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Comment by jfengel | Hacker News Reader

The mainstream doesn't care because it's at all-time highs. The value of a bitcoin is driven entirely by speculation. There's no news driving prices. The only news is ever about the price itself.

Every purchase is also a sale. Every vigorous post about how much you should be buying bitcoins is also a statement that somebody wants to sell theirs off. It's no surprise that mainstream investors have no interest in that.

Not that investors are above cheering on stock market bubbles and other speculations. But they at least know that there's some value there setting a floor for what a stock is really worth. A bitcoin has no way for me to evaluate its real worth, and all I hear in "bitcoin at alltime high" is "bitcoin getting ready to crash again".

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Bitcoin doesn't appreciate on news. It's not a company and it doesn't necessarily have a product that is being constantly worked on. There is the odd software upgrade every few years but the core function never changes.

The value to which people are bidding is primarily 2 things.

1. Tolerance to threats, social or technological. This reduces with time.

2. Its increase in demand (yes, a lot of speculation) relative to the constant reduction of supply. I.e. scarcity.

Bitcoin's value based on how much people use using it to store value. You can't store billions of dollars without the price of Bitcoin being high. More and more people are using it to store and transfer value.

Why? Because as a currency it's good. There's nothing like it and I challenge you to give me an alternative.

Here's the requirements you need to meet -

* Unable to be manipulated - this rules out most fiat currencies. The recent pandemic shows governments have no self control and will print trillions on a whim.

* Fast to transfer - I can send thousands of dollars worth of bitcoin around the world in under 30 minutes. It takes days for ACH transfers. It takes hours for a wire transfer if you're lucky.

* Cheap to transfer - Compared to wire transfers, transferring bitcoin is cheap.

* I can hold it - I can't store large sums of cash or gold in my pocket (or even my house) safely. Large sums of bitcoin I can securely hold in my phone with my private keys backed up elsewhere.

* Open source - This entire system is out in the open for inspection. No company controls it or can mess with it.

* Battle tested - The fact that people have been trying to break Bitcoin for 10 years now and it still works gives people more confidence to use it as a store of value.

It doesn't matter if it has no value to you. But it has a lot of value to myself and others. If you have an better way let's hear it.

The same logic applies to dozens of other cryptocurrencies, and new ones are offered every day. Any one cryptocurrency has a fixed base, but the set of currencies together expands every single day, brrrrrrrr.

To justify Bitcoin specifically you'd need to explain why it in particular should be the one-and-only (or at least, one of a fixed and finite set). A government could do it by fiat, and it wouldn't surprise me to see a government bless some cryptocurrency as its default transaction mechanism. A stablecoin could do it by piggybacking off a government fiat.

It's not impossible that the population as a whole could simply land on Bitcoin, much the way a government exists by the collective consensus of the people living there. But I don't see that as being very likely, since there are too many alternatives. It has the first-mover advantage and might just succeed, but I consider other cryptocurrencies more likely.

There is more to a particular crypto currency than the technology. Bitcoin has the longest history, good team management, wide distribution, a track record. Just as people judge fiat currencies by the stability of the government behind them we do the same with crypto.

This is why Bitcoin, Litecoin, Ether are on top, but other coins will rise as well. This is what we're seeing today - Crypto scaling horizontally to deal with scaling issues and transaction fees.

I don't see any government making a crypto the 'default transaction mechanism' as it would work against the government itself. Being able to control your currency, and print more when need be is what allows a country to manage their long term debt and fund things like large infrastructure projects (or wars etc..)

Crypto is just like gold, just better at storing value than gold in every way - so people are moving over to it. Just as gold doesn't replace cash and credit cards - don't expect crypto to either.

That "horizontal scaling" is currency manipulation, and I don't understand why the people who like gold are so tolerant of it.

You're right that governments need to be able to deflate their currency, but I don't think that's insurmountable. There are lots of ways to design a manipulateable currency. That would make it less attractive to the people who want a gold standard, but as I said, I'm skeptical about that. While a crypto is like gold, all the cryptos are like the Zimbwean dollars.

Maybe Bitcoin will sweep those away eventually, but for the moment, the imbalance between BTC and the other cryptos makes me wary.

You seem hung up on the altcoins and how easy it is to create new ones. That's not the hard part. The hard part is getting people to trust it, exchanges to carry it, and most importantly figuring out a way to distribute it fairly after creation. All these things together make it extremely difficult to create a new coin that people will jump to. Case in point - zillions of altcoins have existed for years while most value is still stored in the top 10 coins.

I believe that altcoins are the reason people don't trust it. They don't see the difference between BTC and altcoins -- they're all altcoins.

Maybe the system will stabilize on those top 10 coins, and the others will fade out or become irrelevant. But I don't see any particular reason why they would. Most of those 10 ten coins were created in the last three years, and could easily be displaced.

BTC is the granddaddy and could yet be the foundation of a stable basis. But it has enough problems that competitors keep arising, and that makes me skeptical.

> good team management...

You mean Blockstream and Adam Back in particular? Yikes, if that's what you call a good team I'd hate to be on a software project with you. They have severely diviated from the design layed out in the White Paper and Satoshi's intensions of having a cheap, Peer-to-Peer digital currency. The failure to raise the block size alone has been, at best, a massive misstep, at worst, a deliberat sabotage of the Bitcoin project.

I guess it all boils down to the network effect of the Bitcoin network. It's the first mover advantage at play.

> Because as a currency it's good

Bitcoin is seeing essentially no use as currency (in the sense of medium of exchange, rather than speculative good).

