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Bitcoin has value for the same reason Visa has value. A medium of exchange is a tool, and tools people use have value. I grant the majority of the market is s

by lrvick 4y ago

Bitcoin has value for the same reason Visa has value. A medium of exchange is a tool, and tools people use have value. I grant the majority of the market is speculation but many of us actually regularly use Bitcoin for things like payroll, settling debts, cheap international value transfer, buying coffee, and for cash-like privacy for online purchases. For those like me that have been continually buying, saving, and spending bitcoin for a decade, vs simply speculating, dollar cost averaging kicks in. Even 300% price swings do not matter all that much in the long run. Those that go all-in short term looking to gamble get wrecked, but that is often the case in trading. Bitcoin will be healthier when the short term traders are forced out.

igorkraw 4y ago
Using this logic, we can value 1 bitcoin at 7/1700* 442billion /21 million = 87$ (Bitcoin Tps divided by Visa TPS times first visa market cap I found divided by number of Bitcoins ). Except if course, if you buy a piece of visa, you get a dividend and legal rights, while owning a Bitcoin gets you the privilege of paying miners to extract that value. So really, that 7/1700*442e9 $ is the value of those who own the network (the miners), not the users.
- lrvick 4y ago
  The miners have no incentive to mine unless there are a large number of people choosing to exchange Bitcoin giving it buying power to offset electricity cost.
  - igorkraw 4y ago
    So you are saying there is no value to be extracted? Shocking
    - lrvick 4y ago
      I feel certain you understood that is not at all what I was saying.
dendriti 4y ago
Visa is not a medium of exchange. This is a sad take.
- lrvick 4y ago
  I assume you have used credit cards.
  - ChrisLomont 4y ago
    Visa is a company processing transactions for a medium of exchange, which is USD (or other currencies). Visa is not a medium of exchange any more than a local bank is.
    - nextstepguy 4y ago
      So Visa is similar to miners on Bitcoin blockchain and bitcoin is the medium of exchange?
scoopertrooper 4y ago
You shouldn't have your wealth stored in a medium of exchange, while expecting capital appreciation exceeding or even comparable to the equity market. That kind of volatility is a sign of there being something seriously wrong with that medium of exchange.
- lrvick 4y ago
  Storing wealth in an -inflationary- asset like fiat currency is a stupid move, I grant. I store value in a mix of fixed quantity or -deflationary- assets that are useful or interesting to me like art, vehicles, real estate, and yes... crypto-assets. The latter is perhaps the most volatile but also has the highest liquidity, is fireproof, can be traded for other assets anonymously, etc. Tradeoffs.
  - cmrdporcupine 4y ago
    Calls fiat currency inflationary while advocating a "currency" that has had (as of this moment) 45.92% inflation YoY and is rapidly getting worse. Nice religion you got there.
    - datadata 4y ago
      Normally by inflation it is meant "monetary inflation", price has no bearing on this.
      - cmrdporcupine 4y ago
        So you agree it's not money then.
        datadata 4y ago
        That is irrelevant here. The argument that bitcoin is not inflationary is merely that it has a supply cap. USD has no supply cap but it obviously has lower price volatility. That said, it is the Fed's goal to purposefully reduce the purchasing power of USD by 2% every year, so the trajectory is clear.
listenallyall 4y ago
> many of us actually regularly use Bitcoin for things like payroll Please define "many" when it comes to settling payroll to employees.
- lrvick 4y ago
  I run a high-risk security and applied cryptography consulting firm so naturally most of my clients are in the crypto-asset industry. Multiple offer payroll in crypto-assets to all staff, and one pays all employees in it exclusively to avoid hires that do not have an interest in the space. I pay most subcontractors in Bitcoin too. Unlike paying in company stock you do not deal with nonsense like AMT or blackout periods. I for one am thankful for the regular clients that pay me in crypto-assets, and wish all would. It saves me having to buy from exchanges. Makes for an easy dollar-cost-averaging strategy too.
  - somewhereoutth 4y ago
    So the advantage of using crypto is that it is good for those that use crypto? Your argument is circular. > avoid hires that do not have an interest in the space > saves me having to buy from exchanges
    - dubswithus 4y ago
      You omitted one of their arguments: > Unlike paying in company stock you do not deal with nonsense like AMT or blackout periods.
      - somewhereoutth 4y ago
        so pay in cash, not funny stock.
        dubswithus 4y ago
        I guess GP likes it? I think plenty of hobbies, sports, and events are stupid. But there are whole industries built around them.
bb88 4y ago
> Bitcoin has value for the same reason Visa has value. No. Bitcoin has utility. Screws have utility also, they just don't have very much value.
