4 ms·

Bitcoin just like any other currency, is worth exactly what people think it is worth. The entire financial system is basically a collective delusion of sorts. A

by donatj 5y ago

Bitcoin just like any other currency, is worth exactly what people think it is worth. The entire financial system is basically a collective delusion of sorts. Any currency can become worthless as faith in it drops out.

RobertoG 5y ago
If you demand a currency to pay taxes and fines, there is always going to be people that need to acquire it.
zwirbl 5y ago
This is often repeated, but it always ignores that there are state-level actors (often called a "state") propping up currencies, often supported by central banks. In this regard Bitcoin is definitely not "like any other currency". This is by no means exhaustive, there are a myriad of differences
- imaginator 5y ago
  Zimbabwe has entered the room. Also had a central bank before the last round of hyperinflation/reset. One could argue that the lack of a central bank is a feature. What other differences would would you imagine distinguish bitcoin from central bank currencies?
  - kergonath 5y ago
    “One state is doing terribly” (or even a handful of them, before someone mentions the Weimar republic) really is not equivalent to “it is impossible for a state to do it well”.
- deleted 5y ago
  [deleted]
bwb 5y ago
Caveat, national currencies are secured with economic power, a system of law, culture, military power, etc etc. It is a bit different. They aren't perfect either but there is more supporting what people "think" they are worth here. Bitcoin has it own culture and history, but it is still a baby. I do think bitcoin is a bit more like Gold, although Gold has real uses so that is still a bit of a rough comparison.
- hoseja 5y ago
  All of those are memes too.
- rjbwork 5y ago
  Don't forget that whole pesky "have to pay taxes to the state in their chosen currency under threat of the state monopoly on violence" thing. It is somewhat touched on in your first sentence, but at the end of the day, if you want to engage in productive economic activity in a particular jurisdiction, you must render what is Caesar's unto Caesar - and Caesar demands his preferred fiat.
  - md_ 5y ago
    Known as https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism, by the way. :) While these risks clearly _do_ apply to traditional currencies, I do think, as an investor, it's worth considering market cap (as a proxy for "social belief in") and history of stability. Bitcoin's market cap is probably (factoring in permanently lost coins) something like $750B, which makes it a bit smaller than, say, the Swiss franc, and its history of stability is much, much shorter.
    - rjbwork 5y ago
      Chartalism is more of an absolute. I don't claim that money has value only due to this reason, just that it is a significant component of the mass delusion.
      - md_ 5y ago
        Agreed, chartalism as the only explanation for assigned value is clearly empirically false. But as one mechanism, or perhaps one of the stable or reliable mechanisms, is somewhat convincing to me.
    - donatj 5y ago
      Is there a term for something between Metallism and Chartalism for the value of currency coming neither from innate value nor state backing, but rather our belief in it? That's where I land I guess. Magicism?
mattbrewsbytes 5y ago
I would counter that Bitcoin is not a currency. A currency is used as a medium to exchange goods/services so you don't have to take goats down to the market to purchase seed. It operates more like a stock than a currency and can be moved by any person/firm/entity that has a few billion dollars. I would venture a guess that the number of individuals using bitcoin to purchase goods/services is less than a couple percent of the total number of people that have bitcoin.
- jack_pp 5y ago
  It is a currency, a fairly new one that hasn't gained mass adoption yet, with many problems (tx cost and tx/s limits) but people can and do use it to buy stuff. My energy provider in Romania lets me pay my bills with bitcoin. That's like saying any new social media website you create isn't really a social media website because it has only 10 users.
  - mattbrewsbytes 5y ago
    If a currency hasn't gained mass adoption, I don't believe its a currency. I can claim I have a currency of green marbles and my son lets me buy candy from him with green marbles and he buys candy from a friend with green marbles so therefore its a currency. I'm not saying bitcoin can't get there, its certainly possible, but when the majority of use cases use terminology like "holding", "investing", "trading" its treated by users as more of a security/equity than a currency.
- bwb 5y ago
  we might be underestimating the market for drugs as that seems like the primary use
- donatj 5y ago
  You can pay for things with Cypto using PayPal, right now, and for a while now. It's a currency. I've paid for many things with crypto. https://www.paypal.com/us/smarthelp/article/how-to-use-crypto-at-checkout-faq4477 https://www.paypal.com/us/smarthelp/article/how-to-use-crypt...

