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My thought is that this is spot-on: this doesn't function like a currency, never really has, and has no prospect of ever actually being one.

What if btc just increases the block size too? Wouldn’t that render bch useless?

Does anyone know anything about this lightning strike thing they are all singing about?

But they did hardfork and increase the Bitcoin block size.....it’s called BCH. Bitcoin but with bigger blocks and still usable as p2p cash

and the refusal to hardfork to improve the protocol & increase the blocksize is the reason.

Terrible headline, but the article makes a really good point.

A currency is not supposed to increase in value or have wild fluctuations in value. Both of those degrade its utility as a medium of exchange. It's supposed to be stable and, if anything, very gradually lose its purchasing power over time. It's not supposed to be an investment, it's supposed to be a temporary token that we use to exchange one thing of value (our labor) for something else of value (goods, services, or investments). If what you're buying is not doing that, then its not a currency.

Bitcoin today is a speculative investment, not a currency. So long as its market value is so volatile and overall increasing, it won't be used as a currency.

Bitcoin solves a core issue with fiat currency; central banks have a history of hyperinflating its value. Fiat currencies, on average, last 27 years. Governments use central banks to finance increased spending by printing money in the form of debt. That money has to be paid back eventually. Governments can either raise taxes or print more money to pay off the debt created by printing money. The former has immediate negative effects on the economy while the latter kicks the can down the road so future politicians have to deal with the consequences. Governments always choose the latter. Its a self destructive feedback loop that ends up forcing the central bank into hyperinflating its own currency to pay off its debt.

The USD became a fiat currency in 1971 when it was taken off the gold standard. It's managed to stay incredibly stable as a world reserve currency. It's used for trade between countries, giving it extraordinary demand. Without that demand, the Federal Reserve wouldn't be able to print money at its current rate without creating immense inflation. USD M1 supply increased 25% in 2020 alone. It's creating asset price inflation with stocks at ATH, yet living expenses haven't increased substantially. There's too many reasons for low inflation to list, but a couple major factors are that people are hording cash during this recession and technology is lowering prices. The bottom line is that the money printing won't slow down and inflation will catch up to us eventually. The US government isn't going to raise taxes to pay off debt and the Federal Reserve won't be able to raise interest rates without crashing the economy. It could be 40 years before it's a problem, but who knows.

The USD isn't going to last forever, we will need to move to a different system eventually. Bitcoin is a step forward in the right direction because its supply is fixed. We know exactly how much bitcoin there will be 100 years from now. Bitcoin is volatile, but its volatility is decreasing. USD on the other hand will increase in volatility years down the road. Eventually, (I'm taking 40 years into the future) bitcoin or some other decentralized currency will become less volatile than the dollar and people won't have option but to use it. People will see prices skyrocket in USD and remain relatively stable in crypto. They'll have a choice between holding a currency that increases in value or a currency the decreases in value. Inflating currencies may be better for spending, but to spend a currency you have to hold it first. Cryptocurrency will be an obvious choice in the future.

Bitcoin is a very limited technology. It can only handle 7 transactions per second. That said, second layer solutions can be made on top of bitcoin. People don't have to transact with bitcoin itself, bitcoin can be used as a reserve currency for financial institutions to back their customer's deposits. For example, PayPal can hold all of your bitcoin and keep track of your transactions. They don't have to make an on chain transaction every time a customer spends their bitcoin. Instead, financial institutions can make bulk transactions with each other every 10 minutes to ensure their holdings match the amount held by their customers. The institutions would manage all the transactions between customers themselves.

Crypto is a solution to fiat's supply problem. The only other solution known is gold and silver. Bitcoin is faster and cheaper to transact than gold and works in today's digital age.

Oh no, the best performing asset of the decade has volatility! It's dead! Again!

As a long time btc holder, it's fucking hilarious seeing these same articles pop up over, and over, and over, and over, and over; and despite bitcoin's many deaths, large institutions and millions of retail investors keep buying, putting btc at almost 40k at time of writing.

