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Comment by vinceguidry | Hacker News Reader

My whole attitude towards cryptocurrencies changed when I realized that intrinsic value literally didn't matter to the global rich, they're not interested in growth or value at all, only in security, and they'd be willing to pay a premium to store their wealth if it only means that they can control the risk.

Crypto can provide them with precisely that. The volatility of crypto is immaterial, what matters is that it's still around. The resilience of Bitcoin means that rich people can park wealth there. They can trust the protocol more than they can trust their nation's banks, their political institutions, and their social order.

Techies can make a nice side income arbitraging the scrambling of the global elite for a safe haven. It's the new Cayman Islands bank account, only now it's math keeping the filthy government's hands off your money, not the flimsy sham of sovereignty.

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> They're...interested...in security, and... [c]rypto can provide them with precisely that.

20% of all bitcoins have been irretrievably lost [0] and 7% have been stolen [1]. If I was the global rich, I'd rather hide gold bars in my mattress rather than put it in Bitcoin if my goal was just security.

[0] http://fortune.com/2017/11/25/lost-bitcoins/ [1] http://www.businessinsider.com/how-many-bitcoins-have-been-s...

Due to haphazard security and sheer being unlucky (i lost 300bitcoin from very very early on because they were on an external hardisk that I threw out) I am not the only one.

Peoples money gets stolen all the time.

Also, Bitcoin is 15x more expensive than gold to store securely: https://finance.yahoo.com/news/bitcoin-15-times-more-expensi...

Edit: for large institutional investors in a trust fund

>Also, Bitcoin is 15x more expensive than gold to store securely: https://finance.yahoo.com/news/bitcoin-15-times-more-expensi....

This is only the case for this particular trust fund. You can secure your coins for free on your own.

edit: downvoted for stating a fact? really?

Didn't mean to leave that out. Added it in

I disagree with this point. While the facts about the amount of bitcoin being lost are true, if someone is properly motivated to learn how to do things correctly, and large amounts of money can definitely be motivating, you can be very confident in your security.

So many coins have been lost because people were careless or uninformed, not because the system is fundamentally broken.

Edit: You're free to downvote, but if you can't make a reasonable argument against me it just shows the emotional response you are leaning on. I would be happy to post a wallet address with $10,000 in bitcoin on there, if I am wrong about what I said, surely you'd be able to take the money from me?

Just because I can't steal from you starting from nothing but your wallet address doesn't mean that your system is secure. It just means that if there is an effective attack vector, it doesn't work by working out the private key from the public address.

I agree with you that downvoting without offering counter-arguments is a sign of emotional rather than intellectual responses... but so is using straw man arguments like the one you put up.

I disagree. No one has ever lost bitcoins from keeping them in cold storage with multi sig keys distributed in safety deposit boxes. Literally no one. Its secure.

You misrepresent the intent of bitcoin along with it's intended use. Bitcoin was designed to be lost - to be eternally deflationary and for coins to fall out of circulation. Also you have to consider that the majority of coins were lost when bitcoin was worth considerably less than it is worth today.

Proper techniques to store bitcoin (local keys on a secure machine or a hardware wallet) make bitcoin mathematically impossible to steal. "Stolen" bitcoin is synonymous with "insecure" bitcoin. Properly securing bitcoin would be significantly cheaper than storing gold bars in a mattress.

Can one mathematically prove invulnerability to a $5 wrench attack?

Edit: Just in case it's not clear, my point is not that specifically bitcoin is more vulnerable to violence/coercion than other forms of value storage (although I'm pretty sure it is, as there are fewer safeguards/redress mechanisms). My point is that the regardless of the security of the mathematical element, cryptocurrency also has the real-world to contend with, which contains bugs, hardware failure, extortion, phishing, memory loss, theft, etc.

So much bitcoin was lost/stolen in the past because it simply wasn't worth very much. It's harder to forget you have 10btc on a laptop when it's worth $100,000 than when it's worth $10.

> Crypto can provide them with precisely that. The volatility of crypto is immaterial, what matters is that it's still around. The resilience of Bitcoin means that rich people can park wealth there. They can trust the protocol more than they can trust their nation's banks, their political institutions, and their social order.

What? Nobody sane is putting their long-term savings in crypto. The resilience of bitcoin has absolutely not been proven.

For long term assets, you want your money in some stable, solid, not volatile, and preferably backed by a global superpower, hence US Government bonds and Euro bonds are pretty much the safest assets you can buy. They won't go up much in value, but they won't go down much either.

Government bonds are limited in quantity, the government can't sell enough of them to meet demand. Not even the US government has that much appetite for spending. And if you think about it, governments could never be that sink. Security will forever be a scarce asset.

Long term it's exactly what you should do unless you truly believe that the USD is going to be as valuable as a security as it is right now in the long run (it's not).

