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Bitcoin is used as a speculative investment today only because it is so underpriced. Once its value stabilizes, its use in day to day transactions will grow. >

Bitcoin is used as a speculative investment today only because it is so underpriced. Once its value stabilizes, its use in day to day transactions will grow. > Should also note that MasterCard crypto transactions almost certainly won’t be settled on the blockchain. And neither are USD transactions. In fact, USD doesn't even have a blockchain! The great thing with Bitcoin is once you want to cash out your Bitcoin, you can take it with you "on chain" without any intermediary (and it's a bit more convenient than carrying bags of cash).

steeve 6y ago
How can it stabilize when it has a fixed amount of BTC?
- anm89 6y ago
  No currencies are "stable" inflationary, deflationary or neutral. Stabilize means that volatility reduces, not ceases to exist.
  - arcticbull 6y ago
    Yes there are, thanks to positive control from central banks. That's the point of central banks. Provide and maintain stability through the active expansion and contraction of supply against an index.
    - anm89 6y ago
      Show me a currency that has the exact same inflation figures every month for a single year and I'll send you a bitcoin. Or alternately, just view a currency index like the DXY to see very closely that nothing comes close to this. Here is what some real inflation data looks like (as viewedin terms of CPI). It can't even decide if it wants to stay positive or negative on a monthly basis. https://tradingeconomics.com/euro-area/inflation-rate-mom https://tradingeconomics.com/euro-area/inflation-rate-mom
      - arcticbull 6y ago
        > Show me a currency that has the exact same inflation figures every month for a single year and I'll send you a bitcoin. That's strictly not a goal. The goal is a long-to-medium term target average. > Or alternately, just view a currency index like the DXY to see very closely that nothing comes close to this. DXY has little to do with domestic spending power, only the relative strength of one currency compared to a basket of other foreign currencies when spending abroad. High vs low DXY measures the relative pricing of imports vs exports. Strong dollar means cheaper imports. Weak dollar means more competitive exports. This isn't really inflation related, it's a separate target. After all, I believe every central bank in the DXY basket has the same inflation targets to within a reasonable band. [1] People overwhelmingly spend within the country not abroad. > It can't even decide if it wants to stay positive or negative on a monthly basis. That monetary policy takes time to be reflected in measurements in a multi-trillion dollar system isn't a bug. The data you show me looks pretty. darn. good. > ... and I'll send you a bitcoin. Please don't. I care about the earth too much to have you blow 22 days (650kWh) of electricity and 100g of e-waste on you sending me one. If I wanted a Bitcoin I'd have plenty. You're welcome to sell it at an exchange, and donate the proceeds to an environmental organization like Ducks Unlimited [2]. That of course has the double effect of reducing the price, which reduces the quantity of electricity wasted on its production and security, which reduces CO2 emissions -- while also saving the wetlands. [1] https://www.investopedia.com/terms/u/usdx.asp#:~:text=The%20U.S.%20dollar%20index%20(USDX)%20is%20a%20measure%20of%20the,from%20the%20same%20major%20currencies https://www.investopedia.com/terms/u/usdx.asp#:~:text=The%20.... [2] https://www.ducks.org/support/donateOnlineSecureN2-HCT.aspx?promoKey=HabitatCamoTumbler&ID=9835&poe=GooglePPC&gclid=Cj0KCQiAyJOBBhDCARIsAJG2h5f6RXPuTWUWfHKFQxqr-X-zlGQFIV4zhk_SKhWSx3nGzX323gH20gMaAnu3EALw_wcB&gclsrc=aw.ds https://www.ducks.org/support/donateOnlineSecureN2-HCT.aspx?...
        anm89 6y ago
        You still haven't provided any data of any country showing consistent inflation. Hell, do it over a 10 year period annually. You still can't. No bitcoin for you and the wetlands.
        6y ago
- jrwr 6y ago
  Also, The fixed amount is a rule that has not been hit yet. It can be changed is software as nothing on chain prevents more then the total allowed BTC. its just a good idea that the amount of BTC is limited.
lottin 6y ago
Since bitcoin doesn't produce income and it's not backed by anything there is no way to tell whether it's 'underpriced'.
- PragmaticPulp 6y ago
  It’s ironic that the best bull case for Bitcoin is that maybe it’s so devoid of actual use cases that no one can tell if it’s overpriced relative to its (lack of) utility.
  - arcticbull 6y ago
    Remember that in the near term the block reward is fixed in BTC and variable in electricity costs. The more expensive BTC, the more power is wasted mining. The BTC has to be sold off as its mined and paid to electric companies. To sustain this selling, more new money has to come in as a function of price to retain stability. At current price and block reward, Tesla's investment of $1.5B pays only 6 weeks of electric bills.
