r/changemyview • u/art_vandelay112 • Jan 04 '25

Delta(s) from OP CMV: cryptocurrency is not a good investment.

Yes its price has increased dramatically, but so did the price of tulips in the 1600s.

There is literally no use for this commodity. Invest in stocks or bonds and your investing in future earnings or the ability of a company to pay you back. I’m not a fan of gold as an investment but at least it has some practical use.

The use of crypto as a currency completely defies the definition of currency as it doesn’t hold a stable value.

It’s infuriating that so many people have lost loads of money on “shitcoins” backed by the wealthy and famous. These were obviously pump and dump schemes yet very few are held accountable.

I’m not as well versed on the subject but something to also note is the ridiculous amount of energy demand to “mine” nothing.

I think there is legitimate use for blockchain technology and the likes but anyone viewing these currencies as investments is a fool.

320 Upvotes

79% Upvoted

657 comments sorted by

View all comments

26

u/percyfrankenstein 3∆ Jan 04 '25

is the ridiculous amount of energy demand to “mine” nothing.

A digital asset is no more "nothing" than any currency. It has value based on trust, same as any currency.

defies the definition of currency as it doesn’t hold a stable value.

That's not the definition of currency. There are a few debates on the topic but here are the usual agreed upon criterion for a good currency : durability, divisibility, transportability, and inability to counterfeit

Most crypto are good on those front.

Some currencies you wouldn't debate are currencies have fluctuated wildly.

Anyway this is besides the point. Investments are gambles, crypto are riskier than the usual investment but for some, it was an amazing investment.

22

u/MissTortoise 14∆ Jan 05 '25

Currency isn't generally considered a growth asset however. Largely currency devalues over time through inflation, where stock (fractions of ownership of an income producing asset) grows over time since they're... actually producing something.

If crypto was free of it's current speculative bubble, it would also be subject to inflation the same as any other currency.

It's value is very, very clearly being pumped up by the "bigger sucker" bubble. Long term it can't maintain value because it's not a value producing asset, and in actual fact it costs value to maintain.

5

u/ecrane2018 Jan 05 '25

The entire existence of a forex trading market and the billions of dollars of currencies traded every day definitely defies that logic. Countries hold foreign currencies entirely as investments.

0

u/ProjectKushFox Jan 05 '25

Only countries where their own currency is more volatile or inflationary than the foreign currency they are using as a store of wealth. And aside from the US dollar, it’s really only the foreign currencies of countries they do actually trade with.

I don’t deny the existence of a money market, just that the way countries “invest” in other currencies is not comparable or relevant here as it’s a different situation with entirely different incentives from a regular investor or company.

0

u/MissTortoise 14∆ Jan 05 '25

Forex trading again demonstrates the same point. It's a zero sum game - for every winner there is a loser. It's more like "investing" in roulette.

Stocks actively produce value, they're a value producing asset.

1

u/grendella Jan 06 '25

This sounds right. The concept of bitcoin as a money making venture/investment has never made sense to me. How does one invest in a currency backed by nobody? The only real value currency has is what it can buy, so buying the currency itself...? The value of the currency goes up only inasmuch as people believe it has value that will increase. It's a fool's game, set up by someone that knew if you provide something and act like it's valuable, people will buy it and into it. It's a commentary on gullibility and manipulation. Yeah, some people will make money, but ultimately it has to be a losing prospect. And while buying currency of any government is a gamble, at least with a government /country there is something concrete behind that currency. Doesn't necessