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Comment by H8crilA | Hacker News Reader

Don't know if you've read his paper on Bitcoin, it's a decent one, it roughly boils down to two points: 1) no benefit in the meantime for the holder (such as a dividend or direct utility from the thing itself - a painting can be hung on a wall to look nice), 2) non-zero probability of perishing over any time period. From those two premises one can indeed conclude that the asset should be valued at no more than 0.

On the surface this is right, however I'm wondering if the first assumption is actually true. People do get some sense of fulfillment from participating in this "revolution", sticking it to the "big system", protection of capital from the "insane inflation", or just plain bragging rights (ex: laser eyes). Should this type of a benefit exist indefinitely then the conclusion of it being worth <= 0 isn't correct.

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I haven't read the paper, but based on your description these are really lame arguments. There is plenty of benefit/utility for holding Bitcoin, even if that doesn't apply to everyone in the world. The two biggest are the ability to store value outside the control of governments and send value anywhere in the world free of censorship. Many people don't have or a see a need for this, but that doesn't negate how immense the value is. Bitcoin provides a way to opt out of a financial system that's not serving you, and that is an incredibly powerful concept.

Point 2 seems even more ridiculous. Just about everything has a non zero probability of perishing over any time period (even our sun :)). TSLA/AAPL/GOOG all have a non zero probability of perishing, but that doesn't make them bad investments.

You can get a printout of a painting which looks identical to the real painting. Or you can buy a fake diamond that looks identical or better than the real thing. Yet somehow original paintings/real diamonds get sold at high prices?

I'm not judging - it looks like people are willing to pay for "authenticity", and always were. It is a legitimate "value stream" to someone even if you disagree with it.

> 1) no benefit in the meantime for the holder (such as a dividend or direct utility from the thing itself - a painting can be hung on a wall to look nice)

That point in the quote doesn’t make sense when you consider holding a stock like Amazon or Salesforce that never pays dividends. Are those stocks then the same as crypto? It seems like an oversimplification. Bitcoin, with this point, is just purely a “growth stock”.

If they will never pay dividend or get their stock bought back, or get acquired, or [some other obscure way of paying shareholders] then their stock is worth exactly $0, yes. The key word is "if".

>1) no benefit in the meantime for the holder (such as a dividend

There is no fundamental difference between an asset paying dividends or simply appreciating in value. At the end of the day all an investor cares about is ROI. Holding BTC's lack of dividends against it while it's gained 371% in the past year strikes me as odd.

I’d say that the first premise is objectively false. I think it’s much simpler. The volatility of asset has correlated narratives of hope and fear in the mind of the asset holder. These in turn produce a dopamine response, akin to mechanisms of a gambling addiction

I would have said 1) is for sure true till recently, my cleaner started asking to be paid in BTC, and even more crazy I would never have thought (I only took a tiny position recently)... I'd rather pay her cash because I'm worried I'll be that pizza dude in 10 years. :\ I'm not really bullish on btc and I don't really care what it does, but that interaction with my cleaner gave me pause.

1) is about whether the asset itself generates any benefit to the holder. The cleaner example has nothing to do with that.

Isn't being able to have a clean house direct utility? Or the asset itself must have intrinsic value? (house can be lived in, gold can be used for electricity/nice things etc?)

I'm talking about the asset itself. You've just sold it for labor instead of currency.

There is an argument that 'good money' should have no utility value outside of being money. Gold and silver having a utility premium actually make them 'bad money' according to this same argument.

Yes and (non backed) currency experiences slow but exponential decline in value, even if you augment it with the short rate (tbills in the US), always going to 0. It's still used to settle transactions. All checks out.

Another part of the argument is 'good money' should not to be easy to debase. This is where 100% of Fiat currencies fail and Bitcoin succeeds.

My savings accounts are earning me -.5% per year... That looks like 'no benefit to the holder' to me, so Bitcoin is actually outperforming regular currency by just sitting at 0.

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