Just because Bitcoin isn’t your preferred form of money doesn’t preclude it from being money. Plenty of people use Bitcoin as money so I would argue that Bitcoin is money.
People selling you stuff on the internet don't take stamps or gold for payment. That's why they aren't money. It doesn't need to be anymore complicated than a bunch of people I want to buy stuff from take this for payment. Bitcoin is money if people use it as money.
There are plenty of communities where they'll take precious metals at least.
Coin collectors, for example. Plenty of ordinary "for sale" listings say "I'll take USD50 or two ounces of fine silver coins/bars." I suspect there's also a similar sub-economy in the apocalypse-enthusiast fandom where they're always predicting the death of fiat currency Soon (tm).
Compared to bitcoin, I'd actually argue the fiat on/offramps are easier-- most any local coin dealer or pawn shop will trade a Gold Eagle, Maple Leaf, or Krugerrand within a few percent of spot price and with immediate turnaround, and it's got plenty of well-established legal and tax frameworks around it.
Actually, that brings up an interesting question: do we know how to insure cryptocurrency yet?
If my house burns down, and my physical wallet goes with it, they'll replace a nontrivial amount of paper currency that was destroyed-- something like $500. But if the fire took out a flashdrive with the key to a BTC wallet worth $500 in it, would their responsibility be to replacing the $500 in lost value, or "here's a new 16Gb flashdrive worth $4?"
"Money" (aka fiat currency) is not absolutely money. No money is money without trust. Do I trust my US greenbacks? Mostly, but in the future that will depend on prevailing inflation. Bitcoin has achieved a level of trust and has the advantage of mathematical proofs. Make your choices appropriately.
> Bitcoin is deflationary: it gains value over time (assuming it doesn’t crash).
is extremely popular but not nearly as straightforward as its proponents presume.
The author continues.
> Deflationary money is not good money. It restricts what can be done with it, rewards dead money (people who just sit on what they have), and empowers (again) people who won the past, not people who are doing good things in the present.
A planned decreasing money supply does not automatically mean the per-unit value increases over time. There is less demand to participate in a deflationary economy.
Currencies will be better off in the long run with monetary policy based on increasing the health of their economies. This means no mass-exodus inducing inflation and no steady deflation. If there is no economy there is no demand in the long run.
The first mover benefit is probably the biggest issue I see with Bitcoin. When I think of advances in technology and services I don't feel the first adopters get a locked in advantage that other people can't match or surpass.
There can be some benefits to being early such not needing to fight for attention as hard on a new social platform. But plenty of people put in work and grew things like YouTube channels bigger than many old first adopters. But other services and tools just wait to be used and generally provide their value immediately once adopted
Bitcoin just doesn't feel that way. The value proposition here is... value itself. There just aren't many options to leverage this technology other than being early and waiting. You can only make up for lost time by dumping an equivalent amount of money into it now to make up for lost time.
The obvious way to beat Bitcoin is to wait until it’s maximum value at which it can’t leverage further price increases. Once that happens it needs to compete on features, until then it can be pumped as an investment opportunity. I don’t have a specific prediction on this front, but exponential growth simply never lasts long term.
PS: Dividends and stock buybacks act as an escape value. However, while a 1% dividend simulates exponential growth if you simply buy company stock with it eventually you own the company and are left with a fixed income stream. The same happens with buybacks, eventually if you don’t sell everyone else does and you own the company.
The only value of Bitcoin is its massive brand awareness. Everyone and their doge has heard of Bitcoin, whereas most people have not heard of any other currencies. That's probably worth a few billion in itself, but not more.
From a cynical perspective, I agree with Bitcoin being something that rewards first movers and it could be something that limits social mobility if it's still around for 100s of years.
One potential outcome is for cryptocurrency to behave asset wise similar to land and real estate. It is something that rewards first movers and limits social mobility. The ever increasing costs of land and home ownership (in the United States) are part of a cultural preference as well as expectation of the asset appreciation. Home/Land pricing is almost always based on location and market clearing rates as opposed to fundamentals. Bitcoin is not just Money 2.0 or Gold 2.0, its also Land 2.0.
As Bitcoin becomes more legitimized through institutional and retail investors, ecosystem + industry participants I don't see it going away. Regular people will buy into cryptocurrency with leverage. Some people will make millions of dollars, others will not or will lose money.
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[ 3.1 ms ] story [ 33.6 ms ] threadIt’s ridiculous. Stamps aren’t money. Gold isn’t money. Bitcoin isn’t money.
Disclaimer: I am long Bitcoin. Not because it is or isn’t money, but because I believe I can make money by being in this position.
Coin collectors, for example. Plenty of ordinary "for sale" listings say "I'll take USD50 or two ounces of fine silver coins/bars." I suspect there's also a similar sub-economy in the apocalypse-enthusiast fandom where they're always predicting the death of fiat currency Soon (tm).
Compared to bitcoin, I'd actually argue the fiat on/offramps are easier-- most any local coin dealer or pawn shop will trade a Gold Eagle, Maple Leaf, or Krugerrand within a few percent of spot price and with immediate turnaround, and it's got plenty of well-established legal and tax frameworks around it.
Actually, that brings up an interesting question: do we know how to insure cryptocurrency yet?
If my house burns down, and my physical wallet goes with it, they'll replace a nontrivial amount of paper currency that was destroyed-- something like $500. But if the fire took out a flashdrive with the key to a BTC wallet worth $500 in it, would their responsibility be to replacing the $500 in lost value, or "here's a new 16Gb flashdrive worth $4?"
> Bitcoin is deflationary: it gains value over time (assuming it doesn’t crash).
is extremely popular but not nearly as straightforward as its proponents presume.
The author continues.
> Deflationary money is not good money. It restricts what can be done with it, rewards dead money (people who just sit on what they have), and empowers (again) people who won the past, not people who are doing good things in the present.
A planned decreasing money supply does not automatically mean the per-unit value increases over time. There is less demand to participate in a deflationary economy.
Currencies will be better off in the long run with monetary policy based on increasing the health of their economies. This means no mass-exodus inducing inflation and no steady deflation. If there is no economy there is no demand in the long run.
There can be some benefits to being early such not needing to fight for attention as hard on a new social platform. But plenty of people put in work and grew things like YouTube channels bigger than many old first adopters. But other services and tools just wait to be used and generally provide their value immediately once adopted
Bitcoin just doesn't feel that way. The value proposition here is... value itself. There just aren't many options to leverage this technology other than being early and waiting. You can only make up for lost time by dumping an equivalent amount of money into it now to make up for lost time.
PS: Dividends and stock buybacks act as an escape value. However, while a 1% dividend simulates exponential growth if you simply buy company stock with it eventually you own the company and are left with a fixed income stream. The same happens with buybacks, eventually if you don’t sell everyone else does and you own the company.
One potential outcome is for cryptocurrency to behave asset wise similar to land and real estate. It is something that rewards first movers and limits social mobility. The ever increasing costs of land and home ownership (in the United States) are part of a cultural preference as well as expectation of the asset appreciation. Home/Land pricing is almost always based on location and market clearing rates as opposed to fundamentals. Bitcoin is not just Money 2.0 or Gold 2.0, its also Land 2.0.
As Bitcoin becomes more legitimized through institutional and retail investors, ecosystem + industry participants I don't see it going away. Regular people will buy into cryptocurrency with leverage. Some people will make millions of dollars, others will not or will lose money.
Consider researching it. It has a lot of technical prowess behind it as well as momentum and doesn't suffer from the problems of Bitcoin.
Personally I do see Bitcoin continuing in use in the future as a type of digital gold.