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Bitcoin is a bad store of value because there is no value. If you look at Bitcoin as in game tokens, but one where tokens are given away to people who prove th

Bitcoin is a bad store of value because there is no value. If you look at Bitcoin as in game tokens, but one where tokens are given away to people who prove they have burned cash, you see it is a negative sum system. Even Gold as store of value is questionable. It is a commodity. But we are entering naked empiror territory and I will avoid that hill. Back to Bitcoin: it is basically a bet on mass adoption. If that mass adoption doesn't happen it is a ponzi. If it does the price should stabilize, even then not sure if it is a store of value. Disclaimer. I actually own some.

scotty79 2y ago
I'd say bitcoin is a bet on progressive adoption of artificially but firmly limited resource as a store of value. Which is actually happening for more than a decade now with larger and larger player buying some Bitcoin in every bear-bull cycle. With amazing predictability that you can fit a curve to it for entirety of its existence. What's more, the more money was already funneled into it, the closer the price is to the curve.
- kristianp 2y ago
  Which curve are you talking about?
  - scotty79 2y ago
    You can plot it yourself. Find a dataset with Bitcoin prices going back more than a decade. Plot them on a plot with log y axis. Fit the logarithmic curve to that plot. Plot differences between the fitted curve and the price data. Observe how the envelope of the deviations shrinks in time but also the deviations oscillate periodically with the the frequency dictated by halvings. If you are lazy you can just look at "rainbow chart" which captures the most basic observation about Bitcoin.
    - vdvsvwvwvwvwv 2y ago
      This works until it doesn't. If btc started at 0.01c and is now $100k (roughly) following the curve predicts it will be $100tn/coin or a market cap of $2 billion trillion.
      - scotty79 2y ago
        You could say the same thing any time in the past an you'd be wrong every time. That curve will predict such high price but in year 3400 (I'm guessing, I didn't check yet because I wasn't interested in time horizons that exceed my foreseeable future). It's a logarithmic curve (albeit on logarithmic plot). For example the bull market in 4 years from the one that we are currently entering will result in just doubling Bitcoin price which is pathetic (even when compared to 5-7x of the current one, let alone past ones). In another 4 years the growth will be even less. Besides, at some point the random noise in the price signal will mostly overwhelm the shape of the curve and bitcoin will just become like stock market, growing at the glacial pace of economy growth. Bitcoin is ending, but not in a sense of becoming worthless but becoming another boring randomly walking asset at the price around less than $1mln per unit possibly for entirety of this century. That general insight of the shape what Bitcoin is that can be inferred from long term prices is also confirmed by plotting MVRV: https://insights.glassnode.com/content/images/2023/02/07_mvrv_extremes.png https://insights.glassnode.com/content/images/2023/02/07_mvr... It cyclically heads towards boring.
        lolc 2y ago
        What's the differentiator from all the other cryptocoins?
        npoc 2y ago
        Truly decentralised proof-of-work, with network effect.
        scotty79 2y ago
        I'd say mostly just the sheer amount of money that was already sunk into it. All those people have very little incentive to break the status quo. Bitcoin protocol successfully resisted changes that could potentially alter its shape.
p1necone 2y ago
Agree, although I would argue Bitcoin is likely to hold some amount of value in the long term because of historical importance, regardless of whether it ever ends up being widely adopted or useful. Some other cryptocurrency could solve all the problems Bitcoin has and it will still be valuable because it was the first one.

scotty79 2y ago

I'd say bitcoin is a bet on progressive adoption of artificially but firmly limited resource as a store of value. Which is actually happening for more than a decade now with larger and larger player buying some Bitcoin in every bear-bull cycle. With amazing predictability that you can fit a curve to it for entirety of its existence. What's more, the more money was already funneled into it, the closer the price is to the curve.

kristianp 2y ago
Which curve are you talking about?
- scotty79 2y ago
  You can plot it yourself. Find a dataset with Bitcoin prices going back more than a decade. Plot them on a plot with log y axis. Fit the logarithmic curve to that plot. Plot differences between the fitted curve and the price data. Observe how the envelope of the deviations shrinks in time but also the deviations oscillate periodically with the the frequency dictated by halvings. If you are lazy you can just look at "rainbow chart" which captures the most basic observation about Bitcoin.
  - vdvsvwvwvwvwv 2y ago
    This works until it doesn't. If btc started at 0.01c and is now $100k (roughly) following the curve predicts it will be $100tn/coin or a market cap of $2 billion trillion.
    - scotty79 2y ago
      You could say the same thing any time in the past an you'd be wrong every time. That curve will predict such high price but in year 3400 (I'm guessing, I didn't check yet because I wasn't interested in time horizons that exceed my foreseeable future). It's a logarithmic curve (albeit on logarithmic plot). For example the bull market in 4 years from the one that we are currently entering will result in just doubling Bitcoin price which is pathetic (even when compared to 5-7x of the current one, let alone past ones). In another 4 years the growth will be even less. Besides, at some point the random noise in the price signal will mostly overwhelm the shape of the curve and bitcoin will just become like stock market, growing at the glacial pace of economy growth. Bitcoin is ending, but not in a sense of becoming worthless but becoming another boring randomly walking asset at the price around less than $1mln per unit possibly for entirety of this century. That general insight of the shape what Bitcoin is that can be inferred from long term prices is also confirmed by plotting MVRV: https://insights.glassnode.com/content/images/2023/02/07_mvrv_extremes.png https://insights.glassnode.com/content/images/2023/02/07_mvr... It cyclically heads towards boring.
      - lolc 2y ago
        What's the differentiator from all the other cryptocoins?
        npoc 2y ago
        Truly decentralised proof-of-work, with network effect.
        scotty79 2y ago
        I'd say mostly just the sheer amount of money that was already sunk into it. All those people have very little incentive to break the status quo. Bitcoin protocol successfully resisted changes that could potentially alter its shape.

p1necone 2y ago

Agree, although I would argue Bitcoin is likely to hold some amount of value in the long term because of historical importance, regardless of whether it ever ends up being widely adopted or useful. Some other cryptocurrency could solve all the problems Bitcoin has and it will still be valuable because it was the first one.