Quote:
Originally Posted by ChiefRocka
Bitcoin and Ethereum are not companies or stocks or a plant bulb. They are value protocols on the Internet.
They currently resemble commodities more than any other asset but in reality they are an entirely new asset class.
We love comparing new things to old to try and define and make sense of them.
https://hackernoon.com/why-everyone-...s-c90b0151c169
Great read above about the computer science breakthrough that Bitcoin provided: Triple Entry Accounting
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That is probably the least impressive defense of Bitcoin's value I have read so far. First of all, the author conflates Bitcoin's value with the utility of blockchains; I don't think anyone doesn't think that blockchain is the future, but Bitcoin isn't the sum total of blockchain technology. Most blockchain applications and utility haven't even been discovered yet--we've barely scratched the surface. That, in and of itself, should give anyone pause about how Bitcoin is valued. In this sense, Bitcoin should probably be valued like AOL or Netscape; early adopters will make a lot of money from pioneering technology--but ultimately, better tech as the sector matures, it may very well wind up as a passage in the annals of history books rather than a valuable asset class.
Secondly, the author tries to justify Bitcoin's valuation by claiming that *nothing* has any intrisnic value so it is OK that we say that Bitcoin is valued at what it is:
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Nothing has any inherent value except the value we put in it.
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Fine. But that doesn't mean that Bitcoin is going to always go up--even in the long term. He tries to justify this position by pointing out the value of the value of the Dow in 1929 vs today; this actually reinforces the first point--not a single company that comprised the Dow Jones Composite in 1929 is part of the Dow Jones today.
Thirdly, the author rails against fiat currencies, and yet at the same time, proposes that Bitcoin is valued in terms of those fiat currencies.
Look, I'm not saying that Bitcoin has *no* value--my contention is that we have absolutely no idea of how to properly value it. As far as I am concerned, Bitcoin isn't an investment--it is a gamble. I think people misjudge the value of Bitcoin because there is a finite number of Bitcoins so there is an artificial sense of supply and demand. However, since blockchaining is still in its infancy, while there is a finite amount of Bitcoin, there is potentially an infinite amount of block-chained cryptocurrencies. Should any other cryptocurrency become "fashionable" the net value of Bitcoin could, potentially, drop to zero (just like any other currency). The fact that there are currently only ~300,000 bitcoin adoptors makes this all the more likely.
Just my 2 coppers. Like I said earlier--congrats to those of you who've made a nice little bank from Bitcoin. This is definitely a sector to keep an eye on.