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Is price a good metric for whether bitcoin is dead or not? It seems trivial to imagine a thing that is very expensive but still has ~no value as a currency.

tokai 6y ago
Yeah seems ridiculous. When skimming through the earliest articles they mostly seems to be about Bitcoin as a currency. Btc turning in to a speculative asset underscore their point if anything.
- PKop 6y ago
  Hal Finney has early quotes speculating that BTC would best serve as a reserve asset like gold, predicting that transactions would be inefficient at scale.
PKop 6y ago
It's not a currency, it is an asset, like gold. How many transactions per second does gold do? How many stores accept gold for purchases? Yet it certainly has value and isn't going away as a reserve asset is it?
- stale2002 6y ago
  That is a great example, actually. Because gold as a store of value, in and of itself, is a net negative on the world. The world doesn't benefit with a bunch of gold locked up in a vault. Goods and services are useful because people use them or transact them. Not because they are sitting there doing nothing.
  - Judgmentality 6y ago
    Gold actually has intrinsic value though. https://geology.com/minerals/gold/uses-of-gold.shtml https://geology.com/minerals/gold/uses-of-gold.shtml > Of all the minerals mined from the Earth, none is more useful than gold. Its usefulness is derived from a diversity of special properties. Gold conducts electricity, does not tarnish, is very easy to work, can be drawn into wire, can be hammered into thin sheets, alloys with many other metals, can be melted and cast into highly detailed shapes, has a wonderful color and a brilliant luster.
    - stale2002 6y ago
      Gold has value if it is being used. It has no value, sitting in a vault. Go ahead and talk about all the use cases of gold, and how it can be used in electronics or whatever. But, regardless of that, all the vaults filled with gold, are a net negative on the world.
  - louloulou 6y ago
    The reason money exists is to transfer value that has ALREADY been created in the economy. Gold is good for transferring value across time. Fiat is good for transferring value across space. Bitcoin is good for transferring value across space & time. Therefore Bitcoin is better money.
  - PKop 6y ago
    Your point would make sense if the world was going to try to shoe-horn finite assets into the role of currency transactions, but again, this is a mistaken assumption. There is historical support for the idea of "two monies", soft/weak money, credit, fiat etc that is very good for commerce and day to day transactions, and as unit of account. And hard money for long term savings, and best for settling trade between foreign regimes. There's a reason central banks all hold gold as a primary reserve asset. Give this a read [0] it discusses in detail the idea that there isn't one type (hard or soft) money that best serves both competing use cases of currency and store of value, but that two different monies work best. [0] http://fofoa.blogspot.com/2011/05/return-to-honest-money.html http://fofoa.blogspot.com/2011/05/return-to-honest-money.htm... (Ctrl + F "two monies" for specific section; whole article is good read though)
    - stale2002 6y ago
      > and best for settling trade between foreign regimes. There's a reason central banks all hold gold as a primary reserve asset. > both competing use cases of currency and store of value An action can be both rational for an individual to take, and still be a net negative to the world. I am argueing that the gold in a vault use case, which sometimes people call "store of value" is a net negative upon the world, while still possibly being individually rational. That is my point. I agree that gold serves the use case of a store of value, and could be rational for an individual to take. And I am saying that this is still a net negative, that causes more harm than good, because you have a bunch of resources doing nothing.
- pharmakom 6y ago
  Bitcoin was supposed to be a currency. That was the original vision. So far it hasn’t done very well. Maybe lightning network will fix it? It’s not dead yet, but it also never really got started.
  - PKop 6y ago
    This is your bias projecting onto it what you thought it should be. It is not Bitcoin's fault you were mistaken and it certainly does not equate to failure. It is easy to see in hindsight that a blockchain is and was always going to be inefficient as a transaction mechanism, moreover a finite "money" also can never compete with "easy" fiat money in expandable supply for commerce. Whatever people (mistakenly) thought it was going to be, it is so far succeeding wildly at (long term, with great volatility) store of value asset.
    - Hamuko 6y ago
      >It is not Bitcoin's fault you were mistaken and it certainly does not equate to failure. I guess Satoshi was mistaken as well.
    - Judgmentality 6y ago
      I think you're projecting your own bias. It seems pretty obvious to me bitcoin was meant to be a currency based on the original whitepaper. https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
    - ncallaway 6y ago
      > This is your bias projecting onto it what you thought it should be. "Bitcoin: A Peer-to-Peer Electronic Cash System" "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution" Sounds a lot like the original project was intended to be an electronic version of cash, which would make it an electronic currency.
      - latchkey 6y ago
- Hamuko 6y ago
  >It's not a currency, it is an asset, like gold. Is this why the infamous whitepaper is called "Bitcoin: A Peer-to-Peer Electronic Cash System" and has zero mentions of the word "asset"?
- Waterluvian 6y ago
  "It's not a currency, it's an asset" is accurate. And it seems to be making people rich. But it was meant to be a currency and failed at that. Now it's just an asset with no practical use (unlike gold) and a pretty hefty cost for it to persist. Like Gamestop, I think Bitcoin will eventually be worth nothing. Until then, a lot wealth will change hands, but none is being generated. A meta comment: I don't recall seeing more emotionally zealous defenders of a topic on HN than Bitcoin boosters.
  - xiphias2 6y ago
    It takes time for assets to start functioning as currencies. Bitcoin needs about 10 more years to get adopted by enough people to function as a currency.
    - Waterluvian 6y ago
      Interesting concept I haven't heard of before. Where might I find anything talking about this more? Why 10 years? Is it time or just adoption? How many people?
      - xiphias2 6y ago
        Read the Bitcoin Standard book, or Nick Szabo's Shelling Out blog entry to see how new money is usually adopted. Bitcoin has about 200%/year growth rate, right now at about 100M users (1% adoption, maybe somewhat less). In 10 years it has a good chance to be adopted by billions of people (there's no guarantee though of course).
