Key Post Why Bitcoin has value

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tecate

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Yeah I hear you, and then my thoughts on it are it shouldn't be considered a store of value until there is more broad adoption and stability. A store of value should provide a significant element of safe haven, that can't be said of Bitcoin right now.
I'm not sure I agree on the stability aspect but I'm quite happy to accept its development in that role is formative/early stage.
Can you provide any evidence that people are using it for that? It may certainly happen in the future, but right now is there anyone in any great numbers transacting in Bitcoin except criminals & speculators?
On the 'criminals' aspect, are you discounting that link I posted detailing the MIT study that found that illicit activity accounts for 2% of transaction volume? Andrew365 has provided you with evidence of a move towards that use case in Venezuela. Similar data emerged from Turkey when its currency imploded.

Perhaps, but it's difficult to see how it's worth $266 billion then..
I believe development of that market cap is an achievement. But in the bigger picture, it's just a drop in the ocean. The market cap of gold is $7 trillion.
As far as I can see there are 3 main groups of people transacting in Bitcoin - those speculating, those engaged in criminal activity and those in extreme edge cases (failed socialist regimes suffering hyperinflation).
That first group you can take out (see above). Yes, speculation is huge - no question. 'Extreme edge cases' as you call them - there are a list of them every year. Whilst there is evidence of some use, I've talked to many Venezuelans who have never heard of Bitcoin.
I live in South America - and if there was ever a place that had a use case for crypto it's here. However, bear in mind that we are talking about decentralized crypto - there is no centralized marketing effort. And there's a whole world of education needed to inform people about this stuff and how to use it (whilst efforts will need to be made to make it more user friendly).
That's why I believe something like Libra (even though i think its NOT real crypto) can play a role in conditioning people towards the use of digital money.

I'm not discounting cryptos or Bitcoin for what it's worth. However unless it used by people to actually buy stuff on a great scale, it will remain the preserve of criminals and those in edge cases. If that happens, then speculators will also leave the market as the number of new suckers will dry up.
Again, please drop the criminal thing. There will be criminal use - but it will never be any more than it ever was with cash - and if its 2% as MIT found, then that's not any cause for concern.

As regards to pay for stuff, that use case is going to take much longer to pan out. Notwithstanding that, the leading Bitcoin payments processor - Bitpay - booked $1 Billion in BTC transactions last year. Lightning network and other scaling solutions continue to be built out.

Am I a sucker then if I hold BTC rather than gold? How long until the market implodes? If there was nothing to it, then surely there would have been one major pump and crash? There have been about 5 so far.
 
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Firefly

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I've talked to many Venezuelans who have never heard of Bitcoin.
Really? Never heard of it? Are they living under a rock?

On the 'criminals' aspect, are you discounting that link I posted detailing the MIT study that found that illicit activity accounts for 2% of transaction volume?
I believe this is incorrect & misrepresents the facts

2% of Bitcoin transactions in 2019 were deemed “illicit.”
Among the remaining 98% of the published data, 21% was identified as lawful while 77% remained as unclassified data


77% could be either lawful or not, so to say that "illicit activity accounts for 2% of transaction volume" is incorrect, it is somewhere between 2% and 79%.


Andrew365 has provided you with evidence of a move towards that use case in Venezuela. Similar data emerged from Turkey when its currency imploded.
'Extreme edge cases' as you call them
That's why I am calling them extreme edge cases. How often do the currencies of mature countries implode?


I live in South America - and if there was ever a place that had a use case for crypto it's here. However, bear in mind that we are talking about decentralized crypto - there is no centralized marketing effort.
So what's needed now is a marketing drive? I think you underestimate people. If they have an easy, safe and cheap way of getting their money out in a time of crisis I think work would spread pretty quickly.

As regards to pay for stuff, that use case is going to take much longer to pan out.
Again, I think you underestimate people. I remember when ATMs came in and there was talk that people (elderly in particular) would have problems remembering their PIN. It's funny how money focuses the mind...

Am I a sucker then if I hold BTC rather than gold?
Not necessarily....if you find another sucker before the price crashes then you've been lucky.

