Is Buying Crypto Assets “Investing” | Hacker News Reader

Is Buying Crypto Assets “Investing”

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Any discussion of whether "X is Y" like this is kind of pointless. More than that, it just devolves into sub-arguments. In this case, it will devolve into arguing whether an "investment" requires purchasing things with "intrinsic value", and furthermore whether the term "intrinsic value" has any sort of objective meaning at all, anyway.

At the end of the day, if people prefer to call me a "gambler" or "speculator" or "investor" for owning Bitcoin, any of those terms are fine.

Most of the time, I agree with you. Especially with a lot of the pointless pedantry that people argue about on here.

However, the question of whether X should be termed an investment or speculation can be quite important in people's lives. Marketing in general is really important, especially marketing around which many people base serious financial decisions. If the label you put on the box leads people to expect one thing, and what's in the box is something else, that's problematic. This is part of why the SEC cares so much about who various securities are marketed to. And since, so far, the SEC has not stopped in to stop BTC et al from being marketed to The Average Jane, it's important to unofficially call out unrealistic claims and misleading terminology.

I initially agreed with the parent comment, but you drive a good bargain as well with yours. Still, I think the actual problem is not that it needs to be defined, but that we are trying to define it in the scope of singular current definition, while we actually need to implement a new definition, possibly with the help of mixing current definitions.

The whole reason I made my comment was going through a back and forth with myself about whether there was a case to be made here. I'm still not positive, so I hope I'm not driving that bargain harder than it deserves to be driven. I do 100% agree that the default stance on debating definitions should be that one ought not, and one ought instead be more specific. Maybe the real thing to take care of is that most investors are really innocent and we have to be very careful about what kinds of expectations we give them (if we care about ethics, at any rate).

When you set a boundary like that (X is a Y because of reasons Z1, Z2) you gain systematization leverage. You now have a technology or framework for which you can develop various tools and other informatic resources.

So even if it doesn't necessarily matter what people call you, it may be worth your time to understand where and why they set boundaries and conditions for activities in which you are involved. This could save you a lot of energy that might have otherwise been wasted in repeating hard lessons. Even if you are less "don't reinvent the wheel" and more "NIH" and just want to learn in isolation, you could also gain some helpful tips on defining your own boundaries.

I agree very much that the question 'Is buying crypto assets "Investing"?' is quite unclear.

I would rather ask the questions 'Is buying crypto assets speculative?' (It depends on your intent and ideology.) or 'Is buying crypto assets risky?' (Yes. If you need to ask, your risk model is probably not very quantified.)

Our minds are largely associative computers. Virtually all human thought consists of comparing something to something else. It can be meaningless, but it can signify an important concept as well.

I always hear people saying that blockchain is being used for all kinds of interesting things that gives them intrinsic value, but that's not why bitcoin's price has gotten so high (and recently dropped so dramatically, but still very high).

Bitcoin and most other cryptocurrency is almost exclusively used for speculation. People generally buy bitcoin for one reason and one reason only: to get rich from selling it later.

A currency driven in this great a percentage by speculation is a dangerous bubble. Until it lives up to the hype and this blockchain ecosystem actually exists in a density large enough to realistically support the currency's valuation, I would listen to Warren Buffet's advice.

There's a lot of adherents who are reaching fanatical levels of devotion to blockchain, and those types will explain away any unbeliever's lack of faith. The fact remains--cryptocurrency is almost entirely driven by speculation. A sustainable currency doesn't do that. A Ponzi scheme does that.

A lot of the blockchain applications seem really kind of flimsy and hollow, as if they are really there to prop up a crypto fortune in the hopes that some kind of ecosystem develops and prevents the inevitable crash. Those probably aren't going to work. Once again, it points to fact that the primary purpose of the currency is currently just a get rich quick scheme.

Speculation is a critical part of the process. It's called "signaling".

If price of Aluminium goes up a lot, people will be "signaled" to build more Aluminium mines, Aluminium smelters and so on. All of these people are driven by profit. Yet their profit-seeking provides a service, at least until Aluminium will not be needed anymore.

The same for bitcoin. The ever-increasing price signals all kind of people to do all kind of things. This is critical for adoption.

Thing is, that aluminum industry in your example existed before the investment and independent from the investment. People need aluminum and are going to buy it.

