Bitcoin

HansOndabush

RichTips said:

HansOndabush said:

Bitcoin is neither an alternative to gold nor a store of wealth. It is a different asset class to gold. I don't believe it stores any wealth as although the numbers of numbers are restricted, at the end of the day they are simply numbers with no inherent value and which can't be used for anything useful.

Over the last 10 years Bitcoin seems to have demonstrated remarkable resilience in the face of this 0 value perspective, consistently trending upwards despite multiple booms and busts. 
Outside of whether or not it will go up or down in price from here, would you not consider it possible that you may be uninformed about its significance given this? 

Gold has been around as a form of money for thousands of years; it is hardly comparable to bitcoin that has been around a little over 10. Bitcoin has been tried as a currency but failed; it is now being pushed as a 'store of value'. I say it has no value except for anyone prepared to speculate on it and compete with other speculators; just the same as a number on a roulette wheel. It exists, you can make money on it, but a real store of value? No.

RichTips

HansOndabush said:

RichTips said:

HansOndabush said:

Bitcoin is neither an alternative to gold nor a store of wealth. It is a different asset class to gold. I don't believe it stores any wealth as although the numbers of numbers are restricted, at the end of the day they are simply numbers with no inherent value and which can't be used for anything useful.

Over the last 10 years Bitcoin seems to have demonstrated remarkable resilience in the face of this 0 value perspective, consistently trending upwards despite multiple booms and busts. 
Outside of whether or not it will go up or down in price from here, would you not consider it possible that you may be uninformed about its significance given this? 

Gold has been around as a form of money for thousands of years; it is hardly comparable to bitcoin that has been around a little over 10. Bitcoin has been tried as a currency but failed; it is now being pushed as a 'store of value'. I say it has no value except for anyone prepared to speculate on it and compete with other speculators; just the same as a number on a roulette wheel. It exists, you can make money on it, but a real store of value? No.

Not quite sure why you chose to respond to my post with continued discussion of gold and Bitcoin's place as a store of value.
I was asking whether you might not consider the upwards trend in the Bitcoin price, despite multiple bubble bursts, indicative of the possibility that you don't understand its value proposition, rather than it not having any value.

HansOndabush

OK tell me how a hexadecimal number has inherent value?

RichTips

HansOndabush said:

OK tell me how a hexadecimal number has inherent value?

If this hexadecimal number is a Bitcoin then it is a cryptographically derived product of an ongoing immutable ledger of transactions that through this immutability and its decentralized perpetuation allows for the exchange of value without remit to a third party. If that doesn't strike you as something with value, I think that's where the knowledge gap might be.

thegentleway

HansOndabush said:

OK tell me how a hexadecimal number has inherent value?

It doesn't have inherent value but nor do currencies? Money's value is underpinned by your belief that other people will recognise its worth and accept it as legal tender. Bitcoin bears would argue traditional currencies get eroded by inflation whereas bitcoin supply is limited and is therefore more "inherently" valuable

HansOndabush

RichTips said:

HansOndabush said:

OK tell me how a hexadecimal number has inherent value?

If this hexadecimal number is a Bitcoin then it is a cryptographically derived product of an ongoing immutable ledger of transactions that through this immutability and its decentralized perpetuation allows for the exchange of value without remit to a third party.

Ah hang on there; in your description of blockchain, you suddenly introduce 'exchange of value' without explaining why there should be any value attached to a Bitcoin? Where does that value come from?

With reference to currencies not having any inherent value either; that is true now as all currencies are fiat. However GBP and USD were originally backed by gold and hence had earned respect and by everyday experience one can still buy things with the currency and so in general people believe the currency still has value. However where the currency is abused as with Zimbabwe for instance, the currency quickly becomes worthless. The same can happen to the GBP and USD if the respective governments continue to abuse their currencies by reckless currency creation.