How long until the market implodes? If there was nothing to it, then surely there would have been one major pump and crash? There have been about 5 so far.
And if we knew that!!!! Honestly, I think it will probably last a while longer. Not sure about a sudden crash....I have a feeling it will fizzle out over a period of time and then collapse.
 

Leo

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There will be criminal use - but it will never be any more than it ever was with cash - and if its 2% as MIT found, then that's not any cause for concern.
Careful with that claim, they were only able to determine that 21% of transactions were lawful, leaving 77% they could not classify. So total unlawful transaction volume lies somewhere between 2 and 79%.

We need to update the crypto market cap too, the total cap of the top 100 cryptos is down to B$249. There is also some debate about whether all Bitcoin in existance should be factored into its market cap given such a large proportion are out of circulation and likely unrecoverable.
 

Firefly

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Careful with that claim, they were only able to determine that 21% of transactions were lawful, leaving 77% they could not classify. So total unlawful transaction volume lies somewhere between 2 and 79%.

I believe this is incorrect & misrepresents the facts

2% of Bitcoin transactions in 2019 were deemed “illicit.”

Among the remaining 98% of the published data, 21% was identified as lawful while 77% remained as unclassified data

77% could be either lawful or not, so to say that "illicit activity accounts for 2% of transaction volume" is incorrect, it is somewhere between 2% and 79%.
:)
 

tecate

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Really? Never heard of it? Are they living under a rock?
Yes, I was a bit surprised myself but I've come across quite a few who never heard of it - had no notion what I was talking about. The next level were those that had vaguely heard of it, didn't understand it but remembered some negative connotations regarding it that has been fed to them via media ...the criminal narrative, yada, yada.

Careful with that claim,
I believe this is incorrect & misrepresents the facts
2% of Bitcoin transactions in 2019 were deemed “illicit.”
Among the remaining 98% of the published data, 21% was identified as lawful while 77% remained as unclassified data
That's fair enough. However, by the same rationale, I guess we should hold off on calling it (illicit use) a major part of Bitcoin trading, then - right? Bitcoin is psuedo-anonymous (and can be completely anonymous if used in the right way) - and so, it's logical that they have a large body of 'unclassified' transactions.

Besides, ordinary garden variety criminals will just as easily use cash (but nobody vilifies cash). Your elite criminals just have to get a banking license!

That's why I am calling them extreme edge cases. How often do the currencies of mature countries implode?
They're 'edge' cases from the world you and I come from. But the developing world accounts for a shed load of countries. Other than that, practically all FIAT currencies have been mismanaged at one stage or another - and there is a long legacy of extinct FIAT currencies.
It's not that long ago that there was a hive of activity on this very forum with people scrambling to move euro savings to NL, DE, etc. with the expectation of a real possibility of euro break up. And it seems the euro isn't a done deal yet either - plenty of issues across the eurozone.

That aside, it's why crypto has far more potential in developing nations.

So what's needed now is a marketing drive? I think you underestimate people. If they have an easy, safe and cheap way of getting their money out in a time of crisis I think work would spread pretty quickly.
There's a combination of things needed. Ordinary people don't understand it. You think that a slow movement from national governments towards their own digital currencies won't make it easier for people to figure out how to work with digital currency? The same with Facebook/Libra - and whatever other tech giants/large corporates (Walmart have patented their own digital currency) follow them.

As per the development of many other technologies, ease of use will improve but these things don't happen overnight.

Again, I think you underestimate people. I remember when ATMs came in and there was talk that people (elderly in particular) would have problems remembering their PIN. It's funny how money focuses the mind...
I don't think I do at all. Lets look at the introduction of credit cards. How long did that process take? Didn't banks/credit card companies have to spend heavily in order to induce user adoption (linked to my point above where the corporate world flies in the face of decentralized crypto but yet it just may play a part in achieving adoption as they have the resources to do so).
We also had the same nonsense going on with the web - where the misinformation early on was that it was the medium of pedo's and fraudsters.

