Why Is Bitcoin Valuable? • Hacker News Board

Re: Why Is Bitcoin Valuable?

#51

Post by wereHamster » Sun, Jan 21, 2018, 12:03 PM UTC

erikb wrote: post #16

orionblastar wrote: post #6

Supply and demand curves are what make things valuable or not. Bitcoin has a finite set of coins in its network. Most people only buy fractions of a bitcoin because one full bitcoin is too pricy for them. People used to earn Bitcoins using GPU mining rigs. ASIC miners made that obsolete. GPU mining is no longer profitable but the average person does not know or understand that. I've seen stores like Microcenter sell…

> I am using Coinbase since the new year. Why put money in a gold rush after the rush? Can you explain the logic behind it? Like, have you never heard about it before 2018? Honestly if Bitcoin stabilizes around $300/coin it's still a huge profit to the people who started it and invested early (I bout around $90/coin). $12k/coin certainly is ridiculous. But I don't understand why people would even put a single dollar…

$x/coin is no more ridiculous than $y/coin. I'll leave it up to you to substitute x and y for random numbers.

Re: Why Is Bitcoin Valuable?

#52

Post by rwmj » Sun, Jan 21, 2018, 12:29 PM UTC

hal9000xp wrote: post #7

Back in 2004, I lived in shithole country called Uzbekistan, I wanted to buy some US stocks but my bank refused to transfer MY money because of strict currency control in Uzbekistan. This was probably the first time in my life I realized that I don't actually own money stored at bank, it's just bank temporarily allows me to use my money and at any whim bank would reject to do so. In 2010, I lived in a little bit bett…

I'm confused by this. It might work for you individually, but if large numbers of people in Uzbekistan or Russia want to bypass capital controls and sanctions, and they all buy bitcoins using their сўм's/Roubles, then they're doing a sort of foreign exchange which will eventually lead to сўм's/Roubles becoming worthless, and you'll need more and more сўм's/Roubles to buy each bitcoin.

Or another way to look at is that bitcoins in Uzbekistan are only produced by mining (ie buying expensive foreign-produced ASICs) or by exchanging something of value from Uzbekistan for US$ some other way. So when buying bitcoins there, illegal foreign exchange of fiat currencies is still happening somewhere in the system (maybe you don't see it).

TIL: The currency of Uzbekistan is the So'm / сўм.

Re: Why Is Bitcoin Valuable?

#53

Post by ThomPete » Sun, Jan 21, 2018, 12:57 PM UTC

ben_w wrote: post #49

ThomPete wrote: post #45

Earlier quoted context omitted.

So crimes arent possible with cash?

Fewer crimes are possible with cash than with cryptocurrencies. It’s not boolean.

https://www.veteranstoday.com/2016/09/19/22-billion-dollars-...

How you can even claim that with a straight face is beyond me. Here is just one person's cash usage.

Re: Why Is Bitcoin Valuable?

#54

Post by hal9000xp » Sun, Jan 21, 2018, 1:12 PM UTC

rwmj wrote: post #52

hal9000xp wrote: post #7

Back in 2004, I lived in shithole country called Uzbekistan, I wanted to buy some US stocks but my bank refused to transfer MY money because of strict currency control in Uzbekistan. This was probably the first time in my life I realized that I don't actually own money stored at bank, it's just bank temporarily allows me to use my money and at any whim bank would reject to do so. In 2010, I lived in a little bit bett…

I'm confused by this. It might work for you individually, but if large numbers of people in Uzbekistan or Russia want to bypass capital controls and sanctions, and they all buy bitcoins using their сўм's/Roubles, then they're doing a sort of foreign exchange which will eventually lead to сўм's/Roubles becoming worthless, and you'll need more and more сўм's/Roubles to buy each bitcoin. Or another way to look at is tha…

In order for So'm or Ruble not being worthless in case free capital flows is allowed, these governments have to establish investor's trust. In order to establish investor's trust, clan system have to be dismantled, rule of law for all established, property rights strengthened. But elites in these countries aren't willing to gave up their lucrative rent seeking. Therefore, in order to keep their currency not totally worthless, they established strict currency control which patriots buy it without looking deeper.

Re: Why Is Bitcoin Valuable?

#55

Post by rhapsodic » Sun, Jan 21, 2018, 1:16 PM UTC

Bitcoin is no different than any other non-commodity currency. It's only valuable because people believe they can, or will eventually, be able to use it to acquire something with intrinsic value. Without that confidence, it's worthless.

Personally, I have lots of confidence that the USD in my bank account will one day, at a time of my choosing, get me intrinsically valuable things like cars, a home, food, cloths, etc. With bitcoin, I have very little confidence that will occur. So it's not very valuable to me. Nor do I have confidence that there will always be a "greater fool" handy to purchase any bitcoin I might buy for more than I paid for it. I think bitcoin will inevitably collapse.

TFA talks about "citizens protecting themselves from irresponsible or malicious governments and companies", but that's not a problem I'm aware that I have. If it were, then I might be interested in owning bitcoin.

Re: Why Is Bitcoin Valuable?

#56

Post by jebeng » Sun, Jan 21, 2018, 1:59 PM UTC

foepys wrote: post #24

nsomaru wrote: post #15

Earlier quoted context omitted.

> Flood a network with a few million of these nodes, don't relay addresses of valid nodes and the network will split eventually. Could you direct me to the theory supporting this assertion? Was considering doing a simulation of this but need some kind of model.

That's a thought I came up with a couple of months ago but I wasn't able to find time to test it out myself. From my point of view this seems like a very viable, albeit expensive attack vector without any potential to make money. The only result is destroying confidence in the network, so state level attacks might be the only reason to apply it.

