Why Bitcoin is guaranteed to be a crappy investment
greyenlightenment.com
greyenlightenment.com
Then, assuming no BTC lost or locked in long term storage (I suspect these cause upward corrections of 5-10x from below estimates), the price of BTC will be btc_px ~= float * users / 21m.
I do not know how to estimate "float". For users there are two scenarios:
1. Low adoption/high government restrictions, BTC is used for mostly illicit transactions: say 50,000 users worldwide
2. High adoption, legal use: perhaps 50m users worldwide.
Assuming my float = 1000 USD we get btc_px ~$20 for scenario 1 and ~$20,000 for scenario 2. I may be off by an order of magnitude in the "float" assumption. Would love to hear your thoughts.
there is growth everywhere, every day millions of people create new value, if limited bitcoin were to represent it then it would have to rise in value - but that makes it a bad deal to spend the bitcoin if you know tomorrow will rise in value
every day someone loses their passcode, backups are lost, people die and forget to share the information etc ... eventually, over a long enough time horizon, everyone will make a mistake or be struck down by a series of unfortunate events, thus long term the number of bitcoins available to a transaction will be zero, all will be locked away and lost forever
(this is a joke, but worth considering hypotetically)
I think what wiggle room there is is in this statement:
> These astronomical early Bitcoin gains can be treated as an anomaly arising from a price discovery process that will never be repeated.
I think there have been numerous price discovery phases in the Bitcoin price history, and that's reflective of the wild ramp-ups and following crashes, but it's by no means certain that we've passed the last of the price discovery phases. Looking only at performance over a cherry-picked timeframe is not a great way to evaluate the overall quality of a security.
I was interested in a coin called MedicalChain which promised to store your medical records in the blockchain, but it seems to be vaporware (lost a little bit on that one!).
When Libra came along I thought that it would be 'the one'. Finally, a blockchain that could reach the mass market and actually be usable. Just a shame it's Facebook...
Celo and others are working on Libra alternatives.
Arweave has probably the most compelling decentralized but economically thoughtful web-friendly storage system I've seen — and it's launched, live, now.
They certainly "do" things, although they're in early days. And none of them are Bitcoin.
It's an insurance against the whole world falling apart. Why would the whole world of finance fall apart? Same reason Roman empire fell part and lost its significance.
Long back 1000$ was a lot of money, later a million $ was a lot of money and then billion $ was a lot of money. In today's news, people are describing events in trillion $ costs. If you extrapolate this trend, money as we know will be losing its value exponentially.
Bitcoin is a money system that is defined very clearly in terms of quantity, creation process and exchange etc. This is a good minimum viable product. It definitely has value just like a commodity. It also has people working on improving it as if it were an ipo'd company.
Just like language and law, bitcoin is a product of "spontaneous order" and our knowledge of traditional finance may not have enough mental tools to value it like another financial product. Some people certainly value it more than other people. Over a long period of time take span of 100 years, it becomes easy to imagine having a bitcoin like digital currency with standardized rules for money creation not controlled by any single party.
OTOH, vital, scarce commodities and property have intrinsic worth because they can be used or are valued. Gold, silver, platinum, diesel fuel, guns, knives, equipment, huge tracks o' land
From the begging and until now, Ccs only make sense as a transactional money analog, not an investment other than an extremely speculative (volatile) one that could lose most/all of its value anytime.
If you want to hide money for a couple of days, do some money laundering (j/k), buy some drugs (j/k^2) or send money anonymously, Ccs are great. Please don't put the bulk/large amount of your savings into Cc unless you're leaving a repressive regime or want to give it all to me to avoid taxes. }:D
To be valuable economically, something just needs to be both scarce and sought after. Just because they are valuable to a specific set of persons does not mean they have intrinsic value.
Pricing of goods and services is emergent in nature, based on demand, scarcity and rate of consumption.
The 'bitcoin hype' is exactly what you are describing when you say:
> Ccs only make sense as a transactional money analog
Bitcoin was designed to just be a general accounting ledger that can't be forged. It is supposed to be a transactional money analog.
The 'value' that you should be investing in when talking about bitcoin is not its price in dollars, but rather that the idea:
The 'value' in bitcoin is that non-mutable accounting ledgers will be more reliable and provide a better account of economic activity over some duration than its pre-existing counterpart. The only way it will lose this is if the security of the system breaks.
I was stating that nothing, not even bitcoin or money or gold or water has intrinsic value. Anything can have value to a person who is in need of a seller's goods. That was not my argument. Things have subjective value. Things do not have some mystic intrinsic property that makes them inherently valuable.
So commodities are bad investments, and the author deems Bitcoin a commodity, therefore Bitcoin is a bad investment? I don't find this logic very convincing. Bitcoin has numerous properties that traditional commodities do not have, which makes all the difference.