  There are theoretically a limited number of bitcoins so debasement through oversupply is not a problem although new types of crypto coin are being invented all the time while there is an appetite for them. However bitcoin only has any value while speculators are happy to assign a value to it and while those in the crypto industry can continue to market digital coins to the public. As a currency it has failed. The blockchain ledger is very cumbersome and slow, maintaining it and mining bitcoins consumes an immoral amount of energy. The crypto industry and exchanges, having failed as a currency project are now pushing the idea that these coins are a store of value but like 'The Emporer's New Clothes', once you see it for what it is you realise there is nothing there of value at all.

jimpwarsop

If a Bitcoin was made of gold, how heavy would it be ?

RichTips

HansOndabush said:

RichTips said:

HansOndabush said:

OK tell me how a hexadecimal number has inherent value?

If this hexadecimal number is a Bitcoin then it is a cryptographically derived product of an ongoing immutable ledger of transactions that through this immutability and its decentralized perpetuation allows for the exchange of value without remit to a third party.

Ah hang on there; in your description of blockchain, you suddenly introduce 'exchange of value' without explaining why there should be any value attached to a Bitcoin? Where does that value come from?

With reference to currencies not having any inherent value either; that is true now as all currencies are fiat. However GBP and USD were originally backed by gold and hence had earned respect and by everyday experience one can still buy things with the currency and so in general people believe the currency still has value. However where the currency is abused as with Zimbabwe for instance, the currency quickly becomes worthless. The same can happen to the GBP and USD if the respective governments continue to abuse their currencies by reckless currency creation.

  There are theoretically a limited number of bitcoins so debasement through oversupply is not a problem although new types of crypto coin are being invented all the time while there is an appetite for them. However bitcoin only has any value while speculators are happy to assign a value to it and while those in the crypto industry can continue to market digital coins to the public. As a currency it has failed. The blockchain ledger is very cumbersome and slow, maintaining it and mining bitcoins consumes an immoral amount of energy. The crypto industry and exchanges, having failed as a currency project are now pushing the idea that these coins are a store of value but like 'The Emporer's New Clothes', once you see it for what it is you realise there is nothing there of value at all.

The value, as always, comes from perception of worth. In Bitcoin's case this is derived from consensus regarding the qualities and its ability to meet the qualities that I just explained.

RichTips

The objective of my interjection, however, was to ask you to give your opinion of why Bitcoin's price might be trending consistently upwards despite multiple popped bubbles. In essence, if "there is nothing there," why does the Emperor keep buying the clothes following multiple "realisations"? 

onthebench

barnstar2077 said:

RichTips said:

HansOndabush said:

Bitcoin is neither an alternative to gold nor a store of wealth. It is a different asset class to gold. I don't believe it stores any wealth as although the numbers of numbers are restricted, at the end of the day they are simply numbers with no inherent value and which can't be used for anything useful.

Over the last 10 years Bitcoin seems to have demonstrated remarkable resilience in the face of this 0 value perspective, consistently trending upwards despite multiple booms and busts. 
Outside of whether or not it will go up or down in price from here, would you not consider it possible that you may be uninformed about its significance given this? 

The difference is that gold has a use, it isn't just stockpiled, it is also used for jewellery and electronics.  Bitcoin so far feels more like an idle game.  I understand why people buy it, because they think they can make money, but other than that it is worthless.

Maybe, maybe not. 

The intriguing thing is that nobody knows. I am drawn to the simplicity of the idea: a demonstrably inflation-proof “store of scarcity” where you know exactly how much of something there is and can be. Gold is scarce but we might find a new gold mine or an asteroid made of gold. There will never be more than 21 million bitcoins and the proof is there for all to see, openly. 

Of course, for something to be valuable, scarcity is not enough. You need scarcity combined with desirability. If mankind decides that bitcoin is not desirable then it will become not valuable. But if it is desirable as an inflation-proof store of wealth then there will be a lot of people each trying to get their share of those 21 million coins, and even a fairly small chunk of one coin will be sought after.