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The primary value proposition of bitcoin is as a “currency” but the technical limitations on transaction throughput mean it will never be a viable currency at s

by JCM9 5y ago

The primary value proposition of bitcoin is as a “currency” but the technical limitations on transaction throughput mean it will never be a viable currency at scale. Also the volatility of bitcoin value also makes it a terrible currency. Thus it boils down to just some random thing that people have arbitrarily decided has value, like we did with tulip bulbs centuries ago. This “story” has been told many times thought history and we know how this story ends. The technology is interesting, but the “value” of the coins seems built on a house of cards just waiting to collapse. Although like anything in that space, including tulip bulbs, those that can get in and out at the right time can make a killing while the suckers are left holding the bag at the end.

mthomasmw 5y ago
Would love if you can elaborate on your bitcoin tulip equivalency with the methods that were used to make tulips durable, scarce, programmable, fungible, verifiable, divisible, transferrable at global distances and portable within a human mind. Please be sure to include primary document citations in your explainer and thank you!
- brightstep 5y ago
  Being a more technologically advanced vehicle for speculation doesn't make it less of a vehicle for speculation.
everfree 5y ago
Unless you think the price dipped because everyone was ignorant of that yesterday but all collectively realized it today, this comment isn't really timely or novel.
- JCM9 5y ago
  Fair point, but judging from what I’ve seen out there many still don’t realize/understand this and are case studies of the old adage of “there’s a sucker born every minute.” They’re into it because it’s the thing to be into… not because they understand it and are making a rational investment decision. When the supply of suckers starts to dry up that’s when the value that nobody can explain in real terms starts to become very interesting to watch.
  - reginold 5y ago
    In terms of suckers, there was a big shift in the last year or two, as big corporations, banks, and even nations started to buy Bitcoin. Here's a site that tracks it: https://bitcointreasuries.net/ https://bitcointreasuries.net/ Again, if you know deeply that Bitcoin is a fraud then this probably just further confirms how crazy wacky the world is and doomed for a fall. I get it. To me it's something else.
- m12k 5y ago
  It's not novel - crypto-skeptics have been saying this for a decade. And crypto-believers and speculators have been ignoring it for just as long. But I don't think the comment was aimed at explaining this specific correction, I think it was aimed at predicting a future, more precipitous fall.
beervirus 5y ago
Bitcoin is a gambling token. Nothing more.
- reginold 5y ago
  Just curious, what does it mean if you're wrong about this?
rglover 5y ago
> the technical limitations on transaction throughput https://lightning.network/ https://lightning.network/ > random thing that people have arbitrarily decided has value It has value because it's a fixed-supply currency that can't be manipulated like state currencies, allows for near-instant transactions of arbitrary amounts, is open 24/7, gives banking to billions of people who otherwise wouldn't have it, makes it possible to transact with anyone all over the world without an intermediary, and prevents exactly what's happening right now with inflation.
- paulgb 5y ago
  > prevents exactly what's happening right now with inflation Seems like a funny time to be making the inflation hedge argument. Say what you will about USD inflation, but it's never lost ~30% of its buying power in a month, as Bitcoin has in the past month.
  - NovemberWhiskey 5y ago
    Of course, if goods and services were priced in bitcoin then that would be part of a good argument that bitcoin is actually a currency.
    - reginold 5y ago
      Whenever Bitcoin is an option I pay in Bitcoin. Standard Notes for example, allows you to pay in Bitcoin or any other cryptocurrency. Check out the Lightning network, it's much more about currency/goods/services as a Bitcoin service.
      - NovemberWhiskey 5y ago
        Buying something with BTC doesn't mean it's priced in BTC. With the possible exception of dark web drugs/gun/murder-for-hire/WHY every case I've seen of BTC being used for goods and services involves dynamic currency conversion. i.e. the price is in, say, USD and the amount it costs in BTC is derived from the USD spot price of BTC. It's like I swipe my credit card in Japan; the price is in JPY but I pay in USD. I would be interested to see any counterexamples.
reginold 5y ago
Look into an alternate story on the whole tulip bulb story sometime. It's fascinating. Tulip Mania - the classic story of a Dutch financial bubble is mostly wrong: https://theconversation.com/tulip-mania-the-classic-story-of-a-dutch-financial-bubble-is-mostly-wrong-91413 https://theconversation.com/tulip-mania-the-classic-story-of...
marban 5y ago
The value proposition has long been rephrased as digital gold, with ETH being silver.
- everfree 5y ago
  Silver doesn't power systems of contracts or broker exchanges of assets. ETH is more like oil in that regard.
- rfd4sgmk8u 5y ago
  BTC is gold, LTC is silver, (dogecoin is copper?) ETH is oil. The world is transition from oil to other things. Oil gets expensive near the ends of its life tho! ;-)
  - NovemberWhiskey 5y ago
    Things which can be made into physical objects which are pleasing to look at, have large-scale industrial applications and exist in limited quantities on this earth: gold, silver. Things which have none of those properties: cryptocurrencies.
    - everfree 5y ago
      I believe that smart contract settlement systems will more or less grow into "large-scale industrial applications" before the decade's end.
kjksf 5y ago
People are using Bitcoin as currency, today, at scale in El Salvador. https://twitter.com/BitcoinMagazine/status/1465860149470449669 https://twitter.com/BitcoinMagazine/status/14658601494704496... You can pay for a Starbucks coffee by waving your phone next to a terminal because Visa solved the issue of instant, "virtual" payment that doesn't involve dealing with non-scalable technology of dollar bills. Building similar overlay instant payment network over bitcoin is obviously doable.
- ac29 5y ago
  I'm not sure that posting a tweet from Bitcoin Magazine that may or may not show someone actually paying for a single meal is evidence that Bitcoin is being used "at scale" as a currency.
dehrmann 5y ago
> The primary value proposition of bitcoin is as a “currency” That's the story people tell themselves, not the value proposition. The actual value proposition is/was it's an appreciating asset and FOMO.
koboll 5y ago
>it will never be a viable currency at scale Uh... this has been said over and over for the past decade-plus, and yet it seems to already be a viable currency at scale. Unless you want to append a bunch of no-true-Scotsman caveats onto the definition of "currency".

