My argument for why it is irrational is that bitcoin as an asset has nothing backing it. It does not produce anything, it is not a liability on anyone else's balance sheet, and it can't be used for anything other than hoping that a greater fool than you will pay you more for it in the future.
Yes, you could say some similar things about government currency, but in that case there is a large organization that is motivated to keep the buying power of the currency relatively stable. Traditional currency also has the benefit of being much easier to transfer between people, unlike bitcoin which cannot scale to serve the needs of the population due to inherent limitations of the technology.
Bitcoin has the largest decentralized distributed computer network on the planet backing it. Along with numerous technical advancements in the functionality of money. Many serious students on the anthropological history of currency in human history recognize it’s certainly a significant technological innovation in money.
What I meant by nothing backing it is that it cannot be redeemed for any other thing of value, in the same way that at one point we used gold certificates as currency, which were "backed by" gold. At that time you could literally exchange the gold certificate for gold coins at a bank. A share of stock is backed by the value of the company since the stock grants you partial ownership of the company. Bitcoin may have a lot of computers that are burning electricity attempting to mine bitcoin and powering the bitcoin network, but as a bitcoin holder I don't have any ownership of those computers. They just continue to consume resources that we somehow have to pay for by pouring more money into the bitcoin system.
Sure, there are some people that think it is a significant innovation. There are also many people who recognize that it is not solving any real world problem, and that up to this point it has just operated as a giant speculative bubble.
> There are also many people who recognize that it is not solving any real world problem, and that up to this point it has just operated as a giant speculative bubble.
Both parts of this statement are completely false. I’m unaware of any system which allows secure pseudonymous online global exchange between two parties without any trusted centralized third party. That seems to be a massive real world problem. Additionally Bitcoin is not a speculative bubble by any stretch, that accusation has been repeatedly been made since early days and with each cycle adoption and value increases, it’s a false accusation.
I don't see that problem as being massive. Our society depends on some amount of trust. In order to view this webpage, your browser put some trust in the certificate authority that verified the certificate of the hacker news servers. Sure, in some sense the idea of cryptocurrency is an interesting one, but the downsides are too massive to make it practical. By not trusting anyone, we end up in a situation of constantly trying to resolve a byzantine generals problem, which it turns out is massively inefficient and wasteful.
The fact that the price of bitcoin has gone up and down and up again doesn't disprove that it is a bubble. Bubbles don't have to follow a single boom and bust cycle. For example, I think that shares of GME stock are still much higher than the business fundamentals would suggest, due to the stock gaining a cult like following, so now the share price is driven by memes and dreams. In fact, as I argued before, I would say that there is no inherent value to bitcoin so that really only leaves speculation as the driver of the price.
> BTC largely seems irrational.
I’d be interested in which parts are irrational.