One thing that many people forget is that most bitcoin is owned by very few people who go in very very early. They will not need to sell even if it was cut on half from now and they do not have to worry about inflation. If you can do that in the long run bitcoin will gain trust and thus be less volatile or even live with the volatility (as we used to do with normal fiat currencies)

If, as you say, the majority of bitcoin is owned by very few people, that market is cornered and you shouldn't touch it with a ten foot pole.

That's like saying that because the top 5% own most of the world's wealth you should stay away.

Can't you see how wrong that claim is?

Really rich people have most of their money in t-bills and real estate. Once you have a few million dollars, 95% of people become very conservative and focused on wealth preservation. 4.9% lose it, and 0.1% keep doubling down and get even more wealthy.

The principles of sovereignty have been around for a millennia. They aren't going anywhere. Debt is the financial innovation that has ignited centuries of growth, not few forms of cash... people were getting rich even when they needed to hump wagons of silver and gold around. Cryptocurrency is just a new form of scrip.

Not everyone has access to t-bills and real estate. Capital controls can prevent wealth moving across borders. If you literally can't get your wealth to safety, then Bitcoin looks really, really good.

Wrong.

If you can't move your money due to capital controls, you use bitcoin to bypass those controls, and get your money into somewhere more stable, preferably something that does not have volatility of 20% per day.

Both security and stability are scarce assets. Bitcoin can provide useful alternative market offerings for both.

Bitcoin as a secure and stable asset?

Maybe in the far future, but not even remotely now.

Who do long term investments in short terms?

The whole point is that if you get in now you both gain the upside of the value plus the increasing stability.

If you have enough money you can make that bet, hell even if you have less money you can still make that bet.

Or it goes to zero.

I am not against bitcoin. I have a bunch of Bitcoin. But buying bitcoin is strictly a speculative play. It is. It is not an investment: it is not a store of value. Nobody knows know what will happen ten years from.

But whatever happens ten years from now, odds are that it will be very different than what is here now, and odds are that t-bills will be pretty much the same.

Hence, why for long term stability you buy t-bills. If you want more risk, you buy the S&P 500.

For an amount of money that you can afford to lose, and you’re willing to put it into a highly speculative position, that goes into bitcoin.

Or the US dollar defaults. Nobody know what happens ten years from now either. It doesn't matter that the USD have been more secure or that having a central bank have helped stabilize the currency. In the long run, ten year? who knows.

Point is that Bitcoin is as solid an investment as many other things that are backed by governments.

I am willing to be that crypto will be around much longer than many states and so I am keeping that in mind when I invest.

I only invest long term and crypto like the US stock market is for me long-term winners. I could be wrong but today bitcoin isn't more fragile than many other currencies out there.

You're not investing, you're speculating on a commodity that you do not understand.

If your personal investment outlook is dependent on the major world currencies defaulting, you have a problem. Play with bitcoin, but don't bet your fortunes on it.

I am betting on bitcoin and blockchain being important in the future just like I am betting on a given stock to do well in the future because of the way I believe the world is going. The major world currencies do not have to default for that to be a reality so not sure why you portray it as if that's what I said.

All investments come with a risk the longer your perspective the less the risk depending on which asset we are talking about. Bitcoin/blochain is one of those that will be less risky over time unless the world moves in an anti-technology direction and I don't see that happening.

I like how you two are presenting Bitcoin like some sort of tool for oppressed people under tyrannical regimes.

I'm willing to bet that the majority of Bitcoins out there are somehow involved in money laundering for good ol' fashioned (organized) crime.

The world's second-largest economy, with over a billion people and 20 percent of the total world population, has the type of capital controls that inspire people to find creative ways to move their money. That same country accounts for 60+%, a majority, of Bitcoin mining.

And that country is also riddled with corruption. I wouldn't find it that strange that even for China, a lot of that money is made illegally, even by Western standards.

> If you can't move your money due to capital controls, you use bitcoin to bypass those controls

If I can't move $100K of my money due to capital controls, then I also can't move those $100K to buy the bitcoin I need to bypass those controls.

> Not everyone has access to t-bills

If you have a bank account and an Internet connection, you can buy yourself a Treasury [1].

[1] https://www.treasurydirect.gov

You need to have both a US Tax ID number and a bank account in order to buy treasuries. This opens you up to capital controls and nation-state seizure risk from a number of sources.

The top 7 on the rich list seem to have most of their money in businesses or shares in same.

> The resilience of Bitcoin means that rich people can park wealth there

When one speaks of assets in which one parks their wealth, an asset that loses 50% of its purchasing power overnight is not one of them.

So just wait for it to come back up. You're not looking to withdraw it now, just eventually. Tap one of your other asset stores until Bitcoin climbs back.

