The way I value currencies, the size of the network and the number of projects built on top of it is what matters and in that view Ethereum and Bitcoin are definitely worth much more that their current fx price.
If Bitcoin’s are worth 1 cent each then cash flows in USD can also turn into large Bitcoin cash flows. But, Bitcoin cash flows could not turn into large USD cash flows.
Further, if Bitcoin’s value is dropping at say 15% per year then loaning them out at 10% per year is losing money vs converting them to USD, and doing nothing.
The core problem is Bitcoins are not a productive asset. They can't produce any cash flows.
Suppose you sell it in six months or sixty years. Then, you can compare USD to USD and say it was a good or bad investment. Alternatively, you could say you wished you had waited a year to buy the stock.
This is important for bitcoin as you have people that buy in and have yet to sell and can’t yet say if they made a good or bad investment for them. However, with dividend stocks you can hit the point where dividends are greater than total investments thus even if nobody ever sells becase it fails the company was still a positive net investment across all investors even if some lost money.
Long story short it’s possible for companies to a net positive investment, it is not possible for Bitcoin to be. If it’s value hits 0$ then you look at all the investments and people spent X buying it, payed Y keeping the network running, and made X - Y selling it which must be less than X.
TLDR: Individials can make money in the lottery, from perymid schemes, or from Bitcoin, but on net they are all poor investments.
Your last statement is interesting because you use the term "money" yet I'm not sure you have questioned the nature of the "money" you are making with your investments. If you imagine yourself in a glass bead economy, and you replace all of your notions of money with glass beads. You are making your investments with glass beads and making net positive glass bead investments from dividends. This is all fine in your glass bead economy. However, the day that the Venetians come with technology to make glass beads, they will subtly buy up all of your wealth because you chose a poor for of money - that you were making so much of with your investments.
https://en.wikipedia.org/wiki/Trade_beads
Alternatively, Bitcoin could be the trade beads (despite the fact they are disinflationary), but the point is the same about the assumptions being confined to the context of a single economy and currency.
That’s the Bitcoin model. If you want to use Bitcoins as your money then it’s even more obvious. If I sell 10 bitcoins to somone they get 9.99999 of them and miners get that .00001 or whatever bitcoin. Wait 1000 years an they are still our that .00001 or whatever coin.
Miners also got coins from the original 2.1 Million but rather than pay people they payed overhead spending electricity and depreciation on hardware. That money is simply gone never to be recovered. Sure, they can sell coins to other people, but that money is new investments.
PS: Bitcoin as a useful service is fine, people lose money to Visa every day but trade that money for other forms of utility.
It’s talk of Bitcoin as an investment that is more troubling. You can make money buying gold or whatever at the right time, but it’s a hedge not an investment. Holding gold has real costs and their is no dividend just the next buyer.
I don’t think it has failed as a medium of exchange though. I used it yesterday as one. That said, it hasn’t filled as niches there, specifically the major ones.
ICOs were created precisely because these projects aren't supposed to generate profit.
I take HN user's reaction to Web3 to be within expectations for any revolutionary technology. If von Neuman criticised FORTRAN for being too high-level and not needed for serious computer science and IBM failed at capturing the web, Warren Buffet didn't invest in Microsoft, Apple or Google, then this to me suggests that the bigger the paradigm shift, the more those who created or benefit from the status quo will fight it. It's my belief that the web as we know it was developed without security or privacy in consideration and that this is the ultimate reason why we have the current "surveillance economy" and the cyber risks affecting people, businesses and nation states and that the Web3 will offer a cryptography-first alternative within the next two years.
We could go through my comment history and you'll see that for the most part I try to share my knowledge and experience in a positive way and never assume others are irrational, but a few interactions were generally negative. I do get a gut reaction to comments that insinuate my line of work benefits criminals, for instance, and lashed out once or twice at terrible articles or blogs that were shared here and were taken as authoritative when in fact they were complete nonsense for anyone _working_ in the space. I regret those but won't delete them. This is my work and I sustain a family with it so yes I am biased but not uninformed or incapable of learning new facts.
More broadly, I'm familiar with how trends work and some aspects of the blockchain community can be off putting and the technology itself is often misrepresented as simply a "distributed ledger" but I'm also confident that anyone who cares enough to try and join a developer focused meetup (Ethereum!) or event will see the side that I try my best to represent.
Ten years and you still have no accepted standard for valuation. Hmmm.... what does that tell you about the entire space?
Beanie Babies are collectibles, cryptocurrencies are money. Both have had bubbles but only one of them is tied to a brand name and there have been plenty of great new collectibles that have taken its place since.
Cryptocurrencies on the other hand are a new solution to a new problem (digital native representation of value) and even if the current offer isn't perfect their development hasn't stoped or even slowed down in any considerable way and there's no reason to believe we won't continue to grow and make better products and solutions. Money isn't going away anytime soon.
It's been established over and over again that cryptocurrencies are not money. They are a collectible like Beanie Babies. Cryptocurrencies vary too much in value to be used as money. Would you go into a Starbucks and spend $4 USD dollars to buy a coffee, if there was a chance that the $4 might gain 10,000% in value over the next year? Of course not.
There have been dozens of good articles over the last two years comparing money to cryptocurrencies and detailing all of the differences. If you still don't understand the differences, at the end of 2018, then you are keeping yourself willfully misinformed, and I suspect no comment on Hacker News will be able to change your mind.