Not necessarily....if you find another sucker before the price crashes then you've been lucky.
I see - and if I find another sucker before the gold price crashes, then I'm not a sucker to go out and buy gold either then?

And if we knew that!!!! Honestly, I think it will probably last a while longer. Not sure about a sudden crash....I have a feeling it will fizzle out over a period of time and then collapse.
Ok, well lets take a look at this more closely. If you maintain that Bitcoin is useless - don't you think that during any one of those 5 crashes, people with money invested would have re-assessed its value or otherwise? WHY is it taking so long to permanently implode? Many of the naysayers here believed that the last crash was exactly that - the last crash.
I asked Brendan the other day to put a time on it - from 5 months to 50 years and he wouldn't/couldn't. If you have confidence that its nonsense then surely there's a conservative guestimate you can provide as to how long more this will take? As per yesterday's FT, we have word of a $1 billion crypto hedge fund being set up. Seems like there's an expectation of many more 'suckers' to come...

We need to update the crypto market cap too, the total cap of the top 100 cryptos is down to B$249. There is also some debate about whether all Bitcoin in existance should be factored into its market cap given such a large proportion are out of circulation and likely unrecoverable.
Eh, I'm pretty sure that you know this very well already but in a nascent market like this one, that's a fluid market cap. :cool:
As regards it needing to be revised down, no problem - fill yer boots. I'm delighted ...it also means that the level of scarcity is so much higher than the official math.
You'll remember that market cap was mentioned as an illustration of how far the project of a handful of cypherpunks collaborating online had come in the space of 10 years. BTC can go down to $3k tomorrow and the achievement is still impressive to my mind.
 
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Firefly

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negative connotations regarding it that has been fed to them via media ...the criminal narrative, yada, yada.
That must be all this "Fake News" I'm hearing about? Just a misrepresentation?

On the 'criminals' aspect, are you discounting that link I posted detailing the MIT study that found that illicit activity accounts for 2% of transaction volume?
Here's an alternative study:

"Almost half of all bitcoin transactions are associated with illegal activity, a new study has concluded.
The study, which was conducted by researchers from the University of Sydney and the University of Technology Sydney, found that 44 per cent of bitcoin transactions and 25 per cent of all users were associated with illegal activity."



And from the Bitcoin wiki page:

In 2014, researchers at the University of Kentucky found "robust evidence that computer programming enthusiasts and illegal activity drive interest in bitcoin, and find limited or no support for political and investment motives".

There were an estimated 24 million bitcoin users primarily using bitcoin for illegal activity. They held $8 billion worth of bitcoin, and made 36 million transactions valued at $72 billion.[232][233]



Again, please drop the criminal thing.
Why? Google it and you'll get pages & pages & pages of it.

They're 'edge' cases from the world you and I come from. But the developing world accounts for a shed load of countries.
There are 180 recognised currencies in the world used by 195 countries. Only a handful have failed in the past 20 years. They're edge cases fullstop.


It's not that long ago that there was a hive of activity on this very forum with people scrambling to move euro savings to NL, DE, etc.
Long time lurker? ;)

Ordinary people don't understand it.
I don't understand the Google's search algorithim nor the inter-bank market, but I don't need to.

If you maintain that Bitcoin is useless
I don't think it's useless - it's been great for criminals. In fact, it could be great for lots of people to avoid paying tax come to think of it. Can you imagine how hard it would be for Revenue if more and more people were paid in Cryptos? It's a libertarian's dream.

If you have confidence that its nonsense then surely there's a conservative guestimate you can provide as to how long more this will take?
I genuinely don't know. At a guess maybe 3-5 years it may well still exist but will be below a tenner or something. I think it will be great for Reeling Back the Years though!
 

tecate

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That must be all this "Fake News" I'm hearing about? Just a misrepresentation?
It's being talked up beyond its worth - but shur, if it fits a certain narrative...