If you have a signal to purchase more currency, and that currency's value only goes up if more people show up to buy it at a higher price, and those people can only get a payout if another tier of people show up and pay a higher price... See the shape of that structure? Vaguely... triangular?

Legitimate investment takes advantages of inefficiencies in pricing. It's not possible to always sell a commodity at the absolute ideal and correct price at the correct time, especially for an industry just getting its start. So people with a lot of assets can take some commodity, hold it for a period of time, then sell it wisely to take advantage of an existing industry. Or nurture it and reap the rewards when it is successful. See how cryptocurrency is potentially different? Most of the price of crypto is not supported by any industry. It's people buying more in hopes of getting rich quick. It's absolutely a bubble in its current incarnation, although hopefully it develops a more diverse underpinning as time goes on.

If it develops that foundation then it will be like investing in a fledgeling industry, nurturing it until it can become self-sustaining and profitable. If those applications don't come through, it's just another scheme.

You seem to be slowly turning to the side of it being an investment in the end.

You start out with lambasting bitcoin and crypto as nothing but a ponzi scheme, yet by the end of this paragraph you admit that

>If it develops that foundation then it will be like investing in a fledgeling industry, nurturing it until it can become self-sustaining and profitable. If those applications don't come through, it's just another scheme.

Which is exactly what it is!

I think lots of crypto debates should more accurately define their context.

Are we debating if the current price of bitcoin represents its intrinsic value?

Are we debating if bitcoin even has any value?

I don't see this drift you're speaking of. I actually really want to see cryptocurrency become a real thing, it has this amazing promise of computers maintaining a sense of absolute truth that resists all falsification. We desperately need to build a new decentralized system as the internet is brought under the control of fewer people each day.

But it's not looking good so far. People need to be more mindful of how bubbles have played out in history. Realistic valuation is more healthy for a fledgeling industry than enormous, uncontrolled, and ultimately false sensationalist growth.

I think anything has value so long as there's a group consensus of value. I'm not debating that. You say a fledgeling industry is exactly what bitcoin is, but I don't think we have strong enough evidence of that. I'm hopeful but skeptical. I'm allowed to be both. And if somebody calls me a concern troll I'm going to lose my mind. I hate that term. Eliminates any sort of realistic self-evaluation within a group. Sometimes it pays to examine yourself in a negative light.

People gotta understand the possibility of it being a false promise as well as the possibility of it playing out well, but right now there seems to be two distinct and fanatical camps with no middle ground.

The shifting semantics of "crypto" is incredibly frustrating; it makes it very hard to talk about in the technical sense.

I know that language is in a constant state of flux (my background happens to be linguistics) but it seems the mainstream media has a real penchant for butchering technical terms.

It's also starting to get really weasel-wordy. There's a billion crypto scams going on these days. It's not the only thing going on, but there's a hell of a lot of old-school cons and then there's a hell of a lot of softer, less malicious scamming that is just based on over-confidence in a very buzzy trend.

Assuming a crypto asset is a currency, then no. You cannot invest in a currency. You can only speculate.

Investing confers ownership in an income producing asset of which you have a percentage ownership stake in.

Bitcoin is not a currency (it's a commodity) meaning other coins are also not currencies because Bitcoin is the most currency-like of the bunch.

So if it's a commodity, it's just speculation. Nobody invests in "corn" or "oil" for retirement.

I disagree - especially with you second sentence.

I think you’d have a bunch of owners of XOM and CVX, etc stock that would beg to differ with you.

And if you don’t like those, take a plane out to Midland, Texas and drive around a bit - you’ll find quite a large number of people who do invest in oil. They may be further out on the risk spectrum than you are, but if they aren’t investing, then you can’t call buying FB or GOOG an investment either.

There is a big difference between investing in companies that produce commodities and commodities themselves. XOM, CVX, BP and the like are companies that are in the business of producing oil to generate profit for their shareholders. Owning XOM/CVX/BP stock is investing, because there's a reasonable expectation that the companies will make money and return that profit to their shareholders in the form of a buyback or a dividend. Owning an actual commodity is like buying art or trading cards speculating your purchase will go up in value based on some inside knowledge you perceive to have. That is the definition of speculation.

What if I buy crude oil in Texas, where it’s cheap, with the idea of selling it where it’s expensive (say, Europe) ?

