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>if I were a bank, bitcoin presents a compelling argument. The supply is finite. Do you think that the most important thing about the value of something is the

by dijit 4y ago

>if I were a bank, bitcoin presents a compelling argument. The supply is finite. Do you think that the most important thing about the value of something is the finite supply of it? Fiat currency is theoretically infinite since we abolished the gold standard, but seems to be compelling. Why would bitcoin be more compelling than gold (a finite store of wealth) or fiat currency (a fluctuating/volatile/infinite store of wealth)

gfodor 4y ago
You can own both gold and Bitcoin. At a minimum unless you think those who think bitcoin is ultimately worthless are right, it’s a way to diversify a gold-like asset class along the axis they are similar.
- epolanski 4y ago
  Let's compare a highly valuable and needed metal with 6000+ years of history as a solid investment, with...cryptocurrencies and their proven record of having no real life utility but lots of speculation. Makes sense.
  - defrost 4y ago
    > Let's compare a highly valuable and needed metal with 6000+ years of history as a solid investment Hi, I've worked in the global mineral exploration industry for decades, both as a mine worker, an exploration geophysicist, and as a compiler of a global DB that now backends the S&P mineral intelligence division. Let's clear up some things about gold. 1) It's valuable because it's valued .. That's pretty much it, it's kind of rare, its shiny, it "stands alone" as a noble metal that doesn't easily react. 2) Much needed - it's used in jewellry, it's essential in high end long life zero maintaince space electronics ... a great deal of other uses (Gold Speaker Cables!!) are just pure performative BD (ie. it's not "essential") - other metals are in the same ballpark for conductivity, etc. 3) The greatest single application for gold, once mined at great expense, is to be formed into ingots and sit about as bullion as "proof" of work (digging a super pit and spending > billion to recover it per annum) and proof of wealth. It's more or less solid crypto that persists after the power goes out, can be worn as shiny jewellery, and has some neat niche applications that it is essential for. I'm not a huge cyrpto fan, although I did hang on the cypher punk boards where the bitcoin paper was first announced (as I have a math background) - I'm no fan of the vast amount of energy wasted (IMHO) on both gold extraction and bitcoin mining.
    - epolanski 4y ago
      I don't understand how does that relates to calling a cryptocurrency a gold-like asset. There's nothing in the world with such a long history of a solid investment that goes back to ancient times on a global scale.
      - Ferret7446 4y ago
        They're saying that gold is a cryptocurrency-like asset. Gold's value is primarily that looks cool and it serves as proof of work: the work of finding, mining, and processing it. So basically, cryptocurrency (i.e. proof of work limited shiny token) has "a long history of a solid investment that goes back to ancient times on a global scale"
        epolanski 4y ago
        Gold's value stems from its unique properties as a metal and of its scarcicity.
        hem777 4y ago
        Bitcoin’s value stems from its unique properties as a digital network and of its scarcity.
        xigoi 4y ago
        What would those unique properties be?
        hem777 4y ago
        Permissionless, as in don’t need anyone’s approval and anyone can participate, transfer of value backed by trustless, as in don’t need to trust anyone’s word for it, global consensus system.
        epolanski 4y ago
  - gfodor 4y ago
    Your sarcastic reply was unnecessary, if you read my post you’ll see I carved out the case you’re talking about. Time will tell. If you can’t see literally any axis along which Bitcoin and gold are comparable, then I can’t really help you. It’s obvious there are some ways the two are comparable, even if you think these comparisons are weak or ultimately insufficient to hold up the price.
tnel77 4y ago
I personally find Bitcoin much easier to send to family than a chunk of gold, and Bitcoin’s block reward results in a far more favorable inflation rate than many currencies. There’s more to money than these two aspects, but they are IMO solid positives for Bitcoin.
- xwdv 4y ago
  What would a family even do with bitcoin or a chunk of gold?
  - strangattractor 4y ago
    Chunk of gold - go down to the local gold broker pay a fee to get dollars. Bitcoin - pay a fee to get it exchanged for dollars so that you can buy something before it loses it's value ($60K -> $17K). Or just use dollars.
    - tnel77 4y ago
      What if they were on the other side of the bull run where it went $3.5k -> $65k? Why only focus on the maximum loss scenario?
      - phs318u 4y ago
        That would arguably feel worse for the sender. "I did what?!" No thanks :)
      - jevgeni 4y ago
        Yes, let's focus on the *positive* returns of Enron, you guys.
      - strangattractor 4y ago
        They likely saw the $65K and listened to all the people that said it was going to $100K and never sold - watching it plummet. The "what if" scenario is pretty useless considering the entire point of any currency is to maintain value - which allows the predictable purchase of things creating an efficient market. One of the original arguments for BitCoin was that it would maintain it's value during inflationary periods - clearly something it has not achieved. The justification for BitCoin seems to be a moving target - depending on whatever the perceived problems are - Dr BitCoin's economic cure all.
strangattractor 4y ago
You seem to be forgetting the hard forks of bitcoin. https://www.investopedia.com/tech/history-bitcoin-hard-forks/ https://www.investopedia.com/tech/history-bitcoin-hard-forks... Creating new digital currencies is also rampant. It seems to me that a finite representation of the current wealth of the economy (the money in circulation) is not even desirable. New things are being created all the time that increase that wealth. It seems reasonable to be able to adjust the amount of currency in circulation to reflect that.
britneybitch 4y ago
I think he means the compelling aspect is its fixed monetary policy. Gold deposits can be discovered (Uganda) or asteroids mined. Governments actively change their monetary policy. But bitcoin, for the first time in history, sets monetary policy in stone and gives all participants perfect information (in the game theoretic sense). I'm not saying that's overall good or bad, but it certainly makes predicting the future easier!
- acdha 4y ago
  > But bitcoin, for the first time in history, sets monetary policy in stone and gives all participants perfect information This is as true as saying that the United States Department of Treasury sets the supply of dollars in stone. Bitcoin is as fixed as the relatively small number of parties who run the network want it to be. If enough of them wanted to fork it, remove the deflationary model, change their rewards, etc. most users would be dragged along for the ride because there’s no anchor.
  - fyloraspit 4y ago
    What would be the shared motive for any of that tho? Like considering the requirements for forking (and the likely crash / loss of value) does that not present more of an anchor than most / all fiat systems which are regularly debased?
    - acdha 4y ago
      Say the mining rewards fall off as planned and electricity prices go up. What percentage of miners is going to stand up for purity of the original vision versus voting for them to make more money? As we’ve seen so many times already, wasting lots of resources doesn’t make cryptocurrency middlemen any less tempted to abuse their positions, there’s nothing like the democratic accountability which keeps most sovereign currencies more stable than Bitcoin, and every major holder knows that they’re holding the weakest fiat currency and will only profit if they cash out ahead of everyone else.
- legutierr 4y ago
bonestamp2 4y ago
Nobody said it would be more compelling than gold or fiat. Even if it's less compelling than both, banks still like to diversify.
- danaris 4y ago
  ....Actually, lots of people have been saying cryptocurrency is or would be more compelling than gold or fiat for several years now, and deriding those of us who disagreed with phrasing like "how do you like being poor?"

