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Comment by ashtonkem | Hacker News Reader

The idea of a "currency"[0] attracting investment is kinda crazy in its own right. Normally currencies don't attract investment; you can bet on the difference between them, but you usually "invest" (buy) large amounts of it specifically to do business with the country or economic entity that issued it. You buy Euros to do business in the EU, not to "invest" in the currency itself.

0 - Which crypto currencies actually function as currencies is a matter of debate.

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Betting on the difference between is done by buying and selling them. I'm no defender of cryptocurrencies but speculation and trading have been a major feature modern forex markets since their inception.

Speculating on Forex is gambling, just like speculating on crypto.

Which is speculating on the relative difference in inflation rates, not actually investing in either currency per se.

Modern treasury operations for large cash holders absolutely “invest” in currencies. They do so in the form of what cash they hold outside of their immediate needs and in what cash “equivalents” they keep on their books.

What’s the difference between “investing” and investing?

Maybe that will help me to better understand cryptocurrencies “investors”.

Investing is when you buy something that creates enduring, repeated value over an indefinite period of time, which you can capture without selling the asset itself. Real estate, for example, creates value (a place to live) over a long time, which you can capture either by living there yourself or renting it to someone else - without selling the house.

Stock is ownership in a business which creates value over time (shoes, tweets, cars, etc) which is captured in a variety of ways, like selling through retail or ads or whatever - without selling the stock.

This is why currencies, gold and the like are not investments. They do not, in and of themselves, create value. They may be good to buy/hold anyway though!

Agree. I personally don’t consider cryptocurrencies as currencies and the comment has few points where I disagree:

- Consider them currencies

- Describing the fact of holding positions on currencies for operational purposes as an investment

- Thinking that cryptocurrencies accomplish the second point

The only difference in investing in currency than other asset classes is that the value of currencies is entirely relative to other currencies in ways other asset classes aren’t.

In practice that doesn’t make a difference because all the mechanics are the same as any other form of investment decision.

First of all I should be convinced that cryptocurrencies are currencies and secondly I don’t see how this asset can be used by treasury to hold any cash for operational purposes. Besides I am not sure that is investing per se.

I personally wouldn’t hold crypto as part of an forex portfolio mix for a corporate treasury largely because they are currently not really currency equivalents but there might be treasury groups that do & the mechanics of holding them isn’t much different than any other fx holding.

As far as whether treasury asset allocations are investing or not is largely in the eye of the beholder but companies very frequently prefer to hold “cash equivalents” beyond their immediate operational requirements. If a treasury buys us tbills that is both a traditional investment & a fx position (in that it’s a usd we are viewing preferentially over other currencies in our portfolio).

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