5 ms·

There seems to be two concepts that are getting conflated. One concept is that BTC is a good investment. Historically that is undeniable. The other concept i

There seems to be two concepts that are getting conflated. One concept is that BTC is a good investment. Historically that is undeniable. The other concept is that it is a good medium of exchange. I think that is not so true because 1) its neither cheap nor easy to buy a lot of things with it 2) a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it. If you accept that BTC is a reasonable investment, but not a great medium of exchange then what is happening makes sense. I am not saying that a decentralized token couldn't be a good medium of exchange -- honestly I don't know. But so far BTC is not that.

bawolff 2y ago
> One concept is that BTC is a good investment. Historically that is undeniable. I'll deny it. Bitcoin has seen large gains, that is undeniable. However, that is not the same thing as being a good investment.
- deleted 2y ago
  [deleted]
LudwigNagasena 2y ago
> a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it. So... traditional money is good because it forces poor people to spend it? Rich people have no problem converting cash into assets that go up in value and holding onto them converting back at need. It's only poor people that have to hold comparatively high percentage of their assets in something that loses value.
- llamaimperative 2y ago
  Yes it is good to have currency that is distinct from an investment asset. It allows you to do currency things with one, and investment things with the other.
- georgeecollins 2y ago
  Yes, exactly. It forces the poor (and the rich) to spend it. When you take out a mortgage on a house its partly because someone took cash they received and deposited it in the bank. If they kept the cash the bank would not have reserves to loan.
  - LudwigNagasena 2y ago
    You don't even need to do anything to deposit money in the bank anymore. Most people automatically receive their salary in the form of direct bank deposits. And if the value of your money grows, why would you want to do anything with it? You would just let it sit there in the bank.
ptero 2y ago
Let me add a third concept which, to me, is a much more useful feature (as I wrote in a sister thread): a store of value for people whose governments like to control the money flow, dilute savings in the single available local fiat currency and confiscate savings calling it a money reform. Which, sadly, is a large part of the world. Value oscillating against some golden reference by a factor of 4? Many will likely take that if it means avoiding their own government shenanigans. I saw a currency reform which turned savings to zero. My parents lived through two such devaluations. As did my grandparents. Buying dollars or another hard currency, if found, meant prison. In this setup a permissionless, anonymous store of value, warts and all, is very valuable.
- KetoManx64 2y ago
  Beautifully explained. This applies to just about every single country in the world. There are no countries in the modern world that operate on the gold standard, which means they all print just about as much money as they want and deflate the savings of their citizens.
olalonde 2y ago
You're also conflating two distinct concepts: "Bitcoin the currency" and "Bitcoin the payment network." The currency itself can be used independently of its base-layer network, which is intentionally slow and costly (functioning primarily as a settlement layer). This separation is enabled by off-chain or layer 2 systems, such as the Lightning Network or custodial platforms. These solutions retain Bitcoin's monetary benefits - like a predictable money supply, off/on ramping through the base layer - while enabling fast, cheap transactions. The tradeoff is that you must trust an intermediary, but this mirrors the same compromise inherent to digital USD payment systems (Venmo, credit cards, PayPal, etc.). In fact, USD lacks a true "base layer" altogether. The closest equivalent would be the Federal Reserve Bank’s ledger, but accounts there are restricted to large financial institutions, not individuals.
- next_xibalba 2y ago
  That’s a lot of words for “it cannot be used in everyday financial transactions”.
  - olalonde 2y ago
    It's not convenient to use "Bitcoin the payment network" for everyday financial transactions, just as it's not convenient to use the "USD the payment network" (e.g. the Federal Reserve ledger) for everyday financial transactions (in fact, it's impossible). However, “Bitcoin the currency” and “USD the currency” work perfectly for daily use if you route them through trusted intermediaries (Strike, Cash App, PayPal, etc.). These third parties abstract away the base layer and offer fast, cheap, and reversible transactions.
    - jcgl 2y ago
      But Bitcoin qua payment network is/was a major part of the Bitcoin value proposition—what a Bitcoin _is_ is an entry in a distributed ledger. Whereas USD is ultimately bearer tokens. Yes, those tokens can be optimized away as entries on a balance sheet when held by a large entity. But USD is a token system, not a payment network. Bitcoin is the opposite.
agumonkey 2y ago
Makes me wonder why the BTC original design tilted toward deflationary, since allegedly, 'satoshi' was trying to create currency, not speculation. Was it a two phase idea ? Attract people for 80 years as investment then when it's stable, use them as stupid coins ?
- toenail 2y ago
  Deflation is the natural state of the economy because progress makes everything cheaper. We only have an inflationary system because central banks print money. Putting a central bank into code and micro-managing the money supply was not possible, so bitcoin is more like a commodity, like gold for example. Gold has worked just fine as a money for thousands of years.
- int_19h 2y ago
  A lot of people on libertarian right genuinely believe that deflationary money is desirable. BTC is often referred to as "digital gold" for a reason.
  - agumonkey 2y ago
    can you explain their reasoning ? just curious (i'm a newb)
    - llamaimperative 2y ago
      Sure: if I buy today, I’ll be richer tomorrow. Ergo, the exact reason it’s a horrible currency for the system. It’s really just the infamous libertarian inability to consider the needs of the system as separate but still important and sometimes in tension with the desires of the individual. It’s just a particularly goofy one because a deflationary currency very obviously cannot support an economy.
      - KetoManx64 2y ago
        You're right, It is a horrible currency for the system. How would we prop up the military industrial complex and wars with foreign third world countries if we could no longer print money out of thin air? Just dreadful to think about.
stiltzkin 2y ago
[dead]

bawolff 2y ago

> One concept is that BTC is a good investment. Historically that is undeniable. I'll deny it. Bitcoin has seen large gains, that is undeniable. However, that is not the same thing as being a good investment.

