3 ms·
People confuse a lot of things about volatility, risk, and long term valuation. Bitcoin is an inherently good long term store of value, because it has determin
by Geee 3y ago
People confuse a lot of things about volatility, risk, and long term valuation.
Bitcoin is an inherently good long term store of value, because it has deterministic and finite inflation schedule, which is also plausibly immutable (contrary to fiat cryptocurrencies, called "cryptos"). On the other hand, fiat currencies are a lousy store of value, because they have non-deterministic, but always positive inflation schedule, i.e. they are guaranteed to lose value in the long term. These are just objective facts about their inherent properties.
In addition, Bitcoin includes cryptographic property protection, making it a better store of value in jurisdictions where local authorities won't provide property protection, or the cost of property protection is high. For example, in many countries, it's illegal to own US dollars. Bitcoin is easier to hide and use discreetly, compared to anything physical.
Volatility is a property of the market, not a property of the asset. All things considered, bitcoin should get less and less volatile when time goes on, assuming that it continues gaining adoption. Which is given, as it doesn't have any competition.
- siftrics 3y ago> contrary to fiat cryptocurrencies, called "cryptos" This is wrong. No one says this.
- tnel77 3y agoIt’s pretty common in the Bitcoin community.
- theorytheory22 3y agoYou're missing the forest through the trees. Bitcoin doesn't have value beyond what can be converted into real currency. Real currency is used to buy things. BTC isn't. The currency-BTC market IS the entire value of Bitcoin. None of the other stuff matters, because BTC is solely denominated in actual currencies. BTC is non-inflationary? Doesn't matter. You only use it to buy USD or actual currencies. If there's less demand for BTC, BTC value goes down. And guess what? Demand is fickle. The cyrptographic property protection is ok in theory. But try and point out somebody it's helped? And by that I mean a non-criminal/extortionist/money launderer.
- Geee 3y ago> But try and point out somebody it's helped? There are a few stories of how Bitcoin helps people in Africa in this short documentary: https://www.youtube.com/watch?v=r7lm7IHnKDw https://www.youtube.com/watch?v=r7lm7IHnKDw
- cheschire 3y agoI think you're trying to articulate the difference between price and intrinsic value?
- robocat 3y ago> Bitcoin is an inherently good long term store of value That really depends on the taxation rules in your jurisdiction.
- voxic11 3y agoWhat jurisdictions have favorable tax rules here? Just ones which don't tax income at all? Because afaik every jurisdiction which taxes income does it based on the value in some fiat currency. So suppose you buy $100 worth of bitcoin today and tomorrow the dollar experiences 100% inflation then if you sold your bitcoin for $200 you would end up with the same amount of value except you would owe taxes on $100 of "income". It still makes bitcoin better than holding dollars (taxes are almost always less than 100% of gains). This seems to be an inherent problem with all "stores of value" and is usually why people choose to invest rather than "store".