Yes, Bitcoin is worth nothing but it is a "consensual reality" among a large group of people that it is worth something and thus it is.

It is incredibly hard to predict if such a consensual reality will collapse -- but it can collapse if there is a strong "vibe shift" towards something else that competes effectively with the current "consensus."

It is like fashion. What is considered stylish and not is just a group consensus. And it can shift relatively quickly, but it is hard to predict and certain people in key nexus have a lot more influence than the ramble.

It's basically Beanie Babies, but with more direct environmental damage

Collective mythologies underpin most of modern life. Does the Turkish Lira have more or less intrinsic value than Bitcoin?

To say that state-backed currencies are equivalent to private currencies is to greatly misunderstand how things work in finance.

Traditional state-based currencies mostly exist because the government pays its obligations in that currency and also collects taxes in that currency. The state's population is forced to use that currency as a result for these behaviors.

This is the main difference between a state-backed currency and "private currencies."

This isn't to say that state-backed currencies can be a mess just like "private currencies." But these state-backed currencies fail with the governments based on balance of payments and debt and money printing, etc and it is very infrequent.

This. For a currency to have value you need to be able to buy things or satisfy obligations in it. What does a theoretical country named Bictoinalia export? Drugs, ransomware and speculation. And they're starting to lose drug export market share because the public ledger is easy to track people with.

No need to put private currencies in quotes. Here ECB talks about the interplay between public and private money [1] when discussing their CBDC (digital EUR) plans. I think this is a pretty interesting topic and just reducing it to 'private money == not real/useless' doesn't serve it justice.

At all times in unstable monetary conditions, such as hyperinflation, funny-money issued by occupation authorities, unrecognized governments, fiat currency mismanagement, etc, people have flocked to alternative means of exchange. Usually using foreign currencies or other assets (precious metals, whatever). Now there is more choice here. There are reports from places in such conditions of people actually using digital assets for this. Whether it's better to hold Lira or Dash at this particular moment in time though, is a pretty open question.

[1] https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220...

> No need to put private currencies in quotes. Here ECB talks about the interplay between public and private money [1] when discussing their CBDC (digital EUR) plans. I think this is a pretty interesting topic and just reducing it to 'private money == not real/useless' doesn't serve it justice.

I think that most major currencies will have mirror cryptocurrency versions as state-backed entities, replacing USDT and the similar more hand-wavy versions. This is definitely going to happen.

But this isn't "private currency" rather it is just the evolution of state-backed currency.

> At all times in unstable monetary conditions, such as hyperinflation, funny-money issued by occupation authorities, unrecognized governments, fiat currency mismanagement, etc, people have flocked to alternative means of exchange.

Make sense. If your country is in hyperinflation, do not hold its currency.

> There are reports from places in such conditions of people actually using digital assets for this. Whether it's better to hold Lira or Dash at this particular moment in time though, is a pretty open question.

Dash lost most of its value in the last 2 months. I am unsure what your point is. Dash obviously is a speculative asset and it is super hard to predict its future direction.

And the Turkish lira is liable to the whims of an authoritarian leader who doesn't believe in fiscal orthodoxy and keeps firing his central bank leaders as soon as they even hint at raising the interest rates in order to try and reign in inflation. Not great either.

EDIT: When ECB talks about private money they mean non central bank issued digital assets, among other things. Not their CBDC which would of course be public money.

Year over year the Dash is down 75% and the Lira is right around 50%. The Lira has much lower short term volatility. Plus, everyone knows what Turkey is, and there is an entire millenia old society interested in maintaining the value of the Lira.

$DASH meanwhile is a speculative "investment" with no underlying assets that most people has no idea exists.

$DASH could go to 0 tomorrow and it would probably not be reported on outside of crypto sites. Neither of those things is true for the Lira

> forced

Ultimately through threat of violence or depriving of liberty. That is, it is the state's monopoly on violence which makes a currency. Bitcoin, being state-less, has no such monopoly and must ultimately fail.

Although Venezula seems to have been making a first pass at it.

To be clear - the Lira is worth far more intrinsically than bitcoin.

