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However, it's important to notice that Ethereum is not money. It doesn't have a clear monetary policy, and it has a major utility risk, making it a bad store of

by Geee 6y ago

However, it's important to notice that Ethereum is not money. It doesn't have a clear monetary policy, and it has a major utility risk, making it a bad store of value. It solves completely different problem than Bitcoin. No one really knows what problem it solves, but it's getting there.

dgellow 6y ago
Storing “value” in a crypto currency is a concept I will never understand. What value do you store? How can you store value in something that can drop by 20% in a few hours? It seems to me to be a way to say “put your money there and it will eventually become more”, which is just speculation, and not a store of anything. Edit: to add to that, how is Bitcoin a store of value if a bear market is >90% lower than a bull market? That seems to be a meme that people repeat to justify their Bitcoin bet, but I don’t see how that makes sense.
- Geee 6y ago
  It has all the properties of a store of value. Scarcity, durability, portability, fungibility and divisibility. If we compare assets on their fundamental properties, then we arrive at the conclusion that bitcoin is the best asset for storing value. Then, markets decide the relative value to other assets by buying and selling. The upwards movement in price discovery will continue until value from inferior assets, such as gold and real estate, has transferred to bitcoin. After that, bitcoin's price will stabilize around $15 million per bitcoin, and continue increasing with economic growth.
- deleted 6y ago
  [deleted]
- wmf 6y ago
  The trough tends to be higher than the previous peak so if you're willing to hold for ~5 years it has been a good investment. Even that has to end eventually though.
  - dgellow 6y ago
    Sure, but that’s speculation. I can speculate on Tesla shares, but that’s not considered storing value. What is the store of value in the case of Bitcoin? The bull market will stop at some point. Is it still a store of value in this case?
    - G3rn0ti 6y ago
      If you’re storing value in a physical bar of gold you‘re speculating on its price not to fall (aka to increase). So do you suggest gold not being a store of value? On the other hand, if you decide to store your savings in the form of Dollar bills under your pillow, you’re probably not speculating its purchasing power to increase (as that would be against its historic trend). Rather, you’re speculating to need it soon to buy goods. Essentially, you’re betting on an economic crisis to come soon and prepare yourself with a decent amount of cash. Either way you are trying to anticipate the future and, hence, engage in “speculation”. IMHO, the “store of value” vs “speculation” is a false dichotomy.
- sparkie 6y ago
  If an apple falls from a tree, does the apple move away from the tree, or does the tree move away from the apple? In order to determine whether something has "dropped", you need to have a frame of reference to compare it to. You have arbitrarily chosen a frame of reference which fits your existing world-view, the dollar. If you are fixated in this view you will struggle to comprehend alternatives. Consider instead, that a bitcoin (or satoshi) could be a frame of reference, and from it, you can determine whether a dollar is dropping. Here's a visualization of this: https://usdsat.com https://usdsat.com. Since it is very clear from this visualization that over the course of years (rather than hours, which you have limited yourself to) that the dollar is in decline w.r.t bitcoin, then anybody wishing to "store value" over the course of years (not hours) would be making a poor choice if they selected dollars to do it. This is part speculation, as you suggest, but this speculation is not random or guesswork - it is a result of other processes which go by names such as "quantitative easing." These processes (deliberately) devalue the dollar. Since not everybody wants to hold onto an asset which is being devalued, they look for alternatives, and they find one which, by design, cannot be deliberately devalued. Further, the reason the value of dollars declines so rapidly w.r.t bitcoin is because people are betting against the currency which is being devalued, and for the one which can't be deliberately devalued. As more people make this bet, others become more confident that they can also make the same bet, which then leads to a situation where the more astute savers will front-run other savers because they expect that the dollar will continue to decline in value w.r.t bitcoin - and since the monetary policy of the federal reserve is to keep devaluing the dollar this is a very asymmetric bet.
  - krrrh 6y ago
    Isn't this true of any asset? You’re not really addressing GPs concern that the term “store of value” usually applies to more stable valued assets. > You have arbitrarily chosen a frame of reference which fits your existing world-view It’s not really arbitrary. The earth and things anchored directly to it is an obvious frame of reference for objects moving in space because it is by far the largest gravity well compared to anything you’d be referencing it against. The US dollar is the world’s reserve currency, and fiat currencies have armies and police backing them and their use for paying taxes in addition to massive distribution, velocity, and proven utility.
tryptophan 6y ago
"Monetary policy" What a joke. Using big-boy words doesnt make such ridiculous ideas any more sane.
- sparkie 6y ago
  "Monetary policy" is the term used by fiat economists to describe their policy, which inevitably boils down to debt expansion towards infinity. Bitcoin is an experiment at providing an alternative to infinite debt expansion, by defining a finite quantity of the asset which can ever exist. The idea behind MMT is that you can kick the can down the road forever and the road will never end. Whose ideas are ridiculous, you say?
cslarson 6y ago
Might be tough to hear but it is money if people use it as money and they certainly are within the Ethereum ecosystem. Bitcoin's promise of only 21m is based on a wing and a prayer (very suspect whether fees can ensure security in place of mining rewards) whereas ETH is based on 1) primacy as money within Ethereum, 2) utility - required for paying Ethereum tx fees, 3) earning potential with PoS staking, 4) deflationary pressure from fee burning under EIP 1559.
deleted 6y ago
[deleted]
casi 6y ago
The monetary policy is becoming much clearer with proposals like EIP-1559 which has been approved for the summer upgrade. But beside that, I can buy things with it, and I regularly do buy things with it. I pay people with it, and get paid with it. So that makes it money to me. Peoples experience with it make it something else to them. ether is more useful to me than $ (as a european).

by Geee 6y ago

dgellow 6y ago

Storing “value” in a crypto currency is a concept I will never understand. What value do you store? How can you store value in something that can drop by 20% in a few hours? It seems to me to be a way to say “put your money there and it will eventually become more”, which is just speculation, and not a store of anything. Edit: to add to that, how is Bitcoin a store of value if a bear market is >90% lower than a bull market? That seems to be a meme that people repeat to justify their Bitcoin bet, but I don’t see how that makes sense.