I’m still investing.

In fact, I could build a company around it. And if I did, and then sold stock in that company to you and you used that as investment for retirement, then you would have just validated that buying a commodity is indeed investing.

Maybe not all the time, but certainly some of the time.

By the way, you can buy some of these companies today, under tickers such as TNP, NAT, DHT, among others.

investing implies a long term horizon. if you are just taking advantage of an arbitrage opportunity then you are a commodity distributor/shipper or commodity trader. you aren't investing in the underlying asset you want to hold the asset for as short a period as possible to avoid the arbitrage disappearing beneath you.

Investing implies no such time horizon.

Investing is spending money with an expectation of a return.

For contrast, expenses have no expected return.

Neither have a time horizon. And further, what would “long term” be anyway? Not sure how you could ever define it.

the interesting thing about crypto is that it allows for diversified speculation/investment in the equivalent of the oil drillers to gas station owners.

I have not found a comparable analogy. The problem is that btc or eth may not correlate with long-term crypto growth bc they may start a trend, but another similar tech may actually be the winner. Its interesting and I hope that people dont take too large of a personal position in the asset class as a % of total investments.

[Disclaimet] I currently 'invest' a small sum of money monthly in crypto assets. (Less than 1% of my portfolio monthly allocation)

They are more similar to commodities like gold, silver, or other precious metals in that they behave much like monetary assets.

Tons of people do invest in gold/silver for retirement.

Gold/silver are also speculative assets, not investments (per Warren Buffet definition, which I like and use myself). Just because they are speculative assets doesn't mean it's a bad idea to buy them.

An investment would be putting your retirement money in a startup for instance. And that would be a very very risky investment with near guarantee of complete loss of capital.

I don't think it's not easy to classify bitcoin as just one certain category. It's a community-driven entity which purpose is constantly changing. I think it ought to have a completely new category.

I agree, but you'd have to take it up with the CFTC. I don't think they're big on "new categories".

It's not a commodity and it's not a currency. It's nothing-cy. How much is 0x12efadeb8790234b5ed worth? Anyone can make a crypto "asset" with less effort than it took me to type this in.

Biggest. Pyramid. Scheme. Ever.

EDIT:

Buffet: Crypto currencies will come to a bad ending. ... "tulips" ...

Munger: I think worse about crypto currencies than you do. ... "trading turds" ...

The asset is the ledger-recorded amount of cryptocurrency attached to the wallet keypair, not the keypair itself. Cryptos have plenty of problems without misrepresenting what they are.

Our bank accounts are also identified by mere bits. What's that quote...

> Cosmo: The world isn't run by weapons anymore, or energy, or money. It's run by little ones and zeroes, little bits of data. It's all just electrons.

(To be clear, I'm extremely ambivalent about cryptos, so I don't entirely disagree with your sentiment. I can see the "it's a new form of currency" side, and I can see the "mass delusion and speculation bubble" side. History will prove someone right, but I don't know how to estimate a probability of any one cryptocurrency winning, if any do.)

I'm fully aware of that. My point is that its value is just about the same as any random sequence of bits. The fact that those bits are in a super inefficient ledger doesn't matter.

Did you realize, that money is just green paper? Deep.

It's green paper backed by a government. If I printed my own paper money it'd also be worthless.

If you started your own cryptocurrency, it'd also be worthless. That's not to say all cryptocurrencies are worthless.

Maybe we should split things up a bit ?

Bitcoin is, according to group:

IRS/tax offices around the world: a commodity (and thus taxed like stocks)

Banks: neither (and don't you dare touch it !)

Most historical bitcoin currency guys (e.g. Steam): neither (this unfortunately seems to exclude pretty much all the bigger ones)

Some remaining guys[1]: currency

Believers: currency

[1] https://99bitcoins.com/who-accepts-bitcoins-payment-companie...

I don't see how Bitcoin is a pyramid scheme. I don't need others underneath me to be producing/selling/mining so that my existing BC have value. If you think it is a sham or a con that is one thing, but a pyramid scheme it isn't.

I think he meant ponzi-scheme, which would be true if Bitcoin didn't have any purpose. Anyways, this debate has been settled for us by the US government, it's a commodity.

Its speculating, same as penny stops isn't investing.

