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I'd rather invest into something that is highly volatile but almost certainly appreciates over time rather than something that depreciates at a predictable yet

I'd rather invest into something that is highly volatile but almost certainly appreciates over time rather than something that depreciates at a predictable yet increasing rate. We could discuss the fact that BTC might be overpriced or underpriced, nobody really knows. But that it's going to go up in value (in terms of purchasing power) in the long term is, black swan events aside, almost a certainty because of its engineered stock to flow. Scarcity is real whether it's physical or digital (as we've seen with art, collectibles or more recently NFTs). Gold is a good store of value because of historically predictable scarcity but it's not predictable with certainty. Bitcoin is. We'll know exactly how many bitcoins are in circulation 10 minutes, 10 days, 10 or even 100 years from now. If anything many will be lost, which will contribute to its scarcity. Will Bitcoin be replaced by something else in the future? Almost certainly. But let's not forget that unbacked cash has been around for just half a century. Even if Bitcoin is replaced by something 50, 100 years from now that's plenty of time for a couple of generations to use it as a store of value (and payment system).

Priem19 6y ago
>Even if Bitcoin is replaced by something 50, 100 years How about 5 years?
- iexplainbtc 6y ago
  Extremely unlikely. Bitcoin has been around 12 years and it's just now starting to go mainstream. Most people still have no idea what it even is. You can count the number of publicly traded companies that have Bitcoin in their treasury on 2 hands and that's only destined to increase. I can't give you an actual estimate of how long it will take for Bitcoin to lose its market share but I can confidently say it will take decades. At very least until it replaces a good chunk of gold's market cap.
  - Priem19 6y ago
    Seems like an Is/Ought Fallacy. Also, governments won't willingly surrender their control of the money supply. I think that with one stroke of a pen they could let the price /10 as fast as it went x10. Moreover, since technology is accelerating ever faster, five years from now is a lot longer than five years starting from 1980.
maclured 6y ago
The question is, will people run to it as a safe haven in the event of a huge stock market crash, or away from it? Nobody knows for sure. It's a game of chicken - not having the heritage of gold, I don't think it'd take much for people to get scared and realise that all they have are a load of strings of characters (scarce or not) and want to dump it. After all, it's crashed before. Until then, it's potentially a great investment in today's climate (especially if you don't care about the climate).
- iexplainbtc 6y ago
  > all they have are a load of strings of characters Most things valuable nowadays are strings of characters. It's not the byte sequence that's valuable, it's what it represents. Bitcoin is, conceptually speaking, an asset that is orders of magnitude better than most existing financial instruments and commodities. The fact that it's implemented using bits instead of atoms is completely irrelevant. I really don't understand this urge of breaking down anything digital into its fundamental units to try and diminish its value. It's the equivalent of evaluating anything in the physical world as "just a bunch of atoms".
  - maclured 6y ago
    > I really don't understand this urge of breaking down anything digital into its fundamental units to try and diminish its value. It's the equivalent of evaluating anything in the physical world as "just a bunch of atoms". Because in the good times, people think these things are great investments. But as soon as things go south they look at what they have from a different perspective. Something with some intrinsic value (e.g. a "bunch of atoms" that can be eaten or lived in) is likely to be much easier to rationalise holding on to in that scenario, rather than something that's only worth something due to consensus by a bunch of strangers. And that's the risk - it doesn't matter if as an individual you see great potential. If everyone else disagrees, gets scared and sells, then BTC could be battered.
    - iexplainbtc 6y ago
      Most subjectively "useless" objects are used as a store of value. Only 7/8% of gold is used in the manufacturing industry, the rest is sitting there with no active purpose other than existing. Same goes for collectibles (you can't eat or live in a baseball card or a valuable artwork). Also the "live in" is a big misconception. Real estate doesn't increase in value. What does is the land on top of which it sits. A house depreciates over time exactly like a car (prefabs on rented land are a great example of that). The only question that matters is: is Bitcoin better than commodity X? Where X can be gold, silver, oil or whatever else. And if the answer is yes there's no reason to believe it wouldn't take over X in terms of market capitalization (and, therefore, value).
notahacker 6y ago
There are many, many things other than Bitcoin which are also guaranteed to be finite in supply (more so in the case of physical goods, since they cannot be forked). BCash, most shitcoins and inactive ICO tokens, for example, are limited in supply in exactly the same way. Share certificates of bust companies are fixed in supply, and yet rarely worth more than the paper they're printed on. The creative output of every dead person is fixed in supply, and yet some dead people's work appreciates massively in value whilst others' is near worthless. Price is the interaction of supply and demand, and there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now.
- iexplainbtc 6y ago
  Yep and that's Bitcoin's network effect. There is demand for Bitcoin. 2017 was the year of retail interest, 2021 is the year of institutional interest. It's easy to see that the price is now uncorrelated with the retail interest, using Google Trends as an example. [0] > there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now Absolutely. Nobody can know with certainty what will happen but if you compare Bitcoin with something like gold you immediately realize that Bitcoin is better in any possible way. There is literally no reason to think that Bitcoin won't replace gold in terms of market capitalization (except for the 7.5% actually used in manufacturing) [1]. [0] https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=%2Fm%2F05p0rrx https://trends.google.com/trends/explore?date=today%205-y&ge... [1] https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/ https://www.statista.com/statistics/299609/gold-demand-by-in...
  - notahacker 6y ago
    > Nobody can know with certainty what will happen but if you compare Bitcoin with something like gold you immediately realize that Bitcoin is better in any possible way. Again, this is cargo-cult nonsense. Gold does not take the electricity resources of a large country to render it secure and make transactions possible. People cannot vote for a greater gold supply or fork gold, or create an alternative gold which lacks the need to use the electricity resources of a small country to secure it but is in every other respect functionally identical. Gold is pretty to look at and can be made into jewellery, not intrinsically worthless. Gold's price might be pushed higher than that intrinsic value by interest in its use as a store of value, but it's driven by millenia of desire to possess gold as a status symbol and currency substitute across a vast array of cultures, not a 12 year bull run propped up by counterfeit dollars and increasingly unrealistic claims that it will replace currency. There is literally no reason to believe that Bitcoin will ever 'replace gold in terms of market capitalization'

