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BTC is not money? What it's? Disclosures · I have personally made money buying and selling Bitcoin.

arcticbull 5y ago
It's best modeled as a speculative asset. It has none of the hallmarks of a good currency. It's not fungible, it's not predictable, it's not cheap to exchange and its value flails around wildly like a decapitated chicken. That's even before you get into the Keynesian vs. Austrian argument that IMO should be long since settled but apparently, here we are.
- otherme123 5y ago
  You are making up the qualities of good currency, and then conclude BTC has none of them. Qualities of good money are 1) Durability (not losing value with time), 2) Portability, 3) Scarcity (limited supply), 5) Divisibility, 6) Acceptability and 7) Storability. BTC has all of them except maybe 6). And I'm no defender of BTC, I don't like it and I don't think it will ever be the main currency. It will be at best like the gold backing the day to day exchanges in another kind of "coin", and used only for clearing. Money can be, and currently is, as "fungible" as annotations in a ledger. Banks are not that different from BTC, except they don't need "proof" because they limit who can add transactions: a VISA transaction is just "write in the ledger -X for this wallet and +X for this other wallet". No gold, bills or any fungible asset is moved around, exactly like BTC.
  - arcticbull 5y ago
    C'mon now BTC certainly doesn't have (1) it's down 50% in the last month. I'd quibble with (2) because portability does imply a low cost of portability which compared to USD it does not have. (3) It has. (4) It has. (5) It definitely isn't broadly accepted and (6) it's not great at either, just look at what percentage of the coins have already been lost. 20-30% in a decade. Every random walk down the time line leads to 100% of coins lost.
    - anonporridge 5y ago
      (1) If you think about the stability of your wealth on the scale of months, you're going to have a bad time regardless of what vehicles you store your money in.
      - deleted 5y ago
        [deleted]
    - otherme123 5y ago
      You misunderstood the terms. Economically Durability refers to an asset that doesn't decay with time. Historically, things like cows, sheeps, wheat and other things were used as money. Those things are not durable: they rot or are consumed. Gold, silver, paper/fiat money and BTC are durable. Portability refers to the ability/costs to transfer your money from, say, New York to Singapore. Transferring USD is cheap and easy, but transferring BTC isn't expensive either. Specially when compared to transferring cows or a gold bar. Storability is somewhat related to durability: you should be able to store your money, forget about it, and recover it later without loss. Think of burying gold and coming back for it in five years: all your gold is still there. Wheat seeds or cows not so much. BTC is perfectly storable: the very first mined BTC would be the same BCT for years to come. I would say that paper money loses against BTC and gold in this concept, but then again, fiat money works exactly like BTC. Losing your wallet is another concept not related to storability: you can also lose a gold coin or a $100 bill.
      - arcticbull 5y ago
        > Transferring USD is cheap and easy, but transferring BTC isn't expensive either. I disagree, the sticker price at the moment looks cheap but only because the majority of a transaction cost is socialized in block reward. To look at the actual cost of a transaction you need to sum the direct fees and the socialized fees. After all, the socialized fees are going away over time, so either users will have to pay directly or be subject to a less secure network. An average block of 2000 transactions costs 6.25 BTC ($225,000) in indirect subsidies plus about $16,000 in direct costs. This means an average transaction costs somewhere in the neighborhood of $120. At $120, you could probably just overnight a gold bar via FedEx. This is dramatically higher than competitive solutions. > Losing your wallet is another concept not related to storability: you can also lose a gold coin or a $100 bill Yes, but losing a few billion dollars worth is exponentially harder. I would argue that over time your risk of losing all your coins in a step function approaches 100%. Even though it's step, on average it represents a negative storability/durability. As the total quantity in circulation drops the entire supply could be seen as "rotting."

It's best modeled as a speculative asset. It has none of the hallmarks of a good currency. It's not fungible, it's not predictable, it's not cheap to exchange and its value flails around wildly like a decapitated chicken. That's even before you get into the Keynesian vs. Austrian argument that IMO should be long since settled but apparently, here we are.

otherme123 5y ago
You are making up the qualities of good currency, and then conclude BTC has none of them. Qualities of good money are 1) Durability (not losing value with time), 2) Portability, 3) Scarcity (limited supply), 5) Divisibility, 6) Acceptability and 7) Storability. BTC has all of them except maybe 6). And I'm no defender of BTC, I don't like it and I don't think it will ever be the main currency. It will be at best like the gold backing the day to day exchanges in another kind of "coin", and used only for clearing. Money can be, and currently is, as "fungible" as annotations in a ledger. Banks are not that different from BTC, except they don't need "proof" because they limit who can add transactions: a VISA transaction is just "write in the ledger -X for this wallet and +X for this other wallet". No gold, bills or any fungible asset is moved around, exactly like BTC.
- arcticbull 5y ago
  C'mon now BTC certainly doesn't have (1) it's down 50% in the last month. I'd quibble with (2) because portability does imply a low cost of portability which compared to USD it does not have. (3) It has. (4) It has. (5) It definitely isn't broadly accepted and (6) it's not great at either, just look at what percentage of the coins have already been lost. 20-30% in a decade. Every random walk down the time line leads to 100% of coins lost.
  - anonporridge 5y ago
    (1) If you think about the stability of your wealth on the scale of months, you're going to have a bad time regardless of what vehicles you store your money in.
    - deleted 5y ago
      [deleted]
  - otherme123 5y ago
    You misunderstood the terms. Economically Durability refers to an asset that doesn't decay with time. Historically, things like cows, sheeps, wheat and other things were used as money. Those things are not durable: they rot or are consumed. Gold, silver, paper/fiat money and BTC are durable. Portability refers to the ability/costs to transfer your money from, say, New York to Singapore. Transferring USD is cheap and easy, but transferring BTC isn't expensive either. Specially when compared to transferring cows or a gold bar. Storability is somewhat related to durability: you should be able to store your money, forget about it, and recover it later without loss. Think of burying gold and coming back for it in five years: all your gold is still there. Wheat seeds or cows not so much. BTC is perfectly storable: the very first mined BTC would be the same BCT for years to come. I would say that paper money loses against BTC and gold in this concept, but then again, fiat money works exactly like BTC. Losing your wallet is another concept not related to storability: you can also lose a gold coin or a $100 bill.
    - arcticbull 5y ago
      > Transferring USD is cheap and easy, but transferring BTC isn't expensive either. I disagree, the sticker price at the moment looks cheap but only because the majority of a transaction cost is socialized in block reward. To look at the actual cost of a transaction you need to sum the direct fees and the socialized fees. After all, the socialized fees are going away over time, so either users will have to pay directly or be subject to a less secure network. An average block of 2000 transactions costs 6.25 BTC ($225,000) in indirect subsidies plus about $16,000 in direct costs. This means an average transaction costs somewhere in the neighborhood of $120. At $120, you could probably just overnight a gold bar via FedEx. This is dramatically higher than competitive solutions. > Losing your wallet is another concept not related to storability: you can also lose a gold coin or a $100 bill Yes, but losing a few billion dollars worth is exponentially harder. I would argue that over time your risk of losing all your coins in a step function approaches 100%. Even though it's step, on average it represents a negative storability/durability. As the total quantity in circulation drops the entire supply could be seen as "rotting."