Hacker News Reader

It seems like every discussion of cryptocurrency has at least one proponent use the Bolivar as an example. That argument is the equivalent of us judging every cryptocurrency based on Dogecoin. It just doesn’t make any sense.

I assume the point is that if it's useful against the Bolivar it's not useless.

But almost anything is better as money than the Bolivar. Gold coins. Dollars. The Mexican peso. Chunks of coal. Eggs. Kalashnikovs. Laundry detergent. It's not exactly an exclusive club.

This is true, but importantly bitcoin is easy to obtain (assuming internet access), validate, and store/transport.

If you’re in Venezuela it’s hard to get your hands on $5000 USD and convince other people it’s legitimate.

$5000 USD in eggs will go bad before you can trade them all.

$5000 USD in laundry detergent is several truckloads!

Gold coins might be a good option but A) You’d better keep them well protected and B) Why not keep $2500 in gold coins and $2500 in bitcoin?

So simply put, you're moving the goalposts.

It used to be the argument for Bitcoin was this vast thing that could fix US Centralized Banking once and for all. And now, your best argument appears to be fixing an inflationary economy run by a dictator.

While it may give people the ability to use a new currency without government approval, at some point a person has to convert a Bolivar to a Bitcoin and back. And a dictator can make most of those conversions illegal, if he so chooses.

So no. Your argument doesn't sway me. Particularly because Brazil went through something similar a few years ago as well and didn't require the use of bitcoin to fix it's inflationary spiral.

https://www.npr.org/sections/money/2015/12/02/458222801/epis...

> at some point a person has to convert a Bolivar to a Bitcoin and back

But most transactions can be done without Bolivars.

> And a dictator can make most of those conversions illegal, if he so chooses.

Dollar conversions in Venezuela (at black market rates) are already illegal, yet they exist.

How did Brazil fix its inflationary spiral, and how does this invalidate Venezuelans using cryptocurrency due to an intransigent government?

Edited to add: This quote below changed while I was replying. More goalpost moving.

> But not all transactions require Bolivars. That is the point.

Only if everyone agrees to not use the Bolivar anymore and say something that everyone has readily access to that can't be counterfeited. At which point you say, "BITCOIN IS THE ANSWER", except it's not because Bitcoin is not easy to obtain. It requires some technical skill, a bank that allows you to make bitcoin transactions, etc.

And even if most transactions no longer require the Bolivar, then using Bitcoin at all is mostly a moot point.

> Dollar conversions in Venezuela (at black market rates) are already illegal, yet they exist. I don’t see your point.

Right, and so if you want to not be thrown in prison you're going to use the Bolivar and not US Currency. The same would be true with Bitcoin if Bitcoin were made illegal.

> Edited to add: This quote below changed while I was replying. More goalpost moving.

Can you explain how editing "not all transactions require Bolivars" to "most transactions can be done without Bolivars" is goalpost moving?

> Only if everyone agrees to not use the Bolivar anymore

Not true. People can use the Bolivar for some transactions and not others.

> It requires... a bank that allows you to make bitcoin transactions

What do you mean?

> Right, and so if you want to not be thrown in prison you're going to use the Bolivar and not US Currency.

Not true. Many Venezuelans don't want to be thrown in prison and use US currency, because it's a matter of survival.

> The same would be true with Bitcoin if Bitcoin were made illegal.

What would be true if Bitcoin were made illegal? And where?

I don’t presume to know what the original intention of bitcoin was, I’m only interested in it’s current viability as an investment. My goalposts are - and have always been - is it likely I can sell this later for a healthy profit?

Sounds like you’ve got a bone to pick with some ideology I’m not privy to.

And to your point - bitcoin doesn’t need to solve a crisis to be useful! It just needs to be useful to be useful.

> I don’t presume to know what the original intention of bitcoin was, I’m only interested in it’s current viability as an investment.

Typically the people who shill bitcoin the hardest are the ones with an active stake in it. If this were the stock market, it would be a pump and dump.

Serious question: How do you even convert Bolivars to Bitcoin anyway? Who is selling Bitcoin for Bolivars?

Anyway even counterfeit dollars would probably hold their value better than the Bolivar. It's hard enough to print counterfeit money (unless you have the resources of a state) that the supply is probably significantly more constrained than the Bolivar even if a significant portion of the dollars in Venuzuela were counterfeit. Until there's someone pumping out convincing fake dollars as fast as Bolivars are printed you still might be better off holding onto possibly-fake dollars. Even if 70% of your $5k is fake, the remainder won't inflate away like Bolivars will.

I'll grant that Bitcoin are probably better than fake dollars though.

> Serious question: How do you even convert Bolivars to Bitcoin anyway? Who is selling Bitcoin for Bolivars?

The problem is that the Bolivar is so toxic it's almost radioactive. An exchange wouldn't want to deal with Bolivar's at all, since the price could drop 5% in a day, say.

Even if you could exchange Bolivar cash for black market bitcoins, the black market would have Bolivars to get rid of. And that would manifest itself back into the price of the transaction.