agentdrtran 6y ago
"Once its value stabilizes, its use in day to day transactions will grow." and how will it grow when it's a fixed amount of currency with a fixed amount of transactions per second?
- nemo44x 6y ago
  You can divide it over and over. The source code is a living document and transaction speed can be implemented either off chain, in the code base itself, or otherwise. It’s weird to see so many opinions on this website that think BTC is a static thing that can’t or won’t adopt useful pull requests that miners agree are useful. It’s like if it were the mid-90’s and everyone was just as skeptical of e-commerce of the web in general. Useful things get better.
  - ryder9 6y ago
    except it charged me to use money, my credit card gives me 1-2% back from all the money I spent... why would I ever use bitcoin in any normal transactions? also, why would I buy bitcoin to spend it if it's so volatile it can depreciate 10-20% in a day?
  - zucker42 6y ago
    > in the code base itself There was a fierce debate that lead to a hard fork over increasing transaction throughput by raising the block size, so I think it's really not a given that BTC will change to increase transaction speed. Also, one problem people have with Bitcoin is that the idea of every node of the network storing and processing every transaction is fundamentally not scalabe. Sure BTC can change and adapt, but it's hard to overcome a fundamental design shortcoming.
    - nemo44x 6y ago
      Right and look at the result - Bitcoin Cash is a failure. This is true democracy. We tested both solutions and the champion still stands. When there is incentive (if there ever is) then miners will adopt changes that make sense. But you need a true consensus. This built in conservatism is a great feature of BTC.
EGreg 6y ago
False. It will never be a mainstream medium of exchange because its block size can only handle 10 transactions per second. It will be a reserve asset, used to back actual payment systems. And eventually other newer technologies will supplant it, as long as there are “synthetic bitcoins” that can be on that new network, crypto collateralized. If that new network launches as a sidechain though, then free unstaked BTC will be a perpetually dwindling amount of coins, and perpetually going up in price like collectibles or gold. With no other thing giving them value other than everyone else wanting it, and the miners / HODLers shilling it. It is a perfect investmen vehicle, it can go to $50 Billion a free coin once most coins are staked in other things. So, ironically, competitors better in every way will drive up the price for those who don’t switch and keeo HODLing for decades. And mining rewards will be worth so much that electricity will be wasted on a bigger and bigger scale until people can’t afford to power their homes since bitcoin mining makes more $. It’s sad... but where is the flaw in the logic
- kristianp 6y ago
  That new network has existed for years, the lightning network.
raiyu 6y ago
Bitcoin is used as a speculative instrument because by definition it is deflationary. Which means it is more expensive to buy something with it today, then tomorrow. Just look at Chamath's tweet about how he bought a property for Bitcoin in 2014 for $1.4MM but today that same amount of bitcoin would be $100MM+ https://markets.businessinsider.com/currencies/news/chamath-palihapitiya-bitcoin-land-investmet-loss-porn-btc-tesla-2021-2-1030067864 https://markets.businessinsider.com/currencies/news/chamath-... This creates an environment there is never a reason to use the currency for a purchase, strictly because it's supply is completely limited and never increasing over time. Since the world economy continues to grow as GDP, output, and the population grows, it stands to reason that if Bitcoin in any way parallels our real world economic scenario, it would continue to rise in price per unit, because the overall GDP continues to increase. As a result, it in fact never stabilizes, unless overall GDP stops growing. Since it never stops growing, it never makes sense to use it for a purchase, and so you have a flywheel effect of ever increasing upward price pressure.
- BenoitEssiambre 6y ago
  And this can go on until GDP is forced to shrink because people and businesses are all hoarding crypto tokens instead of participating in the real economy. This happened almost a hundred years ago when the world got too excited about gold. It' scary to think it could happen again with cryptocoins.
  - jkepler 6y ago
    What historical period are you referring to? If you look at the first 200 years of US history, for example, there was plenty of real world growth on spite of slow price deflation. Gold and silver jointly backed the banking system until the Federal reserve started the current USD system in 1913. In much of the rest of the world, the 40 years prior to WW1 were largely characterized by economic growth, while on an international (albeit decentralized on a national level) gold standard. What event are you thinking if?
    - BenoitEssiambre 6y ago

steeve 6y ago

How can it stabilize when it has a fixed amount of BTC?

