Key Post Why Bitcoin has value

[Leo]

And what earthly incentive do they have to distort the figures? What does it bring for them?

I honestly don't know, but my guess is that they are not attempting to report on global figures and are simply focusing on their own market. Their editorial focus in almost exclusively US centric. I know the Gold Council have been criticised in the past for maintaining too US-centric view and underestimating the market and demand levels, particularly in Asia, and they did alter their data collection methods in response, and made their methodology available to member companies to review.

I'd also suggest that two separate publications are likely to be more accurate than a data sampling of asking your Indian work buddies.

Hard to argue with you there. But neither party are quoting authoritative sources, so best be suspicious of both.

 

[Brendan Burgess]

I am not a bitcoin fanatic and I stand corrected, the first use of Gold as a currency was 700 BC so 2719 years ago.

Hi Andrew

Gold has been valued long before it was used as a currency.

I know very few people who use gold as a currency. I know a few who have invested in it.

I know lots of people who have bought it for its inherent value.

So, I suppose it is similar to Bitcoin in one way at least. I know very few people who use Bitcoin as currency. I know a few who have invested in it.

Brendan

 

[tecate]

Hard to argue with you there. But neither party are quoting authoritative sources, so best be suspicious of both.

For sure - you have to be suspicious of any info that's put into the public domain in the times we live in. However, to short circuit this - for the purposes of this discussion, it would appear that investment is a significant aspect of the interest in gold. That could be a majority or minority use case - we may not have gotten precise or unquestionable data - but it plays very much a significant role when we include the store of value use case that those that purchase gold jewelry oftentimes are motivated by.
Bitcoin can play that same role - whilst bringing the ability to transact worldwide and remain an unconfiscatable asset.

I know very few people who use gold as a currency. I know a few who have invested in it.
I know lots of people who have bought it for its inherent value.
So, I suppose it is similar to Bitcoin in one way at least. I know very few people who use Bitcoin as currency. I know a few who have invested in it.

So to surmise, gold has a looong track record and a couple of other use cases (beyond investment/store of value). Bitcoin brings designed in scarcity to the table with an ability to transact it anywhere in the world whilst remaining unconfiscatable.
The only question that remains is how long it needs to be serving this purpose to be proven as a 'digital gold' to everyone's satisfaction.

 

[Brendan Burgess]

Bitcoin brings designed in scarcity

My toe nail clippings are scarce. That does not make them valuable. There are plenty of other better toenail clippings out there.

Brendan

 

[tecate]

My toe nail clippings are scarce. That does not make them valuable. There are plenty of other better toenail clippings out there.

So your toe nail clippings (and his Dukenesses MarmaladeCoin) may be scarce but go out onto the market then and sell them.
Are they borderless and unconfiscatable? Can you transmit your toe nail clippings to a stranger on the other side of the planet (regardless of jurisdiction) in minutes? They have not and will not build up any network effect as there is no value there to begin with. That's not the case with Bitcoin.

We've already established above that approx. 50% of gold use is for gold jewelry and within that, many people globally are motivated to buy gold jewelry as a store of value and investment as much if not more than as an ornate object. We've also established a large element of purely investment use for gold (up to 40% in one case). Ergo, being conservative about it, speculative value of gold is considerable.
At the end of the day, people assign value. 10 years of Bitcoin leaves me reasonably confident that it will remain a store of value. At what point are you prepared to accept that its here to stay? Are we still going to have this debate in 5 or 10 years time or is there a point - assuming it retains value -and doesn't die - that you will amend that outlook?

 

[Andrew365]

Hi Andrew

Gold has been valued long before it was used as a currency.

What was its value?

 

[tecate]

What was its value?

1000 toenail clippings to a gram of gold, apparently

 

[noproblem]

There's an awful lot of people out there who have quite a few thousand to spare, regardless of what everyone might think. I certainly think it might be worth a punt to put €5k or thereabouts into Bitcoin or similar. Not saying there's anything to it, but that's the way some people think and speculate. It's their money, might lose it, might not, no one can say. Going to have a think, sure if we're all here in around 5 years time someone will be having a laugh. But who will that be?

 

[Brendan Burgess]

It's their money, might lose it, might not, no one can say.

Hi np

Actually people can say.

Bitcoin is worth nothing. So if they keep it long enough their €5k will go to zero.

But no one can say what route it will take there.

Brendan

 

[noproblem]

There's smarter people than me and you out there putting their cash on the opposite to what you say. We'll see. Ex politician Michael Portillo had an interesting short documentary this evening on BBC 2 on Gold and its effect over the centuries. One thing's for sure, it will always have a value.