deleted 2y ago
[deleted]

LudwigNagasena 2y ago

> a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it. So... traditional money is good because it forces poor people to spend it? Rich people have no problem converting cash into assets that go up in value and holding onto them converting back at need. It's only poor people that have to hold comparatively high percentage of their assets in something that loses value.

llamaimperative 2y ago
Yes it is good to have currency that is distinct from an investment asset. It allows you to do currency things with one, and investment things with the other.
georgeecollins 2y ago
Yes, exactly. It forces the poor (and the rich) to spend it. When you take out a mortgage on a house its partly because someone took cash they received and deposited it in the bank. If they kept the cash the bank would not have reserves to loan.
- LudwigNagasena 2y ago
  You don't even need to do anything to deposit money in the bank anymore. Most people automatically receive their salary in the form of direct bank deposits. And if the value of your money grows, why would you want to do anything with it? You would just let it sit there in the bank.

ptero 2y ago

Let me add a third concept which, to me, is a much more useful feature (as I wrote in a sister thread): a store of value for people whose governments like to control the money flow, dilute savings in the single available local fiat currency and confiscate savings calling it a money reform. Which, sadly, is a large part of the world. Value oscillating against some golden reference by a factor of 4? Many will likely take that if it means avoiding their own government shenanigans. I saw a currency reform which turned savings to zero. My parents lived through two such devaluations. As did my grandparents. Buying dollars or another hard currency, if found, meant prison. In this setup a permissionless, anonymous store of value, warts and all, is very valuable.

KetoManx64 2y ago
Beautifully explained. This applies to just about every single country in the world. There are no countries in the modern world that operate on the gold standard, which means they all print just about as much money as they want and deflate the savings of their citizens.

olalonde 2y ago

You're also conflating two distinct concepts: "Bitcoin the currency" and "Bitcoin the payment network." The currency itself can be used independently of its base-layer network, which is intentionally slow and costly (functioning primarily as a settlement layer). This separation is enabled by off-chain or layer 2 systems, such as the Lightning Network or custodial platforms. These solutions retain Bitcoin's monetary benefits - like a predictable money supply, off/on ramping through the base layer - while enabling fast, cheap transactions. The tradeoff is that you must trust an intermediary, but this mirrors the same compromise inherent to digital USD payment systems (Venmo, credit cards, PayPal, etc.). In fact, USD lacks a true "base layer" altogether. The closest equivalent would be the Federal Reserve Bank’s ledger, but accounts there are restricted to large financial institutions, not individuals.

next_xibalba 2y ago
That’s a lot of words for “it cannot be used in everyday financial transactions”.
- olalonde 2y ago
  It's not convenient to use "Bitcoin the payment network" for everyday financial transactions, just as it's not convenient to use the "USD the payment network" (e.g. the Federal Reserve ledger) for everyday financial transactions (in fact, it's impossible). However, “Bitcoin the currency” and “USD the currency” work perfectly for daily use if you route them through trusted intermediaries (Strike, Cash App, PayPal, etc.). These third parties abstract away the base layer and offer fast, cheap, and reversible transactions.
  - jcgl 2y ago
    But Bitcoin qua payment network is/was a major part of the Bitcoin value proposition—what a Bitcoin _is_ is an entry in a distributed ledger. Whereas USD is ultimately bearer tokens. Yes, those tokens can be optimized away as entries on a balance sheet when held by a large entity. But USD is a token system, not a payment network. Bitcoin is the opposite.

agumonkey 2y ago

Makes me wonder why the BTC original design tilted toward deflationary, since allegedly, 'satoshi' was trying to create currency, not speculation. Was it a two phase idea ? Attract people for 80 years as investment then when it's stable, use them as stupid coins ?

toenail 2y ago
Deflation is the natural state of the economy because progress makes everything cheaper. We only have an inflationary system because central banks print money. Putting a central bank into code and micro-managing the money supply was not possible, so bitcoin is more like a commodity, like gold for example. Gold has worked just fine as a money for thousands of years.
int_19h 2y ago
A lot of people on libertarian right genuinely believe that deflationary money is desirable. BTC is often referred to as "digital gold" for a reason.
- agumonkey 2y ago
  can you explain their reasoning ? just curious (i'm a newb)
  - llamaimperative 2y ago
    Sure: if I buy today, I’ll be richer tomorrow. Ergo, the exact reason it’s a horrible currency for the system. It’s really just the infamous libertarian inability to consider the needs of the system as separate but still important and sometimes in tension with the desires of the individual. It’s just a particularly goofy one because a deflationary currency very obviously cannot support an economy.
    - KetoManx64 2y ago
      You're right, It is a horrible currency for the system. How would we prop up the military industrial complex and wars with foreign third world countries if we could no longer print money out of thin air? Just dreadful to think about.

stiltzkin 2y ago

[dead]