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Comment by bufferoverflow | Hacker News Reader

> How is that not irrational? Come on.

It's not irrational in the most basic economic sense - supply and demand determines the price.

Why is gold so expensive? Around 90% of it is being hoarded, not used industrially. People think it's valuable, the supply is limited, therefore it is valuable. Same with cryptocurrencies. Actually, particular cryptocurrency supply is truly limited, unlike gold, which is extremely abundant in our universe.

The only weird thing about the tulipmania is that tulips can be (relatively) easily grown.

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Actually, particular cryptocurrency supply is truly limited, unlike gold, which is extremely abundant in our universe.

Depends what you mean by a 'particular' cryptocurrency. There's certainly been no sign of a limit on bitcoin, what with all its forks. And there's no end of alternative copycat coins filling the list at coinmarketcap.com. You have to take a leap of faith to trust that miners won't change the system once all the 'limited' 21 million original bitcoins have been produced...

Ultimately miners aren’t in charge. If miners try to change the rules, but the majority of users ignore them, the miners’ fork will be close to worthless.

Doubt you need miners in order to process transactions, how would you do it without any miners?

* Don't

Gah, that's a pretty bad typo.

If the miners are financially motivated and rational they wouldn’t refuse to mine the most valuable fork. They have a large investment in hardware and would lose a lot of money.

If for some reason they did refuse, or worse, attacked the network (with double spends or censorsing transactions) then the users could emergency fork to change the proof of work and attract new miners.

That's exactly what I mean. Forks of bitcoin are not bitcoin. Though some of them are valued too.

The miners can't change bitcoin, unless the community agrees with them. They can only really join or leave with their hashing power.

I don't think bitcoin will even exist by the time it's scheduled to be mined completely (100+ years).

> Why is gold so expensive? Around 90% of it is being hoarded, not used industrially. People think it's valuable, the supply is limited, therefore it is valuable. Same with cryptocurrencies.

I'd say it's quite different. Governments that hold gold often do it because they expect gold to keep its value, not because they are expecting the value to increase massively (I can't think of any government leaders advocating that their country buy a lot more gold to get rich quickly). People who hold cryptocurrencies, on the other hand, seem to say that enormous fluctuations in value (including massive decreases in value) are acceptable because eventually the value might skyrocket. The reason people hold gold and the reason most people hold cryptocurrencies seem to be the opposite of one another.

This is like arguing that it was rational to appear to be an enthusiastic Christian to avoid being burned alive by the Spanish Inquisition.

If everyone around you believes something fundamentally irrational, it can be situationally rational to appear to have the same belief system.

But that only proves thst rational people are adaptable, not that the belief system itself makes sense, or that it doesn’t create terrible outcomes.

Which is mainly also overblown [1] and one of the first world wide, anti-imperialist campaigns in modern history. And wildly successful if I might say.

[1] https://en.m.wikipedia.org/wiki/Black_Legend

> particular cryptocurrency supply is truly limited, unlike gold

It is dimensionally incorrect to compare abundance of (a particular) cryptocurrency with gold.

Well, you could compare the number of satoshis with the number of atoms of gold, or grams of gold, or even tons of gold.

Satoshis are still more rare.

https://answers.yahoo.com/question/index?qid=20090614042422A...

Likewise one could make the argument it is dimensionally incorrect to compare abundance of a particular cryptocurrency (bitcoin) with all the different element in the periodic table.

If you are thinking of investing heavily (relative to what you can afford to lose) in any speculative activity, it is not rational to limit your analysis to that most basic economic truism.

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