If you haven't bought btc yet, it's not too late. You don't need to rationalize sitting on the sidelines with these silly articles. Invest responsibly, a small portion of your net worth. Buy and hold for the long haul. Don't try to time the market. Take profits if you need them for your life. It's not hard.

There's definitely an article a week making this exact argument and it's mostly irritating because it's an entirely destructive argument that offers nothing helpful, not even a framework to start thinking about a better alternative.

I'd like to see an author like this tackle the stated goals of bitcoin - peer to peer, censorship resistant, independent, global currency, and propose a system that doesn't look like this. Or compare bitcoin to other currencies with similar goals.

Because the volatility argument in particular is not an easy to avoid problem and I'd be curious to hear alternative suggestions.

You can tie your crypto to the dollar, but that doesn't meet the goal of being an independent entity. You could write a crypto which issues more coins to combat deflation automatically, but that is unpredictable in an entirely different way, and not easy to create and secure. You can have a highly inflationary currency, but it's still subject to market forces which affect it differently at different economic scales, so volatility is not likely to be solved.

I also agree with other posters that volatility inevitably comes with growth in bitcoin. It's absolutely true that bitcoin adoption is growing, both as a speculative asset and a currency. The limited supply means growth causes it to spike in value, and this activity will increase speculative activity, until growth has reached some kind of plateau. Price stability will open up currency opportunities, leading to increased growth, leading to another speculative run.

Finally, these articles assume that bitcoin has reached full maturity because its price is astronomical compared to the last bull run. Bitcoin, and the crypto space, is in its childhood still - a niche plaything with insane potential. It's an evolving technology and it may die before adulthood, but for now it's at the highest levels of usage and speculative value in history, and still has a bright future. Satoshi opened pandora's box for the next generation of money, and it's not just going to fade away.

This has pretty much been my take on bitcoin for years now. There's 2 main groups who see value in it: investors and people who want to use it as currency, and their end goals for bitcoin are completely contradictory while simultaneously creating a feedback loop that makes both goals seem plausible (but the currency folks are definitely getting the short end of the stick).

Like the article said, nobody's ever going to use bitcoin as a currency when its value fluctuates so wildly because nobody wants to be the guy who paid $300 million for a couple of medium pizzas. On the flip side, the only reason the value fluctuates so wildly, and mostly upwardly (which the currency people love to point at as a sign of mass adoption), is because of the investors. If the currency folks give up on the idea, then investors are speculating on an intangible asset with no real value. If the investors get bored with it, the price tanks and the currency folks are left with a worthless currency.

Eventually, one side of the two groups is going to decide en masse that they're not getting the value they wanted out of it. I think it'll be the currency side, and then we'll get an absolutely ridiculous bubble popping from the investors. I wouldn't be at all surprised to see it jump to $100-200k before cratering to near zero.

Oh hey! It's one of these articles.

With the boring predictability of a spinning planet, BTC goes up and then when it drops there's a wave of "BTC is dead/horrible/never lived" articles. This one is nicely formatted, but still in that pile.

Yeah, we don't really now what public general use cryptocurrencies are just yet. They're a lot closer to cryptocommodities than currencies, at least for BTC's design.

There's some circular logic here. Bitcoin isn't used by consumers or accepted by retailers because of it's volatile price. Businesses are hesitant that the bitcoin they accept is worth ~25% less than what they accepted within a business day. Individuals are hesitant to spend that bitcoin because the pizza or cup of coffee they're buying might literally be a downpayment on a house in a couple years. So because no one is spending/accepting, then it's not usable as a currency? And because no one is using it as a currency, it's dead?

Bitcoin is useful for lots of reasons; the store of value, combined with the ability to globally transfer/receive, all publicly legered but with a layer of anonymity, is interesting and unique outside of the crypto realm (obviously there are other crypto that do this). There's all kinds of speculative assets that double as something else. Real estate, art, trading cards, cs go skins, stocks. All of those things do one thing or service, and double as a tradable store of value. Bitcoin is the same.

