We're absolutely in a bitcoin/cryptocurrency mania. Unfortunately, stating that is much easier than predicting what will happen next.
Isn't the most important thing you want from a store of value stability? Ie, that it'll store the value that you put into it? Bitcoin certainly doesn't have that property.
And if that's not the desired property implied by "store of value", what is?
A stable currency is far more usable to me. Bitcoin is very similar to gold at the moment, in that I'm as likely to use it as I am to carry around bricks of gold in my pocket. For different reasons, sure, but the net result is the same.
So if something has been rising for 6 months, it cannot dip below that point, because of your opinion.
Too bad we did not have your opinion in 1929 or 2008 or 2013 (Mt Gox). Would've saved us.
How about businesses like Steam ditching Bitcoin support?
How about Bitfinex not backing up their fake currency called tether?
For example, if you're on any exchange that lists the total amount of orders in BTC, you can easily catch when the manipulation starts by seeing out of the ordinary sums (triple the amount of usual) for open positions.
Not to mention insane bot activity that is equivalent to a DDOS attack on the exchange.
During the last several hours of IOTA pump, exchanges, even the IOTA tangle were, and still are unstable.
doesn't tether fix this?
https://coinmarketcap.com/currencies/bitcoin/#markets
for example, bitcoin is now huge on bithumb, I'd buy it at bitstamp and sell it for 10% more, and repeat. given the slow transaction times, huge fees, large mempool, this is impossible to do.
exchanges also ban you for trying to do arbitrage too, so there's a risk of losing all the funds.
It's also not impossible to trade via bitstamp and bitthumb, sure it may take an hour or so to get your btc from bitstamp to bitthumb but that's not the bottleneck. Once you sell on bitthumb for USD you need to get that USD back to bitstamp. So you have to get it from a Korean Bank to your own account and then to bitstamps European bank account. Best case scenario that route takes 5-10 working days so the BTC network taking an hour or so to confirm is the least if your problems.
As for transfer times for BTC not being a problem, 1 hour is a gamble in cryptocurrency world.
Or should I be parsing the phrase to mean "It's not anything today, but in the long term, once the market cap is large enough, it'll be a store of value"?
(I'm not being snarky; I'm legitimately confused by what people mean by the phrase.)
I am being snarky: They mean "you better hurry up and buy some bitcoin quick, so I can have some new bagholders"
That said, if the trend of wild volatility were to continue into the long term it would indeed prove to be a poor store of value, but market speculation would indicate as such long before we were to get there (assuming we pick now as the period delta starting point for a "long term").
Obviously this is not even noise compared to bitcoin; but my point is that bitcoin has shown to be an exceptional store of value for a long term hold.
Beyond that, I think most people who believe in bitcoin as a long term store of value expect that when it reaches a mature global-level market cap; the swings should be less severe.
Which is absolutely insane. What's the point of a currency if you can't use it for transactions? Store-of-value? What value?
$13K of value, and counting.
All other fiat currencies have some fundamental value. In the past they were backed by gold. Most common today, you have to pay your taxes using them, which means for example everybody who owes US taxes needs USD.
That makes no sense. If the market were really 'screaming there is no actual value', the price would be around $0, not $14K.
And how exactly will it become more prevalent when it can't be used for transactions.
Just like Gold, coloured beads, or stocks
> can't be used for transactions.
Gold is a pain to use for transactions, and so are shares, but they still store value and people continue to speculate on their future worth?
BTC in the absence of transactions has not tie-back to anything.
It's a bit like buying one pen out of a very large pack of pens. You don't own the pack if you only buy one.
I incorporate with 1,000,000,000 shares of stock. I sell 20 shares of stock to my good friend for $50. Is my company now worth 2.5 billion dollars?
The answer to this worry is that the value of the good (bitcoins or stock shares, or anything else) is reliable in proportion to the total trading volume, not in proportion to the amount one person typically buys in a single transaction, or even the amount that one eccentric rich guy bought that one time when he was drunk.