- Turbots 4y ago
- petertodd 4y ago
  FWIW the global industrial fastener industry totaled $86 billion of revenue in 2020, or about $11/person: https://www.grandviewresearch.com/industry-analysis/industrial-fasteners-market https://www.grandviewresearch.com/industry-analysis/industri...
  - deleted 4y ago
    [deleted]
  - squidbeak 4y ago
    Beautiful retort to a lazy argument.
- datadata 4y ago
  Visa has value (on top of it's utility) because it is able to take a 1-3% cut of all payments that use the visa network. Suppose bitcoin gave the equivalent utility as visa but for negligible fees. In this world, you would have the same utility for a lower cost, and the equity value of Visa would conceivably go to zero. My point is that converting utility to value depends on the ability to monetize something. If there was somehow a screw monopoly, I'm guessing the "value" of screws would go way up even with fixed utility. This of course was also true when the cost of producing a screw was much higher in the past. Technology is deflationary. I don't know what the value of bitcoin should be (nor do I think it has comparable utility to visa), but we are undoubtedly in world where too much value is extracted from financial services relative to the utility that they provide. I think that will be disrupted, but have no idea what, if anything, will be valuable after it is disrupted.
knorker 4y ago
> Bitcoin has value for the same reason Visa has value. No. Visa has contracts, offices, and cash. They have over $81B in assets, over $12B of which is cold hard cash.[1] Visa also has employees who know what they're doing. Bitcoin has cryptocurrency industry people working on its behalf. It's not the same thing. Bitcoin has people and companies invested in it (emotionally and financially). Visa has almost a hundred billion dollars in assets, and the market believes they'll be able to make even more (hence the almost $400B market cap). Visa's market cap is just 4-5x its current assets.[2] Bitcoin has no assets. It's just speculation. It can't be liquidated even in theory. [1] https://s1.q4cdn.com/050606653/files/doc_financials/2022/q2/Q2-2022-Earnings-Release-_FINAL.pdf https://s1.q4cdn.com/050606653/files/doc_financials/2022/q2/... [2] ok, so it also has liabilities. But my point stands. Visa has value in a way that Bitcoin doesn't.
- datadata 4y ago
  > Bitcoin has no assets. Cash just as well "has no assets". You can't just compare bitcoin to a corporation and get something that makes sense.
  - knorker 4y ago
    Two things: > You can't just compare bitcoin to a corporation and get something that makes sense. 1) I agree. I was replying to a comment that did. > Cash just as well "has no assets". 2) USD is backed, ultimately, by the full force of the nuclear armed state and multiple branches of the biggest military the world has ever seen. If you think the US government will allow USD to become irrelevant then you are going to be very disappointed. Bitcoin has no such thing.
    - datadata 4y ago
      No one said that USD is going anywhere. As you pointed out for bitcoin, the people who work on or invest in bitcoin are not part of the asset. This is the same for USD also. Visa equity is the most different amongst the three.
jmartin2683 4y ago
I believed all of that until the day I actually tried to accept it as currency at my business. It doesn’t work. Other things do the job much cheaper and faster… and without burning a small country worth of energy.
thehappypm 4y ago
As a medium of exchange, the price of one bitcoin should be kind of meaningless. As long as you can quickly do the transaction and cash out on the other end, it shouldn’t really matter if BTC IS $100 or $100,000.
- datadata 4y ago
  As a lower bound it would need to be high enough to support the largest supported transaction. If the market cap of bitcoin was only $100, you could not transact $200.
quickthrowman 4y ago
> Bitcoin has value for the same reason Visa has value. I disagree, Visa has value because it is a company that earns profits, ~$10B in FY 2021 ($5.xx per share, 2B shares outstanding) Bitcoin is not a company that earns profits, so any value ascribed to BTC cannot be for the same reasons Visa has value. In fact, BTC has zero intrinsic value.
smaryjerry 4y ago
Visa has also has value because it adds trust to the system. You can contest your charges and a lot of the fees go towards keeping that trust. Credit cards have tons of abuse but it’s backed by a level of insurance. I stopped using crypto because the fees were so high, it wasn’t simple (unless you use an exchange) and doesn’t come with that trust. Even the exchanges themselves fail because they are gambling with customer cash essentially. It’s like if my bank decides to put all the cash it was holding for me into Iraqi dinar because it has a feeling it was going to go up.
moistly 4y ago
> many of us There are 8 billion of us on this planet. There are maybe a hundred thousand bitcoin holders. A fraction of them actively use bitcoin. By any metric, “many of us” is an grossly incorrect statement.

