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> “The only good use cases that come to mind is if there is some particular reason for you to evade the conventional and easier systems of communication and sto
by mlthoughts2018 6y ago
> “The only good use cases that come to mind is if there is some particular reason for you to evade the conventional and easier systems of communication and storage.”
This is the number one model for valuation of Bitcoin-like cryptocurrencies. Say you live in Venezuela and dealing with custodial intermediaries in your local fiat currency is completely untenable. You can’t store money in gold or other precious metals. You can’t keep it in a bank account. You can’t transfer it (with fees) in a foreign exchange market.
All these things require dependency on the local fiat currency (plus more for custodial fees if dealing with anything like gold or stocks or bonds), not even factoring in issues of the fiat currency’s own extreme volatility and transaction fees. Banks being trusted central parties or Visa being able to process 40k transactions per second sure won’t mean shit to you at that point.
But with Bitcoin you can drive across the border and actually buy milk or medicine, no fiat currency involved. You’ll happily see the volatility and slow transaction process / high fees as a worthwhile overhead cost for independent purchasing power outside of your local fiat currency.
Now, of course this is a rare and small use case by volume and by market cap in comparison to normal functioning fiat currencies. At any given time only a small amount of the world demand for financial transactions would fall in some destabilized government zone where independence from local fiat currency is materially important and having a preemptive stock of cryptocurrency holdings really matters. And somewhat lesser there will be some small market for people with extreme risk aversion preferences or “prepper” outlook (eg, “What if the US dollar collapses?” - most of us don’t care to hedge that extreme tail risk, but some people do care).
The total demand for currency holdings like this will obviously be much lower than any total market cap of a major fiat currency.
But it may still be higher than the total market cap of cryptocurrency today - that completely depends on your personal take on forecasting and speculating.
In other words, there are several straightforward and uncontroversial reasons why buying and holding cryptocurrency rationally makes sense. You could happen to be wrong about the speculative future demand for this type of transaction capability. You could be wrong in the magnitude of the forecast. But being wrong doesn’t make it irrational hype or conceptually broken from first principles, as you foolishly assert. There are many very uncontroversial, directly obvious and rational reasons to speculatively buy and hold crypto, depending on your personal appraisal of that market and future demand for that transaction capability.
- selestify 6y ago> You’ll happily see the volatility and slow transaction process / high fees as a worthwhile overhead cost for independent purchasing power outside of your local fiat currency. Don’t stablecoins solve the volatility problem, and NANO solves the slowness/transaction speed aspect? Granted, these features can’t be combined just yet. But they are available separately
- africanboy 6y ago> But with Bitcoin you can drive across the border and actually buy milk or medicine, no fiat currency involved. I still don't understand why the government of Venezuela is so bad that it's literally leaving their people without the necessary means to buy milk, where "government has been able to partially block internet access to citizens by using a system that allows them to restrict selected content that may threaten their power over the country" but allows people to use untraced bitcoins...
- mlthoughts2018 6y agoBy what means can a government restrict use of Bitcoins that you hold in your own hardware wallet? You can run your own VPN at home. I don’t believe it would ever be practical for any government, of any size or sophistication, to prevent use of Bitcoins. Governments are deeply incapable of stopping even just basic crimes and fraud. If they can’t stop overtly criminal acts often committed with no technology to assist in obfuscation, why would anyone believe they can (a) detect network traffic somehow related to Bitcoin and (b) trace it back to an individual and (c) prove that individual has broken some law? Let alone to do this to perfectly law-abiding citizens conducting perfectly legal purchase of Bitcoin. Your point is very bizarre to me. Are you suggesting a government so incapable of managing fiscal activities that it descends into hyperinflation crisis is somehow magically super competent at extremely bespoke and difficult internet traffic surveillance of legal cryptocurrency transactions they have no reason to need to invest in expensive capabilities to monitor in the first place?
- africanboy 6y ago> You can run your own VPN at home. they can block VPN traffic > Governments are deeply incapable of stopping even just basic crimes and fraud that's just silly in my countries there are 270 homicides every year on a population of 60 million people do you think it's luck? > detect network traffic somehow related to Bitcoin because it's stupid easy > prove that individual has broken some law? do you really believe that in places like Iran or North Korea they really need to prove individuals broke some law? > Are you suggesting a government so incapable of managing fiscal activities that it descends into hyperinflation crisis is somehow magically super competent if they are so incompetent, why are they in charge then? if they are so incompetent, how did they manage to censor any media channel, including the internet? remember that "poor" countries aren't really poor, regimes keep the population in poverty but they still handle a ton of money.