  - tekdemon 6y ago
    I think you need to remember that at the end of the day Bitcoin is software running on the hardware of the internet, so assuming that it stays static in it's capabilities doesn't really make good sense. I mean when we used 14.4kbps modems for dialup to access AOL or Prodigy the sort of bandwidth we had then wasn't very good, but assuming that this would always be the state of the internet would have been made you very wrong. It's the sort of prediction Paul Krugman made when he proclaimed that the internet would be no more important than fax machines. Bitcoin will have changes made to it's core software that will allow significant scaling improvements-some of that foundation is being laid this year via taproot and we're really talking about a foundational piece that will take years for the benefits to be fully realized with additional future improvements. But there's little reason to believe that the current state of Bitcoin where it's an asset that can't function as a currency will be a permanent one. At the moment people already have easy to use currencies they can use on their smartphones, so Bitcoin being an easy to use digital currency adds nothing to their lives. What Bitcoin does provide is simply the fact that it's not a fiat currency. This may not seem valuable to people who've grown up in a nation with relatively stable currency value and a sophisticated economic system. But just look at the value of currencies in numerous nations around the world over the last 2 years. Whether you look at Russia, Mexico, Argentina, Brazil, Venezuela, Lebanon (street value), Nigeria, Zimbabwe, etc. what you see are nations where the currency has dropped in value by double digits per year. So if you live in the US or Canada or a EU nation you may not feel the sort of urgency to find a solution to this problem, but people elsewhere aren't as lucky. You also have to remember that people in these countries can't just buy reputable US securities via a smartphone app like people in most advanced nations can. Their choices for storing their wealth come down to literally their native currency that's tanking in value, blackmarket US dollars, precious metals, and Bitcoin. I honestly think if you think outside of your own life experiences and look at the experience elsewhere in the world then the actual true value of Bitcoin becomes much more apparent. Then the energy use stops looking so plainly wasteful and in fact you might start wondering whether the fact that video game consoles like the Xbox actually use significantly more power than Bitcoin (and significantly less renewables) makes Bill Gates a bit of a hypocrite when he attacks Bitcoin.
- capsulecorp 6y ago
  Really? Because Satoshi's whitepaper is literally titled “Bitcoin: a Peer-to-Peer Electronic Cash System", not "Bitcoin a 'store of value'". It seems to me the real answer is Bitcoin was sequestered by Blockstream and purposely sabotaged in order to promote their offchain solutions. BCH had to hard fork away to maintain the original intention of the project. Thus BCH can be transferred quickly and for mere fractions of the fees in BTC. So bitcoin is a currency, but that currency is now BCH. Whereas BTC exists to serve Blockstream and its for-profit offchain solution, which conveniently solve the limits they fought to impose.
  - splintercell 6y ago
    Technically speaking a layer 2 based payment system would also do the job.
    - capsulecorp 6y ago
      Technically speaking, that still wouldn't be Bitcoin.
      - splintercell 6y ago
        Bitcoin's main purpose was to create an unattackable (by govt or private entities) decentralized consensus. It was best perceived to have been created by the a currency on it. This currency can still be used on layer 2 for smaller transactions. If you and your buddy opened a tab between each other to have bitcoin settlement at the end of the day, that wouldn't be saying "But you aren't using bitcoin".
        capsulecorp 6y ago
        I believe you are mistaken, the purpose of Bitcoin was very clear from the whitepaper title. It was to create "a Peer-to-Peer Electronic Cash System". Bitcoin Cash is the real, continued implementation of bitcoin, as it was designed in its whitepaper. BTC is simply an attempt (rather good one at that) by bad actors, to purposely hamper the protocol and then sell offchain solutions to solve those issues they introduced.
bhupy 6y ago
> It seems trivial to imagine a thing that is very expensive but still has ~no value as a currency. What are some examples? Keep in mind that Bitcoin doesn't have to ever be a "currency" for it to remain relevant, as a "thing".
- adflux 6y ago
  Considering that it was touted as the future digital CURRENCY until up to about 2 years ago, it has failed horribly in that regard. Its no longer being used on darknet either, that place has been taken by monero. Bitcoin failed as a currency. Bad UX, high fees, high volatility. All things you dont want for a currency. Now for a store of value, thats something else. If everyone "believes" it to be worth something, thats what it'll be.
  - bhupy 6y ago
    We agree. Bitcoin doesn't ever have to be a currency, but that doesn't mean that it will ever be "dead".
    - londons_explore 6y ago
      It isn't impossible for it to form a currency sometime in the future... Something like lightning popping up that actually worked could turn it into a currency overnight.
  - andrepd 6y ago
    Lightning network will improve transactions substantially.
- ben0x539 6y ago
  idk, expensive cars?
Mc_Big_G 6y ago
If you're willing to accept that Bitcoin is not viable as a currency, you can then embrace that it's a better store of value than fiat currencies because the monetary policy is static and it is scarce. Bitcoin is digital gold, not a currency.
- danielmarkbruce 6y ago
  There is some implication that the only alternatives are fiat currencies. Anyone in finance will tell you: "do not to hold a lot of cash as an asset or store of value". Buying real assets is the general advice.
- wizzwizz4 6y ago
  Bitcoin is a deflationary currency with high barriers-to-transact (rendering it nearly useless as a currency), backed by consensus trust in two assumptions: • Enough people are burning enough electricity using enough computer processors that no one entity has control over enough computer power to become the majority burner of processing power. • That's the only way to violate the axioms of blockchain transactions. Assuming these two points, Bitcoin is a reasonably good “financial asset”, albeit one that's rendered GPUs almost impossible to buy and is rapidly becoming a major contributor to the anthropocentric climate change that's rendering our planet a harder place to not-die.

