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Criticizing Bitcoin investment for speculation rings hollow when the majority of equity investment is speculation. Very few people invest with the intention of

Criticizing Bitcoin investment for speculation rings hollow when the majority of equity investment is speculation. Very few people invest with the intention of never selling. The news has a daily ritual of reporting the rising and falling of stock prices.

rich_sasha 6y ago
You can eat neither Bitcoin nor equities, but equities at least make things you can sell for food, even if they are overvalued. Yes, trading equities or bitcoin can both be speculation, but at least equities have an intrinsic use, that exists even if no one wants to buy them. Bitcoin without buyers is just a waste of energy. Whether Bitcoin as investment makes more sense than gold is unclear to me (though gold does have some real-world needs; probably not sufficient to justify its value), but comparing to productive assets makes no sense to me.
Rochus 6y ago
Well, when you buy shares, you buy a stake in the company, i.e. a share in the company's assets, which per se represent a value (and of course can be completely overvalued). When you buy precious metals, they also have an intrinsic value. What countervalue do you have when you buy Bitcoins?
- ryan_j_naughton 6y ago
  > When you buy precious metals, they also have an intrinsic value. There is over $7.5 Trillion in gold in reserves held by governments and institutions as a store of value. [1] Only around $17B worth of gold is used for electronics annually (~320 tons) [2]. Thus annual electronics usage is around 0.22% of the world's gold reserves. Pretending like the "intrinsic value" of gold is from its use in industry is ridiculous and ignorant. The value of gold comes from the fact that the world uses gold as a store of value -- because it does not oxidize and is relatively rare. The same attributes that make gold a good store of value make bitcoin an even better store of value -- one that isn't simply a protection against inflation but is naturally deflationary given the limited supply. [1] https://en.wikipedia.org/wiki/Gold_reserve https://en.wikipedia.org/wiki/Gold_reserve [2] https://unu.edu/news/news/only-15-of-gold-and-silver-used-in-high-tech-goods-is-recovered.html https://unu.edu/news/news/only-15-of-gold-and-silver-used-in...
  - Rochus 6y ago
    There are a lot of other precious metals than gold, some with heavy use by industry. And even if industry doesn't use a lot of gold, it has its merits; you can store it, it's persistent, and you can use it as a means of payment. Bitcoins are virtual, a promise with no government guarantee; you can't put your hands on them; they're too complicated for most people to handle, and if there's no electricity or computer networks available, there's little you can do with them.
    - randallsquared 6y ago
      You also can't put your hands on email, or videos, or most US Dollars. That doesn't mean they cannot be useful and valuable. Gold's value is based on people wanting it. Bitcoin's value is based on exactly the same thing: higher demand than supply.
      - Rochus 6y ago
        Would you bet your fortune on an email or a video? Already the monetary currency of most countries is built on sand and one is well advised not to hold all one's assets in cash. Until someone finds a formula to produce gold cheaply (like diamonds), it will continue to be a useful currency with good inflation protection; of course, you wouldn't invest your entire fortune in gold either. But with Bitcoins, we have more of a situation like we had with investment certificates; they may also protect against inflation if everything works as promised, but they can also vanish into thin air very quickly.
- alexmingoia 6y ago
  Whether an asset has cash flow is besides my point. If one buys an asset with the intention of selling later at a profit, they are speculating. It’s fine to criticize speculators, but my point is it is not exclusive to Bitcoin. The majority of all stock investing is speculation. Very few investors buy stock purely for dividends with no care for whether the price will rise or fall. If Bitcoin is a “ponzi” because buyers are hoping to profit from rising price, then the stock market is also a “ponzi.”
aww_dang 6y ago
There is a passionate dislike of Peter Schiff within the BTC community. Grayscale, a BTC ETF launched a "drop gold" marketing campaign. Gold would be an example of exactly the kind of investment people buy and hold. There are also dividend investors and critics of today's high valuations, buybacks, et cetera. Stocks are an interest in a company that in ideal terms should be creating value. Bitcoin is a medium of exchange at best. Even if you accept that it is a store of value, that is distinct from a company that turns profits. I don't disagree that there are plenty of shenanigans going around, but nor do I accept that as excusing the problems with BTC.
audunw 6y ago
> Criticizing Bitcoin investment for speculation rings hollow when the majority of equity investment is speculation. Very few people invest with the intention of never selling. That's true. But there are plenty of investors who are conscious about what the investments are used for AS WELL. I mainly buy stocks in renewables and technology. A big part of that is that I feel like I know enough there to make informed investments that'll generate some return. But it's also because I want companies making renewable energy solutions to have access to capital, because I believe that what they're doing is good for the world. As long as my returns are equal or better than interest in my savings account, I'm happy. There's a lot of people only focusing on pure speculation too. They serve a purpose in making stocks more liquid. But that alone is not the point of the stock market. If it was it'd be banned by now. This is the main reason why I'm not buying BitCoin. I don't see what good the money I'm putting in will do in the economy.

rich_sasha 6y ago

You can eat neither Bitcoin nor equities, but equities at least make things you can sell for food, even if they are overvalued. Yes, trading equities or bitcoin can both be speculation, but at least equities have an intrinsic use, that exists even if no one wants to buy them. Bitcoin without buyers is just a waste of energy. Whether Bitcoin as investment makes more sense than gold is unclear to me (though gold does have some real-world needs; probably not sufficient to justify its value), but comparing to productive assets makes no sense to me.

