Nope, because you can transfer between cash systems. Outsized examples to prove a point.

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.

You have completely not understood anything I have written, and your example makes zero sense. Pointing out the flaws it what I can make of it - you are talking about currency conversion (this is two different monetary systems and cash positions in both). Second, your example is again talking about 2 different systems and by that metric, everybody has been losing money during the equities bull market because Bitcoin has outperformed the S and P every year bar 2, and when looking at raw purchasing power, still has outperformed even after an 85% crash. Obviously this is stupid, because in the context of the monetary system those investments were made, Apple and Tesla have done fine.

Bitcon has on net lost money every year after it was created through mining. People spend money mining, and add money to the system but the only way to extract money is for someone else to buy in. You can do a silly calculation and say if we could find a magical buyer then the net gain is their increase in price, but there is not such magical buyer which is why it's been tanking.

The core problem is Bitcoins are not a productive asset. They can't produce any cash flows.

Does cash produce cashflows? No, it doesn't - yet you would have been better off holding cash than Nvidia this year. (Note - Nvidia has cashflows and pays dividends!)

Without converting to the same currency it’s not obvious. Which is why you are taxed when an asset is sold, until then it’s purely theoretically valuable.

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.

Yet people buy stocks that pay no dividends all the time, and often do very well because these companies create value.

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.

Dividends come in multiple forms, buybacks for example return money to investors. Companies aloso get sold returning money to investors. However, if a company never returns money and eventually folds then on net it was a bad investment even if some people made money they made money from other people not the company.

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.

I think you are confusing equities with mediums of exchange. The mechanism of value creation is different. One facilitates trade and solves the coincidence of wants. The other generates a yield.

Bitcoin has also clearly failed as a medium of exchange, but I rarely see people try and defend that.

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’d agree with that. It’s an investment in the sense of currency speculation (which is a bit of a big bet now at this size it’s a fairly legitimate currency). It is really just a hedge and a cash position, and maybe part protest, not so much an investment. Store of value.... maybe.

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.