Random thoughts on Bitcoin
The weird thing about bitcoin/cryptos being a new asset class is that they have no intrinsic value and hence the price is not tied to anything. It could go to $0, could go to $1 million. What's it worth? I'd argue nothing. What could its price be? Anything.
Bitcoin pundits then respond 'well what's the value of fiat?'. I'd argue fiat only has value because we are forced to use it as legal tender. The legislation of fiat is what makes it have value, and we all have to agree on some type of universal method of exchange for convenience.
'Why can't that be bitcoin?'
A crypto that fluctuates 20% in a day will never be a reasonable method of payment.
Central Banks aren't going to give away control of their monetary policy.
Also at present,
it takes 12.18 minutes for a transaction to be made that costs $1.56 USD - how does that have any value in saving people banking fees.
"But the lightning network (layer 2 crypto protocol) is going to one day solve those transaction speed and cost issues'
Maybe, maybe not. Maybe quantum computing comes along and makes all of the cryptocurrency networks insecure.
'Ok, its not presently a reasonable payment method - but its a store value'
Way to change the goalposts. How can it store value if it has none?
'But if people think something has value then it has value?'
Lol People thought Pets.com had value, then when they realised it didn't have value sentiment turned and it collapsed. Pure sentiment is a terrible way to determine value.
'But the tech is worth something right?'
Well the tech of cryptos isn't patented, anyone could go out and start up a new blockchain by copying bitcoin's code.
Governments could copy the tech if they wanted to. If El Salvador wanted to use bitcoin they should have just started their own crypto so they could have owned a significant portion of it. Instead El Salvador just gave the power to dudes in their 20s to buy their entire country. Unbelievable.
'But De-Fi and smart contracts are useful'
The only way it can become useful is if crypto gets its price pegged to a hard asset. (gold coin, silver coin, nickel coin or hell even S&P 500 index coin)
Rant over - tell me where I'm wrong.
