The twins say none of this has dented their faith in the promise of the technology — they say they continue to hold every Bitcoin they ever purchased
This is a common refrain seen around /r/bitcoin as well.
If few people use it as a currency now, and the majority of people that buy it simply sit on it hoping it will appreciate, why do people think lots of people will want to use it as a currency in the future?
If cryptocurrencies were to become significantly more user friendly in the future and there was an economic niche revealed where their use made sense for lots of people, wouldn't people be more likely to choose a cryptocurrency that didn't come with a built in rentier class of people who have piled up large amounts of the cryptocoin while praying that a vapor future demand be made manifest?
The twins have placed themselves firmly in the camp of those who believe that Bitcoin will survive only if it has regulatory oversight.
At present bitcoin's two main use cases seem to be buying recreational drugs[0](which I have no problem with) and paying for things related to computer fraud(which I think is a destructive waste of time by misguided minds.) Both of these things are presumably things that regulators would like to regulate out of existence as best they could. So if they are even partially successful in doing that, what is going to drive the demand for bitcoin?(tell me something other than remittances, or if you insist on remittances then please explain why if it is not a suitable option for many now, how it could become one in the future.)
- - - -
[0] As a side note on this, bitcoin does seem to be very well suited to the online drug trade, it of course has already proven itself in this area, but from my outside perspective it seems current or potential future problem areas are the on and off ramps, the exchange between fiat and crypto. But imagine if the loop could be closed between the drug buyers and sellers.
So after a drug dealer has accumulated a large amount of crypto, he'll need to convert it to a more widely accepted currency to pay for the cultivation/production of more drugs, food, housing, etc. I guess the current method is to use a mixer then cash out at Bitstamp or btc-e or something, but say that bitcoin becomes regulated to the point that this becomes much more difficult to manage. So to close the loop, using bitcoin or another crypto, the drug dealer with the accumulated crypto sells to a network of crypto dealers, these crypto dealers then sell to a smaller hub in the network and on and on until the drug buyer instead of going over to the neighborhood weed dealer, goes over to the neighborhood crypto dealer, then buys his weed online with the crypto.
There would likely need to be some profit incentive in this, so maybe the drug dealer would sell their cryptocoin to large hubs in the crypto dealing network at a discount in exchange for not dealing with more onerous regulated off-ramps, that discount then gradually being reduced as the crypto radiated out through the network.
Of course with the way drug laws are being re-developed, hopefully all of this becomes moot in the not to distant future.
Ah, the good old "if no one uses it as a currency it will die, so you have to spend it!" argument. The answer is that we are using it: as a store of value. But every time we explain this, detractors will invariably reply either that it's not a good store of value because it went down in <insert cherry-picked timeframe>, or that saving is bad for the economy because central bankers say so.
For these sort of questions, simply compare it to gold: Is it dying because "no one is using it" to buy groceries? Does it sometimes go down, and yet a lot of entities, including central banks, consider it a great store of value?
With regard to 'store of value,' there are two sides to the coin, if you will.
For something to work as a store of value, there's got to be some other aspect of it that has a value/utility in another way. For gold this is it's resistance to corrosion, millennia of history, for the usd it is its broad acceptance as a medium of exchange, I could even store value in something like canned goods, or toilet paper, or firewood, or soap, or solar panels...
With bitcoin the case could be made that the structure of its network is this other side of the coin, intrinsically valuable aspect of it. That might bear out and more people might gravitate toward that, but that is far from a given at the moment. (do keep in mind that this aspect of it is endlessly replicable open source software, so it really boils down to the community, brand, ethos... that is built up around a given cryptocoin network. Another differentiating aspect I suspect we will see more of is innovative distribution/mining models. And then the other thing that establishes a currency is that it has to be the sole coin of the realm in a given realm/economy no matter how small, which we have seen you could say in the darkmarkets, but I think something along these lines but a little more 'legit' is what is really needed to see a cryptocoin take off.)