by dijit 4y ago

gfodor 4y ago

You can own both gold and Bitcoin. At a minimum unless you think those who think bitcoin is ultimately worthless are right, it’s a way to diversify a gold-like asset class along the axis they are similar.

epolanski 4y ago
Let's compare a highly valuable and needed metal with 6000+ years of history as a solid investment, with...cryptocurrencies and their proven record of having no real life utility but lots of speculation. Makes sense.
- defrost 4y ago
  > Let's compare a highly valuable and needed metal with 6000+ years of history as a solid investment Hi, I've worked in the global mineral exploration industry for decades, both as a mine worker, an exploration geophysicist, and as a compiler of a global DB that now backends the S&P mineral intelligence division. Let's clear up some things about gold. 1) It's valuable because it's valued .. That's pretty much it, it's kind of rare, its shiny, it "stands alone" as a noble metal that doesn't easily react. 2) Much needed - it's used in jewellry, it's essential in high end long life zero maintaince space electronics ... a great deal of other uses (Gold Speaker Cables!!) are just pure performative BD (ie. it's not "essential") - other metals are in the same ballpark for conductivity, etc. 3) The greatest single application for gold, once mined at great expense, is to be formed into ingots and sit about as bullion as "proof" of work (digging a super pit and spending > billion to recover it per annum) and proof of wealth. It's more or less solid crypto that persists after the power goes out, can be worn as shiny jewellery, and has some neat niche applications that it is essential for. I'm not a huge cyrpto fan, although I did hang on the cypher punk boards where the bitcoin paper was first announced (as I have a math background) - I'm no fan of the vast amount of energy wasted (IMHO) on both gold extraction and bitcoin mining.
  - epolanski 4y ago
    I don't understand how does that relates to calling a cryptocurrency a gold-like asset. There's nothing in the world with such a long history of a solid investment that goes back to ancient times on a global scale.
    - Ferret7446 4y ago
      They're saying that gold is a cryptocurrency-like asset. Gold's value is primarily that looks cool and it serves as proof of work: the work of finding, mining, and processing it. So basically, cryptocurrency (i.e. proof of work limited shiny token) has "a long history of a solid investment that goes back to ancient times on a global scale"
      - epolanski 4y ago
        Gold's value stems from its unique properties as a metal and of its scarcicity.
        hem777 4y ago
        Bitcoin’s value stems from its unique properties as a digital network and of its scarcity.
        xigoi 4y ago
        What would those unique properties be?
        hem777 4y ago
        Permissionless, as in don’t need anyone’s approval and anyone can participate, transfer of value backed by trustless, as in don’t need to trust anyone’s word for it, global consensus system.
        epolanski 4y ago
- gfodor 4y ago
  Your sarcastic reply was unnecessary, if you read my post you’ll see I carved out the case you’re talking about. Time will tell. If you can’t see literally any axis along which Bitcoin and gold are comparable, then I can’t really help you. It’s obvious there are some ways the two are comparable, even if you think these comparisons are weak or ultimately insufficient to hold up the price.

