As I have pointed out my toenails have all those characteristics, yet they are not a store of value, because they lack any fundamental value.
Most of those characteristics are necessary, but they are not sufficient.
Bitcoin lacks the main characteristic - it has to have some fundamental value in the first place.
You are looking at something which walks and swims so you are concluding that it is a duck. But in fact, it lacks the inherent quality of "duckness" as it's a human swimming.
Ducks, toe nails, poetry, tulips, hot air and
hypocrisy, Brendan.
If you were less disingenuous, you would accept that those characteristics - which are used universally be it by the boffins in the Federal Reserve or elsewhere - are key in determining what makes a decent store of value. You would accept that Bitcoin scores very well against those characteristics but you're ducking and diving every which way NOT to say one objectively positive thing about a digital decentralised currency that was incredibly well thought out. You do it a disservice by trying to suggest its equal to these nonsensical things that you mention (which you also know don't rate against those characteristics).
On to the intrinsic value argument....
This is where the hypocrisy comes in. You summarily dismiss Bitcoin on the basis that it lacks intrinsic value yet for all of your days, you've been supportive of a currency (and terrible store of value) that has zero intrinsic value - the €uro (and the dollar and all other FIAT currencies).
How do you square that? You'll say that its backed by the government. In real terms, what does that even mean? What does it mean to the people of <insert long list of a gazillion countries that have mismanaged their sovereign currencies>? What does it mean to citizens of all the other countries where their central banks/governments have made mistakes in tinkering with monetary policy that have cost them dearly?
How Bitcoin Offsets Intrinsic Value
And it is right here in the weakness of FIAT currency that Bitcoin is offsetting that intrinsic value requirement in spades. You don't get this - but one by one, millions do so. It's the fact that people trust in it because it works within completely trustless parameters. There is no tinkering - it's all set out and pre-programmed. Nobody will be printing off more of it. Nobody will be tinkering with it. Nobody will be left wondering what some unelected unknown officials will do in setting its interest rate - as all stakeholders already know. There's no mystery - the rules of the game are totally transparent. This built in assumed lack of trust is where people are finding value in Bitcoin. They're also being led towards this realisation due to sustained mismanagement of FIAT money and an ever growing distrust of those that manage sovereign currencies.
It would be great to be able to go back and look at what the buyers of tulips said during tulipmania.
Once again, tulips don't even come into consideration here in the Bitcoin context. You can make the intrinsic value argument but Tulipmania is not worthy of consideration in the same context as Bitcoin as tulips score an F in consideration of practically every characteristic of what makes a decent store of value. Bitcoin doesn't.
You can see some of it in the dot.com bubble.
You're right to cite over exuberance in the dot com era but you'd do well to acknowledge the incredible innovation and $$$ value add that emerged from it with the FAANGS worth a combined $5 trillion.
Those involved are completely blind to the reality and no amount of reasoning will shift them.
And I'd argue that your own views are pretty hard set and betray a certain lack of understanding.
It's hard to post sense in the thread when any alternative opinion is beaten down by talk of bags of hot air and toenails.
I maintain that such comparison is at best ill fitting and at worst disingenuous and/or betrays a lack of understanding.
I'm still of the opinion that holding cryptos (of any variety) is far too risky, but especially so for anyone not technically savvy enough to secure it effectively.
I agree insofar as anyone that decides to store it needs to own that and take personal responsibility for that. It's entirely do-able (as I'm not technical myself and even I can manage it) but it's certainly not at mass market comfort levels. That's something I'm confident will change. The multi-sig and timelock features of Bitcoin will be used to create user friendly solutions for Bitcoin storage. People are already working on that.
Bitcoin is an evolutionary piece of technology, much like the recognized currency we use today which has evolved through time.
I think we should not lose sight that the technology is playing an important role in the development of financial markets, simply search blockchain settlement, Central Bank Digital Currencies. You will find that nearly every central bank is researching some form of Digital Currency. It is in the early stages but it has the potential to radically change the banking model from a consumer perspective. I think on the consumer-focused forum we should be discussing those topics.
The impact of Bitcoin will have a lasting impact on infrastructure and financial markets in the years to come. These changes may not be seen visibly by consumers and will leave many to jest the failing of bitcoin, but in reality, they won't see the fundamental change and innovation it has created.
Thank you for at least acknowledging this. I'd hope that whatever anyone here believes on $$ value of Bitcoin, we could at least ground the conversation on this basis. Bitcoin is not BOHA, tulips, toe nails, poetry or any other such nonsense. There is something tangible there regardless of where you think it goes from here in terms of usage and $$ value.