Here's an alternative study:
And from the Bitcoin wiki page:

In 2014, researchers at the University of Kentucky found "robust evidence that computer programming enthusiasts and illegal activity drive interest in bitcoin, and find limited or no support for political and investment motives".
Why? Google it and you'll get pages & pages & pages of it.
You're stretching back to 2014. Bitcoin is pretty niche now...do you realise how niche it was in 2014? The data from your 'alternative study' stems from 2009 to 2017! It remains to be seen how they proved them to be illegal transactions when this recent MIT study can't determine the nature of most transactions.

Why? Google it and you'll get pages & pages & pages of it.
I bet you will! Because it's being played up far in excess of the reality. The vast majority of illicit trade happens using cash - far, far in excess of Bitcoin. And beyond the absurdity of KYC/AML, billions are washed and distributed through the banking system every year. The rate at which banks have paid out in fines for this practice is in the billions over the past few years. Guess how many have been imprisoned as a consequence?

There are 180 recognised currencies in the world used by 195 countries. Only a handful have failed in the past 20 years. They're edge cases fullstop.
They are NOT edge cases. They're a regular event. There isn't a year where there isn't a list of countries suffering rampant inflation or hyperinflation. There have been 58 cases of hyperinflation (Hanke-Krus World Hyperinflation Table) - where the monthly rate of inflation has been found to exceed 50%. Think about that for a second. That doesn't take into account the recent drops by Iran, Turkey and Argentina....and others. It doesn't include a longer list still of garden variety 'rampant' inflation as opposed to hyperinflation.

At some stage or other, FIAT currency always fails.

I don't think it's useless - it's been great for criminals. In fact, it could be great for lots of people to avoid paying tax come to think of it. Can you imagine how hard it would be for Revenue if more and more people were paid in Cryptos? It's a libertarian's dream.
It's telling - and it's very much at the heart of the discussion with a lot of naysayers on here. Political belief system rather than approaching the technology on its merits alone. You mentioned this earlier -> "Using Bitcoin (or anything else) to shield their wealth from a regime that's gone rogue will generally make them criminals too but I take your point. "
That's all I need to know, Firefly.
Other than that, whilst many statists like the status quo, maybe just maybe we can strive to do things better. 20% is lost through the tax system in nordic countries. How much do we lose in Ireland? Does anyone know? Maybe we would know if blockchain was being used in our tax system. Maybe we could all pay a lot less tax still - if there was full transparency? Maybe we could have a more equitable pay per use system - given that the technology now exists to implement such systems for taxation?
But keep running with the 'criminal' mantra as it's what you want to believe. We can conveniently not mention the illicit money movements that go on in cash and in the current banking system, though - right?

Long time lurker? ;)
Active on here for quite a few years...where's the mystery?

I don't understand the Google's search algorithim nor the inter-bank market, but I don't need to.
Thank you for making my point for me. You think the first efforts at search were user friendly/reliable/workable/accurate? You think the first means of sending email was?

I genuinely don't know. At a guess maybe 3-5 years it may well still exist but will be below a tenner or something. I think it will be great for Reeling Back the Years though!
As will this thread!
So it will take 13-16 years for people to come to their senses and realise that they've been fools to themselves and Bitcoin/crypto has no value afterall. I don't hear much mention at all these days about tulipmania....how many months did that last?
 
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WolfeTone

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I do think its interesting that such emphasis is placed on alleged illegal activity with bitcoin while simultaneously the rampant, licensed, criminality in the international banking system is virtually ignored. This level of criminality is a multiple many times of the bitcoin market cap by itself. It is not speculation or allegation, it is fact.
 

tecate

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Lots to unpack in Nic Carter's Medium post here. He articulates why Bitcoin has value better than I ever could. Poignant to consider as we delve deeper into a world of inverted yields; as the ECB turns on the printing press once more to the tune of €20 billion/month.


"You may deride Bitcoin, no matter. Bitcoin will be there for you when you need it. You may not need it now; you may not need it ever. But as we plunge into a more despotic, authoritarian, and chaotic world, you may one day feel comfort knowing that the world’s highest assurance wealth protection system in history is waiting patiently for you.

Until then, it will keep ticking along."
 
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Leo

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If you're into cyberpunk fiction...

The current State, in its bloated and rapacious form, craves not only your corporeal submission, but it demands an endless torrent of metadata and analytics too.
 

