The difference is that the Internet had clear useful applications at that point and billions of dollars in real business (not just speculation) was happening annually. Yes, there were plenty VC misfires with no plausible path to profitability — my favorite was cement.com, with free shipping! — but there were tons of existing businesses finding significant value from it and new companies like Amazon, eBay, Travelocity, etc. who were making money on each sale. The daytraders were indeed chasing bad deals but anyone who paid attention to basic market fundamentals wasn't buying those stocks[1].

10 years into Bitcoin there's still no reason for someone to buy in other than speculation. It's not competitive as a currency and the current “store of value” pivot is undercut by the lack of fundamentals. One particular reason why that comparison doesn't work is that if you had, say, bought AMZN in 1997 even if the stock didn't do great you owned part of a profitable book seller which could carry on just fine even if it never saw rapid growth. Bitcoin doesn't have any value other than its current popularity so there's no floor on the losses if people switch to something else.

1. I actually sat in on some calls with Pets.com around the time one of our clients was thinking about buying them and it was quickly evident that they had no strategy beyond cashing out at the IPO.

Bitcoin, at this point in time (and for the last two years or so, though not really for the preceding eight) is digital gold. It's a version of gold that, with proper preparation, can be carried inside your head when you move from place to place, or transferred by voice or text message.

Most people in the west have about the same use for gold[0] and bitcoin - speculation, gamble, "investment". However, people of Venezuela, Turkey, Libya, Iran and even Russia have a lot of use for gold (and bitcoin): A store of value they can take with them if they leave. And unlike gold, bitcoin can be made confiscation proof. The official currencies of these places have more volatility and less stability than BTC.

[0] Gold does have ornamental and industrial use, but that's NOT why people buy it, and not why it is valued the way it is. The "investment" claims on gold outnumbers the industrial/ornamental claims by some 3 or 4 orders of magnitude.

Everything you say about bitcoin is equally true of a bank account in pounds in London. There’s zero reason in principle that it is any harder or easier for an oppressive government to prevent capital outflows to bitcoin than to British bank accounts. At very best there’s a temporary advantage in bitcoin’s favor as oppressive governments take time to understand and lock down the newer avenues for evading their controls.

While you are right, and this is a common practice among wealthy individuals, it's virtually impossible for most people in those countries to open bank accounts abroad.

I started with "at this point in time". At this point in time, it is easy for a person not suspected of crime (or otherwise being on the wrong side of the government) to move their british pounds from their London account to e.g. one in New York or Switzerland, convert them to USD or CHF either before or after the transfer, and generally hedge against government by betting on other things.

At this point in time, the same is certainly not true for the people of Iran or Venezuela, where there are capital controls, and the only way to get a different currency is on the black market. Effectively, compared to the west, everyone there is "on the wrong side of the government".

> There’s zero reason in principle that it is any harder or easier for an oppressive government to prevent capital outflows to bitcoin than to British bank accounts.

In principle that's true, but that just makes bitcoin's raison d'etre more evident. At this point in time it does not seem to be needed, but it may become needed with less than a day's notice. This has happened to the people of Cyprus (a "western" European country). Even the US confiscated gold in the 1930's.

History does not repeat, but it rhymes. Bitcoin is a hedge; it's far from perfect, it has a lot of drawbacks, but at this point in time , it is more useful than gold for people who might have to flee.

You seemed to have missed the point. There’s nothing to stop an oppressive government from preventing its people from buying bitcoin the same as they prevent them from buying pounds and wiring them to British banks.

The dark hints about how any government may become oppressive is a red herring. The issue isn’t that bitcoin isn’t needed because my government isn’t currently oppressive, it’s that bitcoin’s utility in the face of an oppressive government is wildly exaggerated.

You are attributing magic powers to bitcoins that they do not have. Black markets are not invulnerable to government crackdowns because they are digital. On the contrary, digital networks are in many ways easier to control centrally than distributed underground physical networks.

That area of magical thinking just amazes me: look at the Chinese Great Firewall or Erdogan’s Turkey to see how this would actually work. People get arrested for visiting websites or having the wrong app on their phone and there’s no reason to believe that capacity wouldn’t be used the same way.

This especially bad for Bitcoin since unlike cash they’d get your full history and quickly deanonymize everyone you know.

This area of magical thinking just amazes me: Look at the recent two years! The big run up in bitcoin value has happened because people were moving money out of China despite capital controls put in place.

