> Anyone, even low-income earners, can put small amounts into Bitcoin and it will retain value in the longer term.
Will it? The one thing that Bitcoin has not been noted for is keeping a stable value. Even that's fine, as long as the value doesn't go down - nobody complains that the value isn't stable if the value keeps going up. And, Bitcoin has... um... had been doing fine on that front. Now it's not. And I don't see evidence that it will be a good store of value in the future. I hear argument, but the available evidence is not for Bitcoin being a stable store of value.
> No reasonable person would (or does) use Bitcoin as an actual currency if they expect the value to increase in the future so it can't become a means of exchange for real world goods.
I take issue with this statement because it reflects a fundamental misunderstanding that people have about Bitcoin.
The point is not to “HODL” the Bitcoins waiting for the USD or EUR value of the BTC to increase.
The point is among other things:
1. to be able to freely transact with anyone, and
2. to not have a central authority adjusting the purchasing power of your savings
As of yet we are still relegated to caring about the USD and EUR prices of Bitcoin, because in order to use our savings we have to exchange to fiat. But the ultimate goal is indeed to be able to use BTC directly for everything from buying a house to paying for groceries.
For example, I receive 100% of my paycheck in bitcoin.
From week to week I don’t have any desire that it increases in value of USD or EUR.
My main problem is when it decreases in value, so that my purchasing power is worse from having gotten my paycheck in Bitcoin.
But even then, over time it probably averages out.
And if not, well at least I am still receiving my paycheck in the currency I believe in, and maybe some day more people will believe in it too. And then finally some day I can buy my groceries with BTC directly.
> Are you saying that gold can be a currency but Bitcoin cannot?
No.
> Why can't it be both? If I expect my Bitcoin to appreciate 5% per year I might be willing to spend it to buy my weekly groceries.
You might be or might not be. I assure you, the majority will not be willing to buy groceries using a deflationary currency. They'll switch to an inflationary currency instead.
Quote: Optionality [Bitcoin could drop to zero]. I view that there's always a chance that a Bitcoin could be adopted. Could be used potentially as a basis for virtual currency. And so that would have some upside. An option premium of $5, $7, $10 seems reasonable.
This guy is a quack. There's no way he could define where is the "reasonable" point for Bitcoin to be in terms of value vs the Dollar. If he were indeed an expert in Finance, he should know that the value is driven by demand and supply, and not by what one guy thinks it's reasonable.
There's many ways Bitcoin may fall and drop in value, but just saying that it's because it's backed by nothing but confidence is really a wrong argument. Confidence is everything, and this is valid for both Bitcoin and fiat currencies alike. The key difference is that the supply of Bitcoin is limited, and that, inherently, ensures a better long lasting value vs fiat currencies on the long term as long as the utility/confidence remains there.
> I speculate that in the future, Bitcoin might become valued so highly, that people don't even bother using it in favor of other coins, and as people don't use it, no one then accepts it, then it loses value
This is similar to Gold with the difference that it still holds value, it is so expensive that usual shops don't accept it though but still has high value, am I missing something?
> Do any significant number of people genuinely take Bitcoin to be the future of currency at this point?
No one is betting that the current version of Bitcoin is the future of currency. They are betting that the version of Bitcoin that exists in 20 or 30 years is the future of currency.
> a statement like this is exactly why people still don't understand the value of Bitcoin. The usefulness of a store of value has no relation to its actual value. The value comes from the network effect of others also agreeing that it has value.
> Who are you to make a claim as to if it will last or if it won't or how valuable bitcoins are.
A speculator, same as you. This is implied. Besides, what has who I am got to do with what I say?
> We have no evidence to the contrary, and in fact, bitcoin being a deflationary currency by definition means it will likely increase in value and, what's more, if you look at the trend it has been increasing in value. If you were to use a single shred of logic then your conclusion would be "it might or might not last", but that's hardly a useful post.