But your answer, I don't think is sufficient. Just because total trading volume supports the figure doesn't mean that it's valid. If I've invested a small amount of money into the currency (as I suspect most of its buyers have), I've essentially bought into an insane price for little or no "skin". In other words, the price could be high simply because there's no risk to it being that high for most of its investors.
Going back to the analogy, suppose I incorporate with 1,000,000,000 shares of stock and sell 20 shares to my friend for $50. He forgets about them, because after all the whole thing was just a joke.
My company has a market capitalization of $2.5 billion, of which I own $2,499,999,950. That paper wealth is worthless, because the daily (or whatever) trading volume of stock in the company is $0, suggesting that if I tried to realize my immense wealth, I wouldn't be able to.
Suppose instead that I sold 500,000 shares to my friends for $50 (total - 10,000 shares to the dollar), and that they sold the shares on to the public, and that now 10,000 shares trade per day at $2.50 per share.
My company has the same market capitalization of $2.5 billion. I own $2,498,750,000 of that (plus $50 of cash!) -- not as much as I had in the first example, but still pretty good. Just as in the first example, the daily trading volume suggests that this wealth is mostly illusory -- the tiny $25k / day market will be quickly overwhelmed if I try to sell $1 million worth of stock, and the trading price will plummet. However, unlike in the first example, my wealth is not entirely illusory. If I try to pick up an extra $5,000, I'll probably have to sell more than 2,000 shares of stock, but the trading volume can support that amount.
As long as there is active trading at a price, that price is real. There is no such concept as trading enough of a bitcoin for the price of "a bitcoin" to be "real"; what matters is whether you're trading enough of the market to move the price single-handedly. If the amount that you want to trade is much less than trading volume, you can more or less rely on the market price. If you want to trade an amount which is noticeable relative to trading volume, you're going to change the market price.
Put another way, if bitcoin trade volume is 100,000 bitcoins per day, you can sell one bitcoin at the market price even if nobody ever buys or sells more than .00001 bitcoin in a single transaction.
If you're speaking of stock dilution, there is a hard-cap on the number of BTC in the wild and a hard-coded granularity (as I understand it) where a satoshi is a hundred millionth of a Bitcoin.
As a store of value, it has many desirable properties. There is a fixed supply, it can be used anywhere with internet access, it is secure, and it is very inexpensive to hold. Gold, for instance, has a large potential supply, is very difficult to move and secure (e.g. vaults, armed guards), and typically requires you to trust a 3rd party (most hold gold IOUs, not the physical bars).
If you accept that there is a demand for such a store of value, then you must recognize the value of cryptocurrencies. There is also a great deal of potential value as technological solutions to the scaling problem are found, as well as new uses for Nakamoto-style networks.
https://storeofvalue.github.io/posts/cryptocurrency-hacks-so...
Exchange how? Your entire argument assumes a functional BTC eco-system (and exchanges with willing counter-parties).
Without usefulness in transactions BTC's only value is whatever is agreed on. And in the absence of a use that is worse than fiat currency - at least that has legal backing rather than just agreeing that BTC has value as a value store.
It's the essence of circular logic: BTC has value since it is a store of value and since it's a store of value it has value...
>If you accept that there is a demand for such a store of value, then you must recognize the value of cryptocurrencies.
I do - just not BTC. Anyone sane will store their value in something that has an actual shot of being grounded in real world transactions. So ETH or whatever is a far better bet.
The "digital gold" argument doesn't make sense to me at all. Human beings aren't rational spenders. Gold, if nothing else, looks good. I can buy a $10,000 bar of gold and even if its value crashes by 20% tomorrow, I at least have an aesthetic metal that feels nice to touch.
BTC doesn't even give me that satisfaction
http://www.macrotrends.net/1378/dow-to-gold-ratio-100-year-h...
In 1917 it was about 5, now it's about 15. So threefold increase in a century.
Plus the Dow pays around 2% dividend per year which is 7-fold increase in a century.
So US stocks outperformed gold by 21 times between 1917 and 2017.
Looking at the chart, there are very few long-term periods when gold has outperformed US stocks.