Geee 6y ago
It has all the properties of a store of value. Scarcity, durability, portability, fungibility and divisibility. If we compare assets on their fundamental properties, then we arrive at the conclusion that bitcoin is the best asset for storing value. Then, markets decide the relative value to other assets by buying and selling. The upwards movement in price discovery will continue until value from inferior assets, such as gold and real estate, has transferred to bitcoin. After that, bitcoin's price will stabilize around $15 million per bitcoin, and continue increasing with economic growth.
deleted 6y ago
[deleted]
wmf 6y ago
The trough tends to be higher than the previous peak so if you're willing to hold for ~5 years it has been a good investment. Even that has to end eventually though.
- dgellow 6y ago
  Sure, but that’s speculation. I can speculate on Tesla shares, but that’s not considered storing value. What is the store of value in the case of Bitcoin? The bull market will stop at some point. Is it still a store of value in this case?
  - G3rn0ti 6y ago
    If you’re storing value in a physical bar of gold you‘re speculating on its price not to fall (aka to increase). So do you suggest gold not being a store of value? On the other hand, if you decide to store your savings in the form of Dollar bills under your pillow, you’re probably not speculating its purchasing power to increase (as that would be against its historic trend). Rather, you’re speculating to need it soon to buy goods. Essentially, you’re betting on an economic crisis to come soon and prepare yourself with a decent amount of cash. Either way you are trying to anticipate the future and, hence, engage in “speculation”. IMHO, the “store of value” vs “speculation” is a false dichotomy.
sparkie 6y ago
If an apple falls from a tree, does the apple move away from the tree, or does the tree move away from the apple? In order to determine whether something has "dropped", you need to have a frame of reference to compare it to. You have arbitrarily chosen a frame of reference which fits your existing world-view, the dollar. If you are fixated in this view you will struggle to comprehend alternatives. Consider instead, that a bitcoin (or satoshi) could be a frame of reference, and from it, you can determine whether a dollar is dropping. Here's a visualization of this: https://usdsat.com https://usdsat.com. Since it is very clear from this visualization that over the course of years (rather than hours, which you have limited yourself to) that the dollar is in decline w.r.t bitcoin, then anybody wishing to "store value" over the course of years (not hours) would be making a poor choice if they selected dollars to do it. This is part speculation, as you suggest, but this speculation is not random or guesswork - it is a result of other processes which go by names such as "quantitative easing." These processes (deliberately) devalue the dollar. Since not everybody wants to hold onto an asset which is being devalued, they look for alternatives, and they find one which, by design, cannot be deliberately devalued. Further, the reason the value of dollars declines so rapidly w.r.t bitcoin is because people are betting against the currency which is being devalued, and for the one which can't be deliberately devalued. As more people make this bet, others become more confident that they can also make the same bet, which then leads to a situation where the more astute savers will front-run other savers because they expect that the dollar will continue to decline in value w.r.t bitcoin - and since the monetary policy of the federal reserve is to keep devaluing the dollar this is a very asymmetric bet.
- krrrh 6y ago
  Isn't this true of any asset? You’re not really addressing GPs concern that the term “store of value” usually applies to more stable valued assets. > You have arbitrarily chosen a frame of reference which fits your existing world-view It’s not really arbitrary. The earth and things anchored directly to it is an obvious frame of reference for objects moving in space because it is by far the largest gravity well compared to anything you’d be referencing it against. The US dollar is the world’s reserve currency, and fiat currencies have armies and police backing them and their use for paying taxes in addition to massive distribution, velocity, and proven utility.

tryptophan 6y ago

"Monetary policy" What a joke. Using big-boy words doesnt make such ridiculous ideas any more sane.

sparkie 6y ago
"Monetary policy" is the term used by fiat economists to describe their policy, which inevitably boils down to debt expansion towards infinity. Bitcoin is an experiment at providing an alternative to infinite debt expansion, by defining a finite quantity of the asset which can ever exist. The idea behind MMT is that you can kick the can down the road forever and the road will never end. Whose ideas are ridiculous, you say?

cslarson 6y ago

Might be tough to hear but it is money if people use it as money and they certainly are within the Ethereum ecosystem. Bitcoin's promise of only 21m is based on a wing and a prayer (very suspect whether fees can ensure security in place of mining rewards) whereas ETH is based on 1) primacy as money within Ethereum, 2) utility - required for paying Ethereum tx fees, 3) earning potential with PoS staking, 4) deflationary pressure from fee burning under EIP 1559.

deleted 6y ago

[deleted]

casi 6y ago

The monetary policy is becoming much clearer with proposals like EIP-1559 which has been approved for the summer upgrade. But beside that, I can buy things with it, and I regularly do buy things with it. I pay people with it, and get paid with it. So that makes it money to me. Peoples experience with it make it something else to them. ether is more useful to me than $ (as a european).