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Comment by beagle3 | Hacker News Reader

It’s the bitcoin of yestercentury. It doesn’t display wealth - it proves effort has been spent for something that’s mostly (or entirely) useless. Quite, but not exactly sunk cost.

People are willing to give something up for proof of effort; a personal union, or something else of value.

Whenever someone tells me bitcoin is a scam and has no intrinsic value, I ask them about diamonds, expensive art, etc. Most people cannot reconcile bitcoin and diamonds (as jewelery) in the same value frame.

Diamonds do have some functional uses of course, as does gold. But their price is wholly determined by the belief (whether justified or not) that they cannot easily be manufactured on demand. Just like bitcoin.

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>It’s the bitcoin of yestercentury. It doesn’t display wealth - it proves effort has been spent for something that’s mostly (or entirely) useless. Quite, but not exactly sunk cost.

I really like that, bitcoin as the diamond of yesteryear. Effectively finite, has to be mined, only has value/importance because a group of people assign it one, has limited practical use (diamonds as abrasives mostly, bitcoin as a cookie crumb record of transactions) is seen as foolish/wasteful by others, you can't use either for practical trade as the vast majority of individuals/companies don't accept either for trade and both could easily be rendered worthless by a technological advancement or social change.

The analogy is closer than you might imagine. The rock is not at all rare, and the bitcoins are often mined with other peoples' money.

Ah yes. Every girl and woman I know would cherish a Bitcoin. It really sparkles in the light.

This is literally what my sister responded with when I asked her why she liked diamonds so much:

https://pics.me.me/hello-everybody-sparkle-sparkle-15208126....

Bitcoins aren’t pretty. Sparkling, finely cut specific rocks are. Sometimes it’s as simple as that.

Mojssanite (sp?) and zirconium stones have those properties as well, and cost much less. Some other gem stones are very hard to distinguish from diamonds without specific tools.

Does your sister have a preference for diamonds over finely cut zirconium (or even glass)? It’s likely not as simple as that, even if you and her try to rationalize it that way.

I nor her have any specific preference for diamonds. I only explained why she, and many people, like them: it’s as dumbly simply as “sparkle, sparkle”.

Yet, it never really is.

Interesting metaphor, but the difference between Bitcoin and diamonds is fungibility.

Unlike gold, there's no way to sell 1% of a diamond.

Good luck even trying to sell 100% of a diamond.

You can sell 1% of a really huge diamond, but its value doesn't scale

Yeah, you can, you can pawn it. 3 days = 1%

Except bitcoin can't be manufactured on demand. I'm sorry, but this is a terrible analogy. There's a reason why people compare bitcoin to gold, because it makes for a better analogy, despite the fact that gold is actually ubiquitous throughout the solar system, and bitcoin is actually finite. For the record, I own zero bitcoin.

Analogy illustrates a point, it’s not meant to claim that two things are totally equivalent. It’s very hard to make an analogy on HN because someone will make a complaint about it like this one, and the overall effect just lowers the quality of discourse.

I don’t understand where you believe I am wrong; I said the gold, diamond and bitcoin all have the property that they cannot be manufactured on demand.

I mean, it's a bit overly broad of an analogy. Iron can't be manufactured on demand either. Neither can corn.

Corn can be, and regularly is; iron is abundant. Both are priced by their functionality (with a price floor set by the cost of manufacturing/extracting/growing if we ignore subsidies for a moment). If they become too expensive, they will be replaced by other cheap metals or crop in most uses.

Gold/bitcoins/diamonds just become more desirable when their price goes up.

> it proves effort has been spent

Diamonds only prove that in a very narrow sense, namely in that some gemstone expert (that you need to trust) can subject the diamond to a battery of sophisticated tests in order to testify to its genuine, non-counterfeit nature.

Bitcoin's Proof of Work is trivially verifiable in comparison.

To be contrarian: Bitcoin is only verifiable with a very sophisticated machine and algos...

I.e. a cheap computer and off-the-shelf software.

To be fair with bitcoin you can at least pay (in some places).

Also the worth of bitcoin is (kinda) backed by the worth of the electricty which is used to mine blocks (and consequently new bitcoins).

I know you’re not being precise, but the term “backed” is not valid. For a currency to be “backed” or more accurately commodity backed currency, you must be able to exchange that currency for that other thing. I.e. money for gold. You can’t get the electricity back in exchange for your bitcoin. :)

Can you pay your electric bills in bitcoin? Even though dollars are not 'backed' by gold, you can still exchange dollars for gold. Just not from the government at a government-fixed price.

Well, that is a completely different thing. That’s just a market exchange of goods/services.

Sure, one way is government price control, the other isn’t.

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