube.com/watch?v=YpgfIfD_cRs https://www.youtube.com/watch?v=YpgfIfD_cRs)

xiphias2 6y ago

Bitcoin has 4 year cycles because of the halvings, and it's extremely volatile, I don't think it changed. At the same time it has the best Sharpe ratio amongst all assets (gain rescaled by volatility).

cryptica 6y ago

Agreed, it's quite ridiculous seeing people who need a store of value using corporate stocks as a store of value... It's like if you need to sit and decide to use a table as a chair.

jl6 6y ago

> since despite increased incentives to "hack" it, no exploits happened Bitcoin really has been absurdly resistant to security flaws given the immense and growing incentive to break it. How is it this good when every other major software vendor in the world has to issue weekly security patches?

Sargos 6y ago
Bitcoin is not a software program it's a protocol. It's better to compare it to HTTP which also hasn't had exploits.
- jl6 6y ago
  Since we’re interested in security features, an even better comparison would be with SSL, which has had many exploits. But Bitcoin also has a primary implementation which is software and that hasn’t had any major heists either.

EpicEng 6y ago

>It also repeats typical nocoiner fallacies like "it has no intrinsic value" and "gold is used for jewelry", ignoring that the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. They're not fallacies; you _hope_ that someday it will be able to accomplish the goal you've described, but it certainly doesn't today, and it's price is completely based on the greater fool theory. Gold is desirable; crypto is not. It's a "currency" that isn't one and has ZERO intrinsic value.

Siira 6y ago
> Gold is desirable > completely based on the greater fool theory
- EpicEng 6y ago
  >completely based on the greater fool theory No, it's not. People desire it for what it can be used for. It has some intrinsic value. Crypto has exactly zero value outside of being a store of value, and because it cannot be used as currency, it's value is determined by what it can be exchanged for in actual currency. By your logic I would think everything trades on the greater fool theory because it's only worth what someone will pay. Well, yeah, that's true across the board, but people pay for things because they see value in it. Crypto's value is only what it can be sold for.

kelchqvjpnfasjl 6y ago

I don't think the comparison to TSLA et al makes sense. Companies don't move their cash into stocks like that so it isn't something that was an alternative for this use case.

jedberg 6y ago

It's not gold that gives fiat currency value. It's the courts and their enforcement arm, the US military, that do. The reason the US dollar is valuable worldwide is because if you run into trouble, you can use the US courts to be made whole, and if that doesn't work, assuming the dollar amount is high enough, the US military or Secret Service will use violence to make you whole again. Same thing with the Euro and all the other major currencies (and even a lot of the minor ones). They have the threat of legal recourse and military violence back them. Bitcoin does not have that. If someone takes your Bitcoin, there is little recourse to be made whole again. Now maybe if the US government decided to buy up a significant amount of bitcoin, they would have an interest in using the courts and military to enforce it. But the US government doesn't like competition, so most likely they would be buying up bitcoin to get people to exchange bitcoin for dollars, making the dollar even stronger.

likpok 6y ago
Bitcoin does have a source of value: money laundering. That could be enough to prop up the value as new crime generates new dirty money which ensures new demand (you can include "evading capital controls" as "crime" but that won't generate dollars). That would peg the value of bitcoin with the general "dark economy", making bitcoin sort of Stripe-for-crime. The speculative and tech aspects of it provide enough of a veneer to keep authorities from entirely cracking down (though banks really really don't like touching it!). I dunno how long that can go on, it seems like eventually someone will start making stricter KYC rules and the whole thing will come tumbling down. The feds are currently sniffing around Tether, which might be the start. That or the bitcoin system invents another part of traditional finanical systems, the bank run (tether is already backed by loans and crypto neither of which will assuage depositors looking for dollars).
Siira 6y ago
> The reason the US dollar is valuable worldwide is because if you run into trouble, you can use the US courts to be made whole, and if that doesn't work, assuming the dollar amount is high enough, the US military or Secret Service will use violence to make you whole again. I have heard dollars are popular with crime orgs all the world over, who are unlikely to use or be able to use the dollars in US courts. Dollars are valued by people (and they exchange goods/services for it), and Americans need them to pay their taxes. > If someone takes your Bitcoin This is one big if, and it will still be prosecutable by courts, as evidenced by all the current legal cases about crypto theft. > Same thing with the Euro and all the other major currencies (and even a lot of the minor ones). They have the threat of legal recourse and military violence back them. Military might matters only so far as it defends the country and makes it possible to produce stuff that other people want. A lot of countries with good military might (e.g., North Korea) don't have valuable currencies.

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908087 6y ago

Every time I see the term "nocoiner" used in response to criticism, I automatically stop reading the rest of whatever the person who said it wrote.

tima101 6y ago

Let's see what happens when there are less people who want to buy bitcoin than people who want to sell bitcoin. Sellers without buyers will end up holding a bag of excrement. Almost no one buys it to use as a currency (except criminals) but because of fear of missing out and desire to make a quick buck.

cwkoss 6y ago

> 2 of the 3 dollars in your pocket have been created out of thin air in 2020. I'd wager a guess that most of those new dollars didn't end up in our pockets.

wbl 6y ago

Are you long TIPS spread?

lend000 6y ago

Not to mention, if you look at inflation rates by decade, the Fed has historically done a terrible job of keeping inflation rates at the 2% target level since Bretton Woods [0]. That isn't even considering that most government inflation figures don't include investment vehicles, which certainly can absorb inflation. Take the 2020 stock market for example, after the Fed injected trillions directly. Eventually some of that will trickle out into more expensive food, materials, etc. (and it already is to some extent) but for now their policy is still assuming there has only been a small amount of inflation this year. And because of the fascinating link between the mortgage market and the Fed Funds rate, commercial interest rates are shockingly low, resulting in a tremendous increase in borrowing which will further increase inflation over the next couple years. [0] https://inflationdata.com/Inflation/Inflation/DecadeInflation.asp https://inflationdata.com/Inflation/Inflation/DecadeInflatio...

