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It’s a store of value that regularly goes down double-digits, a digital currency that costs well over $10 for a single transaction, and an inflation hedge that
by nikanj 5y ago
It’s a store of value that regularly goes down double-digits, a digital currency that costs well over $10 for a single transaction, and an inflation hedge that swings wildly. Like does one BTC buy me a Tesla, a Pinto, or a bicycle in 12 months? I can be quite certain what $50000 USD gets me, despite all the claims that fiat is unstable and inflatory
- baq 5y agoObviously inflation dropped 10% since Friday.
- imtringued 5y agoThat's the problem with saying bubbles = inflation. They can go up and down. There is an underlying trend that keeps increasing the value and a small chunk of it is indeed $USD inflation but the rest could just as well be growth of the user base.
- habibur 5y agoAny state's central bank issuing global digital currency would have made a killer app. No mining. Just buy and sell the the coin in exchange of your cash when you have to.
- nikanj 5y agoState-issued global digital currency is here already. It’s been here for decades. $USD at my bank account is state-issued digital currency, and I’m holding it in a bank account in Canada.
- jlokier 5y agoOne difference that I'm aware of (I know people in this situation), is some people cannot open a bank account, but everyone with a computer and a network can open a crypto account.
- chefkoch 5y agoWhy is he mit able to open a bank account?
- jlokier 5y agoConstraints differ around the world. The term to search for is "unbanked". There are a lot of people unbanked worldwide. In the UK where I live, "hostile environment" policies make it illegal for some people to obtain any bank account. It is illegal for a bank to open an account without a person providing documentation to prove the "right to banking". (There is a similar law preventing people from obtaining shelter, "right to rent"). Anyone who knows what happened to the Windrush generation, or to many people who transitioned from "legal" to "illegal" while in the country lawfully, due to arbitrary and capricious Kafka-esque processes, relationship breakdowns, or surprise letters you couldn't have anticipated, knows how harsh the hostile environment can be - some of them died due to critical medical care halted. As you can imagine, such people desparately need the cash system to continue to exist, if only so their friends can support them with cash so they can continue to purchase life essentials.
- dwrowe 5y agoHow does an “unbanked” person convert their fiat currency into crypto? Is there someone taking in reasonably large sums of untracked cash and sending crypto to wallets? (I genuinely am unaware)
- jlokier 5y agoThe unbanked tend to have small amounts, and what they have isn't always in the form of cash. I expect there actually are people providing in-person small cash<->crypto exchange services, just like there are e.g. unregulated loan sharks, unofficial "family" banking, etc. for people who cannot use the regular system. However I was originally addressing the "digital currency" aspect, specifically how "$USD at my bank account" is not universal currency the same way cash is, as many people assume banking is open to all. This is not to say crypto is the solution either, rather there is no universally usable digital currency at the moment. As far as I know crypto isn't currently particularly _useful_ for friends (who are banked) to give friends who are not small amounts of crypto-cash to spend on useful things like food and shelter. There are obvious obstacles, such as transaction costs, times, and excessive transparency for that kind of use. People want small transactions between close associates to be private.[1] But those obstacles cannot be assumed to be permanent. The mathematical developments in zero-knowledge crypto recently have been quite remarkable. Scalability is not a fundamental problem; transactions times are being worked on. Costs are complicated because of economic incentives to keep them high but they could reduce to near-zero. If your unregulated landlord wants to buy a Tesla with crypto next year, perhaps they will accept some amount of crypto for rent now - probably a higher amount than they'd accept in cash. [1] (I personally prefer large transactions to be traceable while small ones remain private - so that "follow the money" works for accountability on large things.)
- imtringued 5y agoA bank deposit is just that, a deposit. Your bank owes you x amount of $USD but it doesn't mean it actually has that many $USD in reserve. There is nothing wrong with it because lending is a valuable service to society but it is not the same. A CBDC is electronic cash. The CBDC $USD in your account are real $USD the same way $USD bills in your wallet are real $USD.
