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I see this point rehashed on HN over and over. I'd love if there was a more productive discussion of cryptocurrencies. I don't think they are going away anyti

I see this point rehashed on HN over and over. I'd love if there was a more productive discussion of cryptocurrencies. I don't think they are going away anytime soon. Too many technologists and others are thinking about them now. I personally think store of value is a strong use case, at least for those of us who consider them to have value. Just wondering, what would it take for you (and others who share similar views) to change your mind about crypto? How long does the technology need to be around to be validated? Would you feel better about the space if it was regulated (which would bring scams, manipulation, and illicit activity down), or would you still think it's all nonsense?

pjc50 5y ago
> store of value is a strong use case The "change my mind" criterion for this would be actual price stability. That is, a significant market for goods and services which can be bought at a fixed crypto price over a period of a year or more with zero price variation. People getting paid salary in fixed crypto denominations. People taking out 10-year mortgages in fixed crypto denominations at interest rates comparable to fiat mortgages. It is feasible that cryptocurrency might be more stable than, say, the Bolivar. It is not feasible that it will be more stable than the dollar. If you want a really concrete use case, suppose you want to buy a new Macbook next year and you want to save on a weekly basis. If you'd done that over various periods over the last year you'd end up with between 150% and 70% of the price of the Macbook. Now, so long as "number go up" you're winning ...
- tata71 5y ago
  > The "change my mind" criterion for this would be actual price stability. See you in 5 years when Ethereum has flipped Bitcoin, then. You may even have to wait until Ethereum forks again, honestly.
- notahacker 5y ago
  Yep. Stability is really the only gap in the market for a "store of value". Shares are fairly fungible and have a "number go up" tendency as well, but there's actual reason for their numbers to go up other than convincing more people to believe they're a share of value than believed last year.
  - hackingforfun 5y ago
    I have heard Metcalfe's Law applied to crypto networks, and I think it actually does make sense. I.e. as the number of participants goes up, the value increases, similar to how as the number of users goes up on a social media or other technology platform, those networks are considered more valuable. Crypto is a technology so I think it makes some sense to apply the same framework.
    - notahacker 5y ago
      Crypto doesn't claim to be a telecoms network, it claims to be an asset. If you double the number of people owning stocks, or bond or oil, it doesn't make the stock, bond or oil four times as valuable as before. It simply updates the market value of stock, bond or oil to whatever the new users paid for it - which might even be less than before (whilst the use value of collecting the dividends or coupon payments or burning the oil to individual end users doesn't tend to change much in response to more people using it at all) And even if we grant a Metcalfe exponential relationship between crypto prices and crypto participants, you're still running into the basic Ponzi scheme problem that if all your value comes from the price appreciation predicated on the number of HODLers growing, it'll hit that ceiling eventually. Which means it isn't a particularly great store of value, compared with something like a stock that generates future income regardless of whether new people enter the stock market or not
      - hackingforfun 5y ago
        Aren't social media networks like Facebook/Meta and Twitter valued higher as an increasing number of users join the network? Or new startups trying to get more users? Do you consider those ponzi schemes? Also, I'm just wondering, do you like tech stocks? And do you think high P/E ratios would be possible if new investors weren't buying those stocks? Also, if there's not enough Bitcoin ever going to be created for everyone alive even now to own just one (21 million max supply cap), and assuming the interest in it only increases over time, how would a ceiling ever be hit?
        5y ago
infecto 5y ago
I don't think crypto in general is nonsense. I do think a lot of the hype is. Some of my concerns with it * Is it a currency or an investment? None of the major coins seem usable as a currency to me, the values are too volatile. * What does it offer me over using USD? For me at least I see very little value, I often cannot use it for purchases and most of the places that I have seen it offered do it for secrecy, VPN or counterfeit goods. I am not trying to perpetuate the idea that cryto is only used for illegal activities but for myself I have little to no benefit of using it for purchases. * Would you compare your "store of value" use case the same as owning gold? It is interesting to hear coins having a store of value since for me at least the volatility kills it and without a huge use in the economy I don't have confidence in it holding up.
- hackingforfun 5y ago
  * Is it a currency or an investment? None of the major coins seem usable as a currency to me, the values are too volatile. More of an investment, for the time being. * What does it offer me over using USD? For me at least I see very little value, I often cannot use it for purchases and most of the places that I have seen it offered do it for secrecy, VPN or counterfeit goods. I am not trying to perpetuate the idea that cryto is only used for illegal activities but for myself I have little to no benefit of using it for purchases. Yes, I've purchased like one thing with crypto and that was back when you couldn't buy hardware wallets with USD, so crypto was the only option. * Would you compare your "store of value" use case the same as owning gold? It is interesting to hear coins having a store of value since for me at least the volatility kills it and without a huge use in the economy I don't have confidence in it holding up. Yes, I do compare the store of value use case similar to owning gold. Gold is just much harder to transport, send across the world, store, etc. Gold has also been trading sideways for about a year, so I don't think it really protects from inflation (someone correct me if I'm mistaken about that). I actually do own both gold and crypto, so I've been able to compare them first hand. Also, crypto is super volatile, for sure, but if you think about it over a multi-year horizon, similar to how someone would invest in an S&P 500 index fund, then I think crypto will in general appreciate and the volatility should go down as more people hold it and consider it valuable. The idea is that it stabilizes as its market cap goes up. Also just want to call out that I consider Bitcoin its own thing, apart from the rest of crypto, since Bitcoin actually has a max supply cap. Many cryptocurrencies do not (they can essentially print money), or their max supply is so ridiculously high as to barely matter at all. Thanks for responding! I like to hear about how people are thinking about this, beyond the point that it's only used for illicit activities.
Aeolun 5y ago
> at least for those of us who consider them to have value That’s the rub isn’t it? They have absolutely zero intrinsic value, and any energy expended to mine them and give them value is a literal waste. > what would it take for you (and others who share similar views) to change your mind about crypto It would help if we could go a month without another DAO breaking. Ultimately I have enough faith in the system that I want my money to be centralized.
nextaccountic 5y ago
Crypto is a very volatile asset, it doesn't seem good for actually storing value. It would be great if the demand was organic and driven by consumption. This could stabilize the price. Right now it's mostly speculative.
- hackingforfun 5y ago
  Do you think that it's possible that as the market cap of crypto grows, the volatility goes down? I believe this applies to traditional markets as well. It just takes more money to sway the price. Also if people see value in it, vs other assets, wouldn't they want to hold it, so wouldn't value be stored in it? Curious if you have any thoughts about that.
  - nextaccountic 5y ago
    The trouble with the usual measures of market cap, trading volume, etc. is that so much of it is faked. And lot of crypto is premined or is otherwise held by whales that don't have much use of it unless they find someone to dump their coins, and they have both means and motive to swing the market. So it's entirely possible that crypto market cap continues to "grow" but volatility just stay the same. But otherwise, yeah, if there's enough people to make the whales look comparatively smaller, it may get more stable.
daniel-thompson 5y ago
To be clear, what I said was that the real-world uses of crypto-as-a-medium-of-exchange are almost all tied to criminal activity. I didn't say anything at all about crypto-as-a-store-of-value. Like any fiat currency, crypto has value iff people think it has value, no surprises there. At the moment, crypto's value is heavily tied to speculation about massive increases in its future value, which is not sustainable in the long term and is the biggest blocker for the medium-of-exchange usecase. I have nothing against the idea of crypto - it's a good idea, especially with the stuff built on top of it around smart contracts, and the technology is neat - but until it stabilizes at predictable exchange rates it will never be used by the unsophisticated masses as a medium of exchange.

