Figures from the MSO show that over 98% of bitcoin trades are speculative. This is surely unique.
The makey-upey statistic? I wouldn't say it's unique per se Dukey but it certainly has your stamp on it.
Every asset has to some degree a speculative aspect e.g. Gold, but can an entity sustain a price indefinitely on speculation alone?
Here's a real stat. 10% of gold's use is industrial - leaving a price that in no way reflects that industrial use and 90% use split between speculative interest and store of value use case. It's going to be a difficulty to tease apart speculative trades from more wholesome store of value use. However, here's something of interest for you. Appox.
11 million BTC have not moved in over a year. Seems more indicative of store of value than speculative trading.
For the answer to this we look to one of tecate's favourite reference sources. John Kelleher of Investopedia is a bitcoin evangelist but the following reflection of his is right on the money so far as I am concerned
John Kelleher was introduced to discussions here by his Dukeness. At that point, he was alright in his book and wasn't a bitcoin evangelist. It wasn't until later when Dukey found that John's scriblings didn't support his world view that John fell off Dukey's Crimbo Card List.
....but the following reflection of his is right on the money so far as I am concerned
Indeed it is when you continue to quote it out of context and leave out parts. Kelleher's article
in its entirety states that gold is king as regards store of value yet gold cannot be used and is not used as a medium of exchange. Ergo bitcoin doesn't have to establish itself as a medium of exchange first - in order to initially mature as a store of value.
I note your requirement for a working currency - which is essentially short term price stability. Bitcoin does not aspire to that role
It certainly does aspire to that role. Over the course of its eleven years, bitcoin volatility https://en.longhash.com/news/data-shows-bitcoins-price-volatility-has-been-declining-over-its-10-year-history (has been reducing year on year). Granted it has a ways to go - and that process is going to take many more years - but it will get there. It's logical that as its market capitalisation expands and as it matures as an asset, price volatility will drop.
which must be the preserve of centralised FIAT and is economy specific
I disagree.
When Kelleher talks about bitcoin being a medium of exchange I think he essentially means a medium for exchanging FIAT but without the perceived drawbacks of exchanging FIAT directly, which seem to revolve around its transparency or what the cultists call its censorship.
Please point out where he states that (because he says no such thing).
A currency is censorship resistant if nobody can prevent you from exchanging it and nobody can confiscate it.
I understand the aspiration for bitcoin to become a recognised currency, to sit alongside fiat currencies (and presumably other crypocurrencies?). If and when it does achieve that status, however, I don't see why anyone would want to 'invest' in it.
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So, bitcoin is an immature asset - it's coming of age right now. With that, there is volatility and there is price discovery. It's a fixed cap currency and naturally as it's adopted, demand will drive price upwards. So right now there is a unique opportunity to get a decent return on investment.
American billionaire hedge fund manager Paul Tudor Jones came out earlier this year and stated that he was taking a position in bitcoin as it represented a good hedge against fiat currency and the potential for 'a great monetary inflation'. You can find his letter to investors . In it, he says that bitcoin reminds him of gold in the 1970s when the first gold futures/derivatives products hit the market. Gold was highly volatile during that decade (like bitcoin is today) and the monetary metal increased in value some 2,300% over the course of the decade. Now it's a settled asset and not as interesting - albeit that it still acts as a hedge.
His point is that bitcoin is where gold was in the 70s. Once it matures as an asset and possibly becomes a recognised means of exchange, it's unlikely to be volatile and it's unlikely to represent an investment in which you would expect to see major gains. Like gold, it will still be a hedge against the traditional markets and fiat currency. Like gold, it can be expected to hold its value - rather than have value eroded through inflation. It's at that point I'm in agreement with you - it's not all that interesting as an investment - although useful to still keep a percentage of your portfolio in it (in the same way as people do with gold)....as a hedge. However, it also outdoes gold at that point too - as it's portable, easier to self custody, divisible and digital (meaning that it can be transacted easily from party A to party B with ease - regardless of where they are in the world). It's also easily verifiable (note the
83 tonnes of fake/counterfeit gold that was discovered in China a few weeks ago) and peer to peer censorship resistant money that can't be confiscated.
In gold's case, however, I do see the logic in putting some aside in case Armageddon happens and we have to revert to stone age society. In that case, having some gold to melt down and use to pay for necessary provisions makes some sense.
In monetary or economic collapse, I believe both gold and bitcoin serve a purpose. At an 'armageddon' level where society has completely fallen apart - I think guns are going to be far more useful to people in that situation than either gold/bitcoin.
I was thinking of Armageddon. If society as we know it collapses, anything depending on the internet will have no value. Gold will.
Bitcoin doesn't depend on the internet. If the internet vanishes tomorrow, anyone can still transact bitcoin via satellite. If one person in a community has access to either a genny or a few solar panels and a sat receiver, then bitcoin can be transacted. Bitcoin can also be transacted by short wave radio, and by sms if there was still a mobile network running or someone managed to get one working. We're a few years away from it, in the future we'll have mesh networks - which are peer to peer networks rather than centralised networks. Bitcoin can be transacted via mesh networks also.