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There are many things, tangible and not, that are valuable and traded other than 'currency'. Why do you see Bitcoin only through that lens? Innovation has crea
by gojomo 14y ago
There are many things, tangible and not, that are valuable and traded other than 'currency'. Why do you see Bitcoin only through that lens?
Innovation has created many things that are valuable, which didn't even have names before they existed, and much of the value comes simply from mutual consensus. Joint stock companies. Intellectual property. Domain names. Mineral rights. Publicity rights. Bonds. And many would say also: fiat currencies themselves are a consensus, but useful, hallucination.
There's always a bit of self-spawning alchemy in this process. "We choose to broadly value this, because when we broadly value this, other good activities ensue."
Again, my framing is: one of Bitcoin's aspects is as (divisible, transferable, even votable) equity in something with interesting novel characteristics. There are a lot of people, working on a lot of interlocking things, for which Bitcoin balances will be the price-of-participation. If that coordinated-action superstructure throws off enough value to its participants to be self-sustaining, each unit will continue to grow in value.
And sure, current volatility makes 4-year-old Bitcoin worse, for many uses, than the best 100-plus-year-old fiat currencies (USD). Bitcoin also has capabilities no 'currency' has ever had before. Your argument seems to be, "it's not been stable enough yet for quoting prices of things, so it's no good for anything" and "it's been in some crazy bubbles, so it can never be useful or valuable".
New hard-to-value things are volatile. Only experience creates stability. As you note, anything can suffer a bubble... sometimes the underlying thing continues to build real value, and sometimes it doesn't. Merely observing that it's bubbly so far is just frothy gossip. Yes, and...?
- MrMan 14y agoSo your insight is: bit coin is something new, that has inherent value, and is unlike anything that came before it, just like other things that were new. And your contention is that bitcoin's primary function is "to go up in value?"
- gojomo 14y agoBitcoin has certain core qualities: limited supply, fast transfer, pseudonymity, decentralized governance, self-managed credentials. (It also has some fringe/potential qualities: ability to represent software contracts, ability to represent fractional ownership/voting interests, support for micropayments.) It's too early to determine what its primary function(s) will be, arising from these qualities. People are doing interesting, potentially valuable things with it, including a bunch of things that are also done with 'currency'. If Bitcoin turns out to win a fraction of the market for international money transfer, or online purchases, or gray/black market purchases, the existing units could be worth a lot more than now. If the combination of constitutional counterfeit/inflation resistance, plus consensus adoption for a few other things, makes it attractive as a rare store of value (like gold), it will also become much more valuable. These are big ifs, but they're not impossibilities, and the way that Bitcoin is like equity is that it has aligned the interests of all its holders to try to create the systems/world where Bitcoin continues to be more valuable, as with founders' shares in any other startup. They start as mere paper, sold at negligible 'par value' under the idea that someday, others will want them too, because they will represent valuable claims on future capabilities. With the incentive-aligned work of the team, that future may come to pass, creating a lot of value. Or not. So yes, in a sense, one of its purposes is: get all the people who hold Bitcoin working together towards increasing its value (and related things). Like equity shares.