Bitcoin Is Not Backed by Nothing | Hacker News Reader

Bitcoin Is Not Backed by Nothing

unchained.com

17 pointscloudmanic27 comments

> bitcoin possesses far more credible monetary properties than the dollar

Sorry this is complete BS. Inflation makes the dollar more useful for exchange. Not only that, the dollar is great for consumer goods as it is pegged to a basket of them unlike Bitcoin. Then on top of that, the liquidity available for trading and moving USD across markets is at least 2 orders of magnitude greater than BTC.

I sold all my btc a long time ago for better cryptocurrencies, and the price appreciation of those relative to Bitcoin proves the point further.

Cryptocurrencies are, thus far, utterly useless as currencies. They're accepted by almost no one, slow, more difficult and risky than cash and credit cards, and subject to wild price fluctuations.

They are, however, a nearly perfect vehicle for scams and fraud. =)

Luxury goods, blockchain games, access to usd for unbanked, international remittances, international contracting, alternative governance, p2p lending, trading micro cap assets, asset self custody, and more are all legal use cases of cryptocurrencies.

Access to USD for the unbanked extends to illegal use of cryptocurrency. Some of those people are unbanked for a reason.

A pittance relative to it's utility for bad actors. I like Bitcoin, and I cheered it on as a pimply-faced nerd who wanted to watch numbers do funny tricks. It's protocol is incompatible with what society deems acceptable though, so something's gotta change before the world goes all-in.

No fiat will ever be perfectly solvent, but that's a poor excuse to argue for the superiority of a currency as fickle as Bitcoin.

For good or for bad, what “society” wants doesn’t really matter. People onboard through extremely difficult and regulated processes to blockchain applications because their desire for the products is stronger than the blockages. Sure you can minimize that as a pittance but it doesn’t change the reality of desire.

1. Inflation does not make it more useful for exchange.

You want something that holds 1-to-1 exchange through time for it to be useful for exchange. E.g. stock market appreciate versus goods, and dollar depreciates. You want something that's actually stable.

2. Just because there's more liquidity available, does not the dollar have better monetary properties than Bitcoin. I think the author is talking about monetary in the terms of monetary policy of the dollar versus Bitcoin.

3. I don't see how Bitcoin's appreciation versus other cryptocurrencies prove any point.

> You want something that holds 1-to-1 exchange through time for it to be useful for exchange.

There’s three issues. First, 1-1 to what? For daily expenses, people want their currency to be stable against consumer goods in a practical way. Second, price inflation doesn’t matter if it’s a small enough that day to day prices don’t change significantly. Third, for a variety of complex macroeconomic factors, the economy runs more efficiently with slight inflation - for instance, it automatically reduces the price of goods that have sticky prices such as wages which reduces unemployment.

> liquidity isn’t an important monetary property

Ok you can define what is “money” however you like, but the fact is that a currency is more useful the easier it is to trade it. The more goods you can buy with it, and the less the market moves when you make a large purchase, the more useful the currency is. In fact this is one of the few areas where Bitcoin has value versus other cryptocurrencies.

> price appreciation doesn’t matter

It proves that the people who said alt coins are scams are silly. Alt coins have value that is increasing faster than Bitcoin. You might disagree with how they generate value or whether they are valuable to you personally, but that doesn’t change the fact that well designed alt coins have outperformed Bitcoin.

Please stop conflating price and value. In speculative markets the price of a small cap asset can wildly outperform the price of a larger one and that fact has nothing to do with value - this is proven by the fact that most top 10 altcoins cycle in and out of favor and usually trend towards zero against Bitcoin in the long run.

I am not a "Bitcoin maxi," but your reasoning is flawed - if you believe other layer-1 blockchains have superior value you should have more justification than price to back that up. I'll start:

https://mukdde.substack.com/p/the-economic-solution-to-the-b...

The problem with any asset purporting to be money is that the final requirement for it to truly be money is belief.

Bitcoin can be the best technical alternative for money, which I believe it currently is, but if people in general do not believe it is money then it simply is not money. But in fact, the bar is even lower than that for Bitcoin (or any alternative money's failure) - if the government(s) decide that you cannot accept Bitcoin (or any money) easily in trade, then it loses dominance as money (and thus is not really).

When people say Bitcoin is not backed by anything, the intuition they are trying to communicate is that Bitcoin's value relies on people believing and accepting that value (of course so does the US Dollar, but look who is in the ring fighting for it).