LocalBitcoins.com

From a recent article (VEF = Venezuelan Bolívar):

>According to Coin Dance, 14,886 Bitcoin have been purchased with VEF on LocalBitcoins between the beginning of 2018 and Aug. 18.

(there's more on the VEF BTC rate here https://dolartoday.com/indicadores/)

Well, ask yourself why people are using cryptocurrencies over the things you listed.

As a pure fiat currency Bitcoin has neither intrinsic value nor an invested community of users, which makes the value proposition very risky. If a cryptocurrency did start to become useful for mainstream use, everyone who isn’t heavily invested in Bitcoin would have a strong incentive to use something else where they could capture the profits which would otheraise go to the Bitcoin early adopters, and if that starts happening the floor for BTC is zero as everyone cuts their losses and moves on. Yeah, there’d be some HODLers trying to recruit users but that’d die off over time since nobody new would have that sunk cost.

Yep, the current state of bitcoin is far from fiat. I hope it does make strides as a currency, but if it never evolves past a deflationary store of value it’s still an attractive asset.

The advantage that the Dollar has over Bitcoin is that when dealing with the US Government, it requires dollars to be used. So the banks get FDIC insurance on US Currency deposits, and taxes to the government must be paid in dollars.

So in essence, there's a legal requirement to use dollars when dealing with the federal government. So while the dollar is technically currency by fiat, it's also currency by legislation.

Yeah, but gold is real, it's a real metal here in the physical universe, not only does it look good, it doesn't tarnish or rust ( to any real degree under normal circumstances ) with many niche uses beyond ornamental, just think about how much gold foil goes into something that's going to space... it is also one of the heaviest, most uniquely workable metals that isn’t dangerously radioactive.

My point is that it has an INTRINSIC value, not just an arbitrary value we've assigned to it, but a natural value that comes only to things that are actually naturally valuable... that statement may seem to be self referential, i.e. wet because not dry, but I think it makes the point I'm trying to get across, which is: there's a difference between that which IS valuable, and that which has value because WE assign it value.

Like tulips in pre-crash 1637, "bitcon" only has the value we assign to it, in reality it's nothing but numbers and we've plenty of those.

That it can and probably will decrease in value drastically when a majority of people realize it has no INTRINSIC value... well that should be warning enough to those wise enough to think about critically.

It's not like "market cap" really even applies to it here, yes each "coin" is assigned some value and the multiplication applied methodically does seem to come up with a giant number, but there are no REAL assets... it's not like it's a share of stock in a company that makes anything, it's all ethereal, there's absolutely nothing of value except the fact that somebody else is willing to exchange something of REAL value for it... when that's gone, the whole thing will be another story on Wikipedia...

> there's a difference between that which IS valuable, and that which has value because WE assign it value.

10% of the price of gold IS valuable, the other 90% is WE valuable. What does that say to you?

If you agree that bitcoin has at least 0.0001% IS valuable (for example for some collectors of digital artefacts), then where do you draw the line, what percentage of IS valuable do you require so that you would consider bitcoin having some INTRINSIC value as gold does?

Yes, I agree with you that a portion of the value assigned to virtual currencies ( the IS value ) comes from the utility of the the thing... just like a portion of the value we assign to the U.S. Dollar comes from the utility ( you can carry it in your pocket and exchange it for stuff )... but understand that just like the dollar, we assign value to it because it's HARD to counterfeit ( and only because so ), you can't just make as many as you want easily.

Bitcoin, and most other virtual currencies, are only "hard" to counterfeit because limitations in current technologies ( math included ) make it so... What happens when that goes away?

What would the value of bitcoin be tomorrow if some scientist today, publishes a paper providing an easier way to factor large numbers? What about Moore's law? What about quantum computing and machine learning? What about breakthroughs in mathematics or cryptography? Start thinking about all the intellectual manpower working every day on any number of things that could make the very basis for bitcoin obsolete, and you start thinking that maybe the value we assign it is a bad bet.

As far as gold goes, until someone creates a philosopher's stone, or starts 3d printing gold atoms, I think we're safe to assume you would still have to mine the stuff and refine it, and that amount of work isn't going away anytime soon... and therefore the "value" of it isn't going to zero soon either.

Bitcoin can transition to a quantum resistant system before quantum computers are a reality. At the moment there is no clear post-quantum algo winner, but when the industry settles on one, bitcoin (and the whole world - SSL, ...) will switch. It's not the secp256k1 elliptic curve which defines bitcoin, it's just an implementation detail.

I'm pretty sure most cryptography experts would consider nuclear war more likely than a breakthrough in crypto which breaks bitcoin (and the rest of the world). Yes, it's possible, but I wouldn't lose sleep over it.

Gold supply is elastic, unlike bitcoin which is hard coded.

Gold mining is dictated by the gold price. When gold price goes up, miners start to dig again in regions that were too expensive before. When price goes down, they stop. With a suitable (huge) gold price, it makes sense to just filter it out from ocean water. And let's not even think about giant gold asteroids which are out there.

