Will Bitcoin Make a Good Investment? • Hacker News Board

Re: Will Bitcoin Make a Good Investment?

#21

Post by Pinckney » Thu, Jul 04, 2019, 8:17 PM UTC

sedeki wrote: post #5

pmiller2 wrote: post #3

Not one word here about why BTC should be worth anything at all. Who cares if someone spent time and electricity to mine it? The USD is, along with every other major, government-backed currency, already an almost 100% digital currency. I don’t see any advantage there. In fact, BTC has the disadvantage of no major government backing it. If nobody is required to accept it, and I can’t do anything with it otherwise, wha…

What exactly does it mean when people say that a currency is backed by a government? ”Backed” to me implies, e.g., redeemable for gold which is clearly not the case for the US dollar. Is it that the government issue bonds denominated in that currency? But that has nothing to do with the money supply per se...? Please explain.

The US government accepts payment for taxes in USD. Even if an American wants nothing to do with USD, and conducts all their exchanges through bartering, they will need to acquire some at some point in order to make tax payments. The value of USD can't fall to 0 as long as the federal government retains the ability to impose taxes.

Re: Will Bitcoin Make a Good Investment?

#22

Post by tim333 » Thu, Jul 04, 2019, 8:19 PM UTC

nikanj wrote: post #15

pmiller2 wrote: post #3

Not one word here about why BTC should be worth anything at all. Who cares if someone spent time and electricity to mine it? The USD is, along with every other major, government-backed currency, already an almost 100% digital currency. I don’t see any advantage there. In fact, BTC has the disadvantage of no major government backing it. If nobody is required to accept it, and I can’t do anything with it otherwise, wha…

It's proven to be very, very useful for anonymous blackmail à la Cryptolocker. Also quite useful for buying all sorts of contraband, from guns to drugs.

Also as Warren Buffett put it:

"It’s a gambling device… there’s been a lot of frauds connected with it. There’s been disappearances, so there’s a lot lost on it. Bitcoin hasn’t produced anything."

But it's a good gambling device and people like to gamble. I both think it's kind of nuts and hold a few bitcoins.

Re: Will Bitcoin Make a Good Investment?

#23

Post by pmiller2 » Thu, Jul 04, 2019, 8:22 PM UTC

sedeki wrote: post #5

pmiller2 wrote: post #3

Not one word here about why BTC should be worth anything at all. Who cares if someone spent time and electricity to mine it? The USD is, along with every other major, government-backed currency, already an almost 100% digital currency. I don’t see any advantage there. In fact, BTC has the disadvantage of no major government backing it. If nobody is required to accept it, and I can’t do anything with it otherwise, wha…

What exactly does it mean when people say that a currency is backed by a government? ”Backed” to me implies, e.g., redeemable for gold which is clearly not the case for the US dollar. Is it that the government issue bonds denominated in that currency? But that has nothing to do with the money supply per se...? Please explain.

It means it’s legal tender for all debts, public and private.

Re: Will Bitcoin Make a Good Investment?

#24

Post by Udik » Thu, Jul 04, 2019, 8:23 PM UTC

baq wrote: post #20

zed88 wrote: post #12

Earlier quoted context omitted.

By that logic, gold should be worthless. It isn't. Bitcoin will probably never be a currency equivalent to fiat, but it surely is a store of value in the long term.

Gold has practical, useful applications. Bitcoin is pretty much wishful thinking at best. I’m not sure if bitcoin is worth the CO2 emissions mining it created.

> Gold has practical, useful applications.

Yes. But they don't remotely justify its value, which has been established long before its technological applications.

Re: Will Bitcoin Make a Good Investment?

#25

Post by srib » Thu, Jul 04, 2019, 8:23 PM UTC

Except for a small window around the peak in December 2017, if anyone bought bitcoin anytime during its existence, they would be profitable now.

Re: Will Bitcoin Make a Good Investment?

#26

Post by juanbyrge » Thu, Jul 04, 2019, 8:24 PM UTC

Bitcoin is not an investment. It has no underlying rate of return. When you invest in stocks you get dividends. When you invest in bonds you collect coupons. When you invest in real estate you collect rent. Bitcoin is speculation. You are just hoping somebody comes.along and pays more for it than you did. In that sense it's more like gold and silver.

Re: Will Bitcoin Make a Good Investment?

#27

Post by Toine » Thu, Jul 04, 2019, 8:26 PM UTC

zed88 wrote: post #12

jamisteven wrote: post #6

Short answer: hell no. What gives currency value is how often people use said currency to purchase goods, nobody uses Bitcoin, not to the extent of any real currencies anyways.

By that logic, gold should be worthless. It isn't. Bitcoin will probably never be a currency equivalent to fiat, but it surely is a store of value in the long term.

> By that logic, gold should be worthless.

No, gold is not a currency (anymore). Gold is an asset. Gold is rare. Gold has real world use. Gold can be used for many things. Gold can be purchased with money to be worn or used.

So no, by that logic, gold shouldn't be worthless at all. You're comparing two different things.

Re: Will Bitcoin Make a Good Investment?

#28

Post by [deleted] » Thu, Jul 04, 2019, 8:27 PM UTC

pmiller2 wrote: post #3

Not one word here about why BTC should be worth anything at all. Who cares if someone spent time and electricity to mine it? The USD is, along with every other major, government-backed currency, already an almost 100% digital currency. I don’t see any advantage there. In fact, BTC has the disadvantage of no major government backing it. If nobody is required to accept it, and I can’t do anything with it otherwise, wha…

[deleted]

Re: Will Bitcoin Make a Good Investment?

#29

Post by ProblemFactory » Thu, Jul 04, 2019, 8:27 PM UTC

sedeki wrote: post #5

pmiller2 wrote: post #3

Not one word here about why BTC should be worth anything at all. Who cares if someone spent time and electricity to mine it? The USD is, along with every other major, government-backed currency, already an almost 100% digital currency. I don’t see any advantage there. In fact, BTC has the disadvantage of no major government backing it. If nobody is required to accept it, and I can’t do anything with it otherwise, wha…

What exactly does it mean when people say that a currency is backed by a government? ”Backed” to me implies, e.g., redeemable for gold which is clearly not the case for the US dollar. Is it that the government issue bonds denominated in that currency? But that has nothing to do with the money supply per se...? Please explain.

Backed by a government means that it's backed by the ability of a government to tax work and production happening in the country.

Every year the US government collects about 25% of all economic activity as taxes payable only in USD. Every person and business in the country must sell on average 25% of their productive output for USD, and you can buy all those things with USD.

Re: Will Bitcoin Make a Good Investment?

#30

Post by Toine » Thu, Jul 04, 2019, 8:27 PM UTC

Udik wrote: post #24

baq wrote: post #20

Earlier quoted context omitted.

Gold has practical, useful applications. Bitcoin is pretty much wishful thinking at best. I’m not sure if bitcoin is worth the CO2 emissions mining it created.

> Gold has practical, useful applications. Yes. But they don't remotely justify its value, which has been established long before its technological applications.

They do, gold is rare and useful, supply and demand, that's all.