Rury 6y ago

> the ability to independently verify the money supply and being able to transfer money across political boundaries without censorship is probably the most important intrinsic value one could hope for in a MoE/SoV. This is opinion, not a fact. The problem with bitcoin as a currency (and arguably all currencies) is that its value isn't stable, and can never be, because value is arbitrary and subject to opinion. But if you don't agree, just look at how it's deflationary. Most don't realize it, but deflationary currencies are equally problematic to inflationary currencies in that both deflation and inflation are natural drivers of inequality. Generally speaking, with inflationary currencies, the rich who get richer are those who own assets, and/or those who control the money printer. Those who are at a disadvantage, are people without a money printer who hold onto the devalued currency, and those who have fewer or no assets. With deflationary currencies it's the opposite. The rich who get richer are the hoarders and earlier adopters of the currency. Those at a disadvantage are those who own other things, and those with fewer or no amounts of the currency. As so, if the world mass adopted bitcoin, society would be no better off in terms of the problems people behold to inflationary fiat... (problems regarding inequality). But that's not to say, it wouldn't solve some problems as your statement suggests, but it also introduces new problems. As an example, your very argument above could be changed to "the inability to exchange money without a computer is probably amongst the worst intrinsic value one could hope for". Is it worse/better - again, that's subject to opinion. In short, the only reason to grab bitcoin, is so you can trade it to someone else later who thinks it has value, which means it only has or holds value because people thinks it does or will - same as anything else.

doggosphere 6y ago
With deflationary currencies it's the opposite. The rich who get richer are the hoarders and earlier adopters of the currency. Those at a disadvantage are those who own other things, and those with fewer or no amounts of the currency. I don't follow; how does real estate and stock become less valuable in a Bitcoin world? Or do you just mean relative to the returns on owning Bitcoin?
- bb88 6y ago
  In a deflationary economy, holding money becomes more valuable over time, so why would anyone spend it or invest it if you're guaranteed 5% - 20% more per year by leaving it in the bank? One way to think of the economy is by money flowing between people and industries. The more the money flows the healthier the economy, as it becomes easier to create companies, get a job, etc. When the money is stagnant, it becomes harder to convince people to spend it.

benlivengood 6y ago

What can't be ignored is the ludicrous energy waste that goes into bitcoin and its speculative nature. The energy cost may go down over time as the block reward decays, but the economics of transaction fees taking over isn't totally clear yet. Block difficulty still hasn't reached stability. The speculative bubbles are a bigger problem. Bitcoin looks like at best a $5K-$10K thing in the long term (just look at the 2018 bubble). The argument was always "with limited supply bitcoin price will go to infinity!" but there isn't limited supply because bitcoin isn't the only cryptocurrency. The Bitcoin-cash split doubled the supply. Every new cryptocurrency product increases the available supply. Smart investors will diversify cryptocurrency holdings and bitcoin will eventually be priced accordingly; the cryptocurrencies that can grow appropriately with the economy will have the most stable prices. At least difficulty adjusts more frequently than the block reward decays so that it's very unlikely to have a giant crash where over-invested miners all go bankrupt on a downturn and no one bothers to mine the next block.

Siira 6y ago
Energy "waste" is in the eye of the beholder. The energy is doing useful work by making the system more secure (at a rough rate of 50%, which is actually rather efficient as energy consumption goes). Of course, having some better solution that doesn't need energy as its source of trust would be great, and perhaps proof-of-stake will one day work. But the fact of the matter is that there is no better alternative today, and the traditional governmental currencies don't count.
- benlivengood 6y ago
  > But the fact of the matter is that there is no better alternative today, and the traditional governmental currencies don't count. I can spend USD almost anywhere I want at maybe a 1.5% transaction fee depending on merchant, with 1%-2% cash back (I calculated a 1.67% rebate for 2019). Technically this is only nominally government currency since it's just bank credit denominated in USD. Bitcoin's blockchain does around ~100K BTC in volume a day at ~100 BTC in fees and ~1000 BTC mined (since May) which both are effectively costs going to the miners' electricity. 1.1% vs 1.5% with cash back isn't a huge argument for bitcoin. If transaction fees stay around .1% until the block reward hits .05% then the efficiency argument eventually goes away because miners will be competing on transaction efficiency and not block rewards any more. I like the technology; it's cool and the fact that it works at all is amazing. If overall costs were closer to .1% and speculators were not the primary users it would be revolutionary.

mrnobody_67 6y ago

Anybody wanting to understand inflation vs. the CPI index should familiarize themselves with the concept of "hedonic adjustment" - The Chapwood index offers a good alternative view as to the actual cost of living - https://chapwoodindex.com https://chapwoodindex.com