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Duplicate comment from the other thread:

11 years ago I sold 100 BTC, and made pretty good money. With that said, the more I think about BTC, the less sense it makes to me. Exceedingly few people actually use it for anything practical. The “store of value” functionality has completely eclipsed the practical use that Bitcoin maxis were preaching back then. Since 2016-2017, it seems like people have bought it for the sole purpose of seeing someone else pay more for it. It will never become some “universal” currency that overtakes national fiats. Right now it seems like people are only hoping for governments to hoard up BTC, to moon the price and provide exit liquidity for early holders - which IMO would be reckless spending. It is the ultimate make-believe asset.

Also, when I ran the numbers some time ago, I figured a realistic max value for 1 BTC would be 500k-1M.

So the big money has been made, imo. Betting on a good stock could make you just as rich, as waiting BTC to reach its max. Most money will be made buying and selling between the boom cycles.

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In 2015, we paid 20.4 bitcoins for a comic book [1] signed by several key contributors to the cryptocurrency space, including Nick Szabo (known for his work on smart contracts) and Adam Back (the inventor of Proof of Work). A glimpse of these signatures is available on page 4 of this whitepaper [2].

Today, I view cryptocurrency prices as just another signal within the broader economy. While some of my companies focus on cryptocurrency research, security, and development I am not obsessed with trading.

[1] https://bitcoinist.com/meet-the-guys-who-paid-10-thousand-do...

[2] https://docs.google.com/document/d/1L0Me9si4iMclOq8n-oG2yNQf...

I ran the numbers some time ago, I figured a realistic max value for 1 BTC would be 500k-1M.

Extremely curious about your methodology here. Also I'm not sure how to process "the max value is only 5-10x from current prices so the big money has already been made". Can you explain?

There's no methodology anyone can show you, that's why they never show their numbers.

Bitcoin is an asset like any other, there's no math I can do that will prove to you that someone can't just arrive tomorrow and buy this rock off of me for $2. And there's no math someone can do that can prove someone else won't show up the next day and offer $2 trillions for it, specially because their math can't predict inflation, or they'd be billionnaires on the futures market very quickly instead of showing off their math claims online.

"If lots of optimistic things happen, then it can't be more than X" doesn't require predicting the future.

For example, the total value of all gold is something like $10-20T. At 21M coins, if bitcoin fully replaced all gold you'd be looking at something like 500k-1M. I don't really get the difference between M1 and M2 for money supply but this is about the same as all US dollars.

So $500k-$1M seems like a realistic maximum value. That's different from "I think this will happen" and you can have a value much lower than this but the key part here IMO is saying "I cannot see a way it can be higher". I think there are other investments that require significantly less optimism to see 5-10x growth over any reasonable timeframe.

> Also I'm not sure how to process "the max value is only 5-10x from current prices so the big money has already been made". Can you explain?

A maximum upside of 5-10x assuming lots of things go extremely well for your investment requiring massive global shifts is a tricky sell. To make a huge amount of money you have to put a lot on the line.

So I think broadly this is just about whether you read "realistic max value" as "the maximum I expect this to reach" or "scenarios where it goes above this are unrealistic even with a lot of optimism".

I believe cryptocurrencies have played a significant role in awakening traditional finance and fintech industries. It’s remarkable that systems like ACH [1] have been used for U.S. payments for decades, and yet FedNow [2], a real-time payment solution, has only recently been introduced in the world’s leading economy.

[1] https://en.wikipedia.org/wiki/Automated_clearing_house

[2] https://en.wikipedia.org/wiki/FedNow

> Exceedingly few people actually use it for anything practical.

That is actually fairly common. Gold has been around for millennia, found basically 0 practical applications [0]. The value of something is roughly the marginal difficulty of procuring the thing by whether someone wants to own it, and at the moment nobody can create bitcoin for substantially less than $100k and broadly speaking people will always want to own them at some price.

That being said, I don't think bitcoin will hold its value long term. But the money question now is whether the collapse happens on the scale of years, decades, centuries or millenia.

[0] The purpose of gold jewellery is to demonstrate that someone has gold/the wealth to do something impractical; otherwise we could make plastic jewellery that is prettier, lighter and cheaper.

Gold is not only used for jewelry. It has many practical applications and is essential for electronics.