pjc50 5y ago

> store of value is a strong use case The "change my mind" criterion for this would be actual price stability. That is, a significant market for goods and services which can be bought at a fixed crypto price over a period of a year or more with zero price variation. People getting paid salary in fixed crypto denominations. People taking out 10-year mortgages in fixed crypto denominations at interest rates comparable to fiat mortgages. It is feasible that cryptocurrency might be more stable than, say, the Bolivar. It is not feasible that it will be more stable than the dollar. If you want a really concrete use case, suppose you want to buy a new Macbook next year and you want to save on a weekly basis. If you'd done that over various periods over the last year you'd end up with between 150% and 70% of the price of the Macbook. Now, so long as "number go up" you're winning ...

tata71 5y ago
> The "change my mind" criterion for this would be actual price stability. See you in 5 years when Ethereum has flipped Bitcoin, then. You may even have to wait until Ethereum forks again, honestly.
notahacker 5y ago
Yep. Stability is really the only gap in the market for a "store of value". Shares are fairly fungible and have a "number go up" tendency as well, but there's actual reason for their numbers to go up other than convincing more people to believe they're a share of value than believed last year.
- hackingforfun 5y ago
  I have heard Metcalfe's Law applied to crypto networks, and I think it actually does make sense. I.e. as the number of participants goes up, the value increases, similar to how as the number of users goes up on a social media or other technology platform, those networks are considered more valuable. Crypto is a technology so I think it makes some sense to apply the same framework.
  - notahacker 5y ago
    Crypto doesn't claim to be a telecoms network, it claims to be an asset. If you double the number of people owning stocks, or bond or oil, it doesn't make the stock, bond or oil four times as valuable as before. It simply updates the market value of stock, bond or oil to whatever the new users paid for it - which might even be less than before (whilst the use value of collecting the dividends or coupon payments or burning the oil to individual end users doesn't tend to change much in response to more people using it at all) And even if we grant a Metcalfe exponential relationship between crypto prices and crypto participants, you're still running into the basic Ponzi scheme problem that if all your value comes from the price appreciation predicated on the number of HODLers growing, it'll hit that ceiling eventually. Which means it isn't a particularly great store of value, compared with something like a stock that generates future income regardless of whether new people enter the stock market or not
    - hackingforfun 5y ago
      Aren't social media networks like Facebook/Meta and Twitter valued higher as an increasing number of users join the network? Or new startups trying to get more users? Do you consider those ponzi schemes? Also, I'm just wondering, do you like tech stocks? And do you think high P/E ratios would be possible if new investors weren't buying those stocks? Also, if there's not enough Bitcoin ever going to be created for everyone alive even now to own just one (21 million max supply cap), and assuming the interest in it only increases over time, how would a ceiling ever be hit?
      - 5y ago

