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Comment by trixie_ | Hacker News Reader

Case in point I guess. It is kind of amazing how one of the most important recent technological developments has been written off for more than a decade by the users of this site.

Same with TypeScript for a long time as well, and then there was a magical turning point somehow that the entire zerg all of a sudden discovered static typing was actually useful.

For one of the best sites for discussing the latest happenings in the computer software world, crypto has somehow been consistently rejected as useless when it beats other stores of value in almost every metric.

Crypto has value simply because it is better at storing value than the mediums that came before it.

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> Crypto has value simply because it is better at storing value than the mediums that came before it.

Is this a serious claim? The last one and a half months have seen extraordinary speculation in cryptocurrency markets, even by the standards of cryptocurrencies. Lots of wealth is being produced; relatively little is being stored.

It's in the news everyday. Huge investment firms diversifying into crypto. So yes, value is being stored. The market cap of cypto has been rising exponentially - exactly because it is a good store of value. Which means easy to store, and highly resistant to manipulation and inflation.

> Huge investment firms diversifying into crypto. So yes, value is being stored.

Something being a desirable investment vehicle usually makes it an undesirable store of value: a store of value should be stable and predictable, not subject to significant changes in any direction.

> Which means easy to store, and highly resistant to manipulation and inflation.

These are, again, negative qualities in a store of value. A good store of value is inflates and deflates exactly as much as required to retain its backing value. Inflation means loss of value; deflation represents a liquidity risk when exiting the asset.

More generally, this is an indictment of the cryptocurrency community's basic financial literacy. You can't just call a speculative instrument a "store of value" because every who bought into it in the past two months has seen a positive return; that's just not what it is.

Case in point still. The contradictions you make are astounding. What's more astounding is that you are not even noticing them.

> Huge investment firms diversifying into crypto

> this is an indictment of the cryptocurrency community's basic financial literacy

I suggest that maybe it's you who lacks basic financial (and econ) literacy, not investment firms or the "cryptocurrency community"

> You can't just call a speculative instrument a "store of value" because every who bought into it in the past two months has seen a positive return

No, everyone who bought BTC at _any point in the past_ and didn't sell are seeing positive returns. This is the definition of a good store of value. You are conflating SoV properties with volatility. They are orthogonal. SoV is a long-term play.

> This is the definition of a good store of value.

No, it isn't. Apart from the fact that countless people have lost their shirts to BTC (it's down 6% today! There are losers today!), an asset whose value rises in unchecked proportion to the real economy represents a fundamental liquidity risk: everybody is going to want to sell, but nobody is going to want to buy.

That is why cash is the canonical store of value: not only does it not change (much), but you can exchange it without undermining the value itself.

BTC is liquid enough today for companies to move $1B without moving market (see MicroStrategy). Granted, money (USD specifically) is even more liquid, but that's why it's money -- by definition, money is the most liquid good.

BTC's liquidity has been increasing and will continue to increase in the future, so it's just a matter of time.

And you are again conflating SoV with volatility. Todays cash (USD) is not volatile but it's a terrible SoV. That's why no one is storing their wealth in USD and flee to harder assets (stocks, bonds, gold, and BTC).

Highly recommend this video for how investment firms think about BTC and SoV and how you should too: https://www.youtube.com/watch?v=KlXqfibqb38

> Which means easy to store

Sure, if you want to trust an exchange. But try setting up and running Bitcoin Armory and see how 'easy' that is

> exactly because it is a good store of value

I wouldn't consider highly volatile currencies a "good store of value".

> and highly resistant to manipulation and inflation.

Far from it. An exchange goes tits-up and BTC plummets, and then everyone else follows. It's super susceptible to coordinated pump and dump schemes. Holding any crypto can get you red-flagged by the IRS, and if you don't admit to it most legit exchanges will rat you out. (Better for non-Americans, I guess...)

One of my favorite things to do every now and then is pull up CMC and see just how many coins' performance is a fraction of BTC's. Its funny because at BTC's most volatile times nearly the entire chart is red or green.

> The market cap of cypto has been rising exponentially

Personal pet peeve -- "a lot" is not synonymous with "exponentially." Crypto's market cap is decidedly sublinear on a logarithmic chart.

> exactly because it is a good store of value

If I pre-mine a trillion units of a cryptocurrency and sell one to my dog for $1 then it has a trillion dollar market cap. Whether or not it's a good store of value is a separate claim which needs independent proof.