anm89 6y ago
No currencies are "stable" inflationary, deflationary or neutral. Stabilize means that volatility reduces, not ceases to exist.
- arcticbull 6y ago
  Yes there are, thanks to positive control from central banks. That's the point of central banks. Provide and maintain stability through the active expansion and contraction of supply against an index.
  - anm89 6y ago
    Show me a currency that has the exact same inflation figures every month for a single year and I'll send you a bitcoin. Or alternately, just view a currency index like the DXY to see very closely that nothing comes close to this. Here is what some real inflation data looks like (as viewedin terms of CPI). It can't even decide if it wants to stay positive or negative on a monthly basis. https://tradingeconomics.com/euro-area/inflation-rate-mom https://tradingeconomics.com/euro-area/inflation-rate-mom
    - arcticbull 6y ago
      > Show me a currency that has the exact same inflation figures every month for a single year and I'll send you a bitcoin. That's strictly not a goal. The goal is a long-to-medium term target average. > Or alternately, just view a currency index like the DXY to see very closely that nothing comes close to this. DXY has little to do with domestic spending power, only the relative strength of one currency compared to a basket of other foreign currencies when spending abroad. High vs low DXY measures the relative pricing of imports vs exports. Strong dollar means cheaper imports. Weak dollar means more competitive exports. This isn't really inflation related, it's a separate target. After all, I believe every central bank in the DXY basket has the same inflation targets to within a reasonable band. [1] People overwhelmingly spend within the country not abroad. > It can't even decide if it wants to stay positive or negative on a monthly basis. That monetary policy takes time to be reflected in measurements in a multi-trillion dollar system isn't a bug. The data you show me looks pretty. darn. good. > ... and I'll send you a bitcoin. Please don't. I care about the earth too much to have you blow 22 days (650kWh) of electricity and 100g of e-waste on you sending me one. If I wanted a Bitcoin I'd have plenty. You're welcome to sell it at an exchange, and donate the proceeds to an environmental organization like Ducks Unlimited [2]. That of course has the double effect of reducing the price, which reduces the quantity of electricity wasted on its production and security, which reduces CO2 emissions -- while also saving the wetlands. [1] https://www.investopedia.com/terms/u/usdx.asp#:~:text=The%20U.S.%20dollar%20index%20(USDX)%20is%20a%20measure%20of%20the,from%20the%20same%20major%20currencies https://www.investopedia.com/terms/u/usdx.asp#:~:text=The%20.... [2] https://www.ducks.org/support/donateOnlineSecureN2-HCT.aspx?promoKey=HabitatCamoTumbler&ID=9835&poe=GooglePPC&gclid=Cj0KCQiAyJOBBhDCARIsAJG2h5f6RXPuTWUWfHKFQxqr-X-zlGQFIV4zhk_SKhWSx3nGzX323gH20gMaAnu3EALw_wcB&gclsrc=aw.ds https://www.ducks.org/support/donateOnlineSecureN2-HCT.aspx?...
      - anm89 6y ago
        You still haven't provided any data of any country showing consistent inflation. Hell, do it over a 10 year period annually. You still can't. No bitcoin for you and the wetlands.
        6y ago
jrwr 6y ago
Also, The fixed amount is a rule that has not been hit yet. It can be changed is software as nothing on chain prevents more then the total allowed BTC. its just a good idea that the amount of BTC is limited.

lottin 6y ago

Since bitcoin doesn't produce income and it's not backed by anything there is no way to tell whether it's 'underpriced'.