infecto 5y ago

I don't think crypto in general is nonsense. I do think a lot of the hype is. Some of my concerns with it * Is it a currency or an investment? None of the major coins seem usable as a currency to me, the values are too volatile. * What does it offer me over using USD? For me at least I see very little value, I often cannot use it for purchases and most of the places that I have seen it offered do it for secrecy, VPN or counterfeit goods. I am not trying to perpetuate the idea that cryto is only used for illegal activities but for myself I have little to no benefit of using it for purchases. * Would you compare your "store of value" use case the same as owning gold? It is interesting to hear coins having a store of value since for me at least the volatility kills it and without a huge use in the economy I don't have confidence in it holding up.

hackingforfun 5y ago
* Is it a currency or an investment? None of the major coins seem usable as a currency to me, the values are too volatile. More of an investment, for the time being. * What does it offer me over using USD? For me at least I see very little value, I often cannot use it for purchases and most of the places that I have seen it offered do it for secrecy, VPN or counterfeit goods. I am not trying to perpetuate the idea that cryto is only used for illegal activities but for myself I have little to no benefit of using it for purchases. Yes, I've purchased like one thing with crypto and that was back when you couldn't buy hardware wallets with USD, so crypto was the only option. * Would you compare your "store of value" use case the same as owning gold? It is interesting to hear coins having a store of value since for me at least the volatility kills it and without a huge use in the economy I don't have confidence in it holding up. Yes, I do compare the store of value use case similar to owning gold. Gold is just much harder to transport, send across the world, store, etc. Gold has also been trading sideways for about a year, so I don't think it really protects from inflation (someone correct me if I'm mistaken about that). I actually do own both gold and crypto, so I've been able to compare them first hand. Also, crypto is super volatile, for sure, but if you think about it over a multi-year horizon, similar to how someone would invest in an S&P 500 index fund, then I think crypto will in general appreciate and the volatility should go down as more people hold it and consider it valuable. The idea is that it stabilizes as its market cap goes up. Also just want to call out that I consider Bitcoin its own thing, apart from the rest of crypto, since Bitcoin actually has a max supply cap. Many cryptocurrencies do not (they can essentially print money), or their max supply is so ridiculously high as to barely matter at all. Thanks for responding! I like to hear about how people are thinking about this, beyond the point that it's only used for illicit activities.

Aeolun 5y ago

> at least for those of us who consider them to have value That’s the rub isn’t it? They have absolutely zero intrinsic value, and any energy expended to mine them and give them value is a literal waste. > what would it take for you (and others who share similar views) to change your mind about crypto It would help if we could go a month without another DAO breaking. Ultimately I have enough faith in the system that I want my money to be centralized.

nextaccountic 5y ago

Crypto is a very volatile asset, it doesn't seem good for actually storing value. It would be great if the demand was organic and driven by consumption. This could stabilize the price. Right now it's mostly speculative.

hackingforfun 5y ago
Do you think that it's possible that as the market cap of crypto grows, the volatility goes down? I believe this applies to traditional markets as well. It just takes more money to sway the price. Also if people see value in it, vs other assets, wouldn't they want to hold it, so wouldn't value be stored in it? Curious if you have any thoughts about that.
- nextaccountic 5y ago
  The trouble with the usual measures of market cap, trading volume, etc. is that so much of it is faked. And lot of crypto is premined or is otherwise held by whales that don't have much use of it unless they find someone to dump their coins, and they have both means and motive to swing the market. So it's entirely possible that crypto market cap continues to "grow" but volatility just stay the same. But otherwise, yeah, if there's enough people to make the whales look comparatively smaller, it may get more stable.

daniel-thompson 5y ago

To be clear, what I said was that the real-world uses of crypto-as-a-medium-of-exchange are almost all tied to criminal activity. I didn't say anything at all about crypto-as-a-store-of-value. Like any fiat currency, crypto has value iff people think it has value, no surprises there. At the moment, crypto's value is heavily tied to speculation about massive increases in its future value, which is not sustainable in the long term and is the biggest blocker for the medium-of-exchange usecase. I have nothing against the idea of crypto - it's a good idea, especially with the stuff built on top of it around smart contracts, and the technology is neat - but until it stabilizes at predictable exchange rates it will never be used by the unsophisticated masses as a medium of exchange.