Hacker News Reader

Comment by nosuchthing | Hacker News Reader

Knowing there's continual advancements in all the alternative cryptocoins, one has to wonder why anyone would find it viable to "store value" in a system that may at any moment become objectively obsolete.

More noteworthy is the assumption people have that BTC (or any other early-adopter-deflationary-investment-coin) is able to serve as a currency ecosystem when it's inherently deflationary, thus discouraging the usage of it for anything but speculative hording (which assumes there is a demand by something other than hoarders..) - or rapid short term use, which has proven ineffective and untimely for micropayments [1].

http://www.coindesk.com/lightning-duplex-scalable-bitcoin-mi...

View on HN

Altcoins are a concern, but as a store of value, Bitcoin is already 'good enough' that network effects are likely to make it a standard for a long time to come.

It's also good to remember that the tech world is built on all sorts of 'objectively obsolete' technologies.

BTC and other proof-of-work cryptocoins require active upkeep from the CPU/GPU/ASIC miners maintaining the network.

Hardware, and electricity investment is not static for miner upkeep. A fun feature of most cryptocoins is the ever increasing demand for hashing power, forcing miners to constantly consider the value of their real costs versus the real value of the protocol they apply their equipment to.

So by design, the network effect of cryptocoin miners will flock to whatever the current best design is on any given day.

Not with the block size limit serving the market for payments to the first competing cryptocurrency (like Ethereum) that develops a decent wallet and gets critical traction.

If there's a shift, it can quickly turn into a flood, since much of the value of bitcoin is based on speculation, rather than more robust demand from use as a payment vehicle.

Gold has been the de facto store of value for thousands of years. It has more to do with consensus rather than technology. As long as the bitcoin blockchain technology meets some minimum requirements, there won't be a need to move your funds anywhere else.

Furthermore, for all intents and purposes, the technology behind bitcoin is already obsolete. So if the obsolescence hasn't affected it yet, there is no reason to believe that further obsolescence would hurt it.

  there won't be a need to move your funds anywhere else.

Long term value and volatility would beg to differ.

>Long term value

Bitcoin is inherently deflationary as coin creation slows to 0.

>Volatility

Volatility is due to uncertainty and speculation. If Bitcoin survives and is used significantly for transactions volatility will decrease (it already has but not enough).

The assumption is there is no value in a system which is currently insufficient for use as a currency ecosystem, and doomed for obsolescence as other cryptocoins prove to offer objectively more effective feature sets.

  Bitcoin is inherently deflationary as coin creation slows to 0.

This is exactly what makes BTC ineffective as a currency ecosystem and thus counter-productive for speculative hording. Speculative hoarders assume the value comes from limited supply, and so the problem is two fold; the system disincentives spending, starving the economy in paradox. Additionally, as speculators place their bet that BTC's value is derived from a limited supply, we see there are already numerous competitors with improvements over the BTC protocol, and many more sure to come.. so this supply is not limited at all.

The price of bitcoin, the price of transactions, and the ratio of bitcoin to other alts disagrees with that theory.

A unit of Bitcoin is not replaceable with a unit of some random alternative cryptocurrency.

There is a huge barrier to switch. Bitcoin has common mindshare. Why would someone want to use an asset with far less mindshare?

The history of altcoins over the past 6 years supports these points.

Ah I didn't notice that that was your longer comment above this and misinterpreted you.

I'm not convinced that the deflationary spiral argument applies to what I view as a settlement layer, but it's definitely concerning to Bitcoin's future. I will agree that as long as bitcoin is seen as more of a commodity than a transaction layer, it will have a questionable future.

Bitcoin has been "objectively obsolete" for a while (Ethereum, Monero/ZCash etc.) yet its value increases. Maybe people are investing for some other reason such as network effects.

Yeah, I have to imagine that a lot of the practical use cases would be better on Monero or ZCash where cryptographic anonymity can be had.

Especially in black market type transactions this is hugely beneficial.

That said, a lot of the infrastructure is only on the Bitcoin front still - only a few exchanges offer other cryptocurrencies.

It's actually pretty easy to get alts. Buy bitcoin, go to a site like poloniex (there are lots of them) and trade your bitcoin for the alt.

Yeah totally, but my point was a lot infrastructure still revolves around Bitcoin, not alts.

In the case of investing, isn't network effects a euphemism for bubble?

Mostly yes, although Bitcoin probably has more exchanges and more liquidity than other cryptocurrencies.

>one has to wonder why anyone would find it viable to "store value" in a system that may at any moment become objectively obsolete.

The people of Venezuela or Kenya would say the same thing about their local currency.

And they often use USD because of that.

Reply on news.ycombinator.com