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i know here on hacker news we tend to see everything from the technical perspective and that means bitcoin isn't very interesting. But, try and see things from

i know here on hacker news we tend to see everything from the technical perspective and that means bitcoin isn't very interesting. But, try and see things from a financial perspective. the value proposition of crypto has nothing to with decentralization. Bitcoin isn't about Bitcoin. The reason bitcoin is valuable has more to do with what's happening with governments and fiat currencies than anything about crypto or bitcoin. Ask anyone, why they got into bitcoin, ask any company that got into holding bitcoin instead of cash: they'll tell you: It basically boils down to "I lost faith in fiat". There's been a huge 50 year bond bubble brewing and 100 year government bubble brewing where govt uses larger and larger amounts of GDP with ever larger debts. The explosion of debt is insane. Ask any financial professional, and they'll tell you with all that leverage in the system, there absolutely WILL be a deleveraging. The govts of the world will NOT be able to meet all their obligations. They can't raise taxes and they can't cut spending. That means, they must default on their currency (this is basically just a huge huge tax on anyone who's holding cash or bonds, even if inflation only stays at 10%, that 100K tax per year on anyone holding a million dollars). And when the Dollar and all the other fiats of the world go bust, you're only going to want to hold 3 asset classes: Equities, Real estate and commodities (gold and bitcoin). Real estate is hard to execute and not scalable at all. Gold, can't be held outside an IRA. So, what does that leave? just Equities and Bitcoin. and anyone that wants any diversification is going to need some bitcoin. one by one sooner or later, everyone is going to come to this conclusion, it's just a matter of time. the future will be one where a 60/40 portfolio is not 60 stock/40 bonds but 60 stock/40 bitcoin. Bitcoin isn't attractive. On the titanic, do you think, anyone wants to get onto a rickety row boat with no seaworthiness whatsoever? While the music is still playing and party is going, no one gets on board. But, when it becomes clear that the titanic is sinking, everyone's rushing to get onboard. and when Fiat sinks, there's really only a few liferafs: equities, real estate, gold and bitcoin.

