7 ms·

No, this is an absolutely ass-backwards argument. To be a currency or a store of value or money (read: to be of any use) it has to be exchangeable for goods and

by thworp 3y ago

No, this is an absolutely ass-backwards argument. To be a currency or a store of value or money (read: to be of any use) it has to be exchangeable for goods and services. Now we can see transactions on the blockchain but we have no idea what that transaction was for. *Nobody* can tell you what a bitcoins worth of wheat is without resorting to exchange rates of bitcoin to actual currencies. But because the entire exchange ecosystem is so illiquid, intransparent, unaudited and rife with fraud there is no way to know how many bushels of wheat you could get for something like 13 BTC.

nwiswell 3y ago
Isn't this counter-argument equally applicable to silver or gold?
- paddw 3y ago
  Well, the problem is you can easily trade gold for cash because it is socially acceptable to do so. If Bitcoin became outlawed, it would be very hard to exchange Bitcoin for cash, since it has no extrinsic value outside of being a financial asset (as compared to, for example, barrels of crude oil). That being said, I doubt Bitcoin will be outlawed in the West, and generally agree that it will be around for the long term.
  - nwiswell 3y ago
    > That being said, I doubt Bitcoin will be outlawed in the West, and generally agree that it will be around for the long term. Well, not entirely without precedent, since private ownership of gold was outlawed nationwide in the US during the Great Depression. It wasn't fully legalized until 1974. https://en.m.wikipedia.org/wiki/Executive_Order_6102 https://en.m.wikipedia.org/wiki/Executive_Order_6102
    - mplanchard 3y ago
      This is an entirely new fact for me. It’s surprising to me that I’d never heard of this. Thanks for sharing!
      - nostrademons 3y ago
        Wait till you hear that the first chairman of the SEC was a notorious market manipulator who was hired by his friend FDR to prevent anyone else from doing the things that made him rich. He also happened to be JFK's dad. https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#Wall_Street_and_stock_market_investments https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#Wall_Str...
      - csomar 3y ago
        That's why history repeats. Most people have no idea what happened a 100 years ago.
- HWR_14 3y ago
  Yes.
chromatin 3y ago
Nobody can tell you what a gold oz. worth of wheat is without resorting to exchange rates of gold to actual currencies.
- ntr-- 3y ago
  I'll give you 1kg of wheat for an ounce of gold right now.
  - bhawks 3y ago
    I'll see your 1kg and raise to 100kg.
    - anonporridge 3y ago
      Congrats boys! We just created a market using gold as the unit of account!
- __loam 3y ago
  Gold has intrinsic value as a commodity though. It's scarce, has industrial uses, and has aesthetic value to a lot of people. Bitcoin doesn't have that. Bitcoin has value entirely because people think it has value. As an inflation hedge it fuckin sucks because it follows the market. When the fed increased rates, bitcoin crashed. As a store of value, it's too volatile to really work well for that and small mistakes can leave you with nothing. As a currency, the transactions per second is way way too low to be useful.
  - tasuki 3y ago
    > Gold has intrinsic value as a commodity though. It's scarce, has industrial uses, and has aesthetic value to a lot of people. Yet this value is a small fraction of gold's trading price. How do you explain the current price of gold?
    - bandrami 3y ago
mabcat 3y ago
You do need to separate medium of exchange from store of value. Real estate is useless as a currency while being the primary store of value for most people. Most of your objections also apply to real estate: can't know how much wheat a house is worth, houses are notoriously illiquid, price discovery is difficult and quite opaque, the sector is rife with misrepresentations. I wouldn't go so far as to say fraud, but where does "real estate agent" sit on those polls of "most trusted professions"? Houses aren't even fungible! And if anyone thinks BTC/ETH transactions are slow and expensive (me!), around here the gas fee on real estate transactions is ~5% with a 6-month processing time...
- peoplefromibiza 3y ago
  I guess the difference is that you can live in a house. For the majority of people that's the real value. Real estate market is also heavily (heavily) regulated, to the point that buying and selling houses require so much paperwork that it's not really convenient for scammers. It's also quite stable, loans are secured by mortgages on the properties, I'm not sure anyone would accept bitcoins for the same purpose.
  - thworp 3y ago
    You sort of tipped around the main difference: Real estate is illiquid and intransparent sure, but it is a non-fungible productive asset, you can get people to pay you rents because they need precisely your building. There are no comparable income streams for bitcoin (outside of Ponzi "yield farming") so it is illiquid without any of the benefits of traditional illiquid assets.
    - peoplefromibiza 3y ago
      rent is due after you bought the property. which entails a lot of the aforementioned paperwork and checks and law abidings. if bitcoin could provide the exact same level of security, it could be used as an asset, granted it failed as a currency. the problem is it was designed precisely to not adhere to the standards everyone expects from "old-school" transactions, hence its main purpose is speculation, and it's barely good at that right now.
fnordpiglet 3y ago
I don’t think any of this is accurate. My house is a store of value but not easily traded for goods and services, but can be sold for local currency to facilitate that exchange. There are many crypto exchanges with conversion to many currencies, including fiat currencies, but also between other crypto currencies. This is how price discovery is accomplished. If it were illiquid as you claim then there would be a ton of arbitrage opportunity in the inefficiencies and mispricings of crypto currencies. However in recent times prices are fairly rational across exchanges and conversion to fiat. The fraud claims you have seen overblown, FTX not withstanding. But I’d note that all financial markets are rife with fraud, hence the regulation. I don’t think regulation is a bad thing in crypto exchanges specifically. I think any rational crypto exchange would welcome it. Despite claims to the contrary compliant exchanges in many markets not aligned to big players start up all the time. That’s great, and I think a lot of crypto exchange operators have been hoping for a clear regulatory regime from regulators in the US. The current “you better comply with unwritten regulations or we sue you” regime is absurd.

