
What Is Bitcoin: Internet’s Native Money or Asset for Speculation? - likhuta
https://forklog.media/what-is-bitcoin-internets-native-money-hedging-instrument-or-asset-for-speculation/
======
k_vi
Bitcoin value is in it's potential to become a savings technology(store of
value, digital gold, hard money) on the internet.

Decentralisation is a spectrum, expensive and slow is intentional in it's
design to provide the highest level of security and trustlesness. If you want
fast and cheap transactions then blockchain is not the answer.

If Bitcoin goes mainstream, layer 0 will be used for large value transactions.
Rest will be moved off chain to custodial wallets and on probably a much
smaller scale lightning, liquid and ethereum. Compared to fiat, transparency
and opting out of centralized systems are easier.

The real question is not whether Bitcoin is a good SoV but if Austrian
economics and sound money are a better alternative to our present economic
system[1].

Either way, I believe Bitcoin might become the safe-haven asset that people
could fall back on in times of inflation[2].

I think the following arguments against Bitcoin are not useful.

\- X blockchain is faster than bitcoin.

\- PoW is wasteful.

\- Bitcoin is used for drugs so cannot be money.

\- Whales can manipulate the price.

[1]
[http://econfaculty.gmu.edu/bcaplan/whyaust.htm](http://econfaculty.gmu.edu/bcaplan/whyaust.htm)

[2] [https://news.bitcoin.com/countries-suffering-from-rapid-
infl...](https://news.bitcoin.com/countries-suffering-from-rapid-inflation-
show-significant-demand-for-cryptos/)

------
HashThis
I had a big insight on bitcoin:

* "Sound money" groups have one set of wishes of what will happen to the US Dollar

* Some parts of the population want money printing to pay for services.

* WallStreet likes money printing US Dollars to bail them out.

* Everyone has an agenda for US Dollars.

Here is what happens to bitcoin:

* Bitcoin (and Ethereum) were given a historic strategic value by the US Gov because they get grand fathered in that they are not required to have KYC & AML. Future crypto tokens will, and they will be held back.

* Bitcoin is where citizens can turn to, when money printing doesn't match their agenda. What is amazing, is that they don't need to get approval from the full citizen base. This is great for citizens that are hurt by money printing.

Right now, it is for speculation for investors. But the investors are
investing towards more usage as a currency in the future.

~~~
api
Why would you spend or invest a currency that magically goes up whenever there
is demand for it?

The hard money aspect of Bitcoin and most other cryptocurrencies guarantees
that they will be speculation devices that will behave like iterative Ponzi-
like games of chance (even if they were not explicitly intended as such). Any
increase in their use as currencies will drive their value up which will
paradoxically discourage their use as a currency, leading to boom-bust cycles.
These will be quite extreme as Bitcoin and its ilk are much more deflationary
than precious metals or other traditional commodity monies. They are not only
absolutely finite but are subject to breakage (permanent loss) due to lost
secret keys.

This is why the entire world rejected hard asset money and fiat money pegged
to hard assets. It's bad for the actual economy where actual economy is
defined as actually doing things in the real world. Money is a means to an end
not an end in itself.

~~~
whb07
Because what you're saying is some dreamland example everyone always repeats
like a scratched disc.

Why would you buy a CPU today when you know next year it will be at least 1/2
price or twice more performant?

Why buy a new phone today when tomorrow it will be cheaper?

Why marry a woman/guy today when you know tomorrow there will be a younger and
better looking person out there?

Thats what you're saying. It doesn't hold true. I want something TODAY, not
tomorrow, or next week. So if i had some gold or bitcoin, i would exchange
some of it for the thing i want.

Lastly, some of the bitcoin-USD payment processors saw the largest volumes
DURING the bubble of Dec 2017. What that means is as people got richer they
started buying goods with their highly appreciated bitcoin.

~~~
api
I used to subscribe to the pop Austrian hard money ideology. Watching
cryptocurrency devolve into a HODL cult and gambling casino is one of the
things that changed my mind. I saw by watching the evolution of Bitcoin that
Keynes was right, at least about that particular topic. Everything Keynesian
and modern monetary theorists said would happen happened, and for easy to
understand reasons. In science we call that a correct prediction.

What I saw in 2017 was a giant bubble driven by the greater fool theory
followed by a complete abandonment of cryptocurrency as a payment method. This
abandonment actually coincides with the bubble as this boom-bust cycle made it
very inconvenient to use as a currency.

All this accomplished was to make early adopters rich at the expense of later
adopters, like any Ponzi. (Again I don't think it was an intentional scam, but
unfolded as a Ponzi for structural reasons.) Today I am hard pressed to find
anyone who accepts Bitcoin for anything but drugs and black/grey market stuff,
and those people have a special need that overcomes the currency's downsides
as such.

Today the cryptocurrency world seems like nothing but scams and even those are
fading away. Most articles I see about it are scammy.

Bitcoin is very unlike gold. Gold costs little to nothing to maintain while
BTC has a huge electricity cost. That must be slowly consuming the actual
value in the ecosystem. Eventually nothing will be left but Tethers and other
fictional tokens. When those collapse the music will be over.