It would be incredibly useful if the key posts from this topic could be made into a sticky, to educate people on Bitcoin / Blockchain. I have critiqued Bitcoin / Blockchain in a professional environment and consider myself quite knowledgable and neutral on the topic. This post has been very difficult to follow and would be challenging for people trying to get an understanding.
Agree completely.
Alas, my view is that Bitcoin will not grow further in usage from today.
This remains to be seen as it depends on so many factors. The technology is incomplete and it depends to what extent technologists/innovators can overcome problems as to whether there is any level of mass market adoption. However, as it stands today, it is in the process of establishing itself as digital gold or a store of value in its own right. I'm not entirely sure of your thinking on this but just bear in mind that there will always be a place for at least one truly decentralised digital currency.
tecate's tests are in fact a bastardisation of tests set by the Federal Reserve, though it pointedly omits one which is "credibility". A "currency" which has swung between 4,000 and 13,000 in the last 52 weeks simply ain't credible. tecate argues that it is because it is still only a precocious teenager.
The very same set of characteristics have been used by the Fed and others to assess what makes for a decent store of value, yes. As regards volatility, I'm not sure how this isn't intuitive to you - and how, as market capitalisation expands and adoption grows, volatility dissipates. Data has been cited that demonstrates that the process of ever decreasing volatility is already underway for Bitcoin. When it comes to use as a medium of exchange/every day currency, volatility is problematic. However, it's a case of stepping stones. In it's first found use case - as digital gold and a store of value, volatility doesn't make a blind bit of difference unless the market participant has the lowest of time preferences. Otherwise, Bitcoin has evened out to be the best performing asset of the past decade, of 2019 and thus far in 2020.
It seems that you are not prepared to accept that this can be resolved over time but to my mind, that's an error.
But the main and fundamental flaw is that it has no intrinsic backing. Satoshi recognised that fatal weakness but was so enthralled by his creation that s/he came up with a contorted if ingenious way out - it will gain "value" if people think it has value. tecate argues that this it no different from FIAT in that respect. I tried to explain where he was wrong there, that FIAT is backed by real debts from economic agents in society. He dismissed my explanation as long winded. He likes to chose the terms under which he will compete, hence his bogus 7 tests.
See the paragraph under 'How Bitcoin Offsets Intrinsic Value' at the beginning of this post. It's not just a case of people affixing value to it. You need to get to the 'why' and the 'why' is that one by one, people are coming to question whether they can trust FIAT money. With that they're opening up to the prospect of being able to trust in Bitcoin due to its assumed, pre-programmed and untamperable trustlessness.
People do like intrinsic backing for their currency, hence the Gold Standard. But the GS had become hopelessly unfit for the purpose of acting as a unit of exchange. World trade and economic activity must be a huge multiple of what it was 100 years ago. If this explosion in economic activity had to be backed by available gold supply the result would have been hugely deflationary. I am not an economist but I understand that such enormous deflationary pressure would have put a severe brake on economic development.
Debt backed FIAT was a real breakthrough in human economic development. But it certainly cannot be left to its own devices no more than can the food supply chain. Central Banks are charged with maintaining an acceptable price level. This level of backing and control is anathema to Bitcoin cultists. Fair enough, but my main point is that it is an error to think that the value of FIAT is at the same whims of human sentiment as Bitcoin.
You can say that FIAT money lacks intrinsic value yet is more sophisticated. However, it boils down to the same thing. That sophistication does nothing for people that end up on the wrong end of such currencies when they go very wrong. And all ordinary people end up on the wrong end of it - whether its through blatant mismanagement or the ongoing erosion of their wealth through inflation.
On the need to avoid deflation at all costs, I'm not an economist either but many are questioning this more and more. With that debt backed FIAT approach came exactly that - debt. Is that what society needs - everyone up to their tonsils in debt? That there won't be functioning economies and stable societies with a deflationary monetary system is not a foregone conclusion from what I can see.
Shocking finding. Asset manager who just launches Digital Asset Custody business announces survey results to show that digital assets are gaining in popularity.
Yet they won't give a press release showing how much digital assets they have in custody despite this surge in interest and they also won't offer the same amazing opportunities to retail brokerage clients that they offer institutional investors. So Fidelity are basically saying Bitcoin is great but not for the man on the street. Hardly a ringing endorsement for digital currencies that apparently we are all going to be using....
I'm not sure where you're going with this. Are you saying that there is no uptick in institutional interest in digital assets - because there have been plenty of other indicators that there has been more recently. As regards them catering to a particular sector of the market, what of it? I don't see your point. Fidelity don't cater to the man on the street. The man on the street has other options if he/she wants to gain exposure to digital assets. Here's one that's just been introduced -
Deutsche Borse lists Bitcoin ETP.