Bitcoin opened up the world to cryptocurrency and other kinds of crypto assets. Even though there's other crypto that better accomplish what bitcoin does (faster, more secure, more anonymous, more contract complex), all those other coins are relative to bitcoin. And bitcoin has a cap, there's only ~10% left of the total to mine, and that remaining 10% will take over 100 years to mine. The inherent scarcity is exactly why it retains value, because even though relative to a fiat currency the price may fluctuate or go down, bitcoin won't inflate itself by creating more coins in the system.

I most often compare and use high end art and expensive real estate as the real world comparison for bitcoin. Both of those markets basically exist as a way for wealthy people to park money into assets, and even though the art world and the real estate market are volatile and non-liquid, more often than not the asset will appreciate. Both those markets are huge, but they're so slow moving and non-liquid it's often tough to move if you need it. For luxury real estate you have to have a slew of real estate agents, mortgage/loan officers, appraisers, stagers, insurance, utilities, not to mention crew to upkeep the property until you sell it/while you rent/occupy it. There's closing costs, taxes, escrow. For art, it's the same. There's auctioneer costs, appraisers, temperature controlled storage, insurance, and you're going to pay someone to make a replica that you keep out while you hide away the real one. Bitcoin does away with all of that. You have your store of value, and with an address and a network fee, you can nearly instantly transfer that value to anyone in the world, and the receiver can have the transaction checked and verified by the blockchain and confirm that the funds were actually received. The volatility is a cost you bear, and basically the only cost. I think that's pretty powerful.

I bought some bitcoin in the early days out of curiosity, back when it was very cheap. I unfortunately kinda forgot about it, and my password.

I think there is a lot of nuance missed in both this article and some of the comments. Among those nuances: Bitcoin is a commodity, not a currency. Also, think what you want of Bitcoin, but it has created an entire cryptocurrency industry. This industry is allowing for economic innovation and reimagining of currency, which may lead to a new form of stable currency. Will it be Bitcoin? Probably not. But I expect future money will have been inspired by Bitcoin

I've read this article twice now and I'm still trying to figure out why it is trending. Perhaps someone can explain to me what I'm missing. Bitcoin had trouble being a currency from the start because there was no common market buy-in. There was the occasional story about a pizza place accepting bitcoin, but there wasn't a true market, industry, or region that said that bitcoin will now be as common of an exchange as traditional money. Second, a dip in the value of a currency doesn't signal it's end. It signals an adjustment, which will happen with a currency that has been purchased based on pure speculation. Finally, bitcoin is like any technology and will become whatever we make of it. As long as people see it as an investment it will continue to go up in value. If they start using it as a currency it will fluctuate, like any other currency. If they realize it is another tech fad you will see the bubble burst. As of right now I think the future is far too gray to make the speculations that were made in this article. I thought that was the discussion of all cryptocurrency since the beginning, but again maybe I'm missing something.

Currencies should be stable, no?

Every week I see at least ONE article claiming this, it's a meme at this point

Bitcoin became, and I believe to a large extent remains, popular for ideological reasons as a libertarian and anarchists dream of the ability to divest the power of control over the currency from the govrnment of the country they live in and give that control to the market.

Regardless of any other pros or cons of bitcoin - and there are other cons - this on its own is an incredibly stupid idea. The ability of the people of a country as represented by their elected government to control and purposefully direct the behaviour of their nations currency is an incredibly useful thing to maintain direct control over in times of financial crisis.

Left to the market, the market will often panic when it should remain steadfast, be over exuberant when it should be cautious, and these are things that should be left to experts with the best interests of the people of the nation in mind, not the invisible - or rather, non-existant - hand of the market and the mob.