- kypro 5y agoIt's just pure speculation. No one is in Bitcoin for Bitcoins, everyone I've ever spoken to with Bitcoin is in it to make more USD which really says it all. Arguebly anyone who's holding Bitcoin and is more concerned about the risk inflation than the risk of Elon tweeting something stupid doesn't understand the investment they've made. To me it seems like the inflation hedge arguement is little more than mental gynastics to justify their gambling.
- tristanj 5y agoEveryone I’ve ever spoken to who is in equities is in it to make more USD which really says it all.
- khamba 5y agoEquities are not (marketed as) a USD alternative? This is a bad faith argument.
- tristanj 5y agoDisagree. Equities, specifically index funds, are marketed as an asset that will increase in USD price over time. There is an entire movement founded on this belief (FIRE).
- sudosysgen 5y agoWell yes, but that's because of profit from the capital they represent. Bitcoin is not a means of production.
- thebean11 5y agoThey are marketed as a savings account / CD alternative..
- imtringued 5y agoEven special cases like Venezuela where people are fleeing from hyperinflation, they mostly benefiting from the exposure to the USD. The only benefit is evading capital controls and price is irrelevant for that usecase. Capital controls (blocking foreign exchange) are stupid because for every person selling a hyperinflationary currency, there is someone on the other side paying with a stable currency who is partially relieving some of the inflation pressure. There are Venezuelans in Miami that send their paychecks back home to support the local economy yet capital controls prevent something like this from happening.
- s5300 5y agoIt costs me $15-$25 to do a bank wire with my credit union, and afaik, that's on the lower end of things compared to banks.
- captn3m0 5y agoFree instant P2P bank transfers in India. Maybe blockchain isn't the only solution.
- _tulpa 5y agoSame in pretty much every sane country
- cookguyruffles 5y agoI think US banking is the outlier here. I've never paid anything like this anywhere in Europe, the vast majority of transactions (for example SEPA) are free, or very close to free.
- vmception 5y agoI’ve found SEPA to be highly overrated. Upon further investigation I learned that Europeans have little experience with cross-border SEPA. Its free but not anywhere near instant (although your conversation was not about speed). The instant version of SEPA exists in a thin patchwork, which might solve the most common use cases of people in the same country using that country’s largest banks. Everything else is pretty much the same as ACH in the US in that it also takes several business days, and is also free.
- cookguyruffles 5y agoMost folk don't even know it exists because it's been the default option in their Internet banking for so long..
- vidarh 5y agoI've never had cross border SEPA take longer than a business day. Don't doubt it can happen, but if you submit before the cutoff and it's not there by end of next business day your bank or the recipient bank are violating the rules.
- adflux 5y agoBtc is an environmental disaster and a trash currency. But Don't let the btc/doge/elon fanatics scare you away from exploring the other (real) technologically impressive cryptos.
- xvector 5y agoCrypto is an evolving technology. Why is HN so bitter towards it? I find it strange that everyone here simply dismisses it as a worthless concept. What brand-new, experimental technologies with open-source development have ever been perfect from the get-go? What other technology today provides rapid exchange of unlimited amounts of value, instantly? What other technology today can do so in a censorship-resistant manner? ACH and wire transfer take way longer to settle. The same goes for PayPal, Venmo, and CashApp to hit your bank. Zelle works, only sometimes. All solutions are centralized, proprietary, and KYC. There is no way for the average person or small community to exchange value without being at the mercy of a big bank. What we have with crypto is a way to exchange actual value in a decentralized, democratic manner in anywhere from <5 seconds to just a few minutes (depending on your currency). We also have a way to recreate many financial concepts with smart contracts. This could be a huge win for humanity - the democratization of finance, banking the unbanked, and bringing financial privacy and power back to the individual. And sure, crypto has an energy problem today. A lot of cryptos are solving this. This is a temporary, intermediate problem. In the meantime, I guarantee you that plenty of things that provide less benefit to humanity but consume more energy. Again, I don’t know where everyone suddenly decided that crypto has to be perfect today. Rome wasn’t built in a day. Crypto is very much in its infancy and a ton of work is being done at the protocol level across all cryptocurrencies every day.
