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Also, not quite correct. Bitcoin isn't figuratively a store of value, it actually is. The amount of bitcoin on DeFi, backing collateral for flash loans and Sta

Also, not quite correct. Bitcoin isn't figuratively a store of value, it actually is. The amount of bitcoin on DeFi, backing collateral for flash loans and Stablecoin minting is astounding. >When you own a share of Square (or Visa, or PayPal) each time a transaction takes place on their network, a portion of that transaction (revenue minus costs) accrues to the company - and by extension increases the intrinsic value of your share. All the V3 crypto protocols have exactly as you describe above. However, instead of the money going into the coffers of the company, it goes into a 'Development fund' That will award the crypto to people who have applied and been voted on by the community to launch a project/technology in the protocol. [1] https://fintechs.fi/2021/10/29/as-parachain-auctions-launch-close-in-polkadot-introduces-777m-dev-fund/ https://fintechs.fi/2021/10/29/as-parachain-auctions-launch-...

arcticbull 5y ago
> Bitcoin isn't figuratively a store of value, it actually is. It's a speculative, negative-sum MLM token. I suggest reading up on what a store of value is. [1] I'm not saying there aren't ways of monetizing it within the network - which may indeed create value, but intrinsically, it is a negative-sum asset, a mechanism of redistributing real cold hard dollars from new participants to old entrants and miners. It creates nothing. Systems built on top of it might, exploiting let's say regulatory arbitrage, facilitating crime or gambling, but intrinsically, it creates no value. [1] https://www.investopedia.com/terms/s/storeofvalue.asp https://www.investopedia.com/terms/s/storeofvalue.asp
- RustyConsul 5y ago
  It seems our difference in opinion comes from our definition of value. I know people point to the current system and infrastructure of stock exchanges, SWIFT, the IMF, Central Banks, Retail and Commercial Banks, Internet Banks (Such as Stripe, Paypal, ETC.), Credit Unions, Savings and Loan Associations, Investment Banks and Companies, Brokerage Firms, Insurance Companies as working good enough. But for me... Occams razor hits me hard. Doesn't it seem weird that through this complex system of interactions, we can recreate all of that in Code? If there was no value in it, why did we create all those institutions in the first place? If we can recreate those in a more humane, democratized, decentralized way, I think it's worth the .001% of the global financial system that it currently is. Even if it's grabbing 5% of the current headlines.
  - arcticbull 5y ago
    > Doesn't it seem weird that through this complex system of interactions, we can recreate all of that in Code? All of these systems are already software. > If there was no value in it, why did we create all those institutions in the first place? Centralization makes them massively more efficient than crypto. If there was a way to make them more efficient that did not involve throwing risk models out the window or regulatory arbitrage, someone could just do that in the traditional economy without crypto. This is a lot like the programmer tendency to want to re-write instead of refactor because to understand a system is way harder than to set out on a quest to build a new one. Although they always end up the same way: at best what you started with. To me this falls squarely under Spolsky's "things you should never do." [1] There hasn't been a single actual competitive business built on top of crypto in fourteen years. That's because they're all hamstrung by the massive inefficiencies they boat-anchor to their solutions. Decentralization and trustlessness and permissionlessness don't matter at all to 99.9% of humans. Attempting to offer these is incredibly inefficient and makes it totally uncompetitive with centralized solutions for every legal use case. I would argue it fails Occam's razor to try and add miners to a monetary system. The simplest, most efficient, most economical solution to moving value around is centralization. If there's a better way to solve any of the given problems with crypto, there's an easy way to optimize it further: get rid of crypto. [1] https://www.joelonsoftware.com/2000/04/06/things-you-should-never-do-part-i/ https://www.joelonsoftware.com/2000/04/06/things-you-should-...
    - tevon 5y ago
      I completely agree with this; the prior example given for bitcoins value (that it is used in defi for flash loans, etc) is literally deriving its value from moving value around (internal to the crypto ecosystem). Flash loans are used to arbitrage across exchanges, not create any extrinsic value.
      - RustyConsul 5y ago
        Yeah! Isn't it fantastic? You solve the double spend problem you have in traditional finance! Due to this emergent phenomena of smart contracts you can have very low slippage between exchanges, high liquidity and high yields. A.K.A Every stock market financiers dream.
- epinephrinios 5y ago
  In my book, there's some value in protecting the average Joe from the incessant dollar printing that decreases the value of the dollars in their saving accounts. That's just one argument for Bitcoin, there are more. For example, it provides the opportunity to second/third world countries to break free from the IMF debt slavery.
  - arcticbull 5y ago
    > In my book, there's some value in protecting the average Joe from the incessant dollar printing that decreases the value of the dollars in their saving accounts. This is a complete misunderstanding of the role of currency in a modern economy and the mandate of the federal reserve, which is to maintain a low, predictable rate of inflation to incentivize investment and maximize employment. Literally any asset will "save you" from the "relentless printing." That's the role of an asset, not a currency. > That's just one argument for Bitcoin, there are more. For example, it provides the opportunity to second/third world countries to break free from the IMF debt slavery. They're all basically debunked, but advocates trot them out and try and Gish gallop over any criticism.
    - epinephrinios 5y ago
      > Literally any asset will "save you" from the "relentless printing." That's an oversimplification. Let's just say that Bitcoin and Ethereum are now the apex assets.
- bedobi 5y ago
