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Comment by scottmf | Hacker News Reader

A store of value — digital gold.

But how does it keep it's value stable? How does a store of value weather a small panic when the hope and excitement has died down? When the hodl has stopped because everybody is tired, living their lives, and using Bitcoin. Bitcoin isn't `the magical internet money' anymore, it won't stay buzzword of 20xx either.

Bitcoin needs an inherent value otherwise it will crash. I always believed Bitcoin provided a service to keep it's value stable. You argue against this.

I agree broadly with what you're saying here, but with respect to GP, you could indeed say the same thing about gold ... it's only worth the value ascribed to it in terms of "real world" things. Except that gold does have a few pretty nifty usecases based on its intrinsic properties as well, such as for jewellery and electronics.

I wonder if the same could be said about BTC, in that mining is effectively digging up new prime numbers right? and prime numbers do have intrinsic value for many communications and computing applications no?

Nope, bitcoin mining is based on finding large integers that hash to small integers (under the current threshold). It's got nothing to do with primes. Although there is a cryptocurrency based on this very concept, currently with a market cap of $12M: http://primecoin.io/

So, is there any intrinsic value (at all) to these "coins"?

I don't think there is any different value to that of Bitcoin. However I think they provide a service (money transmitting) better than existing competitors.

I also think that altcoins don't compete with Bitcoin because Bitcoin is unable to saturate the market.

No, mining does not generate value except supporting Bitcoin. Prime numbers (not mining) also only have cryptographic value if they aren't known to anybody else.

Losing the nifty usecases for gold would plummet the price. Luckily were addicted to technology and jewelery. This won't change quickly. However Bitcoin is losing their usecase and already struggling to stay relevant.

Prime numbers (not mining) also only have cryptographic value if they aren't known to anybody else

I don't think this is right. IANAC but from what I recall on the topic, prime numbers are used to "seed" cryptographic keys and the like.

> you could indeed say the same thing about gold

You could not. Exactly because it has some nifty use cases. The jewelry market is what keeps gold stable - it can absorb a small panic and stop it from becoming a large burst and anchors the gold price into a real world quantity.

If you create a store of wealth without any kind of real world anchoring, any small panic would be enough to permanently move its price to any random value. That makes it quite useless for a store wealth.

You could not.

Yes. You could. I have, as have many others.

Thanks for re-iterating and further elucidating my point regarding gold's intrinsic value.

Bitcoin crashes at least as hard as the economy in times of downturn. Probably harder.

A global downturn, yes definitely, but BTC will probably not be affected by a crash (or hyper-inflation) of a small-ish economy.

But what's the advantage over directly buying Dollars or Euros?

A very good use-case for cryptocurrencies is taking money out of countries with strict capital control, like China. But obviously, such governments are also quite authoritarian and will not have problems blocking a cryptocurrency if they see fit.

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