Rochus 6y ago

Well, when you buy shares, you buy a stake in the company, i.e. a share in the company's assets, which per se represent a value (and of course can be completely overvalued). When you buy precious metals, they also have an intrinsic value. What countervalue do you have when you buy Bitcoins?

ryan_j_naughton 6y ago
> When you buy precious metals, they also have an intrinsic value. There is over $7.5 Trillion in gold in reserves held by governments and institutions as a store of value. [1] Only around $17B worth of gold is used for electronics annually (~320 tons) [2]. Thus annual electronics usage is around 0.22% of the world's gold reserves. Pretending like the "intrinsic value" of gold is from its use in industry is ridiculous and ignorant. The value of gold comes from the fact that the world uses gold as a store of value -- because it does not oxidize and is relatively rare. The same attributes that make gold a good store of value make bitcoin an even better store of value -- one that isn't simply a protection against inflation but is naturally deflationary given the limited supply. [1] https://en.wikipedia.org/wiki/Gold_reserve https://en.wikipedia.org/wiki/Gold_reserve [2] https://unu.edu/news/news/only-15-of-gold-and-silver-used-in-high-tech-goods-is-recovered.html https://unu.edu/news/news/only-15-of-gold-and-silver-used-in...
- Rochus 6y ago
  There are a lot of other precious metals than gold, some with heavy use by industry. And even if industry doesn't use a lot of gold, it has its merits; you can store it, it's persistent, and you can use it as a means of payment. Bitcoins are virtual, a promise with no government guarantee; you can't put your hands on them; they're too complicated for most people to handle, and if there's no electricity or computer networks available, there's little you can do with them.
  - randallsquared 6y ago
    You also can't put your hands on email, or videos, or most US Dollars. That doesn't mean they cannot be useful and valuable. Gold's value is based on people wanting it. Bitcoin's value is based on exactly the same thing: higher demand than supply.
    - Rochus 6y ago
      Would you bet your fortune on an email or a video? Already the monetary currency of most countries is built on sand and one is well advised not to hold all one's assets in cash. Until someone finds a formula to produce gold cheaply (like diamonds), it will continue to be a useful currency with good inflation protection; of course, you wouldn't invest your entire fortune in gold either. But with Bitcoins, we have more of a situation like we had with investment certificates; they may also protect against inflation if everything works as promised, but they can also vanish into thin air very quickly.
alexmingoia 6y ago
Whether an asset has cash flow is besides my point. If one buys an asset with the intention of selling later at a profit, they are speculating. It’s fine to criticize speculators, but my point is it is not exclusive to Bitcoin. The majority of all stock investing is speculation. Very few investors buy stock purely for dividends with no care for whether the price will rise or fall. If Bitcoin is a “ponzi” because buyers are hoping to profit from rising price, then the stock market is also a “ponzi.”

aww_dang 6y ago

There is a passionate dislike of Peter Schiff within the BTC community. Grayscale, a BTC ETF launched a "drop gold" marketing campaign. Gold would be an example of exactly the kind of investment people buy and hold. There are also dividend investors and critics of today's high valuations, buybacks, et cetera. Stocks are an interest in a company that in ideal terms should be creating value. Bitcoin is a medium of exchange at best. Even if you accept that it is a store of value, that is distinct from a company that turns profits. I don't disagree that there are plenty of shenanigans going around, but nor do I accept that as excusing the problems with BTC.

audunw 6y ago

> Criticizing Bitcoin investment for speculation rings hollow when the majority of equity investment is speculation. Very few people invest with the intention of never selling. That's true. But there are plenty of investors who are conscious about what the investments are used for AS WELL. I mainly buy stocks in renewables and technology. A big part of that is that I feel like I know enough there to make informed investments that'll generate some return. But it's also because I want companies making renewable energy solutions to have access to capital, because I believe that what they're doing is good for the world. As long as my returns are equal or better than interest in my savings account, I'm happy. There's a lot of people only focusing on pure speculation too. They serve a purpose in making stocks more liquid. But that alone is not the point of the stock market. If it was it'd be banned by now. This is the main reason why I'm not buying BitCoin. I don't see what good the money I'm putting in will do in the economy.