There's a reason we call currencies like the dollar fiat currencies, because they only have the value that we give them. Bitcoin is similarly valued. As for gold, Bitcoin is a currency, not a rock. Have you ever tried to buy a sandwich with gold? No, well no shit because it's not a currency and is useless as a means of exchange. Comparing Bitcoin to gold is silly.

There's probably quite a few places that would take gold for a sandwich...assuming they knew what you were giving them was real gold. Gold is not as widespread in use as it once was for commerce, but it's still used.

Also, the value of gold doesn't go to zero when the electricity stops... if/when that happens the chickens laying eggs in your coop will be worth more than bitcoin.

Those chickens would also be worth a lot more than gold.

Not the best list, but still: https://www.toptenz.net/10-post-apocalyptic-currencies-more-...

If “the electricity stops” how do you expect to retrieve your gold?

Or do you keep it in a vault in your house along with two years’ rations in case the world’s electricity stops working?

I don’t mean to be rude, but let’s try to keep the arguments rational. I’m happy to be convinced otherwise about bitcoin’s value. But I need to be convinced.

Gold is primarily used as a store of value. Bitcoin (for me, at least) is primarily used as a store of value.

Gold has an intrinsic value of “beauty” and has a minor use in electronics. Bitcoin lets you make international money transfers easily.

People rarely buy sandwiches with gold. People rarely buy sandwiches with bitcoin (though I hope that changes in the future, because it will increase the value of bitcoin!).

It’s true that you can hold a piece of gold in your hand. But, honestly, how often do you do that? And more to the point - do you think most of the people who own gold do it for its physical properties, or so they can eventually exchange it for fiat currency?

I compare bitcoin to gold because, to me, they serve the same purpose for the same reasons.

I think bitcoin can be compared to gold in the sense that people use them both as vehicles to store value. Obviously they have different manifestations (digital and physical) and different use cases, but both have the unique characteristic of being rare and therefore valuable.

Have you ever tried to get real gold for your 'on paper' gold?

AFAIK you can buy real gold as much as you want whenever you want it: gold bullion, coins, jewelry... you name it

That is circular reasoning. You can buy gold with money just like you can with bitcoins as well. There is no 'Gold Standard' to the former, nor the latter. Both are pure fiat currencies.

Most people when they say they 'hold gold in their portfolio' don't mean they have the metal lying in their safe. They usually hold shares in a tracking stock like [1], or are active in the commodities market speculating with futures and options on gold, or invested in gold mining companies.

Their is ofc also a real industrial demand for gold. Jewelry makers, electronics firms etc. will take delivery of and use the real metal to make products. For everyone else, it is just numbers in a computer that are transferred from account to account. even when Central banks buy and trade with each-other, the gold never leaves the vault (although it might sometimes be moved from stack to stack inside)

Lately trust in some of these vaults and the accessibility to the actual gold held there has declined, resulting in countries 'repatriating' their gold[2]. As you can imagine, this is not a trivial logistics operation. While the ownership may change, the actual gold never leaves the huge vaults of e.g. the Federal Reserve Bank of New York. [1] https://www.investopedia.com/markets/etfs/gld/ [2] https://en.wikipedia.org/wiki/Gold_repatriation

Are Bitcoin easier to get in Venezuela than other Bolivar alternatives?

That's really the question. How do people in Venuzuela even buy Bitcoin? What do they buy it with? Nobody will swap Bitcoin for their Bolivars, since (as we've decided) Bitcoin is better money than Bolivars.

They will for enough Bolivars.

Price inflation happens daily. You can store your value on Bitcoin and exchange it for enough bolivars just before you go to the supermarket.

This is something I assume to be true (based on the assumption that most of Venezuela’s population has open internet access), but it probably only applies to people with at least cursory technical knowledge. Maybe ~5% of the population, optimistically.

But you can extrapolate from present-day Venezuela to future runaway-inflation crises, at which time (again, making an assumption here) bitcoin and the internet will be more accessible/prevalent.

But who do the savvy internet users purchase the Bitcoin from and what do they exchange?

Someone in country will likely be happy to exchange the Bitcoin for Bolivars at some discounted exchange rate, but that doesn't solve the problem of how they get Bitcoin.

You can have a few people working remotely for Bitcoin and the like, but that isn't going to support other people moving lots of money out of Bolivars.

Precious metals look cool and have held value in human society for thousands of years. Bitcoins are immaterial numbers in a distributed database that a tiny fraction of humanity has been interested in for a tiny fraction of human history.

That the best use cases for cryptocurrencies found in ten years of trying are illegal doesn't say much for its utility.

What other use cases are you expecting at this stage of adoption, considering it has been derided by all "serious concerns" as a fad and all established financial institutions have blockaded it? You are parroting the same dismissive media tune made by the people with a vested interest in the status quo remaining the status quo. The bitcoin logo also looks cool.

The use cases of cryptocurrencies are the same as any currency: paying for stuff.

If enthusiasts think that paying for stuff with cryptocurrencies is going to become popular, I don't think it's just a "dismissive media tune" to point out that after ten years, it hasn't happened.