The reason is simple: The Turkish Lira has a government (complete with courts, military, bureaucrats, police, banks, etc) that has committed to enforcing transactions in the Lira.

Does that mean the speculative market for Lira must be bigger than bitcoin? No, of course not. But it does mean there's fundamental utility to the Lira that absolutely does not exist for bitcoin.

I think a key difference with traditional currencies is that the countries that issue that currency will do anything in their power to maintain at least some of the value of that currency. I'm not sure how true that is for crypto investors. It's likelier they'll cut their losses and run.

Getting too hung up on the precise philosophical definition of intrinsic misses the point, imo.

Things that make Lira less mythological and more intrinsicly valuable include:

- It is a more stable store of value

- It holds a more stable relationship to the value of everything else in the Turkish economy

- It is more widely accepted for buying and selling good and services

These three things are real world practical differences.

Yes.

If you can't point to any math to justify a given price, there is no intrinsic value. Thus price is only driven by speculative factors.

With stocks there are earnings that can be distributed back to shareholders. This is a measurable and explainable fundamental factor.

Real estate has rents... Bonds have coupon payments. Crypto has nothing. Though some will pay you "yield" by diverting money from newer entrants... Aka pyramid-esque structure

One of the major problems with Bitcoin is that it is being treated as both a currency, and an investment vehicle.

As an investment vehicle, it's exactly as you say; there is no fundamental value it represents. As a currency, it has no governmental backing, and while it's possible to trade in currencies, the profit lies in the trade, and the various differing rates of exchange, NOT in the underlying currencies themselves. No one holds currency expecting deflation to make them better off.

Does your argument exclude foreign currency holdings?

Currency value is relatively stable through actual use as a medium of exchange, salaries paid in the currency, government backing to maintain relatively stable pricing.

Crypto has none of these. And if it's a good investment, then it's definitely not a good currency

>if it's a good investment, then it's definitely not a good currency

The Bank of England would like a word with you.

That's kind of the point. Currencies which are pegged to other currencies at fixed exchange rates aren't good currencies at all. They're subject to sudden catastrophic revaluation. Fortunately most of the major fiat currencies now have floating exchange rates so that's generally no longer a problem.

I was introduced to Bitcoin in 2011 by a friend. I'd never heard of it before, and it sounded like something I'd not be interested in. I didn't go all-in with him renting an apartment where the cost of electricity was paid by the landlord, it's basically free, but he 'gave' me some in lieu of his bar bill, just a handful, with the proviso I hang on to it and spread the word that there was use for it.

In that long conversation, the most compelling 'use' was it's 'non use'. That it is intrinsically rare and so as long as it's achieved a sufficient momentum to continue to exist (aside from transactions, we went over various uses for the blockchain that I was struggling to understand), just having some is itself a diversification and thus valuable for that. Diversification like having some precious metal is too. 'Having' being an important point. Another friend was a gold nut (I mean that in a non-pejorative sense, a term he used) that wouldn't touch gold futures or any form of 'contractual gold' and wasn't that keen even on security boxes.

In this, Bitcoin did make some sense. Just hanging on to some. Not for investment purposes, and not for speculative purposes, but for, depending on your perception, the value you may find in something 'rare' in your (somewhat) physical possession. This may be for a time of turmoil when 'rare' assets are extremely valuable, especially divisible ones (sufficiently 'rare' cash, for example, is well documented to be valuable at these times). 'How much' depending on your appetite: appetite for an asset _held for this purpose_ (a purpose that isn't investment or from-time-to-time speculation), and this 'how much' (price*quantity) re-balanced not based on a Bitcoin's price (nor gold's price per ounce) - from this perspective the day-to-day 'price' of Bitcoin becomes less relevant, re-balancing better smoothed than marked-to-market daily given it's volatility.

[A small aside, but on this 'rarity': I remember clearly the first time I held a gold bar, by no means a common occurrence in my life. It was beautiful. Shaped more like a house brick than something stacked in Fort Knox, it had the portrait a family embossed on it, two parents, three children, the family dog, the chateau in which they lived, and their signatures. It was cast at the time of the French Revolution, and sits, certainly when I handled it and I imagine still today, unclaimed, in London, where it was sent for safe keeping. Sad.]