Comment by eatitraw | Hacker News Reader

Comment by eatitraw | Hacker News Reader

Parent Full thread

> Bitcoin is an economic dead-end. It takes CPU cycles to make a Bitcoin, and those cycles aren't used for anything else. It is an output of production that has no intrinsic value.

You simply don't understand bitcoin. It is not like Satoshi couldn't come up with "useful" computations with "intrinsic value". He deliberately chose "useless" computations. Why? Because these computations serve very important role in the network: they make fraud(like double-spending) very costly(you have to control 20-30% of network computing power to have even smallest change to execute your attack, and 50%+ to have 100% chance of doing it). Computations having "intrinsic value" == extra incentive to attack.

Also, you miss all the work done by armed guards to protect large piles of cash( https://en.wikipedia.org/wiki/Cash-in-transit ). Do you think they do their work for free? And this is only obvious work. How much does current banking costs to us in total?

> Gold has industrial uses due to its physical and chemical properties, and it is desired in the consumer space as a material to make jewelry out of.

Gold was used for thousands of years long before it had some uses in the industry. It has no really special chemical properties: it doesn't react much with other chemical elements (which is actually awesome for a currency: it means it can preserve its value for many many years). Jewelry - maybe, but isn't it so desired for jewelry because it is scarce? You could make jewelry out of less noble metals.

I'm speaking in pure economic terms. The production inputs to mining Bitcoin have real market value and thus there is an opportunity cost to mining Bitcoin. I'm not arguing that Bitcoin has no value (because obviously it does if people are willing to trade them for USD) -- just that it has no intrinsic value.

As a physical good, the desirability of gold is simply to own it and stare at it. We can get into a philosophical debate about how you define utility, but for some people the fact that they find the appearance of gold aesthetically pleasing is enough. It's hard to find much aesthetic value in a Bitcoin. If people decided to stop using gold to store value tomorrow, it would still have industrial and asthetic uses. If people decided to stop using Bitcoin to store value tomorrow, the Bitcoins just lose all value.

Current banking is most certainly a product with associated value -- it's just not a currency. Bank checks are issued in USD, wire transfers are denominated in EUR, etc. I'm saying that Bitcoin, as it exists currently, is a digital asset with a high market value but no intrinsic value. It's not really a currency though, because modern currency is almost by definition controlled by a central bank to make it more useful as a transactional tool. If you have regular spikes and drops in the value of the currency, you don't know whether to buy bread on Tuesday or Friday. Everyone starts trying to time the market and you fall into a boom-bust cycle that is excruciatingly painful for individuals who get the timing wrong (see the US economy of the mid-to-late 1800s).

Gold was used for thousands of years long before it had some uses in the industry. It has no really special chemical properties: it doesn't react much with other chemical elements

Actually, gold's lack of chemical interaction is one of its prized properties, which is part of why it is so desirable in jewelry, electronics, and medicine/biology--it doesn't corrode or rust or otherwise diminish over time. Few other elements even come close, and most of them are gases.

>Jewelry - maybe, but isn't it so desired for jewelry because it is scarce? You could make jewelry out of less noble metals.

You're right, people want it because it's shiny and rare. That makes demand for it. People can and do make jewelry out of other metals, but it's not as "prestigious". You highly underestimate how materialistic the majority of the world is.

Reply on news.ycombinator.com