It’s a question of timing. Do I think Bitcoin goes to 0 in 150 years? Yes, but still may have a positive rate of return for the next 20.
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another question. why is gold even worth 10 trillion? how ridiculous that a shining piece of metal would continue to appreciate in value over 5k years. and why is 10 trillion the market cap of all gold. what is the reference point of why gold should be worth that much.
anyways it seems funny when you look at it. imagine we lived 5k years ago and someone told me that gold would stand the test of time. i would tell him he was crazy since gold doesnt have much value. sea shells on the other hand produces music which adds way more value to society, much like my club for domesticating my pet lion, simba.
some gold stats. there are 180k tonnes of gold that has been mined. there are 52k tonnes of gold left out there to be mined. 30k tonnes of gold are used by central bank and hidden away. another 30k is stored in private hands. we use about 5k tonnes of gold per year and thats about the same amount that we mine per year. roughly 50% for jewelry. 40% in investments. and 10% in industry. so nearly 90% is cuz bling bling money aint a thing. So its real value add to society is just 10% of its current value.
The answer is the same answer offered by BTC enthusiasts — because it’s worth what someone thinks it is. Fortunately for goldbugs, the 5,000-year history you describe is harder to alter in people’s minds than the speck of time in human history that BTC has existed.
The other thing that bothers me about BTC. Why should it be BTC that is the “winner,” should crypto be sustainable and widely used for actual transactions going forward? History is littered with first movers that were ultimately losers. Unlike what VC-worshipping culture tells us, sometimes innovation does not equal dominant eventual market share. We are not all flying to our destinations on an airplane emblazoned with the “St. Petersburg-Tampa Airboat Line” logo.
intrinsic value is not price though. the very definition of intrinsic value makes sure of that! it kind of reminds me of art. i saw a tiktok ad today that talked about this new platform that allows you to invest in fractional shares of multi million dollar paintings. they touted an appreciation of 15% CAGR mentioning art pieces like basqiat, warhol, kats.
anyways point is, just because something appreciated that much doesnt mean that it has value. its a speculative market. Even markets that should be focused on value like the stock market has been significantly distorted. from high pe multiples, to massive loss companies, zombie companies, to short selling investing. its prevalent everywhere.
investing is when the focus is on determining value based on the future potential cash flow something can generate discounted at a reasonable rate. speculation though is just supply an demand for a certain product to determine price at a certain point in time. cash flow vs the flow of money.
Sorry, not following. Are you asking why gold has value or why it carries a big price?
I’m saying that gold’s intrinsic value is far lower than its current market price. so yes, why does gold have such a high premium price?
Multiple reasons, but one is that most fiat currencies are being consistently devalued.
so lets run with that. lets say i create a one of a kind nft. there is only 1. fiat currencies will continue to get devalued over time. Should my nft Nerdcoin be worth 10 trillion like gold then?
No, it shouldn’t be worth the same as gold because that is stupid, lol. They are different assets with different fundamentals.
However, if your nerdcoin is traded across 32 million addresses with hundreds of thousands of transactions per day and growing and USD money supply increases by 30% in a year…yes, you should expect the value of nerdcoin in USD terms to rise.
Jewelry might be only bling bling, but it still means that a lot of gold is used / consumed as it has been for millennia. As such, 60% of gold’s value has a real floor. Even that shill Novogratz admits it in Galaxy’s BTC deck.
The investment side of gold may eventually wither, but it had some historical use as a store of value against hyper debasement of currencies and/or complete collapse of economies and entire civilizations. This whole argument about fiat being debased is not entirely wrong, just way overblown (at least so far). Most people know not to hold huge cash positions for extended periods of time. There are also many cheap ways to access a wide menu of investments to protect against said debasement so I find BTC’s purported benefit as a store of value quite weak.
Few in the developed world have truly witnessed a total collapse in which gold and/or some alternative would be needed. In my view, gold is sort of an asset of last resort that might store value in a burndown scenario. BTC maxis are essentially making the same bet (whether they admit it or not), which is that civilization crumbles.