Is it still as easy? Probably not, I'm not up to date. Could people who have done that get in trouble for that in the future (thanks to bitcoins long memory)? possibly, if their opsec wasn't top notch and even if it was top-notch but they were unlucky enough to use a mixer that cooperates with the chinese government.

And Erdogan's turkey is also a great example; While the "coup" was happening, it was possible, even easy, to move money out of the country using bitcoin (not so fiat money). Quite a few people left the country afterwards, and many were arrested regardless of phone app. I don't know how many of them took their wealth with them in bitcoin, but they had much easier time doing that than any other way. at the time

That’s just telling us that it’s easier to get away with something before the authorities take it seriously. Once something grows big enough that window closes, which means it’s not much of a selling point for mainstream adoption.

You can keep moving the goal posts if you enjoy that. Yes, everything becomes harder once the authorities take note.

But if you have managed to acquire bitcoin, e.g. before a government crackdown, or some other way through help from people in other countries, it still provides the "cross border value store" function that gold cannot by virtue of being hard to move.

I am looking at what is actually happening, not hypothesizing.

> There’s nothing to stop an oppressive government from preventing its people from buying bitcoin the same as they prevent them from buying pounds and wiring them to British banks.

There's also nothing to stop an oppressive government from killing its people (and some do). But oppressive is not binary, and people have used bitcoin to "smuggle" money out of (at least) Venezuela and China, despite capital controls and government crackdown, in ways that they weren't able to do with british pounds (and which would have been much harder and riskier with physical gold).

> You are attributing magic powers to bitcoins that they do not have. Black markets are not invulnerable to government crackdowns because they are digital. On the contrary, digital networks are in many ways easier to control centrally than distributed underground physical networks.

I am not attributing any magic powers. I am observing the reality as it happens now ; governments crack down on digital networks and black markets but it's much, much harder for them to shut down than bank transfers.

To stop bank transfers, all you need to do these days as a government is click the right button. To take down the Silk Road, the US government took many months and a lot of work; an oppressive regime might have done that more quickly and swiftly, but it would still have taken considerably more effort than shutting down wire transfers. The special feature cryptocurrencies have is ease of carrying across borders .

> The dark hints about how any government may become oppressive is a red herring. The issue isn’t that bitcoin isn’t needed because my government isn’t currently oppressive, it’s that bitcoins utility in the face of an oppressive government is wildly exaggerated.

Oppressive is not binary. Cypriots were (perhaps still are) subjected to very strict capital controls, with no attempt to crackdown on bitcoin.

So just to understand, you are doing an eulogy to Silk Road and to all the illegal ways of using bitcoin with your posts, or I’m missing something?

Certainly not. You are missing something.

I am not lamenting the downfall of Silk Road - I think it should have been shut down. I was pointing out that "an oppressive government can do everything" is a weak argument, because we have experience showing the limit and effort needed.

All I am saying that bitcoin has some of the same uses that gold has, albeit in an easier-to-carry-across-border and harder-to-confiscate way -- which was a response to G-G-..-G-P saying "bitcoin has found no use".

Now, "illegal" is a problematic word, because it is a technical definition that changes with time and location. It is now legal to own gold in the US, and it was legal in the 1920's but it was illegal to do so in the 1930s. Gold was confiscated, and (since USD was still denominated in gold at the time), it's value in USD was doubled overnight, or rather, the value of USD in gold was halved overnight.

It is still illegal for an unmarried couple to kiss, perhaps even hold hands in public, in the Saudi Arabia.

The technical legality of owning gold in this case is an interesting discussion, but I am interested in the properties and implications of an un-confiscatable store of value, which in some (limited) ways cryptocurrencies are. It keeps governments in check in a way that fiat currency cannot.

Unless you believe every single government anywhere in the world is, at all times, always "just" and "right" and "good" (for whatever definitions of those adjectives), then it is a good that some "illegal" acts in some places and some times have mitigations. And at this point in time, bitcoin provides these mitigations for the people of venezuela and iran, and has provided them earlier for the people of china.

No, no and no. Sweden and Denmark are taxing bitcoin capital gains so I don’t see a single reason why a malicious government cannot confiscate them. The beautiful story of “digital gold” is just a story. To me it seems more like a digital crap honestly and I can’t wait for the day when it finally disappears. Sadly it will be in any case too late given the massive amount of energy and co2 thrown away..

> so I don’t see a single reason why a malicious government cannot confiscate them.

Technically, how can they confiscate them? They cannot.

They can tax them 100% or 150%, true. And they can imprison or kill their taxpayers if they with. true.

But if I managed to cross the border from (hypothetically) malicious Sweden to (hypothetically) benevolent Liberia, with the private key in my head, what can they do about it?

