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Comment by moduspol | Hacker News Reader

> What future does an asset have if people don't actually buy stuff with it?

Lots of assets have value without people buying things with them. Gold, houses, stocks, etc.

The more interesting question is how long Bitcoin will remain top dog merely as a store of value if other cryptocurrencies solve this on-chain / off-chain scaling problem better / faster. There's definitely some amount of value in the name alone, and some more in the security of the mining, but neither of those are unassailable.

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> Lots of assets have value without people buying things with them. Gold, houses, stocks, etc.

That value is predicated on the notion that they're worth something to the holder apart from their market price.

Gold can be used for jewelry and electronics manufacturing. In that sense it is a natural resource.

Stocks are shares in a company that runs a business or multiple businesses that could be profitable. Companies have financial obligations to their shareholders.

People live in houses.

Bitcoin's only function is to be exchanged. If no one is willing to give you anything for your bitcoin, it is completely worthless-- maybe even less than worthless when you factor transaction costs. The idea that it is a "store of value" is still predicated on bitcoin being a viable and accepted medium of exchange.

This is different from a house, which you can still use even if no one will buy it.

This is different from gold, as it is very hard to imagine a scenario where absolutely no one would buy your gold for at least for manufacturing.

This is different from stocks, where the financial obligations to you can only be cleared by legal proceedings such as Chapter 7 bankruptcy.

Besides that, there's a certain shifting of the goalposts going on when people who used to talk about Bitcoin replacing all the world's currencies instead start talking about the rising value of Bitcoin.

My bet is that they're different people motivated by different things.

Bitcoin absolutely can still be exchanged, and (in many cases) far more easily and cheaper than gold. It can also be stored and secured much cheaper, and even large amounts can be easily taken across borders. That is real value, even if transaction fees are high, and even if you don't directly buy things with it.

Yes, gold is a very special case. Gold also has a very, very long history of being used as a global currency, which lends far more confidence in it than is probably warranted.

Bitcoin has not even 10 years of history as a currency, and most of that time the system was propped up by an inflation mechanism that will soon cease to exist (and is already mostly ineffective), and the rest has been fueled by speculative mania. Compared to gold, it is utterly unproven for the role.

There is no reason to think that Bitcoin is in any real position to replace gold in its role as a "store of value."

I'm not arguing it will. I'm arguing it can function as a store of value despite not being used to buy things, or having a secondary material usage.

Yes, but nearly anything can function as a store of value by that standard. While it's true Bitcoin has name recognition and that is an advantage, it's not exactly a big advantage.

And what is jewelry’s worth? What is fine arts worth? What is fiat currency worth? The world is chock full of goods with no inherent value. None. Fine art is worth a lot BECAUSE it is worth a lot.

Kim kardashian is famous for being famous. It’s clear the world is not utilitarian.

Jewelry and artwork are used for adornment and to signal status.

Artwork is also used to decorate or define your living space or working space. It can manipulate your emotional state, serve as a conversation piece at parties, or signal some other trait about you. Artwork is also used to express ideas. Is really high-end collectable artwork from famous dead artists priced far higher than its utility should warrant? Most likely this is because they're used as a store of value. The reasons why artwork became a convenient store of value are probably interesting and might be worth comparing on a detailed level with bitcoin-- but the simple fact that fine art exists as a store of value does not mean that just any arbitrary exchangeable item is likely to fill a similar role.

Kim Kardashian's story is a lot more nuanced than you give it credit for. Many famous socialites quickly fade back into relative obscurity. Kardashian (in full club get-up, anyway) was strikingly beautiful, had a bold but impeccable sense of style, and a willingness to repeatedly expose her personal life to the public. She proved to have a better-than-average ability to entertain audiences on her reality TV show, even if that ability wouldn't fit into any traditional definition of an entertainer.

Fiat currency has no value beyond its utility as a medium of exchange (or store of value). But then, my whole point is to distinguish currency from other types of assets.

While the parent's statement is wrong; it essentially makes the correct point. Gold has value as it is a store of wealth and maybe a case could be made that Bitcoin is that; though it is tougher now. Gold is used as a medium of exchange and the underpinnings historically for currency as some currency is literally minted out of it or was backed by it.

However, other assets have value because they are useful. Per your examples a house is shelter and a stock is a virtual representation of the physical assets and receivables of a corporation which I should add has extreme market liquidity. Other assets like vehicles provide transportation and heavy machinery make products. I like Bitcoin and it may become/stay an asset class like gold; very illiquid and a store of wealth, but if that fails to materialize or continue after this speculation Bitcoin will be a lot more the AltaVista/Yahoo/Dogpile to Google search than the Gold to Cash analogy.

> Gold, houses, stocks, etc.

With a caveat that houses and stocks can provide cashflow in terms of rent payments and dividends / option income.

...And gold is a physical commodity with both industrial and consumer product applications.

... and stocks are a legal claim to some percentage of the assets of a corporation.

The only things that I can think of that are somewhat similar to cryptocurrency as a "store of value" are things like baseball cards.

...and even collectibles have some appreciable aesthetic qualities and enthusiast interest which exists independently of and generally strictly prior to speculators getting involved.

Baseball cards are propped up by nostalgia; you take away the nostalgia, and the value crumbles.

Of course. And Bitcoin historically has provided speculative gains. The point is they can have value without being used to buy things directly.

Incidentally, houses are also useful for shelter and storing other assets

Cryptos have this in the form of gas (Ethereum and NEO for now).

With the cryptocurrency NEO, because it's algorithm is Proof-of-Stake, merely holding some amount of NEO means you can sign transactions, and signing transactions earns you GAS, which has value.

Indeed, I'd go further and say that almost all assets are not used to buy stuff. That's what makes cash special, it's (one of?) the only asset you can freely spend.

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