Yet the bubble can keep continuing as There Is No Alternative (TINA). That is so long as the fed doesn’t push above their ~5% interest rate target.
This differs significantly from real estate or gold, which is backed by a tangible representation. With a virtual currency, there is no floor to the amount of losses. Theres also no dependent economic activity to support it right now and any dependent economic activity could be replaced all the same.
We can all decide that shares of Worthless, Inc. are worth a bunch of money and collect them. But we can't really expect dividends or an acquisition premium in the future.
I'm just making the point that, if stock A trades for $10, and one is concerned because they believe the "true" net present value of its share of the business of $5... that the situation isn't improved by buying asset B that trades for $10 but has a zero underlying net present value.
(Asset B may very well do better, because underlying values are not the only reason we buy assets...)
Take away the speculation and you'll have a zero-sum game which always leverages power costs trough transaction processing. So the store of value is a benchmark of computational energy.
index funds will have better track records than bitcoin, even if all index funds drop 50% tommorrow.
re speculation— I don’t think you can remove it from the equation. Equities are highly speculative. The market can remain irrational longer than you can remain solvent. I can’t count the number of times positive earning reports are expressed in negative movements.
Speculation would be fine if it helped price discovery but it has become clear to me that bitcoin is far too irrational for me to partake in other than keeping the little exposure that I've had so far. I'm sure there is some mathematical hash algorithm/proof of stake/distributed accounting that could serve a better job as a financial tool than relying on government-issued currency with a high risk of inflation as a result of poor debt management. But no crypto can satisfy all factors that investors would like.
* Decrease in transaction costs as the new protocol matures This is historically what happened as technology, computing power, bandwidth improved. Bitcoin would require changes in protocol in order to make this happen, like Ethereum did.
* significantly better balance between early investors and late investors. A million increase in value between early and late investors just destroys the store of value idea as its a pure speculation instrument. A currency with a very stable inflation rate could outperform the dollar if enough markets used it.
* better integration with long-standing agreements like insurance against theft, loss, recalls and other tools everyone expects to be able to use from a functioning society.