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Comment by ivm | Hacker News Reader

Returns from greater fools? I'd better stay without profits than participate in a pyramid.

Plenty of us find value in a currency that isn't controlled by a central authority and isn't subject to inflation. We're betting others who value saving over risking their savings in the stock market will also value such a currency.

Plenty of us believe there's potential in programmable money. Certainly more potential than yet-another-social-media-platform-selling-ads.

You're welcome to dismiss Bitcoin as a bubble. You don't, however, speak for everyone who finds legitimate reasons to get involved.

Do you mean savings in a single overvalued highly volatile $100bln commodity are more sustainable than savings in the overvalued international market diversified between sectors and countries?

Yes. In my opinion the diversified international market is being propped up by coordinated actions by the worlds central banks. These markets lost more than 50% of their value in 2008. Central banks are keeping them afloat at the expense of people trying to simply save their money and not take on debt.

Janet Yellen recently expressed concern regarding the amount of debt in the economy. Apparently giving out loans at rates less than inflation causes a lot of malinvestment.

Those I know investing in Bitcoin do so because it's the only asset that exists outside the system we have today. It's the escape hatch. The volatility of course concerns us, but we believe in the fundamental ideology and in the long term believe it'll change the world. The monetary policy we have today is, quite frankly, insane.

People that purchase Bitcoin are not investing, they're gambling. It's unfortunate that this lesson wasn't learned from the very recent 2008 meltdown when many did the exact same thing with real estate. But, as you say, there's going to be a lot of mal-investment with so much cheap money floating around...

I purchased Bitcoin to escape what I believe is a financial system based on fraud. Who are you to say what my motivations are for purchasing Bitcoin? Who are you to speak for everyone else deciding to purchase Bitcoin? It takes quite an ego to presume everyone buying hasn't researched what they're buying and are just mindless sheep hoping for a payday.

I didn't claim to know your motivations. You could be entirely earnest in your motivations, but that doesn't change the facts on the ground: your "escape" is up to its elbows in the same fraudulent financial system that you decry. It's cheap money looking for easy returns that is fueling Bitcoin's rise.

"Cheap money" implies people are taking on debt to buy bitcoin. I see no evidence of this. Real estate, on the other hand...

So your position is that the world is awash in cheap money but Bitcoin, with its stratospheric rise, is the one thing that isn't a beneficiary of this cheap money ?

Debt is given for student loans, and education has never been more expensive.

Cheap debt is given for housing with a mere 10% down becoming quite common, and housing has never been more expensive.

Debt is being used by companies to buy back stocks, and stocks have never been more expensive.

Loans are being given at 0% interest to buy cars, and cars have never been more expensive.

Banks only loan money for the above things because they are backed by, in the banks opinion, collateral.

Which banks are loaning money to buy bitcoin? My position is the amount of debt being used to purchase bitcoin is very small relative to the rest of the economy.

The effect of cheap money on Bitcoin is a second-order effect whereby people have access to money they wouldn't otherwise have, due to additional debt. It's similar to the effect witnessed during the run-up to the 2008 meltdown where people were refinancing their homes and cashing out (on-paper) equity to use for propping up their lifestyle or buying more real estate.

The point is that it is impossible to separate Bitcoin and it's fate from the greater economy. Cheap money fuels bubbles. Last time it was real estate, this time it looks like Bitcoin.

Sounds like you're arguing for another global financial crisis that isn't limited to cryptocurrencies.

"and isn't subject to inflation"

what do you call price of BC going up 16000 fold in 6 years??? the theory was you can buy the same good with the same amount of coin regardless of what dollar is doing, did that happen in practice? no, because no one knows true value of BC because there is no central authority. I am with you on hating the central authority but inflation part didn't work out as it was planned!

This is a rediculous argument. You can’t just introduce a radically new technology and currency to the market and expect it to instantly be priced at is true value.

Give it time. Bitcoin is a populist movement. Eventually the market will find it’s correct value and volatility will decline (volatility in bitcoin has actually been declining for some time now).

volatility has declined?

are you for real?

bitcoins were at 700 last year. And its 'value' dropped by 3000 just a few days ago, just to go back up. In what way has it dropped?

Percentages my friend.

what you are mentioning is deflation, the opposite of inflation. there is a limited amount of bitcoins, so indeed it is indeed deflationary, unlike most fiat, that central authority keep printing anytime they need.

you are right, and why deflation better than inflation?

Well, inflation makes the money you have in the bank loose value over time. In extreme examples you have countries like Venezuela and results are bad: people struggle to keep their buying power, companies are leaving the country, imports become way more expensive, etc.

I don't think there is a real world example of a country with deflation, so I don't know if the opposite would be true or what real consequences would be, but you can expect the opposite to happen.

>isn't subject to inflation?

The USD is regularly debased to reward people who have taken on debt. Bitcoin, on the other hand, has a fixed supply that cannot be manipulated.

> isn't subject to inflation

lol

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