tokai 6y ago

Yeah seems ridiculous. When skimming through the earliest articles they mostly seems to be about Bitcoin as a currency. Btc turning in to a speculative asset underscore their point if anything.

PKop 6y ago
Hal Finney has early quotes speculating that BTC would best serve as a reserve asset like gold, predicting that transactions would be inefficient at scale.

PKop 6y ago

It's not a currency, it is an asset, like gold. How many transactions per second does gold do? How many stores accept gold for purchases? Yet it certainly has value and isn't going away as a reserve asset is it?

stale2002 6y ago
That is a great example, actually. Because gold as a store of value, in and of itself, is a net negative on the world. The world doesn't benefit with a bunch of gold locked up in a vault. Goods and services are useful because people use them or transact them. Not because they are sitting there doing nothing.
- Judgmentality 6y ago
  Gold actually has intrinsic value though. https://geology.com/minerals/gold/uses-of-gold.shtml https://geology.com/minerals/gold/uses-of-gold.shtml > Of all the minerals mined from the Earth, none is more useful than gold. Its usefulness is derived from a diversity of special properties. Gold conducts electricity, does not tarnish, is very easy to work, can be drawn into wire, can be hammered into thin sheets, alloys with many other metals, can be melted and cast into highly detailed shapes, has a wonderful color and a brilliant luster.
  - stale2002 6y ago
    Gold has value if it is being used. It has no value, sitting in a vault. Go ahead and talk about all the use cases of gold, and how it can be used in electronics or whatever. But, regardless of that, all the vaults filled with gold, are a net negative on the world.
- louloulou 6y ago
  The reason money exists is to transfer value that has ALREADY been created in the economy. Gold is good for transferring value across time. Fiat is good for transferring value across space. Bitcoin is good for transferring value across space & time. Therefore Bitcoin is better money.
- PKop 6y ago
  Your point would make sense if the world was going to try to shoe-horn finite assets into the role of currency transactions, but again, this is a mistaken assumption. There is historical support for the idea of "two monies", soft/weak money, credit, fiat etc that is very good for commerce and day to day transactions, and as unit of account. And hard money for long term savings, and best for settling trade between foreign regimes. There's a reason central banks all hold gold as a primary reserve asset. Give this a read [0] it discusses in detail the idea that there isn't one type (hard or soft) money that best serves both competing use cases of currency and store of value, but that two different monies work best. [0] http://fofoa.blogspot.com/2011/05/return-to-honest-money.html http://fofoa.blogspot.com/2011/05/return-to-honest-money.htm... (Ctrl + F "two monies" for specific section; whole article is good read though)
  - stale2002 6y ago
    > and best for settling trade between foreign regimes. There's a reason central banks all hold gold as a primary reserve asset. > both competing use cases of currency and store of value An action can be both rational for an individual to take, and still be a net negative to the world. I am argueing that the gold in a vault use case, which sometimes people call "store of value" is a net negative upon the world, while still possibly being individually rational. That is my point. I agree that gold serves the use case of a store of value, and could be rational for an individual to take. And I am saying that this is still a net negative, that causes more harm than good, because you have a bunch of resources doing nothing.
pharmakom 6y ago
Bitcoin was supposed to be a currency. That was the original vision. So far it hasn’t done very well. Maybe lightning network will fix it? It’s not dead yet, but it also never really got started.
- PKop 6y ago
  This is your bias projecting onto it what you thought it should be. It is not Bitcoin's fault you were mistaken and it certainly does not equate to failure. It is easy to see in hindsight that a blockchain is and was always going to be inefficient as a transaction mechanism, moreover a finite "money" also can never compete with "easy" fiat money in expandable supply for commerce. Whatever people (mistakenly) thought it was going to be, it is so far succeeding wildly at (long term, with great volatility) store of value asset.
  - Hamuko 6y ago
    >It is not Bitcoin's fault you were mistaken and it certainly does not equate to failure. I guess Satoshi was mistaken as well.
  - Judgmentality 6y ago
    I think you're projecting your own bias. It seems pretty obvious to me bitcoin was meant to be a currency based on the original whitepaper. https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
  - ncallaway 6y ago
    > This is your bias projecting onto it what you thought it should be. "Bitcoin: A Peer-to-Peer Electronic Cash System" "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution" Sounds a lot like the original project was intended to be an electronic version of cash, which would make it an electronic currency.
    - latchkey 6y ago
Hamuko 6y ago
>It's not a currency, it is an asset, like gold. Is this why the infamous whitepaper is called "Bitcoin: A Peer-to-Peer Electronic Cash System" and has zero mentions of the word "asset"?
Waterluvian 6y ago
