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Comment by jf- | Hacker News Reader

BTC is still around $3500, not bad for something that was worth a few hundred three years ago. I'm not willing to call it dead just yet. There are plenty of assets that make little sense to value, and yet they are. The bias here is to assume that cryptocurrency is useless or valueless because the technology isn't all it's hyped up to be, and that is true, but value is not a rational game. Let's wait and see how it develops.

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I'm not arguing that BTC hasn't returned value to earlier investors.

I'm arguing that cryptocurrencies don't have the same economic model as most startups - which is essentially the expected future value generated by their operations discounted to the presented.

There are startups within that definition that have a low probability of achieving such - but it's the same fundamental economic model that applies to Apple that applies to a seed-stage biotechnology startup.

This doesn't extend to cryptocurrencies - given that currencies don't generate operating cash flows.

Sure, there's no rational way to predict what bitcoin "should" be worth like with a startup, or any other company. Exactly because it's less a technology and more a social construct, as you say it's based on momentum and prayers, it's worth what people think it's worth.

We may not be disagreeing, I took "this market is a bust" and the picaxe seller analogy to mean that you foresaw cryptocurrencies dying out completely, but you may have just been referring to the crash that's already happened.

Wait, isn't that a false equivalence? Plenty of compelling rational arguments have been made for a $0 Bitcoin: its value is based on mania, it competes unfavorably with other cryptocurrencies, and it sees minimal (and decreasing!) real-world use as a medium of exchange.

Bitcoin will probably never go back to zero. The money laundering and selling of drugs / other criminal activities will continue using it therefor it will keep some small value. It has a long way to drop from $3500 though. Altcoins though will probably go to zero as they are completely useless compared to BTC at least being useful for criminals.

But criminals don't want their transactions recorded in a immutable ledger for all eternity...

...I hear they use Monero

It's just Bitcoin addresses, not linked to individuals, doesn't matter it's in the ledger. These people don't go through exchanges with KYC I'd assume. They might do something like localbitcoins or shady exchanges in countries like China/Russia.

What am I falsely equating? I don't think that the store of value argument is absurd, even with real world assets like gold their value is really just socially constructed. I don't see why it couldn't in principle be the same for bitcoin, it just needs to be the biggest cryptocurrency and concrete the idea of it's own value in people's minds for a long enough time, until they take it for granted. Whether that actually will happen I don't think anyone can say. I think it's a mistake to assume that the value here has to do with the technology, e.g. the "best" cryptocurrency must win. It's likely just long-term momentum.

The arguments suggesting Bitcoin has an intrinsic value of $0 have rational, evidence-based premises, like the notion that Bitcoin is technologically inferior to some of its competitors and the lack of its use as a medium of exchange. You can't generally say that about the arguments in favor of Bitcoin, though I'm happy to hear counterexamples.

The "store of value" argument doesn't mean anything. Beanie Babies, tulip bulbs, and Hummel Figurines are also "stores of value".

Artworks, antiques, gemstones. None of these are of any practical value, yet they hold value. You’re over systematising and not getting it. Value isn’t inherently rational.

Also, what was the false equivalence?

Try this: being a store of value is a necessary, but not sufficient, condition for Bitcoin's viability.

Try this: why?

Because otherwise your claim for Bitcoin's ability to store value is circular. Bitcoin has value because it's supposedly a viable tool for commerce. But it's not currently useful as a medium of exchange, and it competes with systems that are far better than it.

Because lots of things were stores of value that aren't anymore.

Can I interest you in a share of Bear Stearns?

And lots of other things that were stores of value still are.

Anyway I’m done with this, I don’t even have a horse in this race.

Yes - we probably don't disagree. I believe that there's probably some technological value in digital currencies.

In terms of the "market being a bust", the statement was a criticism of the current valuation of the cryptocurrency market - particularly, that it is based on a cauldron of unholy factors that I mentioned in the first post.

I don't quite understand the staunch love for the current payment and monetary system versus private peer to peer payments.

Some tokens are designed as a right to cash flows... see "work tokens".

Do you know of any "work tokens" which are not minted for free and sold to speculators before entering the closed loop economy of their giftcard network?

http://www.niemanlab.org/2018/11/i-had-to-borrow-money-to-pa...

Last year it was $20000, a month or so ago $6000. I can't see any major changes in the underlying utility of the coin throughout that period.

The utility has actually decreased.

Before this huge speculative boom, shady characters could use cryptocurrencies to buy drugs and launder money.

Now, with KYC/AML implemented by exchanges worldwide, plus the outright banning of the coins in some countries, those activities are much more difficult.

If you want simply transfer money internationally, services like TransferWise do it better than any coins.

Yeah, it doesn’t really have utility. It’s a thing other people will trade things for based on a kind of collective insanity. It just happens to be the same kind of collective insanity that we apply to lots of things, only we dress this thing up in tech-speak while we dress others up in aesthetics.

The question is how much, if any, of that price is derive from actual market activity and not scams like front running, tape painting, spoofing and just plain tether. If people actually tried to move any serious amount of it out it might just fall down on itself, that number may not be real.

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