~~~
whb07
That's got nothing to do with your initial comment nor my response.

------
adaisadais
I would highly recommend Felix Martin’s “Money: The Unauthorized Biography” to
anyone who is interested in the underlying subject of money.

Martin’s basic argument is that money is simply a social technology.

I don’t believe that bitcoin is the internet’s native “money” but I do believe
it is the internet’s native “gold.” I believe future currencies (as some
currently do) will peg their value to Bitcoin. However, once the first major
corporation begins accepting bitcoin then it just might as well be what we
classically view as “money”.

[https://www.amazon.com/Money-Unauthorized-Biography-
Coinage-...](https://www.amazon.com/Money-Unauthorized-Biography-Coinage-
Cryptocurrencies/dp/0345803558)

------
GuB-42
For now, you can't do much with Bitcoin besides buying drugs and paying
ransoms. But people expect it to become more important in the future, and
that's the main reason why they buy Bitcoin.

So, it is like 99% speculation and 1% "internet money", a big part of that 1%
is for illegal activity.

~~~
tfang17
Cash is used for illegal activity at a scale that dwarfs Bitcoin.

~~~
rkoten
True, and cash is used for any activity at a scale that dwarfs Bitcoin. It
makes sense to compare their ratio of illegal to all transactions in this
case.

------
Aaronstotle
Bitcoin is terrible for transacting (slow, expensive, traceable), but I think
its use case will be to provide a store of value, hence the "digital gold"
description.

Monero is closer to Internet's native money imo, and that doesn't seem to have
nearly the drastic swings that BTC has had in the last few months.

That being said, use case for store of value is difficult since whales can
manipulate the price so easily.

~~~
jmeyer2k
It doesn't have to be terrible for transacting though. There are tons of ways
to make Bitcoin better, but nobody wants to try them.

~~~
brink
Why make bitcoin better when you can just reimplement it from the ground up?

Look at Stellar. Transactions take <5 seconds and the chain is kind to the
environment with trust based transactions rather than POW.

~~~
companyhen
Look at how centralized Stellar is and then you have your answer for <5s tx

~~~
jmeyer2k
There is the question of, is trustlessness even needed or is federation
enough?

------
jandrese
I can't even load the site due to some issue with their Cert, but based on the
headline it's the latter. Bitcoin as a currency is hugely problematic, while
as an asset its inherent deflationary nature makes it surprisingly safe as an
investment, assuming you have plenty of time to wait out the enormous
volatility of the system.

Sure it's basically a giant pyramid scheme, but since everyone is incentivized
so strongly to keep holding and not selling it has remained remarkably stable
as far as pyramid schemes go.

~~~
the_gastropod
> while as an asset its inherent deflationary nature makes it surprisingly
> safe as an investment

My toenail clippings have an inherently deflationary nature. Yet, nobody's
knocking down my door to collect them. What gives?

~~~
gruez
>My toenail clippings have an inherently deflationary nature.

how can they be deflationary (unless you're dead, or don't have toes) when
they're growing 24/7?

~~~
the_gastropod
Yea, exactly—you kind of answered your own question: I'm mortal. So like
Bitcoin, there is a finite amount they will increase. That makes it a great
investment opportunity, right?

~~~
oarsinsync
And there are lots of alt-nails out there too.

The problem is that it's not trivial to distinguish between your bitnails and
all the other altnails, so you have a massive counterfeiting problem the
moment any real value gets attached to your bitnails.

(So, no, I won't be investing.)

------
mundo
Equivocating over the technical definition of "money" won't obscure the plain
fact that it's been out for a decade and you can't buy stuff with it.

More generally, the whole point of BTC was supposed to be that it would be
free of external control. Now, everyone seems resigned to the fact that the
only way to scale it is off-chain ledgers run by financial corporations.
Doesn't seem to be much more to say about it.

~~~
_eht
I don’t know about the rest of what you’re saying, but I buy stuff with it.
Have for the last decade or so...

Take that for what it’s worth, but yeah, you’re wrong.

~~~
mundo
"Please respond to the strongest plausible interpretation of what someone
says, not a weaker one that's easier to criticize."

~~~
LMYahooTFY
If you're going to reference the rules, you might put more effort into
articulating the nuances rather than stating it as an absolute, as what you
stated is clearly false.

~~~
mundo
Alice: "You can't buy stuff with it."

Bob: "That's technically false! The truth is you _mostly_ can't buy stuff with
it."

