I’m unsure if discussing bitcoin as an investment is allowed here, but I wanted to bring it up because of the recent trends. The main argument people use for buying bitcoin as an investment is that:
There is a limited supply of it
It works like money
The idea is that once all the bitcoin is mined, there won’t be any more. So, people will keep buying it, which could drive the price really high in the future.
But here are some counterarguments:
Gold has a limited supply too, but it’s not going up in price like bitcoin.
There are other cryptocurrencies that could easily be created. Imagine if the US government decided to make bitcoin illegal and introduced their own cryptocurrency.
Right now, we all agree that bitcoin is worth 90k. But when you compare it to other cryptos and NFTs, it doesn’t seem so different…
But then again, the Mona Lisa is just a painting, yet it’s priceless to many people. So, could bitcoin be the same in the future? Are we all just investing in an agreed value that might change later on?
Sure, the theory about the price going up could happen.
“Today we all agree that bitcoin is worth 90k.” – Not everyone agrees with that. The price is 90k, but whether it’s actually worth that much is a different question. Warren Buffet once said he’d never buy all the bitcoin in the world for $25. A lot of people agree with him, and others don’t.
“The Mona Lisa is just a painting, but we all agree it’s priceless.” – That’s a matter of perspective. Some people see it as priceless, while others think it’s just a random painting of a lady.
With bitcoin, like with the Mona Lisa, the value is not something objective. These things don’t produce future income or cash flow like bonds or companies. So any value we put on them is purely based on people’s opinions, and that’s what sets the price.
Gold is actually up almost 30% this year. I’ve never really believed bitcoin has much value, aside from illegal activities, so I’ve stayed away from crypto. But Trump has shown support for bitcoin and even mentioned keeping US bitcoin reserves. It sounds crazy, but if the government is hoarding bitcoin and working with crypto exchanges, there might be a good chance that bitcoin keeps going up in value.
Would you even use bitcoin as money if you think it’s only going to keep increasing in value? If you believe that, there’s no reason to spend it. You’d only trade it for dollars or something else. You’d only use it if you were forced to for goods.
It’s just betting. A Ponzi scheme. You buy something, hoping it’ll increase in value. If enough people join in, it will rise. Eventually, there won’t be any new buyers, and the whole thing will crash.
I’m shocked that Trump wants to add bitcoin to the national treasury. Why would you want something like this instead of real currency you can control?
A lot of the replies don’t really understand how bitcoin works. I’ve been in airports for 12 hours, so I don’t have the energy to go into all of it, but here are some points:
Bitcoin has more “intrinsic” value than the dollar. The dollar’s value comes from military power and enforcement, but bitcoin is backed by the knowledge of thousands of years of civilization.
If I were creating a new society, I’d code the currency the way bitcoin works.
Bitcoin is trustless. With dollars, I have to trust the banks and Visa. With bitcoin, I don’t.
Bitcoin is deflationary. The rise in its value comes from the loss of value in the dollar.
The only downside is the fear that bitcoin wasn’t really created by cypherpunks, but maybe by the CIA as a form of control.
Bitcoin has more “intrinsic” value than the dollar
No, it doesn’t. USD is the only legal currency in the US. You can’t pay your taxes with bitcoin or anything else. Bitcoin has zero intrinsic value. It’s just a token. No one guarantees you can use it for anything.
If I were creating a society from scratch, I’d use bitcoin as currency.
You can’t build a society like it’s a coding project. Blockchain is not what makes a society work.
Bitcoin is trustless.
Wrong again. If you have a dollar bill, you can just give it to someone. No banks or credit cards needed. With bitcoin, you need miners to process transactions. If mining becomes unprofitable, bitcoin transactions won’t work anymore.
Bitcoin is deflationary.
It’s like the price of tulips in the Dutch tulip mania. It was driven up to ridiculous levels, then crashed.
CIA and bitcoin…
This is nonsense. Once bitcoin mining becomes unprofitable, it will crash. All the coins will eventually be mined, and there won’t be enough incentive to keep mining.
Lastly, if I made a new crypto coin, why would it be worse than bitcoin? Just because bitcoin was first? People who hold it like it, but I wouldn’t give a dollar for one.
I’ve been thinking the same thing lately. Bitcoin’s value isn’t based on anything solid—it’s just driven by speculation. When things go wrong economically, people will sell off their bitcoin just like anything else.
The only reason bitcoin has value is because of the greater fool theory.
You’re right, there are two main ideas people use to justify bitcoin:
It’s a store of value like gold.
It’s a currency.
But for point #1, it’s ridiculous to think bitcoin can hold value. Gold has actual uses in industries like jewelry and electronics. Bitcoin has no intrinsic value. You own it because you hope the price goes up.
Point #2 is just as absurd. There’s a reason we don’t have a global currency and why countries control their own money. There’s no way bitcoin could replace that.
Bitcoin is just a one-way payment method, which is only good for scams. You don’t want any reversals or to know who’s involved.
In the end, it’s useless, and once the supply of bitcoin is maxed out, it’ll become even more impractical.
Bitcoin will eventually be worth nothing. We don’t know if that will happen in 5 days or 500 years, but the math doesn’t add up.
Until then, it’s still better than fiat money. The government can’t just print more of it. It’s easy to transfer compared to gold. It’s kind of like how gold is used to compare the value of other cryptocurrencies.
Forget the legal issues for a moment, but I’m not too sure about this whole “limited supply” argument. From what I understand, bitcoins can be split. So if they split faster than the economy grows, we’ll still see inflation.
I personally don’t see bitcoin much differently than any other currency. It was created to challenge governments with too much control over money. It could work as an alternative to official currencies for buying things or managing wealth.
As for cryptos as a whole, unless every government bans them, they’re here to stay. But I’m not convinced we need all these other cryptocurrencies.
Bitcoin is just about finding the next buyer. There’s no real value to it aside from hoping someone else will buy it for more. The hype will eventually die, and then the value will be just like Beanie Babies.