by lrvick 4y ago

igorkraw 4y ago

Using this logic, we can value 1 bitcoin at 7/1700* 442billion /21 million = 87$ (Bitcoin Tps divided by Visa TPS times first visa market cap I found divided by number of Bitcoins ). Except if course, if you buy a piece of visa, you get a dividend and legal rights, while owning a Bitcoin gets you the privilege of paying miners to extract that value. So really, that 7/1700*442e9 $ is the value of those who own the network (the miners), not the users.

lrvick 4y ago
The miners have no incentive to mine unless there are a large number of people choosing to exchange Bitcoin giving it buying power to offset electricity cost.
- igorkraw 4y ago
  So you are saying there is no value to be extracted? Shocking
  - lrvick 4y ago
    I feel certain you understood that is not at all what I was saying.

dendriti 4y ago

Visa is not a medium of exchange. This is a sad take.

lrvick 4y ago
I assume you have used credit cards.
- ChrisLomont 4y ago
  Visa is a company processing transactions for a medium of exchange, which is USD (or other currencies). Visa is not a medium of exchange any more than a local bank is.
  - nextstepguy 4y ago
    So Visa is similar to miners on Bitcoin blockchain and bitcoin is the medium of exchange?

scoopertrooper 4y ago

You shouldn't have your wealth stored in a medium of exchange, while expecting capital appreciation exceeding or even comparable to the equity market. That kind of volatility is a sign of there being something seriously wrong with that medium of exchange.

lrvick 4y ago
Storing wealth in an -inflationary- asset like fiat currency is a stupid move, I grant. I store value in a mix of fixed quantity or -deflationary- assets that are useful or interesting to me like art, vehicles, real estate, and yes... crypto-assets. The latter is perhaps the most volatile but also has the highest liquidity, is fireproof, can be traded for other assets anonymously, etc. Tradeoffs.
- cmrdporcupine 4y ago
  Calls fiat currency inflationary while advocating a "currency" that has had (as of this moment) 45.92% inflation YoY and is rapidly getting worse. Nice religion you got there.
  - datadata 4y ago
    Normally by inflation it is meant "monetary inflation", price has no bearing on this.
    - cmrdporcupine 4y ago
      So you agree it's not money then.
      - datadata 4y ago
        That is irrelevant here. The argument that bitcoin is not inflationary is merely that it has a supply cap. USD has no supply cap but it obviously has lower price volatility. That said, it is the Fed's goal to purposefully reduce the purchasing power of USD by 2% every year, so the trajectory is clear.

listenallyall 4y ago

> many of us actually regularly use Bitcoin for things like payroll Please define "many" when it comes to settling payroll to employees.

lrvick 4y ago
I run a high-risk security and applied cryptography consulting firm so naturally most of my clients are in the crypto-asset industry. Multiple offer payroll in crypto-assets to all staff, and one pays all employees in it exclusively to avoid hires that do not have an interest in the space. I pay most subcontractors in Bitcoin too. Unlike paying in company stock you do not deal with nonsense like AMT or blackout periods. I for one am thankful for the regular clients that pay me in crypto-assets, and wish all would. It saves me having to buy from exchanges. Makes for an easy dollar-cost-averaging strategy too.
- somewhereoutth 4y ago
  So the advantage of using crypto is that it is good for those that use crypto? Your argument is circular. > avoid hires that do not have an interest in the space > saves me having to buy from exchanges
  - dubswithus 4y ago
    You omitted one of their arguments: > Unlike paying in company stock you do not deal with nonsense like AMT or blackout periods.
    - somewhereoutth 4y ago
      so pay in cash, not funny stock.
      - dubswithus 4y ago
        I guess GP likes it? I think plenty of hobbies, sports, and events are stupid. But there are whole industries built around them.

bb88 4y ago

> Bitcoin has value for the same reason Visa has value. No. Bitcoin has utility. Screws have utility also, they just don't have very much value.