> Bitcoin and Zcash are stores of value that allow users to participate in this decentralized application space without the need for fiat currencies.

How is Bitcoin a store of value? An ounce of gold is a store of value - someone had to do the work of finding and mining it, and it can be used to fill teeth and conduct electricity. Gold is portable, uniform, durable and divisible, so it is a commodity that has good currency qualities. But almost every commodity that can be sold is a store of value - what value does Bitcoin have?

Bitcoin boosters scout around the world for some commodity to compare it to and fail, as it is inherently valueless and ultimately worthless, i.e. ultimately worth nothing. So they come across the US dollar, an item whose value has a question mark over it. So they say "this is like a dollar". Of course, one can then just say a joke cryptocoin like Dogecoin should have a market cap that is over half a billion dollars. And it does ( https://coinmarketcap.com/currencies/dogecoin/ ). Even Dogecoin's creator says the half billion dollar market cap is all just a big joke.

Bitcoin doesn't even have the portable quality of a good currency. Bitcoin transactions have hit large transaction latency issues (or had them when I last looked into it when I did a transaction a few months ago). So the "currency" isn't even good as a currency any more.

US fiat currency was indirectly backed by gold until 47 years ago, and with the window then shut, it is now doubly-indirectly backed by that gold (the US did not get rid of its 8000 tons of gold at Fort Knox and other locations in 1971 when, apparently, a magic wand was waved over Treasury department printing presses, giving them the power to create value). I won't go into why the dollar and Bitcoin are not equivalent here (but if someone makes a coherent explanation why the US did not get rid of its 8000 tons of gold, I will).

At least Pets.com, subprime new housing development real estate and so forth had value at some level. These cryptocurrencies have no value. They are all going to crash. I wondered for a while when and how that will happen, but now I know - things like Dogecoin and its clones will bring it down.

Another thing - anyone who bought Bitcoin, Ethereum or Lumen in January is currently under water. All three currencies dipped at that time, and in fact all cryptocurrencies dipped simultaneously. So when the (total) crash comes, I predict all cryptocurrencies will go to zero.

As Keynes said, markets can remain irrational longer than you or I can remain solvent.

In 2014 you said this [1]:

> I would short Bitcoins if I could find a reliable party to do it with, and it were easier to do. That doing that is so difficult is another sign how it's not a real currency.

Well, today you can short bitcoin on the most reliable future exchanges in the world: CBOE and CME. And as a bonus, you can short it at a price 10 times higher than in 2014.

[1] https://news.ycombinator.com/item?id=7886464

As much as I dislike digging into someone's comment history, this is quite funny.

> These cryptocurrencies have no value.

The markets say otherwise, for 9 years now.

And more and more people who where laughing are not laughing anymore. I'm talking about exchanges like CBOE and CME, and regulators who are seriously talking about regulating cryptos. Do you ever hear regulators talk about regulating ponzies (in the positive form)?

Many people are so stuck up in what they think they know about economics from 30 years ago that they don't dig deeper to see what's happening under their nose.

> I predict all cryptocurrencies will go to zero.

This is easy to make a strong case against. In 2010, when most people said that Bitcoin is probably illegal, because you are not allowed to create currencies, and that all people involved will be arrested, when 100% of comments on HN were critical of Bitcoin, when a minuscule fraction of those who now know of Bitcoin knew about it, Bitcoin was still worth a few pennies.

> The markets say otherwise, for 9 years now

<8 years ago, Bitcoin's market cap was less than $170,000.

> Do you ever hear regulators talk about regulating ponzies (in the positive form)?

Like how the sub-prime real estate market was regulated, or how the dot-bomb stocks were regulated, or how the 1980s S&Ls were regulated...

> what they think they know about economics from 30 years ago

How about from 380 years ago, tulips in Holland?

The one difference between subprime real estate, dot bomb stock etc. is cryptocoins are not just overinflated, but are actually completely worthless. Even Ponzi's postal reply coupons had some value.

Gold is always used as this pillar of value when talking about currencies (one might even call it a gold standard?) but its scarcity is managed and artificially inflated like anything else and it has no intrinsic value unless you really have a burning need for jewelry, electronic contacts, or I dunno, making Goldwasser? You can't eat gold. If there was some kind of huge financial crash, people would not be lining up to barter with your gold beyond a few gullible folks who think it will bring them security. It's worth something because of scarcity and prior agreement, which is exactly why paper money or cryptocurrency have value. If anything, cryptocurrency has that scarcity embedded into its very nature.