THIS IS AN OPINION. Hit it where it hurts.. The insurrection only made the nazis, I mean patriots- withdrawing their money from anyone opposing donold

if i didn't listen to asshats like you ten years ago i'd have a house off bitcoin right now like my UPS driver, shut the fuck up with this cynical ass fascist ass doom and gloom

oh boy a fucking medium article with a clickbait title what fucking quality content article of an internet post this must be i can't wait to read all about how bitcoin isn't yet as static as established currencies and that's why it'll never contribute to denying power to entrenched elites or ever be meaningful in anyway aguuuuu fucking chodes

bitcoins speculative phase will eventually end, were in pure price discovery now, it could be years before it settles but eventually all this price discovery will settle on an agreed upon value.

also im sure the value of currency issued by the continental congress varied wildly from the years 1775-1789 or so.

Not one mention of the bitcoin lightning network in this article, which was specifically designed to address the central problem that was brought up. Its like they just hired an intern or junior level writer and told them "Hey, everyone is talking about bitcoin again. Write us something about it to put between these ads". Then it was put on the internet with no QC by anyone who is actually well informed about the topic. And no one cares if it is woefully poorly informed because they got their clicks and ad revenue.

In which folks learn the difference between currency and commodities. Bitcoin is a commodity. The open question is whether its like oil/grain/soybeans or more like tulip bulbs/beanie babies.

Bitcoin has always bewildered me. I started really paying attention to it around 2014 when it was at its low point after the failure of mtgox (~$200 or a bit below there). Never invested.

It's now up to an incredible amount, about ten times higher than what was then considered a fantasy of delusional proportions. There was at the time literally a whole copypasta of some bitcoiner's fantasy of waking up and seeing a $5K bitcoin price followed by spending their day doing various activities with bitcoin integrated into the process.

Bitcoiners got the first part (the $5K value and then some to boot) but never got the second part. In fact I still can't think of any compelling use cases for bitcoin that I wouldn't rather use venmo/apple pay/wechat pay for. The author pretty much says this too and points out it's entirely a speculative asset, but I mean, even gold can be used in engineering applications, so it's even more "pure" as speculative assets go.

Looking at this, Tesla, and the way that... literally the entire stock market behaved in 2020, I'm just absolutely convinced that much of peoples' investments are based on nothing but hype, and they're making complete bank off of it.

Have I gone crazy? Is this just the way the markets work now? Have they always worked this way? I'm honestly afraid to put my money in now because I wonder when people are going to realize that much of the valuation that goes on right now have nothing to do with the utility/potential of the underlying asset.

The price volatility is due to new people getting into the coin and holding them rather than spending them, this causes price growth as supply dwindles and results in the the occasional short term bubble as people rush in to make easy money. However each bubble cycle is less volatile than the last and eventually the price will stabilise because over time the amount entering into supply shrinks while the amount in circulation reduces towards a certain amount. For anyone looking to speculate based on this, bare in mind that it might stabilize at a price point that is lower than the current.

These massive swings and growth simply can't last forever. None of this happens with state currencies since their adoption is much quicker and the price discovery is measured in days or weeks as a result. The price swings are simply due to the novelty of bitcoin, and its reduction in volatility over time is what's part of the design. If you're at all familiar with bitcoin you'll know about mining and mining rewards. At first the mining was reward was 50 BTC. Then after a certain amount of time the reward halves and then it halves again and so on, literally forever. This means fewer and fewer coins enter circulation and there is less and less reward to enter the network.

The real problem with bitcoin as currency is that it's slow and can be controlled by anyone who has a majority of the hashing power in the network. Right now most hashing power is in mainland China which means that the CCP has in theory control of the blockchain but theoretically they can be checked if other countries set up their own mining farms for no other reason than to counter the Chinese. But then you get into a problem where you're spending huge amounts of power just to keep the blockchain safe

The reality is that blockchain is a cool tech but bitcoin specifically isn't designed with strategic interests or widespread use in mind.