Cryptocurrencies

[SnarkyPuppy]

It's clear that there is tremendous intangible value in an asset that a) cannot be debased and b) that than can be transferred in a judgment resistant manner (ie transfer of value between party A and party B cannot be blocked). 

 

It is simply a better version of gold and I would be surprised if this is not recognized over a long period of time. 

 

One big difference that I see between cryptocurrencies and gold is that you can't make new versions of gold to increase the total supply of "gold-like" things, while you can always (and they do) create new cryptocyrrencies to increase the total supply of "bitcoin-like and ethereum-like" things in circulation even if the supply within once currency is limited.

 

While you're generally correct about gold (there is incremental inflation mined each year and it can be faked), I couldn't disagree more with the notion that new crypto dilute bitcoin.  You can argue that a new consensus mechanism may overtake proof of stake as the best for judgment resistance.  But the notion that bitcoincash#3 dilutes bitcoin is a stretch argument. 

[wachtwoord]

It's clear that there is tremendous intangible value in an asset that a) cannot be debased and b) that than can be transferred in a judgment resistant manner (ie transfer of value between party A and party B cannot be blocked). 

 

It is simply a better version of gold and I would be surprised if this is not recognized over a long period of time. 

 

One big difference that I see between cryptocurrencies and gold is that you can't make new versions of gold to increase the total supply of "gold-like" things, while you can always (and they do) create new cryptocyrrencies to increase the total supply of "bitcoin-like and ethereum-like" things in circulation even if the supply within once currency is limited.

 

That's silly. I can start painting rocks gold and declare them wachtwoordGold or write the word gold on pieces of paper and call it wachtwoordgoldlight. Neither inflate the supply of gold just as altcoins (colloquially known as shitcoins) don't do this for Bitcoin.

 

The difference between Bitcoin and gold is that in the crypto markets many stupid people gather who fall for the proverbial gold painted rock scam. Just looking at the market caps on coinmarketcap.com and seeing that Ripple is second should tell you all you need to know.

[Liberty]

It's clear that there is tremendous intangible value in an asset that a) cannot be debased and b) that than can be transferred in a judgment resistant manner (ie transfer of value between party A and party B cannot be blocked). 

 

It is simply a better version of gold and I would be surprised if this is not recognized over a long period of time. 

 

One big difference that I see between cryptocurrencies and gold is that you can't make new versions of gold to increase the total supply of "gold-like" things, while you can always (and they do) create new cryptocyrrencies to increase the total supply of "bitcoin-like and ethereum-like" things in circulation even if the supply within once currency is limited.

 

While you're generally correct about gold (there is incremental inflation mined each year and it can be faked), I couldn't disagree more with the notion that new crypto dilute bitcoin.  You can argue that a new consensus mechanism may overtake proof of stake as the best for judgment resistance.  But the notion that bitcoincash#3 dilutes bitcoin is a stretch argument.

 

It dilutes it if you're trying to speculate in it and see price raise based on scarcity. Not if you just want the utility of sending money.

[Liberty]

That's silly. I can start painting rocks gold and declare them wachtwoordGold or write the word gold on pieces of paper and call it wachtwoordgoldlight. Neither inflate the supply of gold just as altcoins (colloquially known as shitcoins) don't do this for Bitcoin.

 

The difference between Bitcoin and gold is that in the crypto markets many stupid people gather who fall for the proverbial gold painted rock scam. Just looking at the market caps on coinmarketcap.com and seeing that Ripple is second should tell you all you need to know.

 

I don't agree with your premise of painting rocks, so I disagree with the rest too.

 

In the case of Bitcoin, the code is literally open source and can be (and has been) forked. You can get the same utility with these forks, or they could be made even better and drain supply away from the original at some point. Someone wanting to put their money in crypto has a growing target area to select from, while someone who wants gold doesn't (apart from mining inflation), so the scarcity argument doesn't play quite the same. The molecular makeup of gold gives it properties that painted rocks don't have, and someone can't just make something appears that looks, feels, behave, in exactly the same way as gold to the molecular level the way that software can be forked.