That said, cryptocurrency currently isn't used for much more than speculation and "investment" which is a terrible way for a healthy economy to work. Unless there's a lot of conventional business being done with it, it's only a good investment if lots more investors come by and dump money into it, and those investors will only get a payout if proportionally more investors come after them, and so on... See a resemblance to a certain famous financial scam?

It'll only be legit when people use it for exchange of goods and services in a large enough density to support the investment, which is really just a parasite on a existing economy taking advantage of pricing inefficiencies. You can't have investment and speculation first. A parasite can't live off itself. And so far the only exchange of goods and services is a few people buying psychedelics and a few people making various over-hyped decentralized apps. Oh, and a few people making ransomware. It's not very encouraging.

Hopefully a truly huge decentralized application comes along that makes good, sustainable use of blockchain, but until then--it's starting to look very pyramid-shaped to me.

> You can't have investment and speculation first.

Do you know how a power plant is built today? You buy future contracts of gas, you sell future contracts of electricity (more expensive) and you use the profit from this transaction to build a power plant which will convert the gas that will be delivered to you in electricity that you must be delivering. I'm not joking.

Yeah, but that still involves an existing industry. Just because that specific power plant doesn't exist yet doesn't mean there isn't a market yet.

It gets kind of chicken-and-the-egg, but currency didn't come before services. Currency came as a response to services, and investment came as a way to enable people to get large amounts of capital for large projects. Bitcoin isn't looking like that. It can be used for services, but waaaayyy too large of a percentage is being used to entice more investors to come and pump up the value for yet more investors.

It's pretty difficult for laypeople to tell the difference between legit investment and what Warren Buffet is referring to, where you just hope the next guy comes along and pays more. Which is why these scams keep coming back. So far, not nearly enough of cryptocurrency's value is being used to create that power plant.

Can it become a real economy? Yeah, sure. Tulips could have become a real economy too, technically.

>How is Bitcoin a store of value? An ounce of gold is a store of value - someone had to do the work of finding and mining it, and it can be used to fill teeth and conduct electricity. Gold is portable, uniform, durable and divisible, so it is a commodity that has good currency qualities. But almost every commodity that can be sold is a store of value - what value does Bitcoin have?

Why do we keep going over this? There are tons of material online to help you to the other side of this argument, not to mention the article itself.

One value of Bitcoin is in its decentralization.

How can you say that is worthless? Is it worthless to have an alternative means of payment that is available to nearly anyone around the world and is not controlled by a single authority?

I would very much like to see your thoughts on this topic, but please, before responding take a moment to think. Your current comment is so full of vitriol that I think it might blind your rationality.

> One value of Bitcoin is in its decentralization.

There is surmounting evidence that this is not true and that Bitcoin is actually quite centralized and would benefit from being more centralized [0][1][2][3][4].

[0] https://arxiv.org/abs/1801.03998

[1] https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-...

[2] https://arewedecentralizedyet.com/

[3] https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf

[4] https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/...

> Why do we keep going over this?

Because blockchainers are not listening to the science... why would they? It invalidates their whole investment thesis.

Updated my response.

Thanks for these links, usually when talking about it not being decentralized the source is either Forbes or Business Insider. Let's see what your sources have in store.

EDIT:

[0] https://arxiv.org/abs/1801.03998

Good paper, lots of good research. Identifies that top pools do not change position too often. Shows also that system profits prefer higher pool sizes.

However, fails to notice that pools are made of individual miners/groups and do not represenet single huge datacenters. Groups/individuals can often change pools, and this is not an uncommon practive.

[1] https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-....

First thing to note is that this is 2013, when the bitcoin world was a lot more centralized (Only one major exchange, MT.Gox, much less visbiiltiy and credibility. I argue that more coverage results in a more decentralized system)

Also, this is not really a decision of centralization, but feels akin to an UN meeting, where multiple actors discuss rationally the best course of action for their community, and then move in regards to that course. No one forced the community to follow their moves, but when they did, the results were better for the whole community.