Bitcoin's a great idea, but people have been using it to make a quick buck. That's why (I think) it won't last.
> Well, since people are RIGHT NOW paying over 10 dollars for a bitcoin that indicates that yes, yes it is.
Would you buy houses because "they're a great investment" was "good advice" pre-2008? Speculators aren't using bitcoins to buy $10 worth of stuff, they're using buying bitcoins because they think they can earn more than $10 worth of dollars. So, bitcoin's success is based off of it's ability to earn dollars, not buy stuff: this is what makes it unstable.
> Bitcoin is a great electronic currency, and a real challenge to money transmitters like Western Union, but it is not a store of wealth (in my opinion).
You can store your wealth in any commodity. I can store my value in stocks, gold or BitCoin to hedge against inflation. Just because something doesn't have physical intrinsic properties does not mean it somehow stops being a store of value.
Anything that someone wants to buy and someone wants to sell, that can be stored and transferred, can be a store of value.
> The OP said the only assets some poorer people will have will be some cash [in the bank]. Is this not correct? I’ve been near broke before. The only assets I had besides a dying car was money in between Venmo, PayPal, bank account, and actual cash.
Honestly, all the fretting about the debasing of value of a poor person's small pile of cash seems like outright misdirection to me. You have to look at the whole picture, and that whole picture is that the poor person might be trading say a <$10 loss to inflation on a small savings account for a $1000 stimulus check. That's a good bargain.
More broadly, the hard money/bitcoin people seems to want exchange the elimination of their hypothetical fear of (hyper)inflation for a very real likelihood of lingering recessions due to austerity policies. That doesn't seem like a good bargain to me.
> Bitcoin is too easily replaced to be a long term store of value. It relies purely on public sentiment. Whereas things like precious metals at least have utility and no easy substitutes.
But bitcoin has utility, in case of hyperinflation, capital controls, asset protection etc.
Imagine if you are a Chinese billionaire who wants to move some of his wealth out of China, you buy bitcoin for Yuan in China, sell a futures contract to someone to cover yourself from the price fluctuation, and there you go.
> If I buy Bitcoin, what value-creating activity occurs that pays for my reward?
None. But then:
1. You reasoning applies exactly to gold. Yet, people keep buying it. It's call supply and demand. Demand doesn't have to be grounded in anything rational. If it exists and the supply is limited, the price will go up.
2. Bitcoin has never been about value creation. It's about *preserving* value, something the USD has been historically terrible at [1]
> And every bit of Bitcoin they get is worth slightly more after they get it then it was when it was paid, so their purchasing power is going up and up and up.
So you are saying that bitcoin would only ever become more and more valuable?
How can you similtaneously believe this statement, and that bitcoin is worthless?
They can't both be true. Either bitcoin is deflationary, IE, it goes up and up in value, and becomes more and more valuable, or it isn't.
Which is it? Is bitcoin worthless, or it is so extremely valuable and amazing, that it is going to take over the entire world with how deflationary it is?
Personally, I'd want to support something that you apparently believe is so useful that it is going to take over the world.
> Bitcoin was not designed to be a high-throughput currency. It's a store of value.
I think you should spend some time reading https://bitcoin.org/bitcoin.pdf before making factually incorrect statements. Bitcoin is only viewed as a store of value today because it no longer can be utilized for its original purpose. It's a complete failure in that regard.
> I think the main value of Bitcoin in the long run will be as a store of value, comparable to precious metals but easier to move around.
I disagree with this. Bitcoin makes a terrible store of value because of the constant energy cost to prop up the network. This energy is paid for by diluting Bitcoin's value.
Do you have a bank account with money in it? If so you are using currency as a store of value. This is a very common use case.
> Only poor people store their “wealth” in currencies
So are we just dismissing the needs of poor people then?
> the value will not increase, but rather rapidly decrease.
So a testable prediction would be come back to this and ten years, look at the price of Bitcoin, and see who was right.
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