  I'm no frothing at the mouth crypto advocate or fiat currency hating conspiracy theorist, but whatever you're trying to say, and the article you link to, seems like complete nonsense to me, and your snarky recommendation to "read up on what a store of value is" is silly. > A store of value is an asset that maintains its value, rather than depreciating. Value is just what others are willing to pay for something at a point in time. Literally nothing is guaranteed to maintain it's value, not even US Treasuries. So this is just circular logic saying "things that maintain value are value stores" and "if something that previously maintained it's value no longer does, then it is not a value store". > Gold and other precious metals are good stores of value because their shelf lives are essentially perpetual. Gold and other precious metals are terrible stores of value, their dollar values are incredibly volatile, they are incredibly expensive and risky to store and transact with, and contrary to popular belief, they really don't actually have much "intrinsic value". Let alone that "intrinsic value" is a nonsensical concept. "Intrinsic value" is meant to be understood roughly as "useful for some practical purpose", but valuations clearly often have nothing to do with their practical purposes. A stick or a basket can have very significant and diverse intrinsic values too, but that doesn't mean it has value. Likewise, some sticks and baskets might have very high values, despite actually not being very good sticks or baskets! (eg if they're antiques or archeological artifacts or whatever) > A nation's currency must be a reasonable store of value for its economy to function smoothly. Most central banks aim for 2% inflation per year, literally guaranteeing any amount to become worthless over time if stored in currency. (vs bonds or some other appreciating asset) > intrinsically, Bitcoin is a negative-sum asset, a mechanism of redistributing real cold hard dollars from new participants to old entrants and miners. Just what. Bitcoin is strictly positive sum under any sane definition. Unlike MLMs or pyramid schemes, Bitcoin never alleges to return anything other than Bitcoin. > It creates nothing Neither do currencies. They're just currencies. Their purpose is to be means of transacting things that are created, that otherwise wouldn't be created, if there was no means to transact. Bitcoin does that too. But in Bitcoin's case, it actually does create something: it creates the ledger of transactions itself, the wallets, the ability to sign things etc, which currencies don't. > Systems built on top of it might, exploiting let's say regulatory arbitrage, facilitating crime or gambling, but intrinsically, it creates no value. Even if you disagree with the valuation of Bitcoin and how inefficient the mining is (and I do), the realized idea of a distributed, tamper-proof ledger is useful, and thus has "intrinsic value" just like toilet paper or gold. (again, intrinsic value is a nonsensical concept, but under that logic, it does)
- wpietri 5y ago
  Exactly. Nobody before 2009 would have described a highly volatile unbacked synthetic commodity as a "store of value". That's just what Bitcoin partisans shifted to when they realized it was unworkable for its stated purpose as a payment system. E.g.: https://avc.com/2017/08/store-of-value-vs-payment-system/ https://avc.com/2017/08/store-of-value-vs-payment-system/
  - mattnewton 5y ago
    Why not? There have been much stranger stores of value in the past https://en.m.wikipedia.org/wiki/Rai_stones https://en.m.wikipedia.org/wiki/Rai_stones
    - wpietri 5y ago
      Bitcoin is much more volatile than modern stores of value.
  - robner 5y ago
    Before the car was invented it wasn't considered a form of transport either.
salawat 5y ago
>All the V3 crypto protocols have exactly as you describe above. However, instead of the money going into the coffers of the company, it goes into a 'Development fund' That will award the crypto to people who have applied and been voted on by the community to launch a project/technology in the protocol. So you replaced "shareholders" with "developers of cryptocurrencies/beneficiaries of the development fund". Does a rose, by any other name, not smell as sweet? I mean, from the case you're making, these v3 protocols seem more like securities. Stablecoins sound exactly like banks. Which means AML/KYC/Reserves on the horizon. The entire cryptocurrency space recreated the current financial system, rooked in a new generation of suckers (and some old one's that should have known better), did everything current financial product regulations were put in place to prevent, made it as energy inefficient as humanly possible in the case of PoW, but it isn't all that cause it's called something different. My distinction without a difference alarm is ringing itself off the wall at the moment.
- jkhdigital 5y ago
  > made it as energy inefficient as humanly possible in the case of PoW I'd encourage you to broaden your understanding of the purpose of PoW and specifically the energy used. The energy used is the cost of securing a PoW blockchain--quite literally, the cost of the energy used is what makes it difficult to mount a successful attack. It is simple and universally accessible. It is not "inefficient"; it is functioning exactly as intended. What I think you are really trying to say is that you think the benefits provided by a PoW blockchain do not merit the economic expense of securely maintaining it. And that's a fine opinion to have. But the only reason you pay attention to the electricity cost is because it is highly visible--you probably have no clue how much electricity is consumed by all the other economic activities that you may consider pointless or wasteful.
  - mrep 5y ago
    I mean, we can compare it to mastercard: 74 billion transactions a year for mastercard vs 100 million a year for bitcoin. Mastercard revenue is 15 billion while bitcoin has 21 billion in annual mining fees. So mastercard processes 740 times as many transactions for 70% of the cost and I would argue the real cost is the revenue - operating income for their actual expenses to operate which is 7 billion so 1/3 the cost. That would make it 2,220 times as efficient.
imtringued 5y ago
>Bitcoin isn't figuratively a store of value, it actually is. If I borrow a Bitcoin what makes you think that I can repay the Bitcoin after it grew 10x in value? Who is doing 10x the work? (10x more productive)
- nybble41 5y ago
  > If I borrow a Bitcoin what makes you think that I can repay the Bitcoin after it grew 10x in value? That would make Bitcoin a very good store of value. However, to benefit from the "store of value" property you have to, you know, actually store the bitcoin yourself, not sell it now and try to buy it back later…