Of course, if they had not given advice from an authoritarian position, nobody might have listened. Yet, still Bitcoin would have survived, as explained by Buterin: https://bitcoinmagazine.com/articles/bitcoin-network-shaken-...

[2] https://arewedecentralizedyet.com/

See: Pools are not huge data centers

>% of money supply held by top 100 accounts = 19%

Not an accurate measure of centralization. Addresses do not mean single people, or even single organizations. Most of these addresses belong to either:

>Zombie addresses of huge amounts of bitcoin gathered in the early days

>Exchange cold and hot wallets

>Huge organizations

[3] https://fc18.ifca.ai/bitcoin/papers/bitcoin18-final13.pdf

Commentary on the developer activity of bitcoin compared to other open source code projects. Shows some centralization, but still not even close to a central authority. Not to mention that anyone can join the project at any time. If we say Linux development is decentralized, then we can say bitcoin development is decentralized.

This is not evne taking into account the interaction that needs to be done between the developers and the miners.

[4] https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/....

Mostly about ineffieciencies in mining and decentralization. The core conclusion from the text is this:

"This points to a major dilemma for distributed ledgers: On the one hand, the anonymity and decentralisation of public blockchains expose them to coordination failures and externalities. On the other hand, private blockchains can restore coordination and internalise externalities, but only to the extent that they involve the intervention of a centralised authority, which goes against the fundamental motivation for blockchain."

Which I absolutely agree. Decentralized does not mean efficient, I dont argue that.

---- ---- ----

So all in all, the sources show that the decentralization of Bitcoin could be better. Yet, in all cases decentralization exists, and is not in imminent threat.

To all Bitcoin "centralized" is not only erroneus, but disingenious.

> However, fails to notice that pools are made of individual miners/groups and do not represenet single huge datacenters. Groups/individuals can often change pools, and this is not an uncommon practice.

citation needed. The trend in proof-of-work mining is consolidation of costs into large data centers[0], hence why it is no longer profitable for you to run an ASIC in your garage. Furthermore, there are very few profitable pools to choose from [0]. Large miners risk losing a lot of money by changing pools partly because not all pools provide as much revenue as the others.

> where multiple actors discuss rationally the best course of action for their community, and then move in regards to that course. No one forced the community to follow their moves, but when they did, the results were better for the whole community.

3 individuals decided Bitcoin would orphan the longest chain [1]. The community had no say in the matter. How is that not centralized consensus making?

> Which I absolutely agree. Decentralized does not mean efficient, I dont argue that.

It is not only efficiency, it is also robustness. The more centralized the consensus-making mechanism of a blockchain is, the least likely consensus failures are [2]. If no one would have took control in 2013, there would have been 2 chains for an undetermined amount of time, leading to massive levels of fraud and money loss [1]. Do you think society would benefit more from a Bitcoin that has massive consensus failures like that or would you rather a Bitcoin that has a central authority (the handful of GitHub commiters + mining pool operators) that can quickly fix consensus failures and prevent large institutions from losing a ton of money?

[0] https://arxiv.org/abs/1801.03998

[1] https://freedom-to-tinker.com/2015/07/28/analyzing-the-2013-...

[2] https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/...

> One value of Bitcoin is in its decentralization

Gold, bread etc. have value because they can be consumed as commodities. A bitcoin can not be consumed, thus it has no utility, no use value.

Currencies (like gold) are commodities with extraordinary properties which make them good currencies. Properties on top of their base utility. Those properties are portablility, divisibility, durability and uniformity. You are saying Bitcoin has a good currency property. But it is a property of an object (a non-object actually) which has no utility.

As I said before, then people bring up the last 47 years of the dollar, but that is a whole other discussion.

It can be argued that over 50% of the value of gold is not at all related to it being able to be consumed.

Dollars cannot be consumed, or more broadly a network cannot be consumed.

Yet one can enjoy the benefits of this network and this can be seen as generating value.

Being able to do global transactions without trusting a single authority has value. How is this so hard to see?

You can decentralize without block chain and proof of work.

You can also create an infinite number of block chain "currencies" that are all decentralized. How many do we have already? Hundreds?

What makes bitcoin special? Nothing. The only thing that makes it special is the ongoing speculation on its value, i.e. the supply of people buying it for the hope that other people will buy it at a higher price. Some of those buyers are "miners" some of those buyers buy it directly. But they mostly have one goal which is to find someone who will one day pay a lot more for the same bitcoin then they did.