> Gold is not only used for jewelry. It has many practical applications and is essential for electronics.

47% of gold is used for jewelry and 6% is used for electronics:

* https://geology.com/minerals/gold/uses-of-gold.shtml#history

You're not wrong, but not entirely right either.

Gold has many practical applications though. I think our electronics have gold in them, for example…

Gold was the universal medium of exchange for the vast majority of recorded human history. That also gives it a good track record of being a good store of value. This track record can't be said about Bitcoin which has only existed while the of the economy of the nation driving Bitcoin prices has been growing.

Plastic jewelry and other cheaper jewelry only really look good when it's new in a store. The main buyers of gold jewelry are Indians, who prefer higher karat gold, which looks good forever. The intersection between a non-reactive metal and a colorful metal make gold the ideal material for jewelry.

To bring that needle slightly off of 0, there's a long history of using gold in dentistry.

"Gold is suitable for dentistry because it is malleable, nearly immune to corrosion, and closely mimics the hardness of natural teeth, thereby causing no harm to natural teeth during chewing" - https://en.wikipedia.org/wiki/Gold_teeth

First comment of any bitcoin thread on HN is always something like this, generally negative and a bit grumpy.

Just for the last 5-10 years. Before, BTC was cool.

Because there was naive optimism about it as a technology?

Because 10+ years ago it was being used as a cool currency you could generate with your desktop GPU and buy steam games with.

Now there doesn’t seem to be any use case other than hoping it goes up higher, and enabling crime.

I understand you disagree with the whole thing but blockchain has a lot of uses already. Most obvious ones are storing money or investment and transferring money. It factually works amazing for these. Assuming you believe in capitalism, people won’t put such enormous amounts of money on something if it has no use. Speculation also applies to stocks in the same way, there is no world where nvidia should be priced like this but people have some view on it and it effects the price. Same idea with blockchain, there are already use cases and it is expanding constantly. Also there is a ton of investment going into research of development of it, there is no reason why people shouldn’t invest in it by buying coins, it is factually a good investment so far if you are able to hold for long periods of time

> I understand you disagree with the whole thing but blockchain has a lot of uses already.

Not really.

NIST has a good blockchain explainer with a handy flowchart that has questions you should ask to see if blockchain is a useful solution:

* PNG flowchart: https://csrc.nist.gov/CSRC/media/Projects/enhanced-distribut...

* https://csrc.nist.gov/Projects/enhanced-distributed-ledger-t...

* https://www.nist.gov/blockchain

And other things are probably a better fit for the majority of people's needs.

Stats mean nothing when I use it every month for my savings and salary. As many people already do. I can also send money between countries very easily and cheap.

I understand this can be just as easily done with banking system in more developed countries but blockchain is much better other parts of the world

HN is full of engineers, founders, etc. who kind of resent that there’s a large class of people who got rich doing nothing and creating no value.

I get it but I’d say if you’re mad about Bitcoiners you should be a lot more angry about much of the financial industry and property speculators, two other huge groups that get rich without creating much value (or even by creating negative value).

There's a lot of value-free getting rich lately. People call it "late stage capitalism," but that frames capitalism as the villain when in fact it's a symptom of capitalism having created so much wealth we don't know what to do with it. The problem is that we're allocating it in incredibly dysfunctional ridiculous ways. I think what we're seeing is the symptoms of an early-stage post-scarcity society in denial.

The dysfunction arises from our clinging to scarcity-era puritanical ideas that only those who do a lot of work or do miraculous things "deserve" wealth. So we create all kinds of elaborate games and then convince ourselves that the winners of those games are somehow superhuman or superior in some Calvinist sense when they really just won a video game.

In a post-scarcity society baseline levels of wealth become like oxygen in the atmosphere. You don't "deserve" it. It's just there.

We are not quite post-scarcity yet, but we're close enough that craziness like $100k Bitcoin is possible. A few more key innovations will do it. Another order of magnitude drop in solar/battery prices and/or successful demonstration of a net-positive fusion power plant will do it. Embodied AIs that can do factory jobs will get us pretty far too, making the cost of manufactured goods almost equal to the cost of raw material inputs and energy inputs.