arcticbull 5y ago

> Bitcoin isn't figuratively a store of value, it actually is. It's a speculative, negative-sum MLM token. I suggest reading up on what a store of value is. [1] I'm not saying there aren't ways of monetizing it within the network - which may indeed create value, but intrinsically, it is a negative-sum asset, a mechanism of redistributing real cold hard dollars from new participants to old entrants and miners. It creates nothing. Systems built on top of it might, exploiting let's say regulatory arbitrage, facilitating crime or gambling, but intrinsically, it creates no value. [1] https://www.investopedia.com/terms/s/storeofvalue.asp https://www.investopedia.com/terms/s/storeofvalue.asp

RustyConsul 5y ago
It seems our difference in opinion comes from our definition of value. I know people point to the current system and infrastructure of stock exchanges, SWIFT, the IMF, Central Banks, Retail and Commercial Banks, Internet Banks (Such as Stripe, Paypal, ETC.), Credit Unions, Savings and Loan Associations, Investment Banks and Companies, Brokerage Firms, Insurance Companies as working good enough. But for me... Occams razor hits me hard. Doesn't it seem weird that through this complex system of interactions, we can recreate all of that in Code? If there was no value in it, why did we create all those institutions in the first place? If we can recreate those in a more humane, democratized, decentralized way, I think it's worth the .001% of the global financial system that it currently is. Even if it's grabbing 5% of the current headlines.
- arcticbull 5y ago
  > Doesn't it seem weird that through this complex system of interactions, we can recreate all of that in Code? All of these systems are already software. > If there was no value in it, why did we create all those institutions in the first place? Centralization makes them massively more efficient than crypto. If there was a way to make them more efficient that did not involve throwing risk models out the window or regulatory arbitrage, someone could just do that in the traditional economy without crypto. This is a lot like the programmer tendency to want to re-write instead of refactor because to understand a system is way harder than to set out on a quest to build a new one. Although they always end up the same way: at best what you started with. To me this falls squarely under Spolsky's "things you should never do." [1] There hasn't been a single actual competitive business built on top of crypto in fourteen years. That's because they're all hamstrung by the massive inefficiencies they boat-anchor to their solutions. Decentralization and trustlessness and permissionlessness don't matter at all to 99.9% of humans. Attempting to offer these is incredibly inefficient and makes it totally uncompetitive with centralized solutions for every legal use case. I would argue it fails Occam's razor to try and add miners to a monetary system. The simplest, most efficient, most economical solution to moving value around is centralization. If there's a better way to solve any of the given problems with crypto, there's an easy way to optimize it further: get rid of crypto. [1] https://www.joelonsoftware.com/2000/04/06/things-you-should-never-do-part-i/ https://www.joelonsoftware.com/2000/04/06/things-you-should-...
  - tevon 5y ago
    I completely agree with this; the prior example given for bitcoins value (that it is used in defi for flash loans, etc) is literally deriving its value from moving value around (internal to the crypto ecosystem). Flash loans are used to arbitrage across exchanges, not create any extrinsic value.
    - RustyConsul 5y ago
      Yeah! Isn't it fantastic? You solve the double spend problem you have in traditional finance! Due to this emergent phenomena of smart contracts you can have very low slippage between exchanges, high liquidity and high yields. A.K.A Every stock market financiers dream.
epinephrinios 5y ago
In my book, there's some value in protecting the average Joe from the incessant dollar printing that decreases the value of the dollars in their saving accounts. That's just one argument for Bitcoin, there are more. For example, it provides the opportunity to second/third world countries to break free from the IMF debt slavery.
- arcticbull 5y ago