Turbots 4y ago
petertodd 4y ago
FWIW the global industrial fastener industry totaled $86 billion of revenue in 2020, or about $11/person: https://www.grandviewresearch.com/industry-analysis/industrial-fasteners-market https://www.grandviewresearch.com/industry-analysis/industri...
- deleted 4y ago
  [deleted]
- squidbeak 4y ago
  Beautiful retort to a lazy argument.
datadata 4y ago
Visa has value (on top of it's utility) because it is able to take a 1-3% cut of all payments that use the visa network. Suppose bitcoin gave the equivalent utility as visa but for negligible fees. In this world, you would have the same utility for a lower cost, and the equity value of Visa would conceivably go to zero. My point is that converting utility to value depends on the ability to monetize something. If there was somehow a screw monopoly, I'm guessing the "value" of screws would go way up even with fixed utility. This of course was also true when the cost of producing a screw was much higher in the past. Technology is deflationary. I don't know what the value of bitcoin should be (nor do I think it has comparable utility to visa), but we are undoubtedly in world where too much value is extracted from financial services relative to the utility that they provide. I think that will be disrupted, but have no idea what, if anything, will be valuable after it is disrupted.

knorker 4y ago

> Bitcoin has value for the same reason Visa has value. No. Visa has contracts, offices, and cash. They have over $81B in assets, over $12B of which is cold hard cash.[1] Visa also has employees who know what they're doing. Bitcoin has cryptocurrency industry people working on its behalf. It's not the same thing. Bitcoin has people and companies invested in it (emotionally and financially). Visa has almost a hundred billion dollars in assets, and the market believes they'll be able to make even more (hence the almost $400B market cap). Visa's market cap is just 4-5x its current assets.[2] Bitcoin has no assets. It's just speculation. It can't be liquidated even in theory. [1] https://s1.q4cdn.com/050606653/files/doc_financials/2022/q2/Q2-2022-Earnings-Release-_FINAL.pdf https://s1.q4cdn.com/050606653/files/doc_financials/2022/q2/... [2] ok, so it also has liabilities. But my point stands. Visa has value in a way that Bitcoin doesn't.

datadata 4y ago
> Bitcoin has no assets. Cash just as well "has no assets". You can't just compare bitcoin to a corporation and get something that makes sense.
- knorker 4y ago
  Two things: > You can't just compare bitcoin to a corporation and get something that makes sense. 1) I agree. I was replying to a comment that did. > Cash just as well "has no assets". 2) USD is backed, ultimately, by the full force of the nuclear armed state and multiple branches of the biggest military the world has ever seen. If you think the US government will allow USD to become irrelevant then you are going to be very disappointed. Bitcoin has no such thing.
  - datadata 4y ago
    No one said that USD is going anywhere. As you pointed out for bitcoin, the people who work on or invest in bitcoin are not part of the asset. This is the same for USD also. Visa equity is the most different amongst the three.

jmartin2683 4y ago

I believed all of that until the day I actually tried to accept it as currency at my business. It doesn’t work. Other things do the job much cheaper and faster… and without burning a small country worth of energy.

thehappypm 4y ago

As a medium of exchange, the price of one bitcoin should be kind of meaningless. As long as you can quickly do the transaction and cash out on the other end, it shouldn’t really matter if BTC IS $100 or $100,000.

datadata 4y ago
As a lower bound it would need to be high enough to support the largest supported transaction. If the market cap of bitcoin was only $100, you could not transact $200.

quickthrowman 4y ago

> Bitcoin has value for the same reason Visa has value. I disagree, Visa has value because it is a company that earns profits, ~$10B in FY 2021 ($5.xx per share, 2B shares outstanding) Bitcoin is not a company that earns profits, so any value ascribed to BTC cannot be for the same reasons Visa has value. In fact, BTC has zero intrinsic value.

smaryjerry 4y ago

Visa has also has value because it adds trust to the system. You can contest your charges and a lot of the fees go towards keeping that trust. Credit cards have tons of abuse but it’s backed by a level of insurance. I stopped using crypto because the fees were so high, it wasn’t simple (unless you use an exchange) and doesn’t come with that trust. Even the exchanges themselves fail because they are gambling with customer cash essentially. It’s like if my bank decides to put all the cash it was holding for me into Iraqi dinar because it has a feeling it was going to go up.

moistly 4y ago

> many of us There are 8 billion of us on this planet. There are maybe a hundred thousand bitcoin holders. A fraction of them actively use bitcoin. By any metric, “many of us” is an grossly incorrect statement.