"It's not a currency, it's an asset" is accurate. And it seems to be making people rich. But it was meant to be a currency and failed at that. Now it's just an asset with no practical use (unlike gold) and a pretty hefty cost for it to persist. Like Gamestop, I think Bitcoin will eventually be worth nothing. Until then, a lot wealth will change hands, but none is being generated. A meta comment: I don't recall seeing more emotionally zealous defenders of a topic on HN than Bitcoin boosters.
- xiphias2 6y ago
  It takes time for assets to start functioning as currencies. Bitcoin needs about 10 more years to get adopted by enough people to function as a currency.
  - Waterluvian 6y ago
    Interesting concept I haven't heard of before. Where might I find anything talking about this more? Why 10 years? Is it time or just adoption? How many people?
    - xiphias2 6y ago
      Read the Bitcoin Standard book, or Nick Szabo's Shelling Out blog entry to see how new money is usually adopted. Bitcoin has about 200%/year growth rate, right now at about 100M users (1% adoption, maybe somewhat less). In 10 years it has a good chance to be adopted by billions of people (there's no guarantee though of course).
- tekdemon 6y ago
  I think you need to remember that at the end of the day Bitcoin is software running on the hardware of the internet, so assuming that it stays static in it's capabilities doesn't really make good sense. I mean when we used 14.4kbps modems for dialup to access AOL or Prodigy the sort of bandwidth we had then wasn't very good, but assuming that this would always be the state of the internet would have been made you very wrong. It's the sort of prediction Paul Krugman made when he proclaimed that the internet would be no more important than fax machines. Bitcoin will have changes made to it's core software that will allow significant scaling improvements-some of that foundation is being laid this year via taproot and we're really talking about a foundational piece that will take years for the benefits to be fully realized with additional future improvements. But there's little reason to believe that the current state of Bitcoin where it's an asset that can't function as a currency will be a permanent one. At the moment people already have easy to use currencies they can use on their smartphones, so Bitcoin being an easy to use digital currency adds nothing to their lives. What Bitcoin does provide is simply the fact that it's not a fiat currency. This may not seem valuable to people who've grown up in a nation with relatively stable currency value and a sophisticated economic system. But just look at the value of currencies in numerous nations around the world over the last 2 years. Whether you look at Russia, Mexico, Argentina, Brazil, Venezuela, Lebanon (street value), Nigeria, Zimbabwe, etc. what you see are nations where the currency has dropped in value by double digits per year. So if you live in the US or Canada or a EU nation you may not feel the sort of urgency to find a solution to this problem, but people elsewhere aren't as lucky. You also have to remember that people in these countries can't just buy reputable US securities via a smartphone app like people in most advanced nations can. Their choices for storing their wealth come down to literally their native currency that's tanking in value, blackmarket US dollars, precious metals, and Bitcoin. I honestly think if you think outside of your own life experiences and look at the experience elsewhere in the world then the actual true value of Bitcoin becomes much more apparent. Then the energy use stops looking so plainly wasteful and in fact you might start wondering whether the fact that video game consoles like the Xbox actually use significantly more power than Bitcoin (and significantly less renewables) makes Bill Gates a bit of a hypocrite when he attacks Bitcoin.
capsulecorp 6y ago
Really? Because Satoshi's whitepaper is literally titled “Bitcoin: a Peer-to-Peer Electronic Cash System", not "Bitcoin a 'store of value'". It seems to me the real answer is Bitcoin was sequestered by Blockstream and purposely sabotaged in order to promote their offchain solutions. BCH had to hard fork away to maintain the original intention of the project. Thus BCH can be transferred quickly and for mere fractions of the fees in BTC. So bitcoin is a currency, but that currency is now BCH. Whereas BTC exists to serve Blockstream and its for-profit offchain solution, which conveniently solve the limits they fought to impose.
- splintercell 6y ago
  Technically speaking a layer 2 based payment system would also do the job.
  - capsulecorp 6y ago
    Technically speaking, that still wouldn't be Bitcoin.
    - splintercell 6y ago
      Bitcoin's main purpose was to create an unattackable (by govt or private entities) decentralized consensus. It was best perceived to have been created by the a currency on it. This currency can still be used on layer 2 for smaller transactions. If you and your buddy opened a tab between each other to have bitcoin settlement at the end of the day, that wouldn't be saying "But you aren't using bitcoin".
      - capsulecorp 6y ago
        I believe you are mistaken, the purpose of Bitcoin was very clear from the whitepaper title. It was to create "a Peer-to-Peer Electronic Cash System". Bitcoin Cash is the real, continued implementation of bitcoin, as it was designed in its whitepaper. BTC is simply an attempt (rather good one at that) by bad actors, to purposely hamper the protocol and then sell offchain solutions to solve those issues they introduced.