  > In my book, there's some value in protecting the average Joe from the incessant dollar printing that decreases the value of the dollars in their saving accounts. This is a complete misunderstanding of the role of currency in a modern economy and the mandate of the federal reserve, which is to maintain a low, predictable rate of inflation to incentivize investment and maximize employment. Literally any asset will "save you" from the "relentless printing." That's the role of an asset, not a currency. > That's just one argument for Bitcoin, there are more. For example, it provides the opportunity to second/third world countries to break free from the IMF debt slavery. They're all basically debunked, but advocates trot them out and try and Gish gallop over any criticism.
  - epinephrinios 5y ago
    > Literally any asset will "save you" from the "relentless printing." That's an oversimplification. Let's just say that Bitcoin and Ethereum are now the apex assets.
bedobi 5y ago
I'm no frothing at the mouth crypto advocate or fiat currency hating conspiracy theorist, but whatever you're trying to say, and the article you link to, seems like complete nonsense to me, and your snarky recommendation to "read up on what a store of value is" is silly. > A store of value is an asset that maintains its value, rather than depreciating. Value is just what others are willing to pay for something at a point in time. Literally nothing is guaranteed to maintain it's value, not even US Treasuries. So this is just circular logic saying "things that maintain value are value stores" and "if something that previously maintained it's value no longer does, then it is not a value store". > Gold and other precious metals are good stores of value because their shelf lives are essentially perpetual. Gold and other precious metals are terrible stores of value, their dollar values are incredibly volatile, they are incredibly expensive and risky to store and transact with, and contrary to popular belief, they really don't actually have much "intrinsic value". Let alone that "intrinsic value" is a nonsensical concept. "Intrinsic value" is meant to be understood roughly as "useful for some practical purpose", but valuations clearly often have nothing to do with their practical purposes. A stick or a basket can have very significant and diverse intrinsic values too, but that doesn't mean it has value. Likewise, some sticks and baskets might have very high values, despite actually not being very good sticks or baskets! (eg if they're antiques or archeological artifacts or whatever) > A nation's currency must be a reasonable store of value for its economy to function smoothly. Most central banks aim for 2% inflation per year, literally guaranteeing any amount to become worthless over time if stored in currency. (vs bonds or some other appreciating asset) > intrinsically, Bitcoin is a negative-sum asset, a mechanism of redistributing real cold hard dollars from new participants to old entrants and miners. Just what. Bitcoin is strictly positive sum under any sane definition. Unlike MLMs or pyramid schemes, Bitcoin never alleges to return anything other than Bitcoin. > It creates nothing Neither do currencies. They're just currencies. Their purpose is to be means of transacting things that are created, that otherwise wouldn't be created, if there was no means to transact. Bitcoin does that too. But in Bitcoin's case, it actually does create something: it creates the ledger of transactions itself, the wallets, the ability to sign things etc, which currencies don't. > Systems built on top of it might, exploiting let's say regulatory arbitrage, facilitating crime or gambling, but intrinsically, it creates no value. Even if you disagree with the valuation of Bitcoin and how inefficient the mining is (and I do), the realized idea of a distributed, tamper-proof ledger is useful, and thus has "intrinsic value" just like toilet paper or gold. (again, intrinsic value is a nonsensical concept, but under that logic, it does)
wpietri 5y ago
Exactly. Nobody before 2009 would have described a highly volatile unbacked synthetic commodity as a "store of value". That's just what Bitcoin partisans shifted to when they realized it was unworkable for its stated purpose as a payment system. E.g.: https://avc.com/2017/08/store-of-value-vs-payment-system/ https://avc.com/2017/08/store-of-value-vs-payment-system/
- mattnewton 5y ago
  Why not? There have been much stranger stores of value in the past https://en.m.wikipedia.org/wiki/Rai_stones https://en.m.wikipedia.org/wiki/Rai_stones
  - wpietri 5y ago
    Bitcoin is much more volatile than modern stores of value.
- robner 5y ago
  Before the car was invented it wasn't considered a form of transport either.