Priem19 6y ago

>Even if Bitcoin is replaced by something 50, 100 years How about 5 years?

iexplainbtc 6y ago
Extremely unlikely. Bitcoin has been around 12 years and it's just now starting to go mainstream. Most people still have no idea what it even is. You can count the number of publicly traded companies that have Bitcoin in their treasury on 2 hands and that's only destined to increase. I can't give you an actual estimate of how long it will take for Bitcoin to lose its market share but I can confidently say it will take decades. At very least until it replaces a good chunk of gold's market cap.
- Priem19 6y ago
  Seems like an Is/Ought Fallacy. Also, governments won't willingly surrender their control of the money supply. I think that with one stroke of a pen they could let the price /10 as fast as it went x10. Moreover, since technology is accelerating ever faster, five years from now is a lot longer than five years starting from 1980.

maclured 6y ago

The question is, will people run to it as a safe haven in the event of a huge stock market crash, or away from it? Nobody knows for sure. It's a game of chicken - not having the heritage of gold, I don't think it'd take much for people to get scared and realise that all they have are a load of strings of characters (scarce or not) and want to dump it. After all, it's crashed before. Until then, it's potentially a great investment in today's climate (especially if you don't care about the climate).

iexplainbtc 6y ago
> all they have are a load of strings of characters Most things valuable nowadays are strings of characters. It's not the byte sequence that's valuable, it's what it represents. Bitcoin is, conceptually speaking, an asset that is orders of magnitude better than most existing financial instruments and commodities. The fact that it's implemented using bits instead of atoms is completely irrelevant. I really don't understand this urge of breaking down anything digital into its fundamental units to try and diminish its value. It's the equivalent of evaluating anything in the physical world as "just a bunch of atoms".
- maclured 6y ago
  > I really don't understand this urge of breaking down anything digital into its fundamental units to try and diminish its value. It's the equivalent of evaluating anything in the physical world as "just a bunch of atoms". Because in the good times, people think these things are great investments. But as soon as things go south they look at what they have from a different perspective. Something with some intrinsic value (e.g. a "bunch of atoms" that can be eaten or lived in) is likely to be much easier to rationalise holding on to in that scenario, rather than something that's only worth something due to consensus by a bunch of strangers. And that's the risk - it doesn't matter if as an individual you see great potential. If everyone else disagrees, gets scared and sells, then BTC could be battered.
  - iexplainbtc 6y ago
    Most subjectively "useless" objects are used as a store of value. Only 7/8% of gold is used in the manufacturing industry, the rest is sitting there with no active purpose other than existing. Same goes for collectibles (you can't eat or live in a baseball card or a valuable artwork). Also the "live in" is a big misconception. Real estate doesn't increase in value. What does is the land on top of which it sits. A house depreciates over time exactly like a car (prefabs on rented land are a great example of that). The only question that matters is: is Bitcoin better than commodity X? Where X can be gold, silver, oil or whatever else. And if the answer is yes there's no reason to believe it wouldn't take over X in terms of market capitalization (and, therefore, value).

notahacker 6y ago

There are many, many things other than Bitcoin which are also guaranteed to be finite in supply (more so in the case of physical goods, since they cannot be forked). BCash, most shitcoins and inactive ICO tokens, for example, are limited in supply in exactly the same way. Share certificates of bust companies are fixed in supply, and yet rarely worth more than the paper they're printed on. The creative output of every dead person is fixed in supply, and yet some dead people's work appreciates massively in value whilst others' is near worthless. Price is the interaction of supply and demand, and there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now.

iexplainbtc 6y ago
Yep and that's Bitcoin's network effect. There is demand for Bitcoin. 2017 was the year of retail interest, 2021 is the year of institutional interest. It's easy to see that the price is now uncorrelated with the retail interest, using Google Trends as an example. [0] > there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now Absolutely. Nobody can know with certainty what will happen but if you compare Bitcoin with something like gold you immediately realize that Bitcoin is better in any possible way. There is literally no reason to think that Bitcoin won't replace gold in terms of market capitalization (except for the 7.5% actually used in manufacturing) [1]. [0] https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=%2Fm%2F05p0rrx https://trends.google.com/trends/explore?date=today%205-y&ge... [1] https://www.statista.com/statistics/299609/gold-demand-by-industry-sector-share/ https://www.statista.com/statistics/299609/gold-demand-by-in...
- notahacker 6y ago
  > Nobody can know with certainty what will happen but if you compare Bitcoin with something like gold you immediately realize that Bitcoin is better in any possible way. Again, this is cargo-cult nonsense. Gold does not take the electricity resources of a large country to render it secure and make transactions possible. People cannot vote for a greater gold supply or fork gold, or create an alternative gold which lacks the need to use the electricity resources of a small country to secure it but is in every other respect functionally identical. Gold is pretty to look at and can be made into jewellery, not intrinsically worthless. Gold's price might be pushed higher than that intrinsic value by interest in its use as a store of value, but it's driven by millenia of desire to possess gold as a status symbol and currency substitute across a vast array of cultures, not a 12 year bull run propped up by counterfeit dollars and increasingly unrealistic claims that it will replace currency. There is literally no reason to believe that Bitcoin will ever 'replace gold in terms of market capitalization'