As person with both a finance and economics degrees, bitcoin is a successful fraud. I can list out how they use bitcoin private definitions for standard financial terms, how they do not disclose those differences in conversations with financial professionals using the standard terms and their definitions, and the bitcoin community itself is composed of people that expect someone else did the homework to validate this, but no one did. I did, it's not there. Bitcoin is a fraud designed to trap smart people that trust other smart people, who do not do their homework.

Please do (unironically).

And invite all manner of debate with aggressive non-homework do'ers? No Thanks.

So you have nothing.. Alright then.

Devils advocate / steel man reply: isn't that what all currencies are?

Why does the Federal Reserve US dollar have value? Because people trust other smart people who say they've done the work and trust other smart people who work for the Federal Reserve.

Money is a thing people agree upon as a medium of exchange. It is not value itself. Value is the people, places, and things that make up the actual economy. Bitcoin has no value but neither does the USD. Can't eat them. Can't build a house with them.

My problem with Bitcoin is that I don't think a hyper-deflationary currency is a good idea. Bitcoin is even more deflationary than gold due to breakage (loss of keys) and a hard mining limit.

> a hard mining limit.

This is what I keep telling people. No government will use BTC because of this.There is a reason the US went off the gold standard, so they can print create money without causing inflation tied to money supply. Inflation now is not tied to money supply, but to money spending. (ie. if people did not spend money buying things there would be no increase in prices.) In the past, if you printed more money inflation would be immediate since it, in effect, immediately devalues the price of gold.

USD has value because there are things people need to pay for that can only be paid for with USD.

USD has value because it’s backed by a sufficiently large group with guns.

BTC has value because it’s backed by a sufficiently large group with encryption.

Mechanisms which are difficult to bypass have value. You can’t eat an RSA private key but private keys have immense value.

Fiat currencies have value because governments enforce using them to pay taxes, and to buy goods and services.

My big concern with bitcoin (like AI) is the energy costs. We have to figure those out. The biggest fraud we perpetuate is destroying the planet/climate for shareholder value. But if I was in an unstable country, I'd probably buy bitcoin (or dollars/euro dollars). Bitcoin is portable though so easier to get if your country imposes export controls.

Capitalism isn’t generating so much wealth ifaik, life standard of average working person is constantly going down since 1970s

By what measure?

I know of only one obvious dimension where the life standards of the average person have declined significantly since the 1970s: housing affordability. The entire developed world has a housing affordability crisis driven by cartel-like behavior among homeowners and bad zoning policy among other things. This is a policy failure resulting from bad regulation and undue influence / corruption.

Most other things have stayed largely the same or improved. Food is better and more varied, and while restaurants and some types of food have increased in cost they are still available. Health care is more expensive but also vastly better, especially when dealing with diseases like cancer or heart/circulatory issues. A cancer diagnosis is much less of a death sentence today than it was in the 1970s. Access to information is absurdly, exponentially better. Travel is probably about equally available. Communication capabilities are infinitely better. Appliances, gadgets, and other manufactured goods are significantly cheaper.

This makes sense, I was thinking about income equality, my bad

Yes that has gotten worse, mainly because the high end of the power law distribution of incomes has gone insane.

Believing that misallocation of capital means that we are living in a post scarcity society is a very techno optimist way of looking at things.

HN is unbelievably apolitical, apart from it's baseline tendency towards the left and whatever silicon valley demands people believe.

If you were anywhere near a post scarcity society (applies to USA) you wouldn't be hurtling towards national sovereign debt default at a rate of knots, and you wouldn't have the most expensive healthcare in the world.

As it happens, what appears to be a "post scarcity society" is just pathological misallocation of capital due to a political failure (that shaln't be spoken of here) that has the entire west circling the bowl at the moment.

But do you actually disagree? Has the Crypto Revolution to date produced anything other than financial speculation and a slight warming of the Earth's surface?

In addition to speculation, with longer time horizon people anywhere in the world can retain the value of what they earn by buying bitcoin with it. Also, mining it can make otherwise not cost-effective power plants cost-effective by buying the excess energy.

Sure. Millions of people in the third world use crypto for payments. There's also Polymarket, very much recognized within the mainstream. And generally, crypto will continue to spawn new digital infrastructures in a sovereign space.

> First comment of any bitcoin thread on HN is always something like this, generally negative and a bit grumpy.

And not entirely wrong.