by donatj 5y ago

RobertoG 5y ago

If you demand a currency to pay taxes and fines, there is always going to be people that need to acquire it.

zwirbl 5y ago

This is often repeated, but it always ignores that there are state-level actors (often called a "state") propping up currencies, often supported by central banks. In this regard Bitcoin is definitely not "like any other currency". This is by no means exhaustive, there are a myriad of differences

imaginator 5y ago
Zimbabwe has entered the room. Also had a central bank before the last round of hyperinflation/reset. One could argue that the lack of a central bank is a feature. What other differences would would you imagine distinguish bitcoin from central bank currencies?
- kergonath 5y ago
  “One state is doing terribly” (or even a handful of them, before someone mentions the Weimar republic) really is not equivalent to “it is impossible for a state to do it well”.
deleted 5y ago
[deleted]

bwb 5y ago

Caveat, national currencies are secured with economic power, a system of law, culture, military power, etc etc. It is a bit different. They aren't perfect either but there is more supporting what people "think" they are worth here. Bitcoin has it own culture and history, but it is still a baby. I do think bitcoin is a bit more like Gold, although Gold has real uses so that is still a bit of a rough comparison.

hoseja 5y ago
All of those are memes too.
rjbwork 5y ago
Don't forget that whole pesky "have to pay taxes to the state in their chosen currency under threat of the state monopoly on violence" thing. It is somewhat touched on in your first sentence, but at the end of the day, if you want to engage in productive economic activity in a particular jurisdiction, you must render what is Caesar's unto Caesar - and Caesar demands his preferred fiat.
- md_ 5y ago
  Known as https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism, by the way. :) While these risks clearly _do_ apply to traditional currencies, I do think, as an investor, it's worth considering market cap (as a proxy for "social belief in") and history of stability. Bitcoin's market cap is probably (factoring in permanently lost coins) something like $750B, which makes it a bit smaller than, say, the Swiss franc, and its history of stability is much, much shorter.
  - rjbwork 5y ago
    Chartalism is more of an absolute. I don't claim that money has value only due to this reason, just that it is a significant component of the mass delusion.
    - md_ 5y ago
      Agreed, chartalism as the only explanation for assigned value is clearly empirically false. But as one mechanism, or perhaps one of the stable or reliable mechanisms, is somewhat convincing to me.
  - donatj 5y ago
    Is there a term for something between Metallism and Chartalism for the value of currency coming neither from innate value nor state backing, but rather our belief in it? That's where I land I guess. Magicism?

mattbrewsbytes 5y ago

I would counter that Bitcoin is not a currency. A currency is used as a medium to exchange goods/services so you don't have to take goats down to the market to purchase seed. It operates more like a stock than a currency and can be moved by any person/firm/entity that has a few billion dollars. I would venture a guess that the number of individuals using bitcoin to purchase goods/services is less than a couple percent of the total number of people that have bitcoin.

jack_pp 5y ago
It is a currency, a fairly new one that hasn't gained mass adoption yet, with many problems (tx cost and tx/s limits) but people can and do use it to buy stuff. My energy provider in Romania lets me pay my bills with bitcoin. That's like saying any new social media website you create isn't really a social media website because it has only 10 users.
- mattbrewsbytes 5y ago
  If a currency hasn't gained mass adoption, I don't believe its a currency. I can claim I have a currency of green marbles and my son lets me buy candy from him with green marbles and he buys candy from a friend with green marbles so therefore its a currency. I'm not saying bitcoin can't get there, its certainly possible, but when the majority of use cases use terminology like "holding", "investing", "trading" its treated by users as more of a security/equity than a currency.
bwb 5y ago
we might be underestimating the market for drugs as that seems like the primary use
donatj 5y ago
You can pay for things with Cypto using PayPal, right now, and for a while now. It's a currency. I've paid for many things with crypto. https://www.paypal.com/us/smarthelp/article/how-to-use-crypto-at-checkout-faq4477 https://www.paypal.com/us/smarthelp/article/how-to-use-crypt...