salawat 5y ago

>All the V3 crypto protocols have exactly as you describe above. However, instead of the money going into the coffers of the company, it goes into a 'Development fund' That will award the crypto to people who have applied and been voted on by the community to launch a project/technology in the protocol. So you replaced "shareholders" with "developers of cryptocurrencies/beneficiaries of the development fund". Does a rose, by any other name, not smell as sweet? I mean, from the case you're making, these v3 protocols seem more like securities. Stablecoins sound exactly like banks. Which means AML/KYC/Reserves on the horizon. The entire cryptocurrency space recreated the current financial system, rooked in a new generation of suckers (and some old one's that should have known better), did everything current financial product regulations were put in place to prevent, made it as energy inefficient as humanly possible in the case of PoW, but it isn't all that cause it's called something different. My distinction without a difference alarm is ringing itself off the wall at the moment.

jkhdigital 5y ago
> made it as energy inefficient as humanly possible in the case of PoW I'd encourage you to broaden your understanding of the purpose of PoW and specifically the energy used. The energy used is the cost of securing a PoW blockchain--quite literally, the cost of the energy used is what makes it difficult to mount a successful attack. It is simple and universally accessible. It is not "inefficient"; it is functioning exactly as intended. What I think you are really trying to say is that you think the benefits provided by a PoW blockchain do not merit the economic expense of securely maintaining it. And that's a fine opinion to have. But the only reason you pay attention to the electricity cost is because it is highly visible--you probably have no clue how much electricity is consumed by all the other economic activities that you may consider pointless or wasteful.
- mrep 5y ago
  I mean, we can compare it to mastercard: 74 billion transactions a year for mastercard vs 100 million a year for bitcoin. Mastercard revenue is 15 billion while bitcoin has 21 billion in annual mining fees. So mastercard processes 740 times as many transactions for 70% of the cost and I would argue the real cost is the revenue - operating income for their actual expenses to operate which is 7 billion so 1/3 the cost. That would make it 2,220 times as efficient.

imtringued 5y ago

>Bitcoin isn't figuratively a store of value, it actually is. If I borrow a Bitcoin what makes you think that I can repay the Bitcoin after it grew 10x in value? Who is doing 10x the work? (10x more productive)

nybble41 5y ago
> If I borrow a Bitcoin what makes you think that I can repay the Bitcoin after it grew 10x in value? That would make Bitcoin a very good store of value. However, to benefit from the "store of value" property you have to, you know, actually store the bitcoin yourself, not sell it now and try to buy it back later…