Bitcoin is now just a commodity play: it doesn't have to be rational to make money. Humans assign "value" to all sort of arbitrary things:

* https://en.wikipedia.org/wiki/Rai_stones

^ Typical second comment.

> With that said, the more I think about BTC, the less sense it makes to me. Exceedingly few people actually use it for anything practical.

The same can be said of gold.

It's primary modern use is jewelry, with some industrial uses (electronics, aerospace) as well as medical and dentistry. For a little while it was used as (the basis of) money, and now that particular fetish has stuck around:

* https://www.goodreads.com/book/show/249245.The_Power_of_Gold

Bitcoin and gold are now simply commodities, like oil or frozen concentrated orange juice.

Human psychology is weird.

BTC was designed as a drop-in replacement for both the USD and SWIFT for processing transactions. If it were successful, it would be a grave threat to the US financial position. Trump recently issued threats to BRICS nations for contemplating issuing a common currency with precisely those same aims.[1]

If BTC was on the verge of realizing its purpose, Trump would work equally hard to burn it down. So, who knows if BTC price goes up or down, but categorical statements about a fundamentally transactional politician sending this permanently to the moon bake in a significant degree of risk of later being contradicted.

[1] https://www.cnn.com/2024/11/30/politics/trump-brics-currency...

> BTC was designed as a drop-in replacement for both the USD and SWIFT for processing transactions.

That may have been the original intent of BTC's creators, but what is it actually used for now? USD and SWIFT are being used daily for transactions, whereas two-thirds of Bitcoins have been inactive for the last year:

* https://en.macromicro.me/charts/32355/bitcoin-supply-last-ac...

It's simply being hoarded.

Agree. Bitcoin used to make sense when it could actually be used to buy things, but at this point it's only useful for moving money for extra-legal purposes and even then, it's possibly the worst crypto to use for that because of traceability.

I don't deny that a Bitcoin is worth $100,000 right now, but it could just as easily be worth $0 because at the end of the day it has zero intrinsic value.

Bitcoin at this price level is generally hated by banks, treated with suspicion everywhere around the world, outright banned, and regulators almost actively try to grind it to a halt. They don't do those things for gold for example, and gold is still going up

Certainly gold has been the subject of some suspicion: https://en.wikipedia.org/wiki/Executive_Order_6102

I don't know why you're being downvoted.

Cryptocurrencies in general are a big pain in the ass for banks, due to how much of fraud is associated with those currencies. AML and KYC regulations have made practical use of cryptocurrencies a pain for both parties, for the past 10 years. It's just now, in the very recent years, that it has become somewhat easier and streamlined.

> a realistic max value for 1 BTC would be 500k-1M

[citation needed]

>Also, when I ran the numbers some time ago, I figured a realistic max value for 1 BTC would be 500k-1M

In what units? What makes you think there won't be Argentina-style inflation of the USD?

What makes you think BTC is an inflation hedge? BTC did not hedge the inflation event in 2022.

There’s still room for it to become an inflation hedge, we still havnt really seen much in terms of USD inflation and people scrambling for the exit.

OTOH, government crackdowns might be able to tank the price.

the bet is that the incoming regime won't crackdown and may go do the opposite

> There’s still room for it to become an inflation hedge, we still havnt really seen much in terms of USD inflation and people scrambling for the exit.

Bitcoin is no more an inflation hedge than gold is, which it is not:

* https://www.nber.org/papers/w18706

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789

and both are something worse, deflationary:

* https://www.nber.org/books-and-chapters/financial-markets-an...

* https://www.goodreads.com/book/show/775143.Golden_Fetters

Gold did not help in stabilizing currencies or economies:

* https://archive.is/https://www.theatlantic.com/business/arch...

and neither would Bitcoin.

My rationale is the following:

1) A very high (BTC/USD) rate will come from HUGE whales hoarding BTC. Like governments creating crypto reserves, and purchasing BTC in the magnitude of tens of thousands to low million (US have talked about purchasing a million).

2) BTC will never be a currency that is used for huge worldwide transactions, for things commodities like oil, gas, etc. No serious country will give up control of their currency like that, especially not US that will literally go to war if things aren’t purchased in the Uas dollar

3) Likewise, countries will not adapt BTC as their currency, if they cannot control the supply 100%

4) If BTC becomes too competitive, it will be fairly easy to regulate it into being too unattractive.