The guys at Multicoin get it, and while I’m still skeptical of crypto overall, I like that they at least approach this from a VC perspective (i.e. it’s just investing in startups / R&D) rather than a seemingly ideological one.
well there is a legit nft that sold for 70m. it doesnt have any volume yet people peg its valuation off the last traded price. lol
but yea good point. the more transactions, the more credible it is. i dont know what that says about value though. there was a guy, who would look for penny stocks with a ton of volume. when he found one, he would call them up and ask them if they want some convertible debt that would convert to discounted shares if they couldnt pay up. the cos would take on the debt then default. the guy would then convert the debt to stock then sell/dump it to penny stock traders. eventually the stocks would go down and eventually to 0 since lets be honest most penny stocks go to 0 as majority of them generate losses and dont really do anything.
also heres a fun fact. tether has the most volume and its backed by usd. so shouldnt it trade at a substantial premium then to bitcoin?
Right, but what the tether comparison here is missing is that it isn’t just a “transactional value” that gives something a value.
Your NFT example…I would argue that the Beeple piece is simply more to do with being a unique piece of art than it being an NFT that is magically worth something. Any jerk with no artistic skill can make an NFT, but that isn’t going to sell. The canvas might change from fabric to zeroes and ones, but at the end of the day, humans seek uniqueness and having something that others don’t have. But this is a fluid concept. So that whole Beeple thing is governed by the dynamics of the connoisseurs in the art market, which…well, that’s a whole ‘nother pricing dynamic to those that are not in the Sotheby’s-and-Chardonnay set.
The other item that frustrates me with crypto is that people continuously conflate the value of a currency with the value of…anything else. A currency has a second derivative value. But BTC “enthusiasts” talk about it like people would talk about deriving the value of a collectible. Which is it? Less than 1% of BTC transactions are to facilitate an actual purchase of goods and services. The rest is speculative trading. That’s collectible dynamics, not currency dynamics. Despite the hype of the blockchain and secure transactions, BTC is not actually doing what the BTC evangelists claim in practice.
Taleb makes a great case that the value of BTC is zero; I recommend a read if interested:
presonally i dont think transactions give anything value. that just tells us the last traded price. if volume gave value, then reddit’s wsb can push up say a penny stock and determine that a company that loses money on a yearly basis with a crap business model has real value… oh waitttttt
Maybe I’m playing devils advocate here, but if we truly are sophisticated investors, shouldn’t we be able to find a balance between value investing and momentum investing that can line our pocketbooks?
I’ll be the first to say I totally agree with you on Bitcoin tumbling to nothing, but I’ll be damned if I was sitting here not acting like I wish I bought 40 of the things when they were $0.10 a piece.
I would suspect there is a way, especially since transactions are public, but I think it’d take bigger computers than I’m interested in building.
We’ve been using various currencies for forever. And one thing we’ve learned is that substitutes arise and even the first movers become worthless. In the long, long run, that will be btc. Especially given the fact they never want to hard fork.
However, DOW is going to be jelly as I stack my Ethereum millions. Boomer BOUT to be sad
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Market timing works, until it doesn’t. Thing is, I get paid a lot of money in my boomer job that I don’t need to fool around with trinkets and gimmicks. When you have a great core, you’re much less concerned with the satellite.
I hear you on what you’re saying, some of us are just trying to play catch up though.
And there’s nothing wrong with that, naturally. I’m just saying, do not confuse the truth of how this turns out with the current magical thinking that there is something solid behind the musical chairs. Once that music stops, I hope everyone I care about is well-positioned.
Pst this boomer probably still measuring his core in fiat. I got some swamp land to sell you.
One thing finance teaches us is that momentum is one of the most powerful factors. No need to market time to follow the crowd. How strong a core do you need a when doge is up 5000%?
TO THE 
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broskis. i just got approved for a 80k student loan at 1% rate for 5 year term. 1350 a month. ROFL. also i just did my 7 year cash flow forecast. first year is rough. 149k total cash outflow. 30k for 401k/ira/hsa. usc tuition at 53k. loan payments at 16k. and real estate private equity at 50k. i also got living expenses around 50k but not factored since my comp is taking care of that. bang bang skeet skeet.
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