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Comment by didibus | Hacker News Reader

When you buy into a Crypto you're investing into the technology itself.

If you believe that more and more payments will be handled through it, its value will go up, thus making it a good investment.

If you take Bitcoin, there's a small pool of total Bitcoin and that's guaranteed by the technology. Each new coin costs real money to mine, due to needing physical compute resource to do so, and it gets harder and harder overtime. That means as more and more people transact in Bitcoin, the demand for Bitcoins will go up, thus your Bitcoins are going to be worth more.

Similarly for Ethereum2, there's not a fixed maximum, but there are set rates and limits that affect how much new Ether per year will be added. So there's some guarantees that there's a restricted supply. So again, if you believe that more and more people will rely on its network to transact, the demand for Ether will go up, thus its value.

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Can I try and convince you why that's not a good idea?

Let's say you and I agree that a day's wages is worth 30 or so units of my currency--well pick any value, it doesn't matter for this example. And yet the currency keeps growing in value week over week. Should I not be paying you less and less over time? If the currency increases in value 7% in a month, should I not decrease your pay proportionally?

And are you really going to negotiate that day-to-day, week-to-week, month-to-month, year-to-year? What if the value drops significantly in the middle of the day? What do I pay you at the end of the week?

After all, the value of the currency is going up. I didn't decide the value of your labor was going up. It's staying the same.

I don't know what that has to do with crypto though? That's how all currency works.

> And are you really going to negotiate that day-to-day, week-to-week, month-to-month, year-to-year? What if the value drops significantly in the middle of the day? What do I pay you at the end of the week?

Whatever we agree on. My current pay is mostly company stock, and that has a big fluctuation, yet tons of people seem fine to pay in stock and be paid in stock.

> If the currency increases in value 7% in a month, should I not decrease your pay proportionally?

The problem you're describing is really nothing new. It sounds like you're just very used to thinking in USD. People all over the world do hedges to control for exactly this risk.

If you want to tether wages to USD, you can use USDC instead of BTC. Also you can pay those wages with such low transaction costs that you could pay by the day instead of by the week or month, using current technology.

Pretty soon the transaction costs will be low enough that you can pay those wages continuously. Eliminating the idea of a "pay day" is a great social good IMO.

On the other side, the receiving party can spend their funds in "USD" with a crypto-backed credit card that draws against their USDC balance.

> When you buy into a Crypto you're investing into the technology itself.

This argument of technology + limited supply is fallacious. If the technology is so useful the coin can just be cloned with more supply. The technology itself doesn't force me to participate in a limited supply market in order to get the benefits.

> The technology itself doesn't force me to participate in a limited supply market in order to get the benefits

I'm not sure what you mean here. The technology does indeed force you, that's part of it. If you want to trade in its currency, you can't cheat it and make more coins for it, the network consensus will catch you and prevent you to cheat.

If the tech fails to deliver this property, nobody would trust its currency, and nobody would use it for transacting.

The only thing you're investing in is the wasting of the worlds energy supply. At best it's speculative.

All investment is speculative, you hope that the asset you acquire with your money is worth more in the future.

With Crypto, you hope that the coins you acquire from it are worth more in the future.

Same thing.

Energy requirements of Bitcoin are a technical limitation, but as proof of stake is trying, that might just be a matter of time till it's minimized. Similarly, physical settlements today is also costly, moving real physical dollar bills across borders obviously comes with its own energy expenditure. So I don't know which one is wasting more.

It's not the same thing. When I invest in Apple, I'm in investing in a company, its people, and a product I use daily for work and pleasure. What does Bitcoin provide beyond the speculative nature of it? It's certainly not for making purchases when its value swings double digit percentages.

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