Hacker News Reader

Comment by shawnz | Hacker News Reader

Bitcoin isn't a stock. Most kinds of assets don't provide dividends or other cashflows -- that is certainly not the only determiner of the value of an asset. It would indeed be a bad idea to construct an investment portfolio out of only Bitcoins and no stocks, but that doesn't mean it is without value (for example, as a monetary technology or an inflation hedge)

> It is not at all clear to me that having more (relatively uninformed) speculators will lead to less volatility for such an instrument.

I am not sure how we can judge the informedness of the speculators or what we are comparing them against. But, each additional speculator improves the informedness of the market overall.

View on HN

Assets similar to bitcoin are somewhat rare on the ground. Art, antiquities, maybe a few other things. (Precious metals are typically useful for other things.) Few people regard those assets as useful investments, in anything other than a diversification sense. No one regards them as economically productive.

I completely agree with these statements, except I think the intrinsic value of precious metals is exaggerated and Bitcoin also has functional value as a monetary technology (not generally in an important way for most first-worlders though).

Gold derives its store of value property from being an elemental shelling point. It's the best element to be used as a store of value. That property will not disappear in the future since it's based on the laws of physics. However, the exact price is obviously not guaranteed. Merely the ability to keep exchanging it in the future.

Agreed, I only mean to say that the intrinsic value (i.e. for jewellery or electronics) is exaggerated. Gold has obvious usefulness as a store of value and an inflation hedge, although I think Bitcoin or a similar technology has the potential to be even better/more guaranteed/more convenient.

> each additional speculator improves the informedness of the market overall

I don't think that can be true. Leaving bitcoin aside for a moment, if a new speculator comes into the stock market who truly believes (perhaps due to misleading marketing) that "stocks only go up". This is clearly not the case from an objective standpoint. How would the entrance of such a speculator improve the informedness of the market as a whole?

Garbage in garbage out applies to markets too.

Commodities are not stocks but they have intrinsic value. The value of oil or chickens is based on demand for their consumption.

Reply on news.ycombinator.com