>You can decentralize without blockchain and proof of work.

Yes, but by using blockchain and proof of work we strive to create a system where centralization is the primary state as a result of mathematic equations and game theory. It doesn't need a higher force to govern it. It's inbuilt.

Ahh, so you more have a fight with Bitcoin, rather than crypto in general?

If you're looking for what makes Bitcoin special, the answer is Time.

Time has allowed it to have many many man-hours of development worked poured into it, improving it, making it more resistant. Throughout the years multiple inefficiencies have been removed, and security breaches have been fixed. This is an advantage.

Time has allowed its community to spread and grow, building into a powerful decentralized network. Do not underestimate the power of network effects.

Time has molded its name into the eyes of people and into the history of the world. Everyone has heard of bitcoin. This is incredibly powerful. (Can also be argued to be a negative point though)

You bring up miners as an example of bitcoin having no value, yet that is exactly where the value is. Decentralised mining is how bitcoin keeps its core value of being decentralized. The miners are thus being paid to upkeep this feature. Miners don't need to speculate on the value of Bitcoin, their profits in the long run will be equal to the value of this feature.

I don't have any fight with bitcoin. I just view it as an amazing social phenomena and a demonstration of greed and people's desire for easy money. I was chatting with someone when bitcoin was at $20k and he was gushing about how much money he is going to be making, he just needs the stomach to keep holding through 40% dips. I wonder if he had the stomach to hold through $6k. What's going to happen when/if the cost of mining goes above the value of the bitcoin?

Anyhow, let's talk in 5 years?

Dissapointing. I was looking forward to how you would try and debate my points. So you agree that there is value in decentralization?

I'm not here to debate the profits or moneymaking schemes. My only thesis is that Bitcoin has value, and one of the drivers of that value is it's decentralized and global nature.

>What's going to happen when/if the cost of mining goes above the value of the bitcoin?

There are simulations/discussions on this, and we're not sure.

But the thing is, for the cost of mining to be over the value of bitcoin it would require a huge coordination of miners. Even now, when we saw Bitcoin lose a lot of value it immedietly resulted in a big amount of miners moving to other cryptocurrencies. This then resulted in difficulty reducing, and profits rising back up to previous levels.

But I will admit that, similar to a black swan event, a "bitcoin mining death spiral", could be possible.

Sorry to disappoint. I'm not quite sure what sort of debate you're looking for. Bitcoin was the first and definitely is more well known. As to the inherent value of decentralization, I think it's pretty minimal. I never go to Costco and say darn, I wish my credit card used a decentralized system.

What a weird example. So just because now, at this point in time and place, YOU don't need decentralization --> It's useless?

What a privileged thing to say. Please reconsider and think a bit more broadly, what could be the value of a system that is globally accessible and not controlled by a central authority. Then you will realize how immensely valuable an unique this resource is.

> What makes bitcoin special? Nothing.

Being first is not nothing. It's called first mover advantage.

> But they mostly have one goal which is to find someone who will one day pay a lot more for the same bitcoin then they did.

Funny, you also just described VCs with that phrase. Put $1 mil in this company today in the hope of flipping it for $100 mil in two years. They also brag loudly about it, how they "exited" for many times more than they put in. I presume you also find VCs incredibly stupid and unproductive as bitcoin.

VC's can't "flip" a company for $100M unless that company is actually valued at $100M.

VCs invest in a team and an idea that they believe will build that company. This is why they are productive (as opposed to bitcoin).

The way companies are valued, in general, is by their discounted cash flow. That is the only way you can sell a company for $100M is if you convince someone that company's business will earn at least $100M in present value (typically a lot more).

This is exactly the difference between investment and speculation.

EDIT: VC's don't need someone to pay more. They need a good business. It's true they're generally interested in selling those businesses but they might stay an owner for a very long time if it's a great business. It's not the other people who pay their money that makes VC's money, it's the business creating value. As to their motivation, of course it is partly to make more money through investment, but they don't rely on a bigger fool to succeed.

I was talking about motivation.

Why do the vast majority of VCs "invest"? Profit.

Why do the vast majority of people buy cryptos? Profit.

If you attack bitcoin buyers for wanting to get rich, you should feel the same about VCs.

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