> easy to store

So long as you never make any mistakes. Mt. Gox did a decent job at storing crypto for awhile ;)

> highly resistant to manipulation

So long as we pretend that Elon's tweets didn't impact dogecoin by >50% and that more broadly a form of word-of-mouth popularity doesn't affect the general public's chance of investing in crypto.

Lots of valuation is being produced, propped up by Tether printing. BTC in itself is an unproductive asset, it costs real money to keep it up and running (some $4M/USD in electricity etc).

Low volatility is a pretty important metric for stores of value. By that metric almost anything other than GME shares is better than cryptocurrency: cash in any hard currency, gold, silver, luxury watches, ...

I guess remind me in 10 years and we'll see how returns on crypto compares to 'stocks, hard currency, gold, silver, luxury watches'

Funny how all of those things are not supply constrained, so they seem to be at a disadvantage from the start. But we'll see.

I didn’t mention “possibility of high returns” as a metric. I said “low volatility”.

>I guess remind me in 10 years and we'll see how returns on crypto compares to 'stocks, hard currency, gold, silver, luxury watches'

You're literally supporting the argument of the person you're replying to without even realizing it.

Disproportionately high returns indicates a highly volatile asset, and it's just as likely to go the other way, resulting in staggering losses.

These are not markers of a good, long-term storage asset class.

I think you misunderstand a store of value. Extremely volatility is not a positive characteristic.

Would you want to be paid in a currency that regularly changes value 5-10% day to day?

There are decentralized cryptocurrencies that have achieved low volatility, such as DAI. I don't think it's ever gotten more than a couple percent from its $1 target price since being created. (I assume it almost never gets talked about because there's no profit from investing in it and hyping it to others.)

DAI is tied directly to the dollar. In what way is it better than a simple bank account for storing value?

The idea behind gold, silver, property, etc as value stores is that they remain valuable regardless of what the currency does. If your value store is the currency itself you might as well just hold the currency.

You get the other benefits of cryptocurrencies: direct control and the ability to store or send it online with no middlemen or custodial risk.

TypeScript was about bringing traditional, proven, approaches to a trendy but immature language. That's exactly the opposite of Bitcoin.

> beats other stores of value in almost every metric.

Which metrics you selected so crypto beats following in "almost every metric"?

- real estate

- gold

- $ in cash

- $ in a bank account

- stocks

Metrics as in how easy is it to store and send, how resistant is it to inflation and manipulation.

- Land - Can't send it.

- Gold - Physical so more difficult to store, secure, send, and verify.

- Cash - Easy to manipulate by the government. How many trillions printed for coronavirus? I wouldn't hold too much of it.

- Stocks - Cant send it. More shares can be created by the board of directors.

Crypto is made to do one thing - store value, and do it well.

> Crypto is made to do one thing - store value, and do it well.

Does it really do it well when your "investment" can fluctuate between $5000 to $40K?

Well bitcoin in particular but some crypto is inflationary also

Well, technically you can own a gold ETF rather than physical, and whenever you want to send value to someone, sell it and wire them the money (free on Fidelity and takes on the order of as long as a few Bitcoin confirmations). This is not too different in effect from being able to “send gold”.

Anyway... despite the theoretical limitations of cash, hard currencies in practice have proven much, much more stable than Bitcoin. There hasn’t been hyperinflation in any of the major hard currencies (USD, CNY, GBP, EUR/D-Mark, CHF) since the invention of the fiat system.

You can argue that cash can be manipulated and is therefore a worse store of value than Bitcoin but it simply isn’t backed up by concrete evidence in reality

There was no hyperinflation, but inflation is high enough to matter.

Still, overall damage seems far lower than risks of mistakes, hacks, crashed and scams overrunning crypto. Maybe it is not true for super experts, but for average person loses on inflation will be far lower than overall damage from various dangers present in BTC and other.

So for example land is counterexample to claim that "crypto beats other stores of value in almost every metric."?

Especially given that you can sell it for something used locally and send that? (there is no need to store value and send something using the same method).

There is nothing anyone could say that would convince you aren't on the OneTruePath(tm) is there?

I would love to have an intelligent debate with you. To respond to your original post. Many people, myself included, find crypto an easier, faster, cheaper way to send large amounts of money versus ACH, wire transfers and western union.

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