by JCM9 5y ago

mthomasmw 5y ago

Would love if you can elaborate on your bitcoin tulip equivalency with the methods that were used to make tulips durable, scarce, programmable, fungible, verifiable, divisible, transferrable at global distances and portable within a human mind. Please be sure to include primary document citations in your explainer and thank you!

brightstep 5y ago
Being a more technologically advanced vehicle for speculation doesn't make it less of a vehicle for speculation.

everfree 5y ago

Unless you think the price dipped because everyone was ignorant of that yesterday but all collectively realized it today, this comment isn't really timely or novel.

JCM9 5y ago
Fair point, but judging from what I’ve seen out there many still don’t realize/understand this and are case studies of the old adage of “there’s a sucker born every minute.” They’re into it because it’s the thing to be into… not because they understand it and are making a rational investment decision. When the supply of suckers starts to dry up that’s when the value that nobody can explain in real terms starts to become very interesting to watch.
- reginold 5y ago
  In terms of suckers, there was a big shift in the last year or two, as big corporations, banks, and even nations started to buy Bitcoin. Here's a site that tracks it: https://bitcointreasuries.net/ https://bitcointreasuries.net/ Again, if you know deeply that Bitcoin is a fraud then this probably just further confirms how crazy wacky the world is and doomed for a fall. I get it. To me it's something else.
m12k 5y ago
It's not novel - crypto-skeptics have been saying this for a decade. And crypto-believers and speculators have been ignoring it for just as long. But I don't think the comment was aimed at explaining this specific correction, I think it was aimed at predicting a future, more precipitous fall.