 

Not that gold is that great to begin with, I prefer productive assets, but this is as far as comparing it to crypto.

[SnarkyPuppy]

It's clear that there is tremendous intangible value in an asset that a) cannot be debased and b) that than can be transferred in a judgment resistant manner (ie transfer of value between party A and party B cannot be blocked). 

 

It is simply a better version of gold and I would be surprised if this is not recognized over a long period of time. 

 

One big difference that I see between cryptocurrencies and gold is that you can't make new versions of gold to increase the total supply of "gold-like" things, while you can always (and they do) create new cryptocyrrencies to increase the total supply of "bitcoin-like and ethereum-like" things in circulation even if the supply within once currency is limited.

 

While you're generally correct about gold (there is incremental inflation mined each year and it can be faked), I couldn't disagree more with the notion that new crypto dilute bitcoin.  You can argue that a new consensus mechanism may overtake proof of stake as the best for judgment resistance.  But the notion that bitcoincash#3 dilutes bitcoin is a stretch argument.

 

It dilutes it if you're trying to speculate in it and see price raise based on scarcity. Not if you just want the utility of sending money.

 

Again, there is rational speculation and I think many in this thread have laid out strong data points as to why bitcoin has fundamental attributes around judgment resistant transfer and store of value.  You cheapen the conversation by continuing to anchor back to "speculating trying to get rich".  Obviously the goal is to make money (we are investors, after all) but we aren't trading tulips or beanie babies here.  The consensus view that bitcoin is simply another widget being traded by clueless and uninformed people falling for a get rich quick scheme is, ironically, uninformed. 

 

Again, shitcoin#77 may look dilutive to bitcoin in the short term, but I disagree that there is any meaningful dilutive impact to the censorship resistant non sovereign store of value thesis. 

 

Agree to disagree I suppose. 

[SnarkyPuppy]

That's silly. I can start painting rocks gold and declare them wachtwoordGold or write the word gold on pieces of paper and call it wachtwoordgoldlight. Neither inflate the supply of gold just as altcoins (colloquially known as shitcoins) don't do this for Bitcoin.

 

The difference between Bitcoin and gold is that in the crypto markets many stupid people gather who fall for the proverbial gold painted rock scam. Just looking at the market caps on coinmarketcap.com and seeing that Ripple is second should tell you all you need to know.

 

I don't agree with your premise of painting rocks, so I disagree with the rest too.

 

In the case of Bitcoin, the code is literally open source and can be (and has been) forked. You can get the same utility with these forks, or they could be made even better and drain supply away from the original at some point. Someone wanting to put their money in crypto has a growing target area to select from, while someone who wants gold doesn't (apart from mining inflation), so the scarcity argument doesn't play quite the same. The molecular makeup of gold gives it properties that painted rocks don't have, and someone can't just make something appears that looks, feels, behave, in exactly the same way as gold to the molecular level the way that software can be forked.

 

Not that gold is that great to begin with, I prefer productive assets, but this is as far as comparing it to crypto.

 

Yes we understand that you only like productive assets Mr Buffett.  Please feel free to continue to invest in them and realize your view is an intelligent one, but not impactful to the asymmetric +EV proposition here.  I would never buy a mature store of value like gold, as a value investor.  But the strongest contender to replace gold priced at 1% of gold?  That's a different question. 

 

Bitcoin has unique immutable properties as well.  If bitcoin forks to bitcoin cash, it is not dilutive to owners of bitcoin. 

 

 

[Liberty]

You cheapen the conversation by continuing to anchor back to "speculating trying to get rich".

 

I cheapen the conversation?

 

Dude, this asset is down 80%, was up hundreds of percents, was moving 20%+ a day every day last winter and everybody on every channel and every website was only talking about that.

 

I'm not exactly the one who's bringing speculation into the conversation. Most of the activity around BTC was clearly speculation, and now that the price is down, we're seeing attention drain away from it just like it did from breanie babies.