Sorry but that's not true. You may be confusing "money" with "currency" though.
There's at least one US state that allows paying taxes in cryptocurrencies and there are a few countries here in Europe where cryptos are legal tender.
Legal tender must be accepted to extinguish a debt, by any party.
Just because bitcoin is not illegal doesn't make it legal tender. It may be used if all parties agree.
I understand the first link you gave says that Germany accepts Bitcoin as legal tender, but that is from a misunderstanding of what legal tender is. German vendors are within their rights to refuse it and insist upon real legal tender.
For those reading along, a useful baseline to get you straight on legal tender is in countries where fiat currencies are just broadly assumed to be valuable any legal tender laws are basically just ornamentation. Scotland, for example, doesn't have any bank notes as legal tender, just some old coins. Nobody in Scotland doubts that the notes they have are valuable, but its laws don't bother explicitly privileging this as "legal tender". Nevertheless if you get on a bus in Edinburgh with a goose and some shiny rocks and try to barter, well, you'll be lucky if the other passengers let you back off in one piece, let alone to get an actual ride. "Exact cash fare only".
Yes I have linked to it.
edit: In German: https://www.scribd.com/document/372651554/2018-02-27-Umsatzs...
The European Commission says [1]:
"Within the euro area, only the euro has the status of legal tender."
"Yet...contractual parties are free to use...virtual currency schemes (e.g. Bitcoin). Although these are not official currencies and have no legal tender status, parties can agree to use them".
Germany has not made Bitcoin legal tender. Don't fool yourself.
[1] https://ec.europa.eu/info/business-economy-euro/euro-area/eu...
The link I provided is jurisprudence in Germany but it doesn't impact the whole of the EU. Malta might soon join though.
If there are "a few countries here in Europe where cryptos are legal tender" then this is a big deal and you need to provide a reference.
Otherwise you just come across badly. Terms are important.
The German source says that for some purposes it is "treated equally to legal tender" and that "exchanging virtual currencies to legal tender and back is tax free". Neither statement makes sense if it were legal tender.
Its status for some purposes is similar to that of other non-Euro currencies (e.g. contracts between private parties agreeing on it etc), none of which are legal tender in Germany.
Bitcoin and other cryptocurrencies are treated equally to legal tender in Germany.
I’m sceptical that you spent 20 years in fintech without learning the definition of legal tender.
If you go to a restaurant, eat your meal (thereby accumulating a debt) and slap legal tender on the table, the restaurant must accept it. They may also accept other things, like Visa credit cards or Ethereum. But they aren’t obligated to. The former is legal tender. The latter is a way to pay. Obligations around settling debt are the sole defining characteristic of legal tender, so it doesn’t make any sense to say one thing is “treated equally” to legal tender if it lacks this core characteristic.
If you travel abroad you may have to exchange your currency to pay for a meal, because your coin is not treated equality to legal tender locally, and the defining characteristic is that it settles the debt at the time of exchange. I believe that's a function that cryptocurrencies fulfil by design and if the court states they are to be treated equally to legal tender that seems to prove my point.
I'll bite. "Digital native representation of value" isn't a problem, it's a solution. Cryptocurrencies are a medium of facilitating that solution. No one would think to themselves, "I have a problem: I need a digital-first store of value or currency, now how can I do this?"
Instead they might think to themselves, "I have a problem: I need to do <thing>; this can probably be accomplished if I use a digital-first store of value." I don't see why you would care about how your money or asset is being represented unless you have another problem that forces you think about it.
With that out of the way, this leads me to my actual point - what is an actual problem you see being solved by a "digital native representation of value"? For example, a common one I see a lot is distrust of governments due to control or censorship.
How about HTTP 402?
https://en.wikipedia.org/wiki/List_of_HTTP_status_codes#4xx_...
Randomly posting a quote and a link is not discussion, nor is it an argument.
I posted a link that people who are familiar with the development of the internet and HTTP will remember that there was a big problem back then.. we didn't have a digital native representation of value and all digital data structures can easily be copied so the fear of double-spends is what caused Digicash, Bitgold and a few other earlier digital currencies fail.
In modern times, credit cards and the like provide an adequate solution the problem (there's definitely strong dislike over things like fees, though). Early digital currencies failed because they weren't trustworthy as third parties, or they failed to gain a wide enough userbase to keep fees low. But it's not like they all failed--PayPal is with us today. Bitcoin and other cryptocurrencies suffer as a payment method in that they don't solve the customer's problem, particularly in cases like ransomware where there is strong reason to doubt the seller's ability to deliver.
Except blockchain based currency can't solve the "402 problem" as you call it. They are far to expensive and would never scale to the transaction volume required.
And if you are going to say "oh yeah well Lightning Network will save us!". Lightning Network is the biggest pile of vaporware I've ever heard of. It's been "just around the corner" to save bitcoin for almost as long as bitcoin has been a thing. ...I do love the solution to scaling the blockchain is to not use it--a real ringing endorsement of Satoshi's Glorious Block Chain if I ever heard one!
The solution may be new but the problem is not at all new. The first solution to that problem was proposed in the 1980s and there is a large body of academic work on cryptographic approaches that preceded Bitcoin.