6 ms·

That it is a hedge against inflation because of the network effect and vice versa.

by adhoc32 6y ago

UncleMeat 6y ago
Isn’t everything other than cash a hedge against inflation?
- anm89 6y ago
  Yes but not equally.
- adhoc32 6y ago
  no, a car for example devaluates over time.
  - PragmaticPulp 6y ago
    Driving a car devalues it, because you're using up the utility and extracting value from it. If you buy a car and treat it like an investment (don't drive it, store it properly, keep it maintained) it behaves like an investment. Depending on the car and the market, the value goes up substantially. Here's an example of a 2000 Honda Civic selling for $50,000 USD : https://bringatrailer.com/listing/2000-honda-civic-27/ https://bringatrailer.com/listing/2000-honda-civic-27/ Bitcoiners like to emphasize Bitcoin's limited supply, but Bitcoin is hardly the only thing in life with a limited supply. There will never be any more 2000 Honda Civics, for example.
    - adhoc32 6y ago
      Sure, but it costs money to store it and maintain it in a good shape. Also try sending the equivalent value of 100$ using a Honda Civic. Barter economy is impractical.
    - choward 6y ago
      This seems like an example of survivorship bias. That Honda is an outlier. Not every car will go up that much if at all. Hondas are known for reliability but it takes time to know if a car model is reliable and not a lemon. The purchase price of that car would have been $27,320.28 in today's dollars. Also, you still have to store it and do some minor maintenance even though it's not being used. The true cost of ownership for 21 years isn't really known. It's hard to know how much the real profit actually was. Either way, it's a gamble as an investment strategy.
  - UncleMeat 6y ago
    Ok. Every investment. Bonds, real estate, stocks, metals. Magic cards probably don't count. The point is that "use BTC as a hedge against inflation" is obviously not a thing since people are chasing 10x growth.
    - conradev 6y ago
      Maybe many under-informed retail investors are chasing 10x growth, sure, but it feels like the larger institutions mentioned here are doing it likely the same reason they invest in any other asset: diversification.
    - graeme 6y ago
      Funnily enough my brother showed me prices for magic cards he sold a few years back. They have surged in value in 2020. The asset price inflation isn’t limited to tech stocks.
incrudible 6y ago
Why would you hedge against something like inflation, which is relatively constant over a year, by putting your money into a highly speculative risk asset with absolutely insane volatility over that same timeframe? Like many arguments for Bitcoin, this one just doesn't make sense.
- disruptalot 6y ago
  "Relatively constant over a year" seems very loose don't you think? In the past year we've seen an unprecedented injection of money into the system. Presuming you're living in the U.S. have a look south of the border to find out how every national currency is always a few economic policies from throwing inflation targets out of the window.
  - incrudible 6y ago
    Even countries that do have hyperinflation experience it at a somewhat predictable pace. With Bitcoin, you don't know if it's down 80% tomorrow, then up 200% the next day, then down 50% the day after. It's a huge tail risk.
    - base698 6y ago
      In the Weimar republic eggs went from $0.5 to $500 pretty quickly and by 8 months eggs were $1,500,000. Happens quicker than you think and that's a hell of a tail risk. Bitcoin has been pretty consistently up on any timeline over the last decade. I've been present every crash and my tolerance for keeping a small percentage of net worth in it increases each time. You don't have to keep 100% of your cash in bitcoin. With the current pace of money printing I think not keeping something in it is basically negligence to your family.
      - bluecalm 6y ago
        This happened because there wasn't enough eggs or food in general. If there is food shortage in the future people will pay all the bitcoins they have to get a loaf of bread or a few eggs.

That it is a hedge against inflation because of the network effect and vice versa.

UncleMeat 6y ago

Isn’t everything other than cash a hedge against inflation?

anm89 6y ago
Yes but not equally.
adhoc32 6y ago
no, a car for example devaluates over time.
- PragmaticPulp 6y ago
  Driving a car devalues it, because you're using up the utility and extracting value from it. If you buy a car and treat it like an investment (don't drive it, store it properly, keep it maintained) it behaves like an investment. Depending on the car and the market, the value goes up substantially. Here's an example of a 2000 Honda Civic selling for $50,000 USD : https://bringatrailer.com/listing/2000-honda-civic-27/ https://bringatrailer.com/listing/2000-honda-civic-27/ Bitcoiners like to emphasize Bitcoin's limited supply, but Bitcoin is hardly the only thing in life with a limited supply. There will never be any more 2000 Honda Civics, for example.
  - adhoc32 6y ago
    Sure, but it costs money to store it and maintain it in a good shape. Also try sending the equivalent value of 100$ using a Honda Civic. Barter economy is impractical.
  - choward 6y ago
    This seems like an example of survivorship bias. That Honda is an outlier. Not every car will go up that much if at all. Hondas are known for reliability but it takes time to know if a car model is reliable and not a lemon. The purchase price of that car would have been $27,320.28 in today's dollars. Also, you still have to store it and do some minor maintenance even though it's not being used. The true cost of ownership for 21 years isn't really known. It's hard to know how much the real profit actually was. Either way, it's a gamble as an investment strategy.
- UncleMeat 6y ago
  Ok. Every investment. Bonds, real estate, stocks, metals. Magic cards probably don't count. The point is that "use BTC as a hedge against inflation" is obviously not a thing since people are chasing 10x growth.
  - conradev 6y ago
    Maybe many under-informed retail investors are chasing 10x growth, sure, but it feels like the larger institutions mentioned here are doing it likely the same reason they invest in any other asset: diversification.
  - graeme 6y ago
    Funnily enough my brother showed me prices for magic cards he sold a few years back. They have surged in value in 2020. The asset price inflation isn’t limited to tech stocks.

incrudible 6y ago

Why would you hedge against something like inflation, which is relatively constant over a year, by putting your money into a highly speculative risk asset with absolutely insane volatility over that same timeframe? Like many arguments for Bitcoin, this one just doesn't make sense.

disruptalot 6y ago
"Relatively constant over a year" seems very loose don't you think? In the past year we've seen an unprecedented injection of money into the system. Presuming you're living in the U.S. have a look south of the border to find out how every national currency is always a few economic policies from throwing inflation targets out of the window.
- incrudible 6y ago
  Even countries that do have hyperinflation experience it at a somewhat predictable pace. With Bitcoin, you don't know if it's down 80% tomorrow, then up 200% the next day, then down 50% the day after. It's a huge tail risk.
  - base698 6y ago
    In the Weimar republic eggs went from $0.5 to $500 pretty quickly and by 8 months eggs were $1,500,000. Happens quicker than you think and that's a hell of a tail risk. Bitcoin has been pretty consistently up on any timeline over the last decade. I've been present every crash and my tolerance for keeping a small percentage of net worth in it increases each time. You don't have to keep 100% of your cash in bitcoin. With the current pace of money printing I think not keeping something in it is basically negligence to your family.
    - bluecalm 6y ago
      This happened because there wasn't enough eggs or food in general. If there is food shortage in the future people will pay all the bitcoins they have to get a loaf of bread or a few eggs.