bhupy 6y ago

> It seems trivial to imagine a thing that is very expensive but still has ~no value as a currency. What are some examples? Keep in mind that Bitcoin doesn't have to ever be a "currency" for it to remain relevant, as a "thing".

adflux 6y ago
Considering that it was touted as the future digital CURRENCY until up to about 2 years ago, it has failed horribly in that regard. Its no longer being used on darknet either, that place has been taken by monero. Bitcoin failed as a currency. Bad UX, high fees, high volatility. All things you dont want for a currency. Now for a store of value, thats something else. If everyone "believes" it to be worth something, thats what it'll be.
- bhupy 6y ago
  We agree. Bitcoin doesn't ever have to be a currency, but that doesn't mean that it will ever be "dead".
  - londons_explore 6y ago
    It isn't impossible for it to form a currency sometime in the future... Something like lightning popping up that actually worked could turn it into a currency overnight.
- andrepd 6y ago
  Lightning network will improve transactions substantially.
ben0x539 6y ago
idk, expensive cars?

Mc_Big_G 6y ago

If you're willing to accept that Bitcoin is not viable as a currency, you can then embrace that it's a better store of value than fiat currencies because the monetary policy is static and it is scarce. Bitcoin is digital gold, not a currency.

danielmarkbruce 6y ago
There is some implication that the only alternatives are fiat currencies. Anyone in finance will tell you: "do not to hold a lot of cash as an asset or store of value". Buying real assets is the general advice.
wizzwizz4 6y ago
Bitcoin is a deflationary currency with high barriers-to-transact (rendering it nearly useless as a currency), backed by consensus trust in two assumptions: • Enough people are burning enough electricity using enough computer processors that no one entity has control over enough computer power to become the majority burner of processing power. • That's the only way to violate the axioms of blockchain transactions. Assuming these two points, Bitcoin is a reasonably good “financial asset”, albeit one that's rendered GPUs almost impossible to buy and is rapidly becoming a major contributor to the anthropocentric climate change that's rendering our planet a harder place to not-die.