The perspective of wealthy people is not ours. They have to weigh risk differently than we do. To them, if a bank fails or if the state seizes their wealth, it's the same thing as Bitcoin falling. Only it's not, because Bitcoin can climb back, while the people that stole their wealth are never going to give it back.

Bitcoin being a market entity that can remain outside government regulation and enforcement reach makes it the ultimate asset store. Nothing else in the world offers that.

> So just wait for it to come back up

Some assets do not come back up.

If the global elite start parking wealth in Bitcoin, then there's literally no ceiling on the price. You see this in any market that gets targeted by them. Prices go up, and they don't come back down until governments start paying attention and figure out how to control access and regulate. Then they come back down some.

But unless a governing entity can figure out how to completely shut global money out of a market, then that asset price might not be being held up by God Himself, but by a force almost as strong.

> If the global elite start parking wealth in Bitcoin, then there's literally no ceiling on the price

That's a big if.

Don't think it really is. There is a need for a store of value of the digital space and anyone who wants to invest in the digital space in the future will have to be able to access some of the deals through cryptocurrency or token means.

I would rather bet on that, than the US government in the long run.

> There is a need for a store of value of the digital space

Something like 90% of U.S. dollars are held digitally. Most American stock and bonds are held digitally. Cryptocurrencies aren't novel in being digital. They're novel in being de-centralised. They're pitched in being de-centralised away from the very system the global elite have built and profited from.

If the blockchain proves resilient, it will be adopted by central banks. There is no good reason for those banks adopting Bitcoin over something they design.

That's not the point. It's not about whether it's digital it's about how it can be used in the digital space.

Bitcoin is not just decentralized and thus isn't subject to any political opinion, it's non-inflatory and it's built in a way that both the current elite plus those with less political power can access it furthermore it's actually tracable and not possible to launder.

Those are all things that anyone from government to elite to the working class can get behind.

Whether blockchain is adopted by banks does not have any bearing on the value of bitcoin and how it can be used. If anything it will only improve cryptos value and thus be a good investment target for the elite.

Only if blockchain proves to have no backing and no utility will this trend be inversed. My bet is that it does have backing and does have plenty of utility which will just take some time to manifest itself to everyone.

> Bitcoin being a market entity that can remain outside government regulation and enforcement reach makes it the ultimate asset store.

Any major world government could muster up the resources to do a 51% attack on Bitcoin. China could go after the major miners, the US could shut down Coinbase, etc. Many ways for them to stagger the currency, potentially shaking confidence enough on it for people to cash out.

That's not even counting the non-governmental shenanigans of things like Tether that are going on that could do that on their own.

The global market place is an order of magnitude bigger than all the governments in the world. They maintain order through force, not through economic size.

If governments had to resort to using muscle to crush Bitcoin, the next cryptocurrency won't be so easy to target.

> They maintain order through force, not through economic size.

Force goes a long way.

> If governments had to resort to using muscle to crush Bitcoin, the next cryptocurrency won't be so easy to target.

That's pretty handwavey. "We will jail/execute you if we find out you're using cryptocurrencies" is an option readily available to nation states, and I seriously question the willingness of the "global elite" to risk that sort of penalty.

> Force goes a long way.

It really doesn't. It only goes as far as your resources. Once they run out, then you can literally no longer enforce your will. When dealing with an amorphous entity with an order of magnitude more resources than you do, then deploying force is a game of whack-a-mole that you can't win. Your only option is to fight a rearguard action trying to stay on top while the new world order emerges.

> "We will jail/execute you if we find out you're using cryptocurrencies" is an option readily available to nation states, and I seriously question the willingness of the "global elite" to risk that sort of penalty.

That is already the operative environment under which much of this wealth was created.

It’s already happening.

As long as it gains 100% over long term it is though.

Are you forgetting the fact that it went from 2000 to 11000 in a matter of months?

> The volatility of crypto is immaterial, what matters is that it's still around. The resilience of Bitcoin means that rich people can park wealth there. They can trust the protocol more than they can trust their nation's banks, their political institutions, and their social order.

You may eventually be able to make this claim, but to make it now is lunacy.

It is but so is believing in the government-backed securities IMO.

> My whole attitude towards cryptocurrencies changed when I realized that intrinsic value literally didn't matter to the global rich, they're not interested in growth or value at all, only in security, and they'd be willing to pay a premium to store their wealth if it only means that they can control the risk.

perhaps a bit more accurately, they're interested in growth and value, but they've got enough of both that they've become interested in eliminating risk. which requires finding assets which are decorrelated from one another. the various electronic currencies are a new sort of asset class which appear to be decorrelated from everything (except NVDA?).

> The volatility of crypto is immaterial...

eh, the volatility isn't great, but so long as it is very different from everything else's volatility, it can be useful.

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