 

Functionality remains and it'll probably turn into something more useful over time, but the scarcity argument clearly was one used by speculators to explain why price HAD to keep rising. The scarcity doesn't help you much when it comes to just transferring money or other "utility" arguments for it.

 

If you're looking for a store of value over long periods, then why would you look at BTC? It has no track record, has been wildly volatile and regulatory conditions are still fuzzy in many places and for many things. Productive assets have a track record of doing well over time in real terms, so they're a good way to store value against inflation, and even gold, while not productive, at least has a long track record of doing ok.

[Liberty]

Yes we understand that you only like productive assets Mr Buffett.  Please feel free to continue to invest in them and realize your view is an intelligent one, but not impactful to the asymmetric +EV proposition here.  I would never buy a mature store of value like gold, as a value investor.   

 

Oh, now we have Mr. Sarcasm here. That makes him sound superior. Great.

 

If you buy something that doesn't produce any cashflow, you're just hoping to be able to sell it to someone else for a higher price later. That's speculation. You can do that if you want, some people are good at it, at riding momentum trends and predicting supply & demand... but don't pretend it's investing, and don't pretend that you know that something this volatile and new, in constant flux, is a "store of value".

 

But the strongest contender to replace gold priced at 1% of gold?  That's a different question.

 

Yeah, but you don't know it's at 1% of the price of gold. You just made up that dividing the price of the market cap of one by the other was a way to value it, but nothing says there has to be a relationship between the two. That's like saying "people eat vegetables and they eat meat. Let's divide the market cap of meat by the market cap of vegetables to see which one is undervalued."

 

Bitcoin has unique immutable properties as well.  If bitcoin forks to bitcoin cash, it is not dilutive to owners of bitcoin.

 

It's not dilutive? So you get the fork for free! Great, let's fork it a thousand times and create all this value out of nowhere, you just found the new way to get rich with crypto!

[clutch]

If you're looking for a store of value over long periods, then why would you look at BTC? It has no track record, has been wildly volatile and regulatory conditions are still fuzzy in many places and for many things. Productive assets have a track record of doing well over time in real terms, so they're a good way to store value against inflation, and even gold, while not productive, at least has a long track record of doing ok.

 

I bet gold (or any other "store of value" assets) had the same traits as BTC at their early stages of being adopted as a store of value.

 

See my perspective on this matter: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/what-are-cryptocurrencies-(ontological-perspective)/msg320343/#msg320343

 

Of course, because BTC is at a very early stage, the possible range of outcomes is extremely wide, hence the risk / speculative nature of investing in BTC.

 

It may not turn out to be a good store of value, but fundamentally speaking, I don't think you can claim that it CAN'T be a store of value. The thesis is that if it DOES, it will be worth as much as gold, if not more.

[clutch]

It's not dilutive? So you get the fork for free! Great, let's fork it a thousand times and create all this value out of nowhere, you just found the new way to get rich with crypto!

 

But people won't value those forked cryptos over time, much like not every lump of material on Earth warrants value.

[rkbabang]

It's not dilutive? So you get the fork for free! Great, let's fork it a thousand times and create all this value out of nowhere, you just found the new way to get rich with crypto!

 

It's not dilutive, but it isn't necessarily additive either.  You can go home tonight and write a script to fork bitcoin a billion times and you will have a billion worthless forks without effecting Bitcoin at all.

 

[SnarkyPuppy]

You cheapen the conversation by continuing to anchor back to "speculating trying to get rich".

 

I cheapen the conversation?

 

Dude, this asset is down 80%, was up hundreds of percents, was moving 20%+ a day every day last winter and everybody on every channel and every website was only talking about that.

 

I'm not exactly the one who's bringing speculation into the conversation. Most of the activity around BTC was clearly speculation, and now that the price is down, we're seeing attention drain away from it just like it did from breanie babies.

 

Functionality remains and it'll probably turn into something more useful over time, but the scarcity argument clearly was one used by speculators to explain why price HAD to keep rising. The scarcity doesn't help you much when it comes to just transferring money or other "utility" arguments for it.