PragmaticPulp 6y ago
It’s ironic that the best bull case for Bitcoin is that maybe it’s so devoid of actual use cases that no one can tell if it’s overpriced relative to its (lack of) utility.
- arcticbull 6y ago
  Remember that in the near term the block reward is fixed in BTC and variable in electricity costs. The more expensive BTC, the more power is wasted mining. The BTC has to be sold off as its mined and paid to electric companies. To sustain this selling, more new money has to come in as a function of price to retain stability. At current price and block reward, Tesla's investment of $1.5B pays only 6 weeks of electric bills.

agentdrtran 6y ago

"Once its value stabilizes, its use in day to day transactions will grow." and how will it grow when it's a fixed amount of currency with a fixed amount of transactions per second?

nemo44x 6y ago
You can divide it over and over. The source code is a living document and transaction speed can be implemented either off chain, in the code base itself, or otherwise. It’s weird to see so many opinions on this website that think BTC is a static thing that can’t or won’t adopt useful pull requests that miners agree are useful. It’s like if it were the mid-90’s and everyone was just as skeptical of e-commerce of the web in general. Useful things get better.
- ryder9 6y ago
  except it charged me to use money, my credit card gives me 1-2% back from all the money I spent... why would I ever use bitcoin in any normal transactions? also, why would I buy bitcoin to spend it if it's so volatile it can depreciate 10-20% in a day?
- zucker42 6y ago
  > in the code base itself There was a fierce debate that lead to a hard fork over increasing transaction throughput by raising the block size, so I think it's really not a given that BTC will change to increase transaction speed. Also, one problem people have with Bitcoin is that the idea of every node of the network storing and processing every transaction is fundamentally not scalabe. Sure BTC can change and adapt, but it's hard to overcome a fundamental design shortcoming.
  - nemo44x 6y ago
    Right and look at the result - Bitcoin Cash is a failure. This is true democracy. We tested both solutions and the champion still stands. When there is incentive (if there ever is) then miners will adopt changes that make sense. But you need a true consensus. This built in conservatism is a great feature of BTC.

EGreg 6y ago

False. It will never be a mainstream medium of exchange because its block size can only handle 10 transactions per second. It will be a reserve asset, used to back actual payment systems. And eventually other newer technologies will supplant it, as long as there are “synthetic bitcoins” that can be on that new network, crypto collateralized. If that new network launches as a sidechain though, then free unstaked BTC will be a perpetually dwindling amount of coins, and perpetually going up in price like collectibles or gold. With no other thing giving them value other than everyone else wanting it, and the miners / HODLers shilling it. It is a perfect investmen vehicle, it can go to $50 Billion a free coin once most coins are staked in other things. So, ironically, competitors better in every way will drive up the price for those who don’t switch and keeo HODLing for decades. And mining rewards will be worth so much that electricity will be wasted on a bigger and bigger scale until people can’t afford to power their homes since bitcoin mining makes more $. It’s sad... but where is the flaw in the logic

kristianp 6y ago
That new network has existed for years, the lightning network.

raiyu 6y ago

Bitcoin is used as a speculative instrument because by definition it is deflationary. Which means it is more expensive to buy something with it today, then tomorrow. Just look at Chamath's tweet about how he bought a property for Bitcoin in 2014 for $1.4MM but today that same amount of bitcoin would be $100MM+ https://markets.businessinsider.com/currencies/news/chamath-palihapitiya-bitcoin-land-investmet-loss-porn-btc-tesla-2021-2-1030067864 https://markets.businessinsider.com/currencies/news/chamath-... This creates an environment there is never a reason to use the currency for a purchase, strictly because it's supply is completely limited and never increasing over time. Since the world economy continues to grow as GDP, output, and the population grows, it stands to reason that if Bitcoin in any way parallels our real world economic scenario, it would continue to rise in price per unit, because the overall GDP continues to increase. As a result, it in fact never stabilizes, unless overall GDP stops growing. Since it never stops growing, it never makes sense to use it for a purchase, and so you have a flywheel effect of ever increasing upward price pressure.

BenoitEssiambre 6y ago
And this can go on until GDP is forced to shrink because people and businesses are all hoarding crypto tokens instead of participating in the real economy. This happened almost a hundred years ago when the world got too excited about gold. It' scary to think it could happen again with cryptocoins.
- jkepler 6y ago
  What historical period are you referring to? If you look at the first 200 years of US history, for example, there was plenty of real world growth on spite of slow price deflation. Gold and silver jointly backed the banking system until the Federal reserve started the current USD system in 1913. In much of the rest of the world, the 40 years prior to WW1 were largely characterized by economic growth, while on an international (albeit decentralized on a national level) gold standard. What event are you thinking if?
  - BenoitEssiambre 6y ago