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Comment by tootie | Hacker News Reader

Can someone explain this collective mania to me? This is all 100% pure speculative frenzy, right?

95% speculative frenzy, 5% building the financial framework of the future. It's a bit like the dot com boom in the crazy days when most of the stuff went bust but some real companies came out of it.

Most of us Bitcoiners are skeptical of modern monetary policy and want a risk-free store of value for our wealth. Today Bitcoin is very risky, however, we believe its fundamental properties will ultimately lead to a stable place to put our savings. Sure, it won't gain interest or dividends but it also won't be subject to inflation or central banker manipulation.

The above is purely my opinion and is frequently the subject of disagreement. It is, however, why I got into bitcoin.

If Bitcoin is not inherently stable why do you think it will become stable in the future? Do you believe it is subject to manipulation by parties other than central bankers? I don't understand this line of thinking but I am not an expert so I am curious to hear your perspective.

Because of vaporware promises from the developers of BTC.

Don't worry, in 18 months^, Lightning Network (TM) will come out and fix everything by adding a second layer to bitcoin, nevermind that the first layer will be ignored

^ Not accounting for perpetual delays as LN as been promised for a long time

So why bitcoin rather than another cryptocurrency?

If another becomes more popular, everyone shifts to it, and the price crashes, what use was bitcoin as a store of value?

The difference with other assets like cash or gold is that they have value that is supported by a clear rationale based on a central bank’s economic policies.

The value of gold is not rational

I chose bitcoin because for several reasons:

1. I believe in the technology approach bitcoin is taking over any other coin (I believe functionality like smart contracts should be a side chain to the main bitcoin chain).

2. It has had a firm 21m supply cap since the beginning

3. It is the most decentralized

4. It has the largest userbase -- it's a more widely adopted currency

5. It has the most proof of work behind it (most of the mining power in the world targets the bitcoin blockchain). Proof of work is what keeps the chain secure from malicious actors.

6. The ledger is public

Something like gold can't be audited. If I bought gold, I wouldn't want to store that in my house. I'd need to trust a third party to store it for me. Who's auditing that third party? Is my gold only mine on paper? Bitcoin is auditable, gold is not (for the average person).

Cash is a depreciating asset -- at best, it loses 2% per year (likely much more).

Yes

Yes, it's a gambling fantasy for many. It's like looking a penny oil stocks and their volatility and imagining a path to millions; I admit, I can understand the intoxication and gold fever. For others, it is an intense or obsessive interest in the, somewhat arcane, and a little vague, "technology".

amateurs like Coinbase might speculate, but pros like GS use the Federal Reserve as their backstop

its one of those "heads I win, tails you lose" scenarios...GS will keep the profits but if things go south, their losses can just be taken out of your local school budget

Explain for those not in the know, like me. I thought Goldman repaid their TARP bailout money?

It is complete baloney and has nothing to do with crypto.

You're not supposed to bail out the failures in capitalism (i.e. so-called "crony capitalism").

Of course the companies getting billions in government support will win big and easily pay back their loans. If they didn't get TARP bailout, they would fail and better competitors would replace them.

it changes the risk profile when insolvency is not a potential outcome

I'm not damning GS...any entity that has officially crossed over into too-big-to-fail should take as many crazy risks as possible...why not?

The TARP money was just a small fraction of the actual bailout. The Federal Reserve also drove the interest rate on your savings account below the rate of inflation (robbing you of your wealth). Artificially suppressing interest rates also propped up asset prices -- assets such as houses which all the banks own. TARP was the tip of the iceberg.

That's like blaming firemen for making my house wet when it was on fire. The Fed likely prevented a deflationary spiral with it's relentless QE and never suffered the ill effects of high inflation that the anti-Fed faction insisted would happen.

House prices needed to fall. Bad debt needed to be written off. Investors making risky loans needed to lose. None of these things happened, and look where we are. I vehemently disagree with everything you said in your post.

Idiocracy.

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