 

If you're looking for a store of value over long periods, then why would you look at BTC? It has no track record, has been wildly volatile and regulatory conditions are still fuzzy in many places and for many things. Productive assets have a track record of doing well over time in real terms, so they're a good way to store value against inflation, and even gold, while not productive, at least has a long track record of doing ok.

 

I'm not disagreeing with you that it was used as a means of speculating.  There are/were plenty of fools and bad actors involved - I have no control over this and I view this as mutually exclusive from the actual value inherent in bitcoin/how things play out longer term. 

 

I've never said I think bitcoin will be used as a utility to transfer payments.  I think it's unlikely to be used as a payment rail, but I could be wrong.  That would just add to the potential valuation.  USD is used for payments as well as a store of value. 

 

Again - all else equal productive assets are a better investment than non productive assets (water is also wet).  We are talking about buying a new asset prior to it reaching maturity. 

 

To be clear, nobody is making definitive statements in here.  Or at least I'm not intending to.  The framework I use is simple:

- What value does bitcoin provide? (I've explained my view)

- What are similar assets today that provide that value? (Gold)

- Are there key attributes of bitcoin which gold lacks? (Yes, explained in this thread)

- Are these attributes relevant to the core of why people own gold? (Yes)

- If the market eventually agreed with the above, what is a reasonable proxy for price? (50% of golds value to 100% of golds value = $3.5tn to $7tn)

- What odds are the market pricing bitcoin at reaching those values? (Currently 1.1% to 2.2%)

- Do I think, given the incremental attributes provided by bitcoin not provided by gold, that the likelihood of hitting the value proxy above is reasonable (no, I think the odds are materially higher and TAM is growing)

[Liberty]

If you're looking for a store of value over long periods, then why would you look at BTC? It has no track record, has been wildly volatile and regulatory conditions are still fuzzy in many places and for many things. Productive assets have a track record of doing well over time in real terms, so they're a good way to store value against inflation, and even gold, while not productive, at least has a long track record of doing ok.

 

I bet gold (or any other "store of value" assets) had the same traits as BTC at their early stages of being adopted as a store of value.

 

See my perspective on this matter: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/what-are-cryptocurrencies-(ontological-perspective)/msg320343/#msg320343

 

Of course, because BTC is at a very early stage, the possible range of outcomes is extremely wide, hence the risk / speculative nature of investing in BTC.

 

It may not turn out to be a good store of value, but fundamentally speaking, I don't think you can claim that it CAN'T be a store of value. The thesis is that if it DOES, it will be worth as much as gold, if not more.

 

We're agreeing. I't speculation at this point, not a store of value.

[Liberty]

It's not dilutive? So you get the fork for free! Great, let's fork it a thousand times and create all this value out of nowhere, you just found the new way to get rich with crypto!

 

It's not dilutive, but it isn't necessarily additive either.  You can go home tonight and write a script to fork bitcoin a billion times and you will have a billion worthless forks without effecting Bitcoin at all.

 

I wasn't talking about a private fork, but the official forks like bitcoin cash that had wider support. People woke up and now had a new coin in their accounts, and its value wasn't zero. If it's not dilutive, then they should just keep doing those.

[SnarkyPuppy]

If you're looking for a store of value over long periods, then why would you look at BTC? It has no track record, has been wildly volatile and regulatory conditions are still fuzzy in many places and for many things. Productive assets have a track record of doing well over time in real terms, so they're a good way to store value against inflation, and even gold, while not productive, at least has a long track record of doing ok.

 

I bet gold (or any other "store of value" assets) had the same traits as BTC at their early stages of being adopted as a store of value.

 

See my perspective on this matter: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/what-are-cryptocurrencies-(ontological-perspective)/msg320343/#msg320343

 

Of course, because BTC is at a very early stage, the possible range of outcomes is extremely wide, hence the risk / speculative nature of investing in BTC.

 

It may not turn out to be a good store of value, but fundamentally speaking, I don't think you can claim that it CAN'T be a store of value. The thesis is that if it DOES, it will be worth as much as gold, if not more.