They can, and money governments in the past have, deny me passage with anything of value but my clothes - it is often the case that anything of value gets taken at the border (hell, it is likely the US will take anything above $10,000 on your person unless you are very well equipped legally). But there is no technical way for them to do that with bitcoin, and for that matter to even know that you carry the private key of a $1B wallet in your head, unless they have researched it before hand -- which, at last for now, is hard to do for the entire population.

> To me it seems more like a digital crap honestly and I can’t wait for the day when it finally disappears.

Art pieces that go for >$1M feels like analog organic crap. But the value is determined by the market, not but our feeling.

> Sadly it will be in any case too late given the massive amount of energy and co2 thrown away..

I agree bitcoin is likely wasting significant energy and co2, but ...

Have your ever seen a rough estimate of the costs (in resources / energy / co2) that our existing monetary system imposes? It is certainly not free, and e.g. in a lot of places more than 1% of real-estate / energy is consumed by financial entities, many of which have usefulness to society arguably comparable to bitcoin.

I have looked for a study as such and has not found one.

(sidenote: some estimates are that 1% of global energy use goes towards clothes drying. probably provides even less value to society than bitcoin)

The Netherlands is taxing (my) Bitcoin holdings as well. The way they do that, is by depending on my honesty. The reason I'm honest is because I don't want any troubles when I'm going to buy my lambo (no, not serious).

Afaik Bitcoin is handled the same as cash: they don't really check how much you have, but they will come down hard when you start spending more than you should be able to.

> 10 years into Bitcoin there's still no reason for someone to buy in other than speculation

If you're comparing with the Internet, I'd say 10 years is still quite early into the Bitcoin and Blockchain space. You could say the Internet of 1999 was almost 15-20 years of development from the time TCP/IP was introduced on the ARPANET.

With the attention that Blockchain has received in the past year and the sheer number of smart people working in this field (yes there are plenty of scammers as well but you can't deny smart people are flocking to it right now), I'm pretty sure you'll be surprised of what it looks like in just another 3 years or so.

I don't think that does anything other than make the comparison worse for Bitcoin: while it's technically true that the Internet started well before 1989, what was popular in 1999 was the web and that really wasn't mainstream before 1993 or so when e.g. Mosaic was released but by 1995-6 it was having significant impacts around the world in most fields.

More interestingly, however, is that Internet was difficult to get and expensive throughout most of that period, not to mention the slow and expensive connection speeds of that era, all of which limited adoption substantially. Even with those barriers to adoption, however, there was plenty of demand because it was immediately useful to have email, Usenet (at least in technical fields), FTP, etc. even before the explosion of activity around the web. When the web boomed, millions of people paid (often by the minute) to surf it at 56K or less.

In contrast, Bitcoin has been available to almost anyone on the Internet for many years without anything like those barriers to adoption but most people haven't had a reason to care.

The smart people are the ones choosing an inherently unsafe language not that different from JavaScript on which to build “smart” contract for which the code is law just until the point a bug is found and they hard fork to avoid losing hundred of millions of dollars? I’m honestly not very impressed by what I’ve seen. They may be much smarter than me and I may be a complete idiot, but I never fucked up in a such majestic way honestly.

Oh, and so cryptocurrency programmers are the only people who "fucked up in a majestic way"? Seems to me like there are times past where automobile makers had some spectacular recalls where they had to correct unforeseen situations.

I get lots of bitcoin payments.

>10 years into Bitcoin there's still no reason for someone to buy in other than speculation

This is simply completely wrong, perhaps you should research the subject a little bit more.

Perhaps you could list a legal reason — not the marketing pitch we've all seen for the last decade but something where it makes financial sense to favor it?

I’m not saying it can’t be used but just that there aren’t many reasons other than speculation or an ideological stance. If I was, say, the corner coffee shop what would balance out the extra fees, delays, and lack of fraud protection?

Shops near borders often take the neighboring country's currency because it is convenient for travelers. If bitcoin was accepted more places, then those same travelers wouldn't have to worry about currency conversion. Sounds useful to me.

Okay, so continue that thought to why would that business do that — is it faster, cheaper, etc.? How many transactions are there where the cost of currency conversion is greater than the cost of the Bitcoin transaction fees and conversion into the currency the receiver needs to make most purchases?

>extra fees, delays, lack of fraud protection

It sounds like you are talking about credit cards and not bitcoin.

Compared to credit cards, bitcoin has extremely low fees and fast payments. The fraud protection for merchants is far superior compared to any credit card payment solution.