24601

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Lots to unpack in Nic Carter's Medium post here. He articulates why Bitcoin has value better than I ever could. Poignant to consider as we delve deeper into a world of inverted yields; as the ECB turns on the printing press once more to the tune of €20 billion/month.

"You may deride Bitcoin, no matter. Bitcoin will be there for you when you need it. You may not need it now; you may not need it ever. But as we plunge into a more despotic, authoritarian, and chaotic world, you may one day feel comfort knowing that the world’s highest assurance wealth protection system in history is waiting patiently for you.

Until then, it will keep ticking along."
A more despotic, authoritarian, and chaotic world? Really? People are losing the run of themselves altogether.
 

Leo

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A more despotic, authoritarian, and chaotic world? Really? People are losing the run of themselves altogether.
Did you not realise that every government everywhere are bent on authoritarian control and the subjugation of their populations the the complete seizure of all their assets? We need to hide away what we can to stop them taxing it and spending the proceeds on the likes of social welfare.

So trust everything you have to an unregulated system founded by anonymous entities...we all know anonymous people we meet on the internet are far more trustworthy than those nasty authorities.
 

tecate

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A more despotic, authoritarian, and chaotic world? Really? People are losing the run of themselves altogether.
I disagree.
So trust everything you have to an unregulated system founded by anonymous entities...we all know anonymous people we meet on the internet are far more trustworthy than those nasty authorities.
Trustworthy? Someone hasn't been paying attention from day 1 it seems => 'Don't trust, verify'.

Meanwhile, go ahead and be the compliant statist and welcome in .gov as they steal money from your pension - or the euro in your pocket as the much lauded Quantitative Easing experiment continues to dilute the value of the euro in your wallet.
 

tecate

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My research has verified that Bitcoin isn't fit for purpose, and so is doomed.
That's your opinion (opinions being like backsides, everyone has one) and you're well entitled to it. That's not 'verification', just an opinion.
I'm quite happy to accept that you could be right but that's not my current assessment.

Other than that, taking away this monopoly on money from the state brings positives. They can't screw up when a plan b exists for citizens.
 

Leo

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That's not 'verification', just an opinion.
The 7tps limit has been verified.

Other than that, taking away this monopoly on money from the state brings positives. They can't screw up when a plan b exists for citizens.
In a great majority of cases, weakening a goverment's ability to effectively manage its own economy will harm the most vulnerable in those societies.
 

tecate

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The 7tps limit has been verified.
A couple of things ..
- it's emerging with a primary use case where that doesn't matter all too much.
- That 7tps is not set in stone. Granted it's much more difficult to effect change to a crypto that is already set ( and doesn't trade off in other ways). Notwithstanding that, there are BIPs emerging that will improve on that throughput. And that's all before we get to lightning network.

In a great majority of cases, weakening a goverment's ability to effectively manage its own economy will harm the most vulnerable in those societies.
That remains to be seen. Remember, if people actually go to the trouble of considering an alternative, then a country's sovereign currency and finances have been totally mismanaged.
 
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Leo

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And that's all before we get to lightning network.
It has failed in its primary use case, some have seen utility in an alternative use as a store of value. Any layer 2 solution I've seen requires you to transact out of Bitcoin, so it's not bitcoin.

That remains to be seen. Remember, if people actually go to the trouble of considering an alternative, the a countries sovereign currency and finances have been totally mismanaged.
So the US economy is being totally mismanaged? It all goes back to the Antonopoulos position, it makes some sense in basket case or despotic regimes, neither apply here.
 

WolfeTone

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The US economy is totally mismanaged. $20 trillion in debt, crumbling infrastructure, public health care in a shambles, kids arriving to school through metal detectors, increasing homelessness, biggest prison population per capita in the world, right-wing extremism on the rise, college graduates in life-long debt and a military industrial complex that does the bidding for corporate interests in regime change wars.
Not to mention the $5trn or so that the Pentagon cannot account for.
The US is a great country, great people, but it is a tinderbox in many places. A completely mismanaged economy.
 
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