Whatever; the point stands. Separate from that, you might put some thought in
to why the HN guidelines say "Please respond to the strongest plausible
interpretation" instead of "Please try to phrase your comments so carefully
that there is only one possible interpretation."

~~~
LMYahooTFY
This is, frankly, ridiculously dismissive, and you violated both guidelines.

If you've never heard of Bitpay, I'd suggest looking it up.

I can purchase software on Microsoft's store, hardware on Newegg, a phone line
from AT&T, whatever from Overstock, I can travel via Expedia among other
travel brokers, I mean seriously...

"You can't buy stuff with it" has no obvious interpretation. Did you mean
specifically in some part of the world? Specifically from Amazon or Target?

~~~
mundo
I phrased it vaguely because I meant it that way. Is there one specific thing
keeping Bitcoin from being widely used? No, there are a bunch of challenges.
Why do you think I should've listed them? Don't you pretty much know what they
are? Is it not safe to assume that the other people this deep in a HN thread
on the subject do too?

Sure, I should've said, "...enough stuff" or "...easily enough" or some other
minimizing qualifier, to keep uncharitable readers from mentally inserting a
maximizing one. (I would've edited it in, but the edit button was already
gone) But I also don't think anyone involved had any genuine trouble figuring
out that it was implied. I mean, it's common enough to merit its own bullet
point on the HN Guidelines list.

------
einpoklum
It's a pyramid scheme.

Blockchain as a technology isn't, although distributed ledgering isn't just
blockchain. But Bitcoin is a pyramid scheme.

~~~
_eht
Bitcoin aside, for your own personal financial safety I recommend researching
what a pyramid scheme is.

------
brighton36
You know, if there's a ticker symbol at the top left of the article ... that's
probably a vote for speculation.

------
exabrial
No. Please use Stellar/Lumens for that.

~~~
companyhen
You mean use DAI for that.

------
Darmody
I liked the idea of bitcoin for a while but I think it's pure garbage now. Not
only because the blockchain technology has evolved a lot and you can make
better networks with it, but because it's being used only to make very few
people very rich.

There are others DLT (Distributed Ledger Technologies) far more advanced, with
real life use cases and without that monstruosity called Proof of Work.

~~~
Darmody
I forgot to add that using it as an asset is not the best idea. It has some
nice features that makes it look good as a long term investment but it's
heavily manipulated by big whales, mostly with Tether.

Sad but true.

------
speedgoose
I may be wrong but I think it's too risky to put so much value into crypto
currencies before we have a proof that P≠NP.

I also hope that P=NP.

~~~
tromp
Given how extremely useful public key technology is, I certainly hope that P ≠
NP (as well as the stronger BPP ≠ NP).

------
schmichael
None of the items in "Bitcoin’s Advantages Over Traditional Money" are without
significant caveats:

> Bitcoin’s supply is limited to 21 million coins...

Until it's not. There are already discussions at the highest levels of the
Bitcoin community to raise the cap[0].

Also what are forks and new coins if not new currency in circulation? The
supply of "bitcoin" doubled when BCH forked. The supply doubled again when BSV
forked.

> Low and predictable inflation rate.

See caveats above. Also the inflation rate has appeared to have 0 impact on
the price of BTC so far, so it doesn't appear to be a meaningful metric.
Payments for goods and services using BTC are almost always denominated in
fiat with BTC being used as the medium of exchange (eg a seller wants $50 for
some pills but accepts payment in $50 worth of BTC). BTC's inflation rate is
meaningless in this scenario.

> Lack of a central authority. This makes Bitcoin resistant to censorship and
> voluntary manipulation of its parameters.

This is arguably somewhat true. However, there are very few meaningfully sized
Bitcoin miners, and it's not unreasonable to assume a single miner may have or
be able to have >51% of the hashrate if they desired. The core development
team is also fairly small with a relatively small number of people and
organizations controlling what ships.

As for censorship: exchanges censor bitcoin addresses and manipulate (eg lose,
socialize losses) balances all the time. As long as bitcoin is beholden to
fiat for its value, it's far from censorship proof.

> Low transaction costs and acceptable processing speed.

"acceptable processing speed" is laughable from a retail transaction
perspective.

"Low transaction cost" is arguably somewhat true, but there's also times of
fee volatility as well as a times of high risk if you don't pay enough fees to
get processed quickly. Resubmitting transactions with higher fees is possible
but complex and imperfect.

> Security and irreversibility of transactions

"Security of transactions" is arguably true in the technical sense that the
PKI protecting a transaction is so far unbreakable. However that's just one
attack vector: it's untrue and meaningless for the vast majority of financial
attack vectors. Sure double spends are exceptionally hard, but theft is
rampant, loss due to technical error/bugs is common, and then irreversibility
is a liability not an advantage.

[0]
[https://twitter.com/mhluongo/status/1092559017178734594](https://twitter.com/mhluongo/status/1092559017178734594)

------
Doches
By Betteridge's law of headlines: _No_.

~~~
Darmody
I think that does work only with questions that require an affirmative or
negative answer only.

