Serious Money Is Warming to Bitcoin

https://www.wired.com/story/serious-money-warming-bitcoin/

by otoburb • 7 years ago

42 25 7 years ago

CPLX2• 7 years ago

This article talks about “the crypto industry” and mentions things like “institutional investment in crypto” and so on.

It’s odd that in an article so detailed there’s just no mention of the fact that there are no fundamentals whatsoever to any of these things, and they’ve been used almost entirely for speculation since inception.

Where’s the actual industry? In what are these institutions investing?

roboys• 7 years ago

They are investing in anti-fragility, scarcity, immutability, the world's largest super computer, instant transactions, tx volume, among other things.

You can arrive at a value of the network (and value per btc) using these numbers when you consider tx volume.

jazzyjackson• 7 years ago

The world's slowest supercomputer, amirite?

(Actually tho is there a coin out there that let's people post jobs to be computed as a useful proof of work? I would be curious to know.)

crdoconnor• 7 years ago

The fundamentals appear to be intrinsic scarcity + facilitating illegal transactions easily (circumventing currency controls, drug deals, malware ransoms, etc.).

I haven't seen much intrinsic value beyond those two things. Everything else is fluff (e.g. coffee shops taking bitcoin) or speculation.

That said, illegal transactions are an absolutely massive part of the global economy.

What's perplexing to me is that governments haven't yet reacted to this by bringing the hammer down. Realistically, if you're not involved in fluff or speculation you're probably using bitcoin to break the laws of some country.

CryptoPunk3• 7 years ago

An autonomous platform means that multiple mutually distrusting parties can transact without fear of the trusted third-party that controls the platform raising fees to extract economic rent from them once they're locked in.

https://www.linkedin.com/pulse/say-hello-nightfall-paul-brod...

javert4• 7 years ago

Bitcoin was designed to be honest and sound money. In the way that gold once was. Contrary to the way fiat money is.

For now, the fundamentals are simple: supply side is fixed and known, and demand is speculation.

In the ideal case for bitcoin, over time, people will gradually use bitcoin more for actual commerce. As this adoption increases, liquidity increases, and price becomes less volatile. The speculation we have now is the necessary first step on that road, because it gives bitcoin a price (i.e. props it up) and gives it some liquidity.

People complaining that bitcoin is just for crime are slandering it.

People complaining that it has no intrinsic value don't understand that nothing in the world has intrinsic value, including gold. Intrinsic value is bad monetary theory derived from bad philosophy.

woah• 7 years ago

I have a small amount of Bitcoin so this scenario would be good for me, but the looming crisis is that transaction fees will go really high (or the chain will become insecure) once Bitcoin’s inflation runs out.

The magical 21 number will come into question, which will really dent confidence in the entire premise.

awt• 7 years ago

People complaining that bitcoin is just for crime are just slandering it.

This one really gets my goat. There are so many ridiculous laws. It’s illegal to consume alcohol in Saudi Arabia. It’s illegal in Russia to use profanity in theaters, and in Thailand it’s illegal not to play a salute to the king before every film. Besides geographical differences in current times, the differences throughout history are more striking.

CPLX2• 7 years ago

nothing in the world has intrinsic value, including gold

This is incorrect. Both Western Europe and uncontacted pre-Colombian America considered gold extremely valuable for use as jewelry. That’s what intrinsic value means, people value it for what it actually is.

And nobody says bitcoin is exclusively used for crime. In practice it is used both for crime and financial speculation.

CryptoPunk3• 7 years ago

Bitcoin was designed first and foremost to be a peer-to-peer electronic cash. That is exactly what it is called in the title of its whitepaper. Satoshi describes how Bitcoin would be used in peer-to-peer transactions with full nodes processing gigabytes of data every day, so that Bitcoin could process transaction volumes comparable to Visa.

Now with a limit of 300,000 transaction per day thanks to the Core development team and the censorship of the main forums, BTC has no underlying or intrinsic value. It is based entirely on speculation and memes.

Forge36• 7 years ago

I'm not sure where the sentiment came from (I probably read the article to quickly?) It sounds as if coinbase now had a larger share because a major company switch moved their existing assets.

joeyrideout• 7 years ago

My understanding of this appeal to institutional investors is that it's simply a good risk-reward macro speculation play. A decent amount of macro folks are forecasting some sort of monetary crisis or at least significant inflation in the years ahead.

In the scenario that there is a full-blown crisis that requires a currency reset rather than just restructuring, what are we resetting to? Assign probabilities to gold, silver, a new fiat currency, or cryptocurrency. Given the small market cap of Bitcoin, a small investment would pay off incredibly well if that's where the chips fall down the line.

At a market cap of ~180 Billion USD, Bitcoin has a market cap similar to Pepsi Co. The USD monetary base is something like $4000 Billion and all gold ever mined is worth about $7500 Billion. Of the three, Bitcoin is a growth play plain and simple. Even if it's the least likely system of the future, a probability above 0 means institutions will likely buy some as a hedge. (Edit: That is, if institutions are ever allowed to. Many pension funds in Europe are forced to buy negative-yielding government bonds... sigh.)

xiphias2• 7 years ago

Retail is serious money. I'm actually quite happy that Bitcoin has more retail investors than institutional, and I hope it stays that way (a few billion dollars of institutional money at this point is not important).

Serious Money Is Warming to Bitcoin

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