- matzab 5y agoAs always when there is hype, there will be an equal (or even larger) and opposite counter-hype. Both are rather tiresome.
- user-the-name 5y agoIt has been "evolving" for 12 years. iPhones have been around for about as long as cryptocurrency has. This is a million years in tech. They are still absolute unusable junk with a million problems. It's not early days, it's the twilight of a failing technology.
- xvector 5y agoIn each of those 12 years there has been significant work at the protocol level. You forget that these are mostly volunteers working on these projects. > It's not early days, it's the twilight of a failing technology. This would be true if there was no active development, but development has only been increasing in pace year by year.
- Geee 5y agoStore of value means that your share of ownership is not diluted. It has nothing to do with relative value to other currencies.
- tybit 5y agoThis is entirely incorrect and reinforces OPs point about the obsession of some people with the inflation boogie man.
- Geee 5y agoIt's not a 'boogie man'. It's theft built into the system.
- imtringued 5y agoThere are three people in this fictional economy. You get a paycheck and you decide to save it. The other guy stays unemployed. 3 years later the second guy got hired by the third. You decide to spend your savings. The second guy says he already has a job, you should have asked while he was unemployed over the last 3 years. You raise your offered salary until he is willing to work part time for you. Bang, inflation. Therefore, "saving" is impossible. What really happens when you save your money is that you stopped consuming. There are products sitting on a store shelf that do not get purchased. If those products spoil then they are gone, not saved. If the vendor doesn't get customers then his shop will shut down and his labor will be wasted for those 3 years. You cannot get those 3 years back, ever. Saving is impossible full stop. However, investing is not. If you can invest your money and let that unemployed person build a house, that house will last 50 years and it will generate rental income and rent prices in the future are greater thanks to inflation, having a future income stream will defend against inflation. Edit: Deflation lets you pretend that the labor has not disappeared and therefore the second guy has to work twice as hard to catch up with his unemployed years all. To make things worse the person that decided to not spend their money caused his unemployment but still demands him to work twice as hard in the future.
- 5y ago
- me551ah 5y agoThat's because it has no inherent value. Gold has inherent value because it's used in jewellery and as a conductor. If a new use was to be found for gold, it would go up in value. Similarly if someone discovered another metal which could trump gold for shine, the value of gold would go down. There is nothing that BTC can do which altcoins can't.
- tsycho 5y agoGold's utility value is such a small fraction of its reserve value, that it's moot. And gold has had 1000s of years to find an alternative utility. Even if we did, it's unlikely that that utility would be worth more than gold's market price. I.e. high prices deter utility (this applies to BTC too). Bitcoin (or potentially Ethereum) in particular are a much more efficient reserve than gold; being a reserve unit doesn't require any physical characteristics, but security, pseudo anonymity, and portability can be significant driving features in adoption. [Opinion and speculation alert:] It's clear at this point that Bitcoin's original currency goals are mostly lost, but Ethereum has a good chance of actually meeting them with ETH2. Bitcoin has become a significant reserve unit though, and it's energy costs is the only major risk against it (hence a potential flight to ETH). Although people who invest billions (including indirect investors via ETFs) don't particularly seem to care. Other specific-utility cryptos might also succeed, though I expect most of them to be built on top of ETH.
- vbezhenar 5y agoYou're spoiled by USD stability. There are plenty of unstable currencies all over the world and USD exchanges are not always legal in those countries. Bitcoin looks like an interesting asset in those circumstances.
- cyanydeez 5y agoalso, shouldnt 5he value go up for a currency backed by a finite resource that needs to be mined and you take out miners?