beervirus 5y ago

Bitcoin is a gambling token. Nothing more.

reginold 5y ago
Just curious, what does it mean if you're wrong about this?

rglover 5y ago

> the technical limitations on transaction throughput https://lightning.network/ https://lightning.network/ > random thing that people have arbitrarily decided has value It has value because it's a fixed-supply currency that can't be manipulated like state currencies, allows for near-instant transactions of arbitrary amounts, is open 24/7, gives banking to billions of people who otherwise wouldn't have it, makes it possible to transact with anyone all over the world without an intermediary, and prevents exactly what's happening right now with inflation.

paulgb 5y ago
> prevents exactly what's happening right now with inflation Seems like a funny time to be making the inflation hedge argument. Say what you will about USD inflation, but it's never lost ~30% of its buying power in a month, as Bitcoin has in the past month.
- NovemberWhiskey 5y ago
  Of course, if goods and services were priced in bitcoin then that would be part of a good argument that bitcoin is actually a currency.
  - reginold 5y ago
    Whenever Bitcoin is an option I pay in Bitcoin. Standard Notes for example, allows you to pay in Bitcoin or any other cryptocurrency. Check out the Lightning network, it's much more about currency/goods/services as a Bitcoin service.
    - NovemberWhiskey 5y ago
      Buying something with BTC doesn't mean it's priced in BTC. With the possible exception of dark web drugs/gun/murder-for-hire/WHY every case I've seen of BTC being used for goods and services involves dynamic currency conversion. i.e. the price is in, say, USD and the amount it costs in BTC is derived from the USD spot price of BTC. It's like I swipe my credit card in Japan; the price is in JPY but I pay in USD. I would be interested to see any counterexamples.

reginold 5y ago

Look into an alternate story on the whole tulip bulb story sometime. It's fascinating. Tulip Mania - the classic story of a Dutch financial bubble is mostly wrong: https://theconversation.com/tulip-mania-the-classic-story-of-a-dutch-financial-bubble-is-mostly-wrong-91413 https://theconversation.com/tulip-mania-the-classic-story-of...

marban 5y ago

The value proposition has long been rephrased as digital gold, with ETH being silver.

everfree 5y ago
Silver doesn't power systems of contracts or broker exchanges of assets. ETH is more like oil in that regard.
rfd4sgmk8u 5y ago
BTC is gold, LTC is silver, (dogecoin is copper?) ETH is oil. The world is transition from oil to other things. Oil gets expensive near the ends of its life tho! ;-)
- NovemberWhiskey 5y ago
  Things which can be made into physical objects which are pleasing to look at, have large-scale industrial applications and exist in limited quantities on this earth: gold, silver. Things which have none of those properties: cryptocurrencies.
  - everfree 5y ago
    I believe that smart contract settlement systems will more or less grow into "large-scale industrial applications" before the decade's end.

kjksf 5y ago

People are using Bitcoin as currency, today, at scale in El Salvador. https://twitter.com/BitcoinMagazine/status/1465860149470449669 https://twitter.com/BitcoinMagazine/status/14658601494704496... You can pay for a Starbucks coffee by waving your phone next to a terminal because Visa solved the issue of instant, "virtual" payment that doesn't involve dealing with non-scalable technology of dollar bills. Building similar overlay instant payment network over bitcoin is obviously doable.

ac29 5y ago
I'm not sure that posting a tweet from Bitcoin Magazine that may or may not show someone actually paying for a single meal is evidence that Bitcoin is being used "at scale" as a currency.

dehrmann 5y ago

> The primary value proposition of bitcoin is as a “currency” That's the story people tell themselves, not the value proposition. The actual value proposition is/was it's an appreciating asset and FOMO.

koboll 5y ago

>it will never be a viable currency at scale Uh... this has been said over and over for the past decade-plus, and yet it seems to already be a viable currency at scale. Unless you want to append a bunch of no-true-Scotsman caveats onto the definition of "currency".