 

We're agreeing. I't speculation at this point, not a store of value.

 

It seems to me that you were stating that 1.  because it is being used for speculation that 2.  it cannot become a store of value

 

Maybe I misunderstood.

[Liberty]

And yet none (zero) of the existing altcoins have managed to attain the same attributes as Bitcoin or anywhere close to it. All the existing ones are like the proverbial gold painted rock: looks the same in the eyes of fools, but certainly is not. Painted rocks don't dillute gold and neither do any of the existing altcoins (fork or otherwise).

 

Could a better alternative to Bitcoin be found? Sure, that's the only real threat to the thesis. However, many have tried and failed and the incentive certainly is high enough. Time will tell.

 

Bitcoin isn't exactly doing great right now either... For a while Litecoin, BCH, XRP and ETH and others were stars too, it's not like no other coin had success (even if temporary).

 

When your "store of value" is down 80% in a year, after being up hundreds of percents before, maybe the value isn't being stored, but rather the tulip bulbs are being ferociously traded back and forth and speculated on because nobody can know what the thing is actually worth but everybody hopes that they can be on the "ground floor" of this new-age MLM.

 

Even the utility of sending money anywhere around the world is pretty theoretical for most people at this point when you never know if your account will be worth 20% more or 20% less a week from now...

[rkbabang]

It's not dilutive? So you get the fork for free! Great, let's fork it a thousand times and create all this value out of nowhere, you just found the new way to get rich with crypto!

 

It's not dilutive, but it isn't necessarily additive either.  You can go home tonight and write a script to fork bitcoin a billion times and you will have a billion worthless forks without effecting Bitcoin at all.

 

I wasn't talking about a private fork, but the official forks like bitcoin cash that had wider support. People woke up and now had a new coin in their accounts, and its value wasn't zero. If it's not dilutive, then they should just keep doing those.

 

Private fork?  "Official" fork?  What is the difference.  There is no difference. A fork is a fork.  People value some of them to one extent or another, but don't value others at all.  There is no officiating agency which says this fork is an "official" fork and that one is not.

 

[Liberty]

It seems to me that you were stating that 1.  because it is being used for speculation that 2.  it cannot become a store of value

 

Maybe I misunderstood.

 

I was saying that right now you can't know if it'll become a store of value someday.

 

The characteristics of "store of value" (at least to me) imply reliability and stability and battle-tested robustness and such. Bitcoin isn't at the stage yet, and what we've seen so far is the opposite of that (volatility, uncertainty, hacks, short track record, everything rapidly changing, etc).

[Fat Pitch]

It’s been nearly a year since I dumped most of my crypto holdings in that speculator bubble. In this carnage we are seeing the Netscape moment emerging in the EOSIO ecosystem. Crypto native business models have been springing up in the last few weeks. The collective whole of the ecosystem is generating $400k/day in revenues with very little capital raised (maybe 3-4mm in total). Compare this to Ethereum which raised billions and have literally nothing to show for it. There’s still growing pains with the EOS network, but I expect massive increases in scaling in the next 6-9 months as the infrastructure matures.

 

Some early indications I’m noticing are that the ARPU appear to be 100x higher than traditional app channels (Apple App Store). This may be the benefits of having a native payment rail built into the app and zero user fees. I think the big disruptive nature of this tech is the ability to monetize very niche sectors that wasn’t possible before. So I wouldn't pay attention to the "currency" aspect of blockchains, but what business models can be deployed that wasn't possible before. There's still the issue of regulations, but I think in the end they will be pounding sand.

 

[Liberty]

Private fork?  "Official" fork?  What is the difference.  There is no difference. A fork is a fork.  People value some of them to one extent or another, but don't value others at all.  There is no officiating agency which says this fork is an "official" fork and that one is not.

 

That's just another way to say that the value of these is purely speculative and based on someone else being willing to buy it off you when you want to sell, not much on intrinsic value (since there's no cashflow and so far the utility case is a fairly minor part of the story and trading).