by thworp 3y ago

nwiswell 3y ago

Isn't this counter-argument equally applicable to silver or gold?

paddw 3y ago
Well, the problem is you can easily trade gold for cash because it is socially acceptable to do so. If Bitcoin became outlawed, it would be very hard to exchange Bitcoin for cash, since it has no extrinsic value outside of being a financial asset (as compared to, for example, barrels of crude oil). That being said, I doubt Bitcoin will be outlawed in the West, and generally agree that it will be around for the long term.
- nwiswell 3y ago
  > That being said, I doubt Bitcoin will be outlawed in the West, and generally agree that it will be around for the long term. Well, not entirely without precedent, since private ownership of gold was outlawed nationwide in the US during the Great Depression. It wasn't fully legalized until 1974. https://en.m.wikipedia.org/wiki/Executive_Order_6102 https://en.m.wikipedia.org/wiki/Executive_Order_6102
  - mplanchard 3y ago
    This is an entirely new fact for me. It’s surprising to me that I’d never heard of this. Thanks for sharing!
    - nostrademons 3y ago
      Wait till you hear that the first chairman of the SEC was a notorious market manipulator who was hired by his friend FDR to prevent anyone else from doing the things that made him rich. He also happened to be JFK's dad. https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#Wall_Street_and_stock_market_investments https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#Wall_Str...
    - csomar 3y ago
      That's why history repeats. Most people have no idea what happened a 100 years ago.
HWR_14 3y ago
Yes.

chromatin 3y ago

Nobody can tell you what a gold oz. worth of wheat is without resorting to exchange rates of gold to actual currencies.

ntr-- 3y ago
I'll give you 1kg of wheat for an ounce of gold right now.
- bhawks 3y ago
  I'll see your 1kg and raise to 100kg.
  - anonporridge 3y ago
    Congrats boys! We just created a market using gold as the unit of account!
__loam 3y ago
Gold has intrinsic value as a commodity though. It's scarce, has industrial uses, and has aesthetic value to a lot of people. Bitcoin doesn't have that. Bitcoin has value entirely because people think it has value. As an inflation hedge it fuckin sucks because it follows the market. When the fed increased rates, bitcoin crashed. As a store of value, it's too volatile to really work well for that and small mistakes can leave you with nothing. As a currency, the transactions per second is way way too low to be useful.
- tasuki 3y ago
  > Gold has intrinsic value as a commodity though. It's scarce, has industrial uses, and has aesthetic value to a lot of people. Yet this value is a small fraction of gold's trading price. How do you explain the current price of gold?
  - bandrami 3y ago

mabcat 3y ago

You do need to separate medium of exchange from store of value. Real estate is useless as a currency while being the primary store of value for most people. Most of your objections also apply to real estate: can't know how much wheat a house is worth, houses are notoriously illiquid, price discovery is difficult and quite opaque, the sector is rife with misrepresentations. I wouldn't go so far as to say fraud, but where does "real estate agent" sit on those polls of "most trusted professions"? Houses aren't even fungible! And if anyone thinks BTC/ETH transactions are slow and expensive (me!), around here the gas fee on real estate transactions is ~5% with a 6-month processing time...

peoplefromibiza 3y ago
I guess the difference is that you can live in a house. For the majority of people that's the real value. Real estate market is also heavily (heavily) regulated, to the point that buying and selling houses require so much paperwork that it's not really convenient for scammers. It's also quite stable, loans are secured by mortgages on the properties, I'm not sure anyone would accept bitcoins for the same purpose.
- thworp 3y ago
  You sort of tipped around the main difference: Real estate is illiquid and intransparent sure, but it is a non-fungible productive asset, you can get people to pay you rents because they need precisely your building. There are no comparable income streams for bitcoin (outside of Ponzi "yield farming") so it is illiquid without any of the benefits of traditional illiquid assets.
  - peoplefromibiza 3y ago
    rent is due after you bought the property. which entails a lot of the aforementioned paperwork and checks and law abidings. if bitcoin could provide the exact same level of security, it could be used as an asset, granted it failed as a currency. the problem is it was designed precisely to not adhere to the standards everyone expects from "old-school" transactions, hence its main purpose is speculation, and it's barely good at that right now.

fnordpiglet 3y ago

I don’t think any of this is accurate. My house is a store of value but not easily traded for goods and services, but can be sold for local currency to facilitate that exchange. There are many crypto exchanges with conversion to many currencies, including fiat currencies, but also between other crypto currencies. This is how price discovery is accomplished. If it were illiquid as you claim then there would be a ton of arbitrage opportunity in the inefficiencies and mispricings of crypto currencies. However in recent times prices are fairly rational across exchanges and conversion to fiat. The fraud claims you have seen overblown, FTX not withstanding. But I’d note that all financial markets are rife with fraud, hence the regulation. I don’t think regulation is a bad thing in crypto exchanges specifically. I think any rational crypto exchange would welcome it. Despite claims to the contrary compliant exchanges in many markets not aligned to big players start up all the time. That’s great, and I think a lot of crypto exchange operators have been hoping for a clear regulatory regime from regulators in the US. The current “you better comply with unwritten regulations or we sue you” regime is absurd.