So it's my view that by saying it is being used as a 'store of value' before it has established utility/gained currency in a significant way in other realms is putting the cart before the horse. And that's why I'm asking if all the people that are just sitting on it, so sure it's going to take off in one way or another, how is it going to take off? What is it going to being used for? Also, that sounds less like a store of value and more like a calculated risk/speculative purchase.
As mentioned in my previous comment, I also see its current primary use as a 'store of value,' i.e. a land grab in attempt to profit from speculative future uses, as being a hindrance to its use in any of those speculative future uses.
Almost everyone using gold does it for it's symbolic value. Those uses cases involve tiny amounts compared to the monetary one.But that symbolic use is so old and it fulfills such an important need of humans that it's momentary value is guaranteed. Albeit something "like more worth than most materials".
>The answer is that we are using it: as a store of value
Money serves no purpose beyond a convenient means for economic transactions and paying taxes. There is no magic behind it, nor is it meant to be a long term store of value. It has to turn over to be useful. So if you're holding Bitcoin as a store of value (relative to what?) then there is no point comparing it to money.
There's also a difference between "saving" and "hoarding".
See the Capitol Hill Baby Sitting Co-op[1] for how real life hoarding of stores of values mean that exchange completely stops. It is a classic currency story.
I don't believe I said that. My comment was a glib attempt to imply that gold has other uses aside from being a token of purchase power that also contribute to its worth/cost: jewelry, manufacturing, electronics/microprocessors, I believe even some lubricative uses in aerospace, pigmentation, medical, and probably many others.
This is a common refrain seen around /r/bitcoin as well.
If few people use it as a currency now, and the majority of people that buy it simply sit on it hoping it will appreciate, why do people think lots of people will want to use it as a currency in the future?
If cryptocurrencies were to become significantly more user friendly in the future and there was an economic niche revealed where their use made sense for lots of people, wouldn't people be more likely to choose a cryptocurrency that didn't come with a built in rentier class of people who have piled up large amounts of the cryptocoin while praying that a vapor future demand be made manifest?
The twins have placed themselves firmly in the camp of those who believe that Bitcoin will survive only if it has regulatory oversight.
At present bitcoin's two main use cases seem to be buying recreational drugs[0](which I have no problem with) and paying for things related to computer fraud(which I think is a destructive waste of time by misguided minds.) Both of these things are presumably things that regulators would like to regulate out of existence as best they could. So if they are even partially successful in doing that, what is going to drive the demand for bitcoin?(tell me something other than remittances, or if you insist on remittances then please explain why if it is not a suitable option for many now, how it could become one in the future.)
- - - -
[0] As a side note on this, bitcoin does seem to be very well suited to the online drug trade, it of course has already proven itself in this area, but from my outside perspective it seems current or potential future problem areas are the on and off ramps, the exchange between fiat and crypto. But imagine if the loop could be closed between the drug buyers and sellers.
So after a drug dealer has accumulated a large amount of crypto, he'll need to convert it to a more widely accepted currency to pay for the cultivation/production of more drugs, food, housing, etc. I guess the current method is to use a mixer then cash out at Bitstamp or btc-e or something, but say that bitcoin becomes regulated to the point that this becomes much more difficult to manage. So to close the loop, using bitcoin or another crypto, the drug dealer with the accumulated crypto sells to a network of crypto dealers, these crypto dealers then sell to a smaller hub in the network and on and on until the drug buyer instead of going over to the neighborhood weed dealer, goes over to the neighborhood crypto dealer, then buys his weed online with the crypto.
There would likely need to be some profit incentive in this, so maybe the drug dealer would sell their cryptocoin to large hubs in the crypto dealing network at a discount in exchange for not dealing with more onerous regulated off-ramps, that discount then gradually being reduced as the crypto radiated out through the network.
Of course with the way drug laws are being re-developed, hopefully all of this becomes moot in the not to distant future.