> It offers nothing novel in any way economically.
Ok, can you explain bitcoin in economic terms?
Its current status is essentially a speculative commodity. But in that regard it has no utility. Most commodities are, well, something tangible or valued based on something else in the world. Bitcoin as a commodity has nothing backing it up other than its distributed ledger and the massive amount of computational power behind that. But the distributed ledger will see a drop in miners as the value of BTC drops, or an increase in fees to make it even less tenable as a currency than it already is. If BTC were a useful currency, then BTC the commodity would at least have that as a backing. In theory the commodity price and currency price would move towards each other (with one leading or lagging behind the other). But BTC the commodity has made BTC the currency essentially impossible to use due to the present overvaluation.
Regarding deflation and its inability to survive more than one or two generations, assuming some stability, if it maintains a modest 2% deflation rate the real value of a nominal amount of BTC would double every 32 years. So someone receiving 1 BTC as salary today would receive 0.5 BTC for the same work in approximately 32 years. Halved again 32 years later, the 3rd or 4th generation would receive 1/4 the salary of the first generation (in nominal terms) and have a fraction of the buying power.
I suppose a novel aspect of this is that it virtually eliminates the need for pensions as the mere presence of money in your wallet means you'll have more buying power in the future than now. Unfortunately this only makes financial inequality even worse than the situation we have today. Lending would be eliminated, or the terms would be so dreadful only the most desperate would seek it. Savings would go up, but in the "under the mattress" sense rather than the "in the bank" sense, where the money can at least continue to have some utility by being lended out to others by the bank. A massive economic drag.
None of this is novel stuff, from an economics standpoint.
> As a currency, assuming that its value stabilized
by pointing out that without a central bank, a stable value is literally impossible, because its price becomes entirely demand-driven.
That alone is enough to bring its hope of being a meaningful currency in stable society to zilch.
Correct, but you somehow missed how demand for bitcoin was actually created - it is somewhat untraceable currency therefore used in "black market" transactions.
As those markets develop they will demand such currency in one way or another and that's novelty from an economics standpoint.
But that was also something that held back bitcoins valuation. In 2011/2012 anyone who heard of it either understood its technical features, or thought it was "that thing for buying drugs online". Once it stopped being the latter (at least in common perception) the speculation really began in earnest as the exchanges were able to gain access to banks and other financial institutions.
A blackmarket crypto that retains that reputation, whether used for legitimate business or not, will likely find its global valuation impaired by that reputation like bitcoin and it will be difficult for average folks with no interest in the blackmarket economy from "investing" in it.
It certainly will be interesting.
> Sure. It's an overvalued, speculative commodity in a bubble.
Overvalued compared with what? Speculative is an opinion.
> Ostensibly a currency, but without any of the useful features of a currency
With a fundamentally different set of features. Like being able to exchange with literally anyone in the world is unprecedented. Again, Bitcoin has opened many new markets, e.g. I can trade with North Korea with it. It also lets the underbanked people fight back against their government. E.g. I can pay a worker in Zimbabwe much easier than before. This could drive up the adoption rate to unprecedented levels.
> Most commodities are, well, something tangible or valued based on something else in the world. Bitcoin as a commodity has nothing backing it up other than its distributed ledger and the massive amount of computational power behind that.
The backing part of commodities is greatly exaggerated. Who cares? Is that why you are using dollars? It's a protocol that lets me plugin to the world economy. That's unprecedented.
You talk about BTC but like BTC is not the end all. There's like 7000 crypto, some of which are shit but some have like ...serious research behind them.
As a trading instrument it's so much better than stock. With stock you have to wait three days. I guess the closest is Forex but forex is just so boring.
You asked me to explain bitcoin, I did.
> Overvalued compared with what? Speculative is an opinion.
Overvalued compared to its utility as a currency, which is what it ostensibly is. As a currency it presently has no value because the overall BTC valuation is so high and so unstable, paired with the transaction fees and delays.
Speculation is not an opinion here. Look at how many people are "investing" in it with no comprehension of what it is and what it does.
> Like being able to exchange with literally anyone in the world is unprecedented.
For all practical purposes I can exchange Euros and US dollars with anyone in the world, modulo a few countries that have stricter and enforced policies. I was in Uruguay last July and was able to use USD at shops because the other option was credit card (exchange rate set at the end of the day) or ARS (cash on hand) and the exchange rate was better with the posted USD->UYU was better than either of those (as long as I used at least a $20 bill). No questions asked, they just took it and I got the goods I wanted.
> I can trade with North Korea with it.
I will agree that it does eliminate or reduce the effectiveness of economic sanctions in some situations, like this one. However, if you're a US citizen conducting business with NK is still illegal or tightly controlled, and bitcoin is only pseudonymous. And with regard to opening up financial interactions with people across borders, that is a potentially very useful thing. But at the moment it is not a feasible thing with bitcoin.
> The backing part of commodities is greatly exaggerated. Who cares?
The people seeking profit off of them. If a commodity doesn't have something behind it, its value will fall. When it will fall can be a while in the future depending on the general hype and/or confidence. Bitcoin is all hope, no real confidence, and no real utility (at present).
> You talk about BTC but like BTC is not the end all.
You asked about bitcoin, I answered about bitcoin.
> As a trading instrument it's so much better than stock. With stock you have to wait three days. I guess the closest is Forex but forex is just so boring.
Three days? Three days for what? And better in what way? In the "I enjoy rollercoasters" sense? Then sure, it's better that way. At least with stocks (or the ones I invest in) I can examine the fundamentals of a company, the global and national economies they play in, and have some idea of whether they're overvalued or undervalued at any given time with ease. Most Forex is the same.
Bitcoin, the thing you asked about, is not useful as a currency. So it's only useful, right now, as a commodity and in trading on various exchanges as a commodity. It is pure speculation until the value on those exchanges and the value of things I can purchase with are closer together than they are today.
It's not just a currency. It's part stock, part currency, part forex, part world of warcraft money, part political movement, part programming platform, part distributed database etc etc. Like the number of categories it fits into is a lot.
Ok talk about ethereum. Does ethereum have intrinsic value?
> Look at how many people are "investing" in it with no comprehension of what it is and what it does.
Is everyone investing into bitcoin speculating? Is possible that some people know what it is and still want to invest?
> But at the moment it is not a feasible thing with bitcoin.
That was an extreme example.
> Bitcoin is all hope, no real confidence, and no real utility (at present).
Ok, lets talk about other crypto.
> You asked about bitcoin, I answered about bitcoin.
OK can you answer the same questions for other cryptos not just Bitcoin?
Yes, yes it is. It's incredibly remarkable that bitcoin could rewrite our economic theories so completely. It offers nothing novel in any way economically.