 

If I fork it alone in my basement and nobody knows about it, I won't find sellers and won't be able to make a market.

 

If a large group within a big coin community makes a fork, people will make a market and start buying and selling the thing giving it value. There's no intrinsic value, but the dollar amount that people are willing to put into a thing is limited, which is why I'm saying that these forks are dilutive (if they weren't, they'd be free money).

 

So my basement fork that nobody knows about isn't really dilutive because nobody spends anything on it.

 

But the bitcoin cash fork is dilutive because suddenly thousands of people might start speculating in it and use resources in it that they would otherwise have used on ethereum or bitcoin, leaving less resources to cash people out who are trying to sell their BTC or ETH, affecting the price of those.

 

There's no such thing as a free lunch, as Heinlein would say.

[rkbabang]

And yet none (zero) of the existing altcoins have managed to attain the same attributes as Bitcoin or anywhere close to it. All the existing ones are like the proverbial gold painted rock: looks the same in the eyes of fools, but certainly is not. Painted rocks don't dillute gold and neither do any of the existing altcoins (fork or otherwise).

 

Could a better alternative to Bitcoin be found? Sure, that's the only real threat to the thesis. However, many have tried and failed and the incentive certainly is high enough. Time will tell.

 

Bitcoin isn't exactly doing great right now either... For a while Litecoin, BCH, XRP and ETH and others were stars too, it's not like no other coin had success (even if temporary).

 

When your "store of value" is down 80% in a year, after being up hundreds of percents before, maybe the value isn't being stored, but rather the tulip bulbs are being ferociously traded back and forth and speculated on because nobody can know what the thing is actually worth but everybody hopes that they can be on the "ground floor" of this new-age MLM.

 

Even the utility of sending money anywhere around the world is pretty theoretical for most people at this point when you never know if your account will be worth 20% more or 20% less a week from now...

 

Bitcoin has been around 10 years and 3 years ago almost no one on Earth had even heard of it.  Gold has been around for many thousands of years and for all of our lives, and for hundreds of generations before us, just about everyone on Earth has know what it is.  Yet in 1981 gold fell more than 32%, in 2013 gold fell more than 27%, in 1997 it fell more than 22%.  Yet people still consider gold to be a store of value.

 

[Liberty]

Bitcoin has been around 10 years and 3 years ago almost no one on Earth had even heard of it.  Gold has been around for many thousands of years and for all of our lives, and for hundreds of generations before us, just about everyone on Earth has know what it is.  Yet in 1981 gold fell more than 32%, in 2013 gold fell more than 27%, in 1997 it fell more than 22%.  Yet people still consider gold to be a store of value.

 

Yeah, gold sucks too. All commodities are volatile and can be gripped be speculative bubbles and panics.

 

I'm not making a case for gold.

 

But at least it's been around for long enough to judge how it behaves over time and how it does in the face of inflation (which is to say, not as well as productive assets).

 

Bitcoin might become a store of value. I'm saying it's too early to tell, and so far it's not behaving like one, it's behaving like beanie babies (last winter was truly a peak for the ages -- I logged on Twitch to watch a PUBG stream and the guy was chatting about Bitcoin with his chatroom). Denying that is denying the obvious.

[wachtwoord]

And yet none (zero) of the existing altcoins have managed to attain the same attributes as Bitcoin or anywhere close to it. All the existing ones are like the proverbial gold painted rock: looks the same in the eyes of fools, but certainly is not. Painted rocks don't dillute gold and neither do any of the existing altcoins (fork or otherwise).

 

Could a better alternative to Bitcoin be found? Sure, that's the only real threat to the thesis. However, many have tried and failed and the incentive certainly is high enough. Time will tell.

 

Bitcoin isn't exactly doing great right now either... For a while Litecoin, BCH, XRP and ETH and others were stars too, it's not like no other coin had success (even if temporary).