nradov 4y ago
Nah. Except for a tiny minority of true believers, Bitcoin is just a trading vehicle. The line goes up or down. Traders win or lose. Faith in fiat currency or lack thereof doesn't enter into it. Don't believe the hype. To the extent there is any real value it's primarily a means for wealthy Chinese to evade currency controls.
- throw8383833jj 4y ago
  if wealthy chinese did use to evade currency controls, it sure is trackable with all those YKC rules, not to mention a completely open ledger. China could easily find anyone who did that. Fiat is much better for evading currency controls. so, if you had money/life savings where would you put it?
- tradertef 4y ago
  When you state "Fiat" currency, you are probably referring to USD or Euros. Fiat currency in other countries like Venezuella or Turkey has much different status. Do you have any proof that Bitcoin's value is driven by wealthy Chinese who are evading currency controls?
somewhereoutth 4y ago
I'm sorry, in the nicest possible way, this is complete nonsense. Governments can, will, and have printed money to pay their debts. Indeed, for sovereign currency issuers, debt (or whatever) is just an accounting measure. A certain amount of material wealth is collected by government in the form of taxes and redistributed back to society in accordance with the policies of the day. Debt and other financial instruments are just to smooth the process. Bitcoin will never be a meaningful asset class, anymore than any other pyramid investment scheme.
- dogman144 4y ago
  You must be aware countries have defaulted, even the USA superpowers of the time? Nothing about that is nonsense, it’s in history books. Whether or not the USA reached that point in our lifetimes as OP is pretty sure will happen, idk, hard to say.
- throw8383833jj 4y ago
  the default i'm talking about is inflation: it's a soft default. and in the end most of that debt your talking about, will be paid for by those holding cash and bonds.
  - somewhereoutth 4y ago
    The value of the dollar, relative to the usual basket of goods and services has no bearing on the value of bitcoin, relative to the dollar. None whatsoever. To imagine that the price of bitcoin will go up to match the inflation of the dollar is quite frankly whimsical.
bluelightning2k 4y ago
Even as a crypto-sceptic I must give you some serious props for a very well-thought out and written comment. I found this somewhat persuasive. But despite being very well written, all this does is say why not fiat. If you're looking for a store of value, why not gold? If you're looking to put the money to work, why not value-creating such as real-estate or stocks, growing the wealth through value-creation?
- dogman144 4y ago
  OP doesn’t cover btc as a native machine<>machine or digital economy discrete value transfer mechanism. Gold can’t do that, presumably computers will still be around post-default though so the need exists. People will pay each other with venmo still, just maybe not redeemable for fiat vs crypto.
  - politician 4y ago
    Truthfully, FedNow (2023 launch) fills this use case better than BTC: once the receiving FI gets notice they have 8 seconds to settle the transaction.
- throw8383833jj 4y ago
  Gold would be great but in the US, it's practically uninvestible unless you have a lot of money in a IRA (a tough feat given the yearly contribution limit). Gold is taxed as a collectible. your "gain" is taxed at 28%. But, gain isn't gain anymore. all that so called gain is just your principle when the dollar value goes from 50K to 1 million but your purchasing power is the same as before. so you'll loose 28% of your principle in the long run, if you hold it outside of an IRA. Real estate also sounds promising. I'd love to own real estate over bitcoin. but, have you actually done it? i mean buy property as an investment. i have a real estate buddy that just told us an hour long horror story of all the stuff that can go wrong with buying and holding real estate, the renting issues truely are the stuff of horror stories are made of. So, all that's left is equities and bitcoin. and I don't want everything to be in equities.
mrwh 4y ago
Wouldn't we expect tough economic times to equate to a rise in Bitcoin's value, if that is the hypothesis?
hnthrow1010 4y ago
>It basically boils down to "I lost faith in fiat". Well, this makes no sense, because the value of crypto is also a fiat backed by nothing. With crypto it's not just the government you have to worry about, any person can mint infinite numbers of new crypto tokens, pump and dump them, take out massive debts and gain infinite leverage and then debase anything they want. The massive collapses and bankruptcies in crypto over the last few months should show you that the rickety row boat is actually an illusion, and you're really just stepping off into the water with no lifejacket. My suggestion? Take a swimming class, if you get my analogy.
- throw8383833jj 4y ago
  bitcoin is not fiat.
  - hnthrow1010 4y ago
    But it actually is though, "fiat" is just another one of those words that crypto promoters have redefined to mean something that it doesn't. The original definition was a currency that isn't backed by a commodity, its value is derived from some group (typically a government) declaring a fiat that it has a certain value they give it. That's why it's called "fiat currency". If bitcoin were a currency (it actually isn't) it would definitely be a fiat currency, because it also has no value from any commodity or consuming demand. The value is derived completely from whatever someone else is willing to pay for it. The idea that bitcoin represents some kind of "digital gold" is simply false.
    - throw8383833jj 4y ago
      bitcoin supply is limited to 21 million. that's key. Meanwhile fiat currencies across the world are the governments escape vehicle for collecting the enormous taxes they're going to need to collect for their enormous debts, via inflation. this isn't just my assessment. Financial professionals (on net) across the world are dumping cash and bonds in record amounts. This is why the feds across the world needs to constantly buy up more and more bonds.
waynesonfire 4y ago
I think you have it wrong. crypto unlocks a financial api to the masses, which is why the foundation is decentralized. Nothing to do with whether the entire stack has to be decentralized. The freedom that's unlocked is that anyone with a great idea can create a fintech company, like a bank, that would historically require massive captial to build such a network. That is what a distributed ledge brings to the table.
pjc50 4y ago
There's a bait-and-switch, or motte-and-bailey argument going on here: - currencies can collapse. Venezuela, Zimbabwe; you could add Argentina and (checks chart) Turkey to this list. Against what do they collapse? The dollar. - therefore the dollar will collapse <= this is the "show your working" bit - therefore people will hold an asset class that does not pay dividends or coupons, indefinitely, against the possibility of this event > They can't raise taxes and they can't cut spending They absolutely can if the alternative is SHTF. There is also an assumption that bitcoin owners will be allowed on to their reserved lifeboat with no government intervention, which I wouldn't guarantee if SHTF badly enough. It's already been banned in China and India. I suppose the plan is to get enough senators bought-in that they'll protect you.
- throw8383833jj 4y ago
  > They absolutely can if the alternative is SHTF. Look at the 100 year long term trend for all countries worldwide. There's a rather shocking chart out there that shows the massive increase in govt spending as % of GDP. whereas it was in the single digits about 100 years ago, now it's in the 30-50% range for most countries. I just don't see this trend reversing.
  - pjc50 4y ago
    100 years ago was 1922. The world was an extremely different place then. This is like saying that air travel has increased massively since 1900. 1922: - PRC does not exist - India is a UK colony; most of Africa is not independent countries - Japan in "great power catchup" phase - Soviet Union has just formed and the war against the White Russian forces has not yet ended
danans 4y ago
> Ask anyone, why they got into bitcoin, ask any company that got into holding bitcoin instead of cash: they'll tell you: It basically boils down to "I lost faith in fiat". Huh, nearly everyone I have asked basically told me they want to get rich (like FU money rich), quickly.