Those are my macro views.

I think it will continue to be some asset that competes against silver, gold, etc.

Where's the numbers, you said you did the math?

> If BTC becomes too competitive, it will be fairly easy to regulate it into being too unattractive

Will it though? There are millions of US voters who hold crypto and both sides attempted to appeal to this voting block in the last election (obviously one with more success than the other). Heavily regulating crypto seems to offer massive political downsides with very little potential gain.

And we haven't even seen the crypto version of the NRA yet.

There might be smarter elected officials in the future that facing two choices:

USD losing the world's reserve currency status and:

1. Yuan becomes the reserve currency

2. BTC becomes the reserve currency

they would understand that choice 2 is preferrable for the West

BTC is not a currency however. The Yaun is a currency because it is controlled by a government. BTC is controlled by no one. It is just like gold, but worse because it has no intrinsic value.

There is a reason the US and other governments went off of the gold standard, and that is so we could control the price of our currency, which is what led to te mess we are in now.

If BTC were controlled by the government it would be no different than the dollar when we were on the gold standard, and that it why it will never be a currency.

> 1. Yuan becomes the reserve currency

Who trusts China enough to sign on board with them to do this?

> 2. BTC becomes the reserve currency

Given what we know of history, why would anyone go towards a new (digital) gold standard? It's a bad system:

* https://archive.is/https://www.theatlantic.com/business/arch...

* https://www.goodreads.com/book/show/775143.Golden_Fetters

that limits monetary and fiscal flexibility and helped usher in and prolong the Great Depression.

> https://www.goodreads.com/book/show/775143.Golden_Fetters

just wanted to note that they are using a 20-year history window as an argument, while the gold standard existed for about 3500 years before that, across very different cultures.

> just wanted to note that they are using a 20-year history window as an argument […]

The troubles with a fixed monetary supply existed much earlier than that, having historically recorded issues going back almost five hundred years:

* https://en.wikipedia.org/wiki/Great_Bullion_Famine

We call the thing in the 1930s the "Great Depression", but before it occurred there was another time period that held that label, which has since been renamed:

* https://en.wikipedia.org/wiki/Long_Depression

It's just most folks accepted that this is how things were "supposed" to be because they didn't know any better, but there was great dissatisfaction on how things were:

* https://en.wikipedia.org/wiki/Cross_of_Gold_speech

It took until the likes of Irving Fischer, Keynes, and FDR until the old habits could be thrown off (too late in some places, like Nazi Germany and Imperial Japan):

* https://www.goodreads.com/book/show/24945314-the-money-maker...

> […] while the gold standard existed for about 3500 years before that, across very different cultures.

It did not. For most people, most of the time, it was credit that was used in day-to-day life:

* https://en.wikipedia.org/wiki/Debt:_The_First_5,000_Years

And even the rich often forsook coins:

* https://en.wikipedia.org/wiki/Negotiable_instrument#History

* https://centaur.reading.ac.uk/30672/1/12%20Chapter%201839%20...

They earliest records of monetary transactions used credit:

* https://www.sfu.ca/~poitras/jesho_UR_14.pdf

* https://en.wikipedia.org/wiki/Third_Dynasty_of_Ur

* https://www.goodreads.com/book/show/36854772-the-open-sea

Where gold was perhaps around, most folks were too poor to deal with it. And in a lot of cultures gold was not used at all:

* https://www.goodreads.com/book/show/50358103-money

The use of gold was mostly concentrated around the Mediterranean.

* https://www.goodreads.com/book/show/249245.The_Power_of_Gold

The Chinese used silver (as the Spanish learned post-1492). The Incas had gold (as the Spanish happily learned) but not for currency (of which they had none) but for ornament/jewelry. Other cultures simply used other things, like non-shiny rocks:

* https://en.wikipedia.org/wiki/Rai_stones

It is actually the gold standard—the convertibility between paper money and shiny rocks—that is the historic anomaly, existing between (depending on how you count things) between one and two hundred years:

* https://en.wikipedia.org/wiki/Gold_standard

Even the very meaning and nature of what is meant by "money" has changed over the millennia, starting with Aristotle and continuing to the present day:

* https://www.goodreads.com/book/show/58933308-the-currency-of...

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