It seems pretty obvious that most people spreading this kind of bullshit have never actually tried to use bitcoin, and have instead built their knowledge based on forum posts by other uninformed people.

What's the obsession with needing a legal reason? Why do people reject the illegal but interesting uses? Doesn't the fact that bitcoin has managed to subvert drug prohibition for many people make clear that it is capable of interesting things?

Legality matters for two reasons: one is simply that the huge predictions about market valuations and transformative social effects require more volume than people buying drugs online.

The other reason it matters is that if something is primarily used for illegal activities that'll really hold back the whole system: most businesses aren't going to offer a payment option which makes them look shady, people are going to hesitate to use have the software installed, running an exchange will be even riskier, etc.

For Bitcoin in particular, there's also the practical risk that doing something illegal in a public ledger with non-repudiation guarantees is not generally a good call.

Saying that there is no reason to buy a crypto-currency is absolutely false. You probably live in a Western country where you mostly trust the banking system and stability of your own currency. That is not the case in many other countries. You will probably say that most crypto-currencies are extremely volatile, which is true, but there are already existing and active projects that have addressed that issue, for example the DAI stablecoin. In Russia there's been a banking crisis recently, stablecoins, tokens tied to commodities and such would have directly benefited people keeping their money in these opaque and vulnerable institutions.

Countries without stable currencies tend to use things like USD which have stable values rather than wild fluctuations. That’s a product of a social system and years of practice, not hand waving about magic real-soon-now technology. In your Russian example, the value would be in the link to the commodity rather than whether it’s a printed bill, entry in a database, or record in a block. If that’s honest, any of them will work and if it’s not, none of them will.

Besides, if I lived in Venezuela or Russia, would I really want to record my black market activities in a public ledger which is hard to disavow?

This is all wrong. Many people receive payments and pay in bitcoin. All without having to trust some centralized oracle that cannot, at the end of the day, be trusted.

Take a look at what is happening in Venezuela with bitcoin, and you will see why your statement is wrong. The fact bitcoin, an open source project, continues to flourish with some of the brightest minds in computer science ten years after its foundation speaks to its core strength: the removal of trust.

I sold an old phone through traditional fiat a few months ago, it took paypal 3 weeks to process my payment. With bitcoin, I could have been paid with in the hour.

> Take a look at what is happening in Venezuela with bitcoin

Is anybody actually using Bitcoin as a currency in Venezuela? I can only find references to people mining excessively there because the electricity is so subsidized.

Yes, reports of people paying rent, for school fees, etc. Plenty of use as a currency going on.

But people aren't telling me to invest in btc companies. They are telling me to invest in btc. That is fundamentally different.

No ones forcing you to do anything.

The fact that you think cryptocurrencies and internet is comparable pretty much says it all.

If you had said blockchain vs internet then it might have made for a marginally plausible line of reasoning. Blockchain at least has some proven real life applications that scale.

The key difference is there is no BitInternet craze. In a funny way, there was the craze around PetSmart and other dotcom 'crap' which is very similar to the FOMO-naivety that goes on in this Bitcoin world...

You’ve generalized to a point of nonsense, I’m afraid

Amazon and Pets.com didn’t possess truly novel tech, to a trained eye

I don’t think truly novel tech matters much to most people.

I think ease of utilitarian life is good enough

We don’t need the energy sucking monstrosity that are the data centers we have if we looked at different models of commerce

This is just getting people to be tribal over something that appears magical but will fade out

Goodhart’s Law, Buffets Institutional imperative, and similar ideas, will win out. Human quest for novelty will end bitcoin and its tribal urges for nostalgia and fetishizing their LEGO train

Humanity doesn’t care to ogle dead men’s workshops showcasing their individual brilliance for long

Pointing out that other revolutionary tech looked stupid to some people at first doesn't mean that things that look stupid are going to be revolutionary.

You could just as easily point out that investing in beanie babies looked stupid, or any of a number of other totally failed ideas seemed stupid.

Most things fail. Your comparison adds no meaningful information and is attempting to mislead based on fallacious reasoning.

I think you missed the point I was trying to make; I was mentioning that OP has made a too broad of a statement which could apply to any successful technology too.

I wasn't trying to make any comparisons, since these are two very different situations.

I think you were unclear - I also thought you were saying that bitcoin was like the successful tech you mentioned.

Thanks for pointing it out. Comparing the current bitcoin space to the '99 internet is a common so I should have been more clear. I think that the comparison to the 70s internet is better, but that doesn't work that well to explain current valuations.