nradov 4y ago

Nah. Except for a tiny minority of true believers, Bitcoin is just a trading vehicle. The line goes up or down. Traders win or lose. Faith in fiat currency or lack thereof doesn't enter into it. Don't believe the hype. To the extent there is any real value it's primarily a means for wealthy Chinese to evade currency controls.

throw8383833jj 4y ago
if wealthy chinese did use to evade currency controls, it sure is trackable with all those YKC rules, not to mention a completely open ledger. China could easily find anyone who did that. Fiat is much better for evading currency controls. so, if you had money/life savings where would you put it?
tradertef 4y ago
When you state "Fiat" currency, you are probably referring to USD or Euros. Fiat currency in other countries like Venezuella or Turkey has much different status. Do you have any proof that Bitcoin's value is driven by wealthy Chinese who are evading currency controls?

somewhereoutth 4y ago

I'm sorry, in the nicest possible way, this is complete nonsense. Governments can, will, and have printed money to pay their debts. Indeed, for sovereign currency issuers, debt (or whatever) is just an accounting measure. A certain amount of material wealth is collected by government in the form of taxes and redistributed back to society in accordance with the policies of the day. Debt and other financial instruments are just to smooth the process. Bitcoin will never be a meaningful asset class, anymore than any other pyramid investment scheme.

dogman144 4y ago
You must be aware countries have defaulted, even the USA superpowers of the time? Nothing about that is nonsense, it’s in history books. Whether or not the USA reached that point in our lifetimes as OP is pretty sure will happen, idk, hard to say.
throw8383833jj 4y ago
the default i'm talking about is inflation: it's a soft default. and in the end most of that debt your talking about, will be paid for by those holding cash and bonds.
- somewhereoutth 4y ago
  The value of the dollar, relative to the usual basket of goods and services has no bearing on the value of bitcoin, relative to the dollar. None whatsoever. To imagine that the price of bitcoin will go up to match the inflation of the dollar is quite frankly whimsical.

bluelightning2k 4y ago

Even as a crypto-sceptic I must give you some serious props for a very well-thought out and written comment. I found this somewhat persuasive. But despite being very well written, all this does is say why not fiat. If you're looking for a store of value, why not gold? If you're looking to put the money to work, why not value-creating such as real-estate or stocks, growing the wealth through value-creation?

dogman144 4y ago
OP doesn’t cover btc as a native machine<>machine or digital economy discrete value transfer mechanism. Gold can’t do that, presumably computers will still be around post-default though so the need exists. People will pay each other with venmo still, just maybe not redeemable for fiat vs crypto.
- politician 4y ago
  Truthfully, FedNow (2023 launch) fills this use case better than BTC: once the receiving FI gets notice they have 8 seconds to settle the transaction.
throw8383833jj 4y ago
Gold would be great but in the US, it's practically uninvestible unless you have a lot of money in a IRA (a tough feat given the yearly contribution limit). Gold is taxed as a collectible. your "gain" is taxed at 28%. But, gain isn't gain anymore. all that so called gain is just your principle when the dollar value goes from 50K to 1 million but your purchasing power is the same as before. so you'll loose 28% of your principle in the long run, if you hold it outside of an IRA. Real estate also sounds promising. I'd love to own real estate over bitcoin. but, have you actually done it? i mean buy property as an investment. i have a real estate buddy that just told us an hour long horror story of all the stuff that can go wrong with buying and holding real estate, the renting issues truely are the stuff of horror stories are made of. So, all that's left is equities and bitcoin. and I don't want everything to be in equities.