tnel77 4y ago

I personally find Bitcoin much easier to send to family than a chunk of gold, and Bitcoin’s block reward results in a far more favorable inflation rate than many currencies. There’s more to money than these two aspects, but they are IMO solid positives for Bitcoin.

xwdv 4y ago
What would a family even do with bitcoin or a chunk of gold?
- strangattractor 4y ago
  Chunk of gold - go down to the local gold broker pay a fee to get dollars. Bitcoin - pay a fee to get it exchanged for dollars so that you can buy something before it loses it's value ($60K -> $17K). Or just use dollars.
  - tnel77 4y ago
    What if they were on the other side of the bull run where it went $3.5k -> $65k? Why only focus on the maximum loss scenario?
    - phs318u 4y ago
      That would arguably feel worse for the sender. "I did what?!" No thanks :)
    - jevgeni 4y ago
      Yes, let's focus on the *positive* returns of Enron, you guys.
    - strangattractor 4y ago
      They likely saw the $65K and listened to all the people that said it was going to $100K and never sold - watching it plummet. The "what if" scenario is pretty useless considering the entire point of any currency is to maintain value - which allows the predictable purchase of things creating an efficient market. One of the original arguments for BitCoin was that it would maintain it's value during inflationary periods - clearly something it has not achieved. The justification for BitCoin seems to be a moving target - depending on whatever the perceived problems are - Dr BitCoin's economic cure all.

strangattractor 4y ago

You seem to be forgetting the hard forks of bitcoin. https://www.investopedia.com/tech/history-bitcoin-hard-forks/ https://www.investopedia.com/tech/history-bitcoin-hard-forks... Creating new digital currencies is also rampant. It seems to me that a finite representation of the current wealth of the economy (the money in circulation) is not even desirable. New things are being created all the time that increase that wealth. It seems reasonable to be able to adjust the amount of currency in circulation to reflect that.

britneybitch 4y ago

I think he means the compelling aspect is its fixed monetary policy. Gold deposits can be discovered (Uganda) or asteroids mined. Governments actively change their monetary policy. But bitcoin, for the first time in history, sets monetary policy in stone and gives all participants perfect information (in the game theoretic sense). I'm not saying that's overall good or bad, but it certainly makes predicting the future easier!

acdha 4y ago
> But bitcoin, for the first time in history, sets monetary policy in stone and gives all participants perfect information This is as true as saying that the United States Department of Treasury sets the supply of dollars in stone. Bitcoin is as fixed as the relatively small number of parties who run the network want it to be. If enough of them wanted to fork it, remove the deflationary model, change their rewards, etc. most users would be dragged along for the ride because there’s no anchor.
- fyloraspit 4y ago
  What would be the shared motive for any of that tho? Like considering the requirements for forking (and the likely crash / loss of value) does that not present more of an anchor than most / all fiat systems which are regularly debased?
  - acdha 4y ago
    Say the mining rewards fall off as planned and electricity prices go up. What percentage of miners is going to stand up for purity of the original vision versus voting for them to make more money? As we’ve seen so many times already, wasting lots of resources doesn’t make cryptocurrency middlemen any less tempted to abuse their positions, there’s nothing like the democratic accountability which keeps most sovereign currencies more stable than Bitcoin, and every major holder knows that they’re holding the weakest fiat currency and will only profit if they cash out ahead of everyone else.
legutierr 4y ago

bonestamp2 4y ago

Nobody said it would be more compelling than gold or fiat. Even if it's less compelling than both, banks still like to diversify.

danaris 4y ago
....Actually, lots of people have been saying cryptocurrency is or would be more compelling than gold or fiat for several years now, and deriding those of us who disagreed with phrasing like "how do you like being poor?"