I think there are a few viable, but expensive attack vectors that have been well known within the community for years. But one thing that's always bugged me is how many people out there seem to think that a cryptocurrency could survive being an actual target by a sufficiently powerful state. The economic damage alone just by the whisper of an actual 'war on Bitcoin' would be devastating, without anyone actually lifting a finger. Let alone putting resources into actual attacks on technical, economic, and social levels. Doesn't really matter if a few enthusiast cypherpunks around the world can keep a few nodes going and technically say 'bitcoin is not dead, see!' when the economic model and security is fundamentally based on continued demand for BTC.

I've been really interested in Bitcoin and have followed it closely since Satoshi was still active, and consider myself a pretty big fan of it in general. But the general arrogance and delusion about the reality of where real power is in the world is a bit cringeworthy. And it's always been that way in the community.

It might get interesting in the future if two or more states have competing interest in Bitcoin(or whatever). I can imagine some hypothetical situation where the US political tide turns very anti-BTC, but say China has enough money tied up in it that it's incentivized to attempt to defend it. Like say if enough people in positions of political power have significant portions of their wealth tied up in it. That's possible, I guess. Sounds messy though for something that relies on economic confidence.

Either way, so far all the luck has been on the side of Bitcoin, as really there's been little to no political pushback against the technology itself. That's pretty awesome, and it's made for a very interesting 7 years or so since BTC really woke up and people around here and elsewhere started seriously discussing it. But the political risk is very real and understated imo. The technical risk is interesting in theory for sure, but just knowing a sufficiently powerful state has the ability to attack is probably more than enough to cause massive economic damage without actually pulling any technological triggers.

Re: Why Is Bitcoin Valuable?

#57

Post by mstade » Sun, Jan 21, 2018, 2:06 PM UTC

ThomPete wrote: post #42

mstade wrote: post #41

Earlier quoted context omitted.

Which banks are desperately trying to get rid of.

Which they haven't yet.

But certainly not for lack of trying.

In Sweden, it’s fast becoming nigh impossible to pay for things with cash, particularly in places like restaurants, cafés and bars. If you have a business that deals in cash, banks make it almost farcically difficult to deposit said cash into your business account.

For example, in one town the largest bank will only accept cash through a deposit machine, outdoors, for one hour during the middle of the day. Oh and you can only deposit something like $1500 per day. Your only other option is to order pickups from a security company, which will cost quite a bit more than you’ll pay for card transactions most likely.

Granted, this example is from a smaller town (aprox. 12000 inhabitants, but LOTS of tourists from abroad that tend to carry cash) but even in a place like the capital Stockholm, you’ll have very particular cash handling restrictions. Some because regulation, but most because banks don’t like to deal with cash. It’s a very real security risk and requires manual labor – both of which are costly and like any business banks like to keep costs down. Most smaller (and local) branches these days don’t deal with cash at all, or deals in very limited amounts.

If you run a small shop that deals in cash, there’s a very real possibility that you’ll have to face the question of whether to pay a lot of money for secure cash handling, or just getting a safe and hope you don’t get robbed.

Re: Why Is Bitcoin Valuable?

#58

Post by candiodari » Sun, Jan 21, 2018, 3:05 PM UTC

dreit1 wrote: post #18

Karnickel wrote: post #12

Earlier quoted context omitted.

I think your comment raises some very interesting points, but that you go too far. There are costs (in the wider not just monetary sense) and benefits to various approaches. The reason you had to resort to crypto-currency first of all seems to me to be the problems in the countries you lived in. If they had working institutions, if you had lived in a Western country and had had access to the banking there, would you…

> Having completely anonymous money sure benefits some small businesses (mostly those living in places with bad institutions), but it also enables a lot of very questionable businesses and people. I'm not in favor of this argument at all. The internet has incredible benefits, but enables a lot of bad actors. Encryption has incredible benefits but enables a lot of bad actors. Lots of good things also enable bad things…

The problem is that when it comes to governments and bad actors.

The difference, at times, is murky. Even in the west.

Re: Why Is Bitcoin Valuable?

#59

Post by nefitty » Sun, Jan 21, 2018, 3:09 PM UTC

rhapsodic wrote: post #55

Bitcoin is no different than any other non-commodity currency. It's only valuable because people believe they can, or will eventually, be able to use it to acquire something with intrinsic value. Without that confidence, it's worthless. Personally, I have lots of confidence that the USD in my bank account will one day, at a time of my choosing, get me intrinsically valuable things like cars, a home, food, cloths, etc…

Do you have the same mindset in regards to physical gold? Gold has very little, if any, intrinsic or practical value, yet generations of humans have been motivated to acquire more of it. With digital currencies like Bitcoin, I think we're seeing the birth of a new type of scarce resource that will motivate generations of people to come.

Re: Why Is Bitcoin Valuable?

#60

Post by ThomPete » Sun, Jan 21, 2018, 3:16 PM UTC

mstade wrote: post #57

ThomPete wrote: post #42

Earlier quoted context omitted.

Which they haven't yet.

But certainly not for lack of trying. In Sweden, it’s fast becoming nigh impossible to pay for things with cash, particularly in places like restaurants, cafés and bars. If you have a business that deals in cash, banks make it almost farcically difficult to deposit said cash into your business account. For example, in one town the largest bank will only accept cash through a deposit machine, outdoors, for one hour du…

Sweden is an outlier (same things also happening in Denmark, where I am originally from)

But contrary to cash, cryptocurrencies like bitcoin can be traced fairly easily in fact, it's one of the most transparent currencies that's ever existed.

As color coins show it will be possible to trace the history of a coin and thus trace what's it's been used for.

This will potentially allow NGO's to recieve funding and track how they are used and make sure they can't be used for approved expenses all autimatic.

Cryptocoins are exactly what governments would want if they really thought it trough. The control they loose in creating the currency is gained in controlling the history of them.