What people truly want out of a crypto-currency is value which is more objective, which is not reliant on the belief of others; it is the difference between a monetary chain, like Bitcoin, and a commodity chain.

https://mukdde.substack.com/p/a-monetary-blockchain-is-less-...

> Governments tax what is valuable; a good is not valuable because it is taxed.

The difference is that, if you earn something valuable that is not US Dollars (e.g., Bitcoin), the US Government (the most powerful organization in the history of civilization) will tax you on it in US Dollars, and project global power towards collecting it. The reverse is not true.

> It is backed by the only thing that backs any form of money: the credibility of its monetary properties.

The “credibility” of the US Dollar, or any government-backed currency, has a lot to do with the amount of power that government has.

If, in America, an American citizen has a bunch of USD stolen from them, they can go to the government. In an ideal world, the government will find the thieves, get the money back, and dole out justice.

If that same person gets Bitcoin stolen from them, there’s nothing they can do.

Similarly, if the USD starts to lose its value, you can bet the government will do everything in its power to stop it from losing value. The US government has a lot of power to make changes that will actually effect this change, too, such as raising interest rates to fend off high inflation.

If the value of Bitcoin starts deflating, however, no one can really do anything.

So yes, sure, in a philosophical, pedantic way, Bitcoin is backed by something. But it’s worse than any major currency. In fact, it’s worse than the worst stock, because if market sentiment changes, there’s quite literally nothing _else_ propping up its value.

It is backed by nothing and that's ok. It's a money, it doesn't need to be "backed". Gold is not "backed" by anything, the notion doesn't even make sense. Backing implies a debt or a promise to convert currency into money by a counterparty, and that backing can be taken away.

Bitcoin is based against the wisdom that "all that glitters is not gold." It abuses the "shiny object" trigger in our animal brain. The minute it looks shiny, its price goes up, and vice versa.

It's become a way for people to manage their anxiety around the state of the economy, pumping money into Bitcoin whenever it looks shiny relative to the fiat currency, and getting out when it doesn't, or when it stops going up (no more shiny attraction.) You need a sustained campaign of lies and deception to keep polishing that turd, so to speak.

We're better off without it, but you can't take away some people's psychological safety blankie.

Bitcoin and crypto have demonstrated one great strength, and I don't mean crime and fraud (which crypto does excel at facilitating).

Crypto has demonstrated an unbelievable ability to survive repeated failures, debunking, scams, fraud, and even government bans. What other technology has failed to deliver on any of its promised benefits for over a decade and survive in "any day now" mode for so many people? What other technology has enabled so much fraud and financial ruin and evaded regulation for this long. As a meme crypto shows more tenacity than COVID does as a virus.

This post absolutely needs the (2019) tag.

> Bitcoin is finitely scarce

it's literally just a variable in a config file lmao

Could you tell us how exactly you would convince the owners of 18k bitcoin nodes all over the world to just apply your line change and keep on?

Wrong; it's hard coded in the source code.

We call that "suckless configuration" where I'm from.

> Bitcoin is out-competing its analog predecessors on the basis of its monetary properties. Bitcoin is finitely scarce, and it is more easily divisible and more easily transferable than its incumbent competitors.

This seems false to me. I can tap a piece of plastic to pay for all kinds of things and then pay that off in turn with a few clicks on a web site. And it's all pretty secure and safe and has well established rules for when things go wrong that do a pretty good job of protecting me.

Yeah well you can do that but some of us are trying to run drug and weapon cartels!

bitcoin is backed by shill articles

bitcoin is backed by CO2 or wasted energy

I’m playing the devil’s advocate here but the concept of wasted is subjective. Definitely not wasted if it gets me a couple thousand dollars a month.

He's right in a certain sense, Bitcoin is increasingly backed by energy that would be otherwise wasted due to lack of transmission infrastructure.

Not sure if that was the point he was trying to make.

Not quite:

Bitcoin is backed by greater fools trying to pump the price up and other fools trying to buy into the pyramid scheme.

But seriously it is backed by entirely nothing but speculation.

History will not be kind to Bitcoin and its delusional supporters. It will definitively and inevitably end up on the scrap heap of other failed experiments and bubbles like Tulip Mania and Beanie Babies.

For a more intellectual deconstruction of web3, bitcoin and all other crypto arguments this is a fantastic resource debunking every point on crypto:

https://web3.lifeitself.org/guide#claim-bitcoin-will-and-sho...

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