mrwh 4y ago

Wouldn't we expect tough economic times to equate to a rise in Bitcoin's value, if that is the hypothesis?

hnthrow1010 4y ago

>It basically boils down to "I lost faith in fiat". Well, this makes no sense, because the value of crypto is also a fiat backed by nothing. With crypto it's not just the government you have to worry about, any person can mint infinite numbers of new crypto tokens, pump and dump them, take out massive debts and gain infinite leverage and then debase anything they want. The massive collapses and bankruptcies in crypto over the last few months should show you that the rickety row boat is actually an illusion, and you're really just stepping off into the water with no lifejacket. My suggestion? Take a swimming class, if you get my analogy.

throw8383833jj 4y ago
bitcoin is not fiat.
- hnthrow1010 4y ago
  But it actually is though, "fiat" is just another one of those words that crypto promoters have redefined to mean something that it doesn't. The original definition was a currency that isn't backed by a commodity, its value is derived from some group (typically a government) declaring a fiat that it has a certain value they give it. That's why it's called "fiat currency". If bitcoin were a currency (it actually isn't) it would definitely be a fiat currency, because it also has no value from any commodity or consuming demand. The value is derived completely from whatever someone else is willing to pay for it. The idea that bitcoin represents some kind of "digital gold" is simply false.
  - throw8383833jj 4y ago
    bitcoin supply is limited to 21 million. that's key. Meanwhile fiat currencies across the world are the governments escape vehicle for collecting the enormous taxes they're going to need to collect for their enormous debts, via inflation. this isn't just my assessment. Financial professionals (on net) across the world are dumping cash and bonds in record amounts. This is why the feds across the world needs to constantly buy up more and more bonds.

waynesonfire 4y ago

I think you have it wrong. crypto unlocks a financial api to the masses, which is why the foundation is decentralized. Nothing to do with whether the entire stack has to be decentralized. The freedom that's unlocked is that anyone with a great idea can create a fintech company, like a bank, that would historically require massive captial to build such a network. That is what a distributed ledge brings to the table.

pjc50 4y ago

There's a bait-and-switch, or motte-and-bailey argument going on here: - currencies can collapse. Venezuela, Zimbabwe; you could add Argentina and (checks chart) Turkey to this list. Against what do they collapse? The dollar. - therefore the dollar will collapse <= this is the "show your working" bit - therefore people will hold an asset class that does not pay dividends or coupons, indefinitely, against the possibility of this event > They can't raise taxes and they can't cut spending They absolutely can if the alternative is SHTF. There is also an assumption that bitcoin owners will be allowed on to their reserved lifeboat with no government intervention, which I wouldn't guarantee if SHTF badly enough. It's already been banned in China and India. I suppose the plan is to get enough senators bought-in that they'll protect you.

throw8383833jj 4y ago
> They absolutely can if the alternative is SHTF. Look at the 100 year long term trend for all countries worldwide. There's a rather shocking chart out there that shows the massive increase in govt spending as % of GDP. whereas it was in the single digits about 100 years ago, now it's in the 30-50% range for most countries. I just don't see this trend reversing.
- pjc50 4y ago
  100 years ago was 1922. The world was an extremely different place then. This is like saying that air travel has increased massively since 1900. 1922: - PRC does not exist - India is a UK colony; most of Africa is not independent countries - Japan in "great power catchup" phase - Soviet Union has just formed and the war against the White Russian forces has not yet ended

danans 4y ago

> Ask anyone, why they got into bitcoin, ask any company that got into holding bitcoin instead of cash: they'll tell you: It basically boils down to "I lost faith in fiat". Huh, nearly everyone I have asked basically told me they want to get rich (like FU money rich), quickly.