> Unable to be manipulated [...] governments [...] will print trillions on a whim.

Bitcoin do not get printed on a whim, it's true. But this year, Tether volume has increased from $4B to $18B, and the timing of those Tether backed Bitcoin purchases has certainly been awfully convenient for the Bitcoin price.

> I can send thousands of dollars worth of bitcoin

"worth" is doing a lot of work in your sentence. You can convert your dollars into cryptocurrencies quickly. You can transfer the cryptocurrencies at a reasonable speed. But converting the cryptocurrency back into regular money, and the exchange rate at which you will be able to do so, are entirely different questions, and not necessarily ones with favorable answers for the customer.

> Large sums of bitcoin I can securely hold

Unless you have the misfortune to live in an active war zone, I find it hard to think of a LESS safe way to hold large amounts of money than cryptocurrency.

> This entire system is out in the open for inspection.

Yeah, right! The typical crypto company was funded by an Estonian teenager, backed by a consortium of Colombian drug lords, and two years into the operation, it turns out that the only copy of the password to the cold wallet was lost in a botched Visual Basic upgrade, and now the CFO is missing, presumed dead after a luging accident in the Cayman Islands.

Very useful as a currency, many people use it. Not to buy a snickers, but to easily and quickly transfer large sums of money.

Yes tether is useful for moving and storing the dollar equivalent value. The system works for many people and companies everyday. That's why it's growing.

Easy one - A less safe way to hold money in an active war zone is to hold it physically. With crypto you can hold the keys in your head.

Bitcoin system and protocols is open source. No one company controls it. That's not even a debate.

The recent roller coaster should lead you to seriously question Bitcoin as a "store of value". A "store of value" whose value fluctuates by 50% may be many things, but it's pretty lousy as a lousy store of value.

There is no 'perfect' store of value. If you have a lot of value to store, crypto should absolutely be part of your portfolio. Stocks fluctuate by large percentages and people put their entire retirement savings in those. Property fluctuates as well. The dollar itself may be fluctuating more than usual soon given amount of unchecked spending that happened this year.

No store of value is safe, do what financial advisors says and diversify evenly across asset classes. It's not about making money, it's about maintaining what you have.

> Cheap to transfer - Compared to wire transfers, transferring bitcoin is cheap.

You must be thinking of Bitcoin Cash. Only BCH follows the original design and intention of the Bitcoin White Paper to be Peer-to-Peer digital cash, the BTC chain was co-opted years ago by Blockstream and has been perverted into some wildly expensive settlement layer for their own 2nd layer products.

No, I'm thinking of Bitcoin. The BCH fork is interesting, but not as universally accepted or tradable as BTC is. There are already alt coins with higher transaction rates than BTC and BCH so the fork wasn't really necessary.

I disagree. BCH needed to fork before SegWit activated to stop Blockstream from co-opting Bitcoin into a settlement layer for their second layer products. Thank God we still have an untainted Bitcoin.

Could you please stop creating accounts for every few comments you post? We ban accounts that do that. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html.

You needn't use your real name, of course, but for HN to be a community, users need some identity for other users to relate to. Otherwise we may as well have no usernames and no community, and that would be a different kind of forum. https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme...

I will take pure speculation over a stock ticker influenced by a CEO tweeting random shit.

That's why you should ignore CEOs tweeting random shit, and buy a stock that you can just leave in a drawer for years on end. Ultimately that stock has a value, a share of the company's profits and assets. If you find a stock that you can purchase at a reasonable price for your expectation of those profits and assets, it doesn't matter what that CEO says.

If value investing doesn't appeal, you can absolutely play speculation games against all of the other people playing speculation games. Value investing is dull and plodding, and to be honest, the usual advice about index funds feels hollow on a day when the S&P 500's P/E is pushing 40.

But I, personally, would rather leave my money in a bank account than play speculation games in any asset. I just don't have the stomach for it. If you do, I wish you the best of luck.

The best thing about HN is that comments like these can never be deleted.

I collect them like Pokemon. It's been nearly a decade now and there's certainly many to look back on.

From experience people either double down or feign ignorance years later, which path will this one take?

You should absolutely come back in a few years and discuss it with me. I'm entirely prepared to be wrong.

I can see an end-state in which Bitcoins reach a tipping point that they would become a default for transactions. That would give them a basis for value, the total value of all the world's transactions divided by the total base if Bitcoins (yadda yadda velocity of money and other hand-wavey stuff; I'm not doing the math here since that's not the point).

I consider that unlikely for a number of reasons. Some are technical (the weight of Bitcoin is so high that most people end up using an online provider, which is no easier than just using any other spending app) and some economic/political (if blockchain really works for currency, a government could easily set one up by fiat without rewarding speculators in any existing cryptocurrency).

While that end-state could happen, a stablecoin gets there faster. People could buy and use a stablecoin today, without making every transaction a speculation. Of all the cryptocurrencies, Bitcoin attracts the most attention, and is most driven by speculation rather than any kind of store of value. While Bitcoin's notoriety could be the reason it becomes the one that stands out, I believe that it's more likely to be a different one (most likely a stablecoin, probably backed by a government).

So there, I explained my reasoning. It could be wrong, and if so, it will hopefully be clear where. There will be no reason for me to either feign ignorance or double down: I'd be more interested in learning the lesson of what I missed than defending my ego. It costs nothing to my ego to be wrong, only in failing to learn.

How do you explain that gold is worth so much more than bitcoin and is barely ever used in transactions?

I would like to read some of your personal favorites.

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