 

When your "store of value" is down 80% in a year, after being up hundreds of percents before, maybe the value isn't being stored, but rather the tulip bulbs are being ferociously traded back and forth and speculated on because nobody can know what the thing is actually worth but everybody hopes that they can be on the "ground floor" of this new-age MLM.

 

Even the utility of sending money anywhere around the world is pretty theoretical for most people at this point when you never know if your account will be worth 20% more or 20% less a week from now...

 

It's doing just great as far as I can see. You must be referring to the short term price changes but I thought we were on a value forum?

[rkbabang]

Private fork?  "Official" fork?  What is the difference.  There is no difference. A fork is a fork.  People value some of them to one extent or another, but don't value others at all.  There is no officiating agency which says this fork is an "official" fork and that one is not.

 

That's just another way to say that the value of these is purely speculative and based on someone else being willing to buy it off you when you want to sell, not much on intrinsic value (since there's no cashflow and so far the utility case is a fairly minor part of the story and trading).

 

If I fork it alone in my basement and nobody knows about it, I won't find sellers and won't be able to make a market.

 

If a large group within a big coin community makes a fork, people will make a market and start buying and selling the thing giving it value. There's no intrinsic value, but the dollar amount that people are willing to put into a thing is limited, which is why I'm saying that these forks are dilutive (if they weren't, they'd be free money).

 

So my basement fork that nobody knows about isn't really dilutive because nobody spends anything on it.

 

But the bitcoin cash fork is dilutive because suddenly thousands of people might start speculating in it and use resources in it that they would otherwise have used on ethereum or bitcoin, leaving less resources to cash people out who are trying to sell their BTC or ETH, affecting the price of those.

 

There's no such thing as a free lunch, as Heinlein would say.

 

No one is saying bitcoin has intrinsic value (which you are defining as having cash flow), gold has no cash flow either.  We are saying that it makes a good store of value.  Gold has some industrial uses in the electronics industry, but that is a fairly new.  For thousands of years gold was valuable for a number of properties it has. 

 

- It looks pretty (an advantage it has over bitcoin, but equal to other metals).

- It doesn't rot or tarnish or otherwise lose it's physical properties over time (equal to bitcoin, advantage over other metals).

- It is easily divisible into smaller units or combined into larger ones. (bitcoin has advantage here, gold is equal to some metals like silver, advantage over others like platinum)

- It is easily stored or transported (bitcoin has large advantage, gold equal to other metals)

- Impossible to counterfeit, to a knowledgeable buyer anyway. (equal to bitcoin and other metals)

 

Bitcoin is equal to or better at all of those properties with the exception of being shiny and pretty.  Also bitcoin has some properties that are important which gold, nor any other metal, has.

 

- Easy to store/hide huge amounts.

- Easy to carry large, even huge amounts secretly and anonymously. You can easily carry a $Billion worth in your head without anyone else knowing.

- Easy to quickly send any amount large or small to anywhere on Earth.

 

The long thesis is that those properties along with the properties that gold has, but bitcoin is better (like divisibility), will be important enough to make BTC a replacement for gold.

 

Of course it is all supply and demand.  Everything is, including your stocks which you think have "intrinsic" value.  It only has that value if the market eventually agrees with you.  The same goes for Bitcoin.

 

[Liberty]

It's doing just great as far as I can see. You must be referring to the short term price changes but I thought we were on a value forum?

 

Oh, I'm sorry, I didn't zoom out enough. Yeah, it's doing great. That little 80% drop is just normal volatility in this store of value.

 

Valeant's stock is also doing fine.

 

What's sad is that while there's a bunch of early adopters that made a bunch of money, the vast, vast majority of dollars that were put into this probably came during the peak of the mania from maybe 15k to 19k, many buying on credit and spending money they couldn't spare for that lottery ticket. Same story as hot mutual funds in the 1990s... They did really well for a decade, then 90% of their lifetime AUM piled on during the very last period right before they started doing really badly...

 

Anyway, this *is* a value forum, which is why I point out that this is speculation. You can do it if you want, but don't pretend you're investing based on a rational estimate of IV. There's no value investing in gold or modern paintings either.