 

[tecate]

Actually people can say.
Bitcoin is worth nothing. So if they keep it long enough their €5k will go to zero.
But no one can say what route it will take there.

You've been wrong for 10 years. I've been happy to accept that there is a potential for Bitcoin to fail. However, yours is a theory - it's not fact and there is no such guarantee that it will fail. Once again, I invite you to put a date on it. Will it take 5 months, 5 years or 50 years?
There has to be a point at which your theory is either proven or disproven.

Meanwhile, what we can say with certainty is that every FIAT currency has failed at some point or other. The US dollar has lost 92% of its value since the Federal Reserve came into being in 1913. In any given year, there's a list of failed FIAT currencies that suffer outlandish rates of inflation. Monetary inflation will never affect Bitcoin given that there will only ever be 21 million bitcoin.

regardless of what everyone might think. I certainly think it might be worth a punt

It has ten years under its belt. Despite impatience expressed here by some (on the basis that if it can't function as a currency right now then it never will and notions along those lines), its progress has been outstanding. However, it is still nascent and the eco-system and regulation surrounding it are still formative. It could very well fail. But then the upside potential as a non correlated asset outside of the current system far outweighs any other asset class. Everyone does their own due diligence but it seems to me that to take a few percent of an otherwise balanced portfolio and allocate it to BTC is a no-brainer.

 

[Brendan Burgess]

Once again, I invite you to put a date on it. Will it take 5 months, 5 years or 50 years?

Hi tecate

As I have said before, it's not possible to time it.

I would have been fairly certain that this irrationality would have been sorted out a long time ago but I was clearly wrong on that.

The markets can remain irrational for a very long time. But, sorry, I have no idea how long that is.

Brendan

 

[Andrew365]

Brendan,

Simple question if you were selling a car for €8k and I offered to buy it for 1 bitcoin which has a current value in euros of €9k (rounding down), would you accept? Given you could take the 1 bitcoin and convert it to Euros and make a profit.

If so then you accept that Bitcoin does have a value in todays market.

The argument of Bitcoin going to 0 is void, it will never go to 0, it may lose all its value but there will always be some active exchange in it. Similar to Gold, it can never go to 0 but it could ultimately lose the majority of its value if the collective people agree it is no longer of value. This is dissimilar to an Equity asset (share) that can become worthless.

Why is a lump of metal worth $80 / oz in 1973 now worth >$1,500? (Ignoring inflation)

Whilst Bitcoin in my opinion does have value it will continue to be a speculative asset, the whole idea behind it is to be a decentralized currency free from borders. The underlying technology will change the way we use money, I urge you to google how credit card payments work to see how convulated, risky and costly to the consumer it is. Given this the Central banks aren't going to cease control and why I believe we will end up with a global Digital currency controlled by the Central banks

For those claiming the technology is flawed, well your time is wasted posting on this forum as you must be one of the smartest people on the planet.

 

[Leo]

For sure - you have to be suspicious of any info that's put into the public domain in the times we live in. However, to short circuit this - for the purposes of this discussion, it would appear that investment is a significant aspect of the interest in gold.

Agreed, and I never had an argument that the investment influence is significant, just that the scale of that influence doesn't come close to meaning that industrial and non-investment jewelry demand should be discounted.

... but it plays very much a significant role when we include the store of value use case that those that purchase gold jewelry oftentimes are motivated by.
Bitcoin can play that same role - whilst bringing the ability to transact worldwide and remain an unconfiscatable asset.

Bitcoin's volatility is a significant challenge to its being taken seriously as a store of value, I believe its technical limitations will prevent mass adoption. That's not to say no crypto will ever get there, I just don't think it'll be Bitcoin.

Also, Bitcoin is only as unconfiscatable as any hidden physical asset, bury your gold and they'll only find it if you tell them where it is. Just like your private keys, if authorities seize all your computer equipment, they may fine your keys or the means of generating them, or you will be incentivised into handing them over. Crypto seizures where the owner hands over their keys is commonplace now that some authorities have the means of tracking users across the blockchain.

 

[Firefly]

Simple question if you were selling a car for €8k and I offered to buy it for 1 bitcoin which has a current value in euros of €9k (rounding down), would you accept? Given you could take the 1 bitcoin and convert it to Euros and make a profit.

If so then you accept that Bitcoin does have a value in todays market.

Hi Andrew365,

Let me think about this.....a car or a Bitcoin?

I think you are proving how absurd the current valuation is. QED as they say.

And for the record I don't think Bitcoin will reach zero.....as long as criminals use it, it will be worth something.

 

[Leo]

Simple question if you were selling a car for €8k and I offered to buy it for 1 bitcoin which has a current value in euros of €9k (rounding down), would you accept? Given you could take the 1 bitcoin and convert it to Euros and make a profit.

If so then you accept that Bitcoin does have a value in todays market.

If I were to offer you €12k worth of potatoes, would you accept? If so you accept that potatoes have a value in today's market. But I bet you'd be looking to off load them as quickly as possible right? Not hold on to them as a store of value for a few years?

For those claiming the technology is flawed, well your time is wasted posting on this forum as you must be one of the smartest people on the planet.

Bitcoin isn't that complex. Perhaps you could head over to the other thread and share your thoughts on how you think the scaling problem will be addressed? Can the protocol be adapted so that the current limit of ~7tps will ever come close to 100,000tps? Every layer 2 proposal I've looking into to date involves taking your money out of Bitcoin and into another platform. What are your thoughts on the power demands of proof of work? Is that viable in the long term assuming broad adoption in terms of cost versus reward, especially as we experience future halvings?

 

[Andrew365]

Hi Andrew365,

Let me think about this.....a car or a Bitcoin?

I think you are proving how absurd the current valuation is. QED as they say.

And for the record I don't think Bitcoin will reach zero.....as long as criminals use it, it will be worth something.

You forgot to answer the question

If I were to offer you €12k worth of potatoes, would you accept? If so you accept that potatoes have a value in today's market. But I bet you'd be looking to off load them as quickly as possible right? Not hold on to them as a store of value for a few years?

Well actually, I would sell some and plant some thus creating a store of value for years to come. I am sorry but I assume your comment regarding potatoes was basically saying that you would accept that trade.

Bitcoin isn't that complex. Perhaps you could head over to the other thread and share your thoughts on how you think the scaling problem will be addressed? Can the protocol be adapted so that the current limit of ~7tps will ever come close to 100,000tps? Every layer 2 proposal I've looking into to date involves taking your money out of Bitcoin and into another platform. What are your thoughts on the power demands of proof of work? Is that viable in the long term assuming broad adoption in terms of cost versus reward, especially as we experience future halvings?

Note I said the term Technology, which was being used in context to the rest of my comment not the piece you have highlighted. Unfortunately whilst I understand the challenges (which new technology does not have challenges?), I am not the person that can solve them. However I firmly believe that these will be resolve during the maturation cycle but ultimately as I stated bitcoin will be a speculative asset whilst the final implementation will be a central bank global digital asset to remove the dependence on the $ and because of this bitcoin will remain to have a store of value.

I don't understand what the challenges have with it prevent it from being a store of value?

 

[Firefly]

You forgot to answer the question

You didn't ask me. But for what it's worth, the car

 

[tecate]

Agreed, and I never had an argument that the investment influence is significant, just that the scale of that influence doesn't come close to meaning that industrial and non-investment jewelry demand should be discounted.

Well, I think we took that as far down that road as was possible. At the end of it, it's all in the eye of the beholder, right? I'd suggest that for the most part, store of value dictates/determines it's value and in that way they're very much comparable. We won't reach consensus and that's fine - we can park it up at that.

Bitcoin's volatility is a significant challenge to its being taken seriously as a store of value, I believe its technical limitations will prevent mass adoption. That's not to say no crypto will ever get there, I just don't think it'll be Bitcoin.

In volatility, there is also opportunity and it's just indicative of the stage it's at. There will be other crypto's for other use cases for sure. For decentralized crypto, it remains to be seen if it can be usurped (as a rival crypto has to tick all the boxes - not just ace one aspect and fail another). On mass adoption, that's a long road - it will necessitate the user experience becoming much easier. That said, if one is to accept that there will be CBDC's (central bank digital currencies) - people will need to find a way of becoming accustomed with using these and comfortable with using them. If they can achieve that, then their ability to use decentralized crypto becomes much easier.

Also, Bitcoin is only as unconfiscatable as any hidden physical asset, bury your gold and they'll only find it if you tell them where it is. Just like your private keys,

For sure. There has to be an inherent understanding that..."not your keys, not your crypto".

if authorities seize all your computer equipment, they may fine your keys or the means of generating them

They may be - but if that's the case, you're not doing it right. If they can find them, then a thief can find them.

or you will be incentivised into handing them over. Crypto seizures where the owner hands over their keys is commonplace now that some authorities have the means of tracking users across the blockchain.

Sure, but that's by agreement. So the point stands - unconfiscatable.

 

[Leo]

Well actually, I would sell some and plant some thus creating a store of value for years to come. I am sorry but I assume your comment regarding potatoes was basically saying that you would accept that trade.

For €1k, no, I wouldn't take Bitcoin.

I don't understand what the challenges have with it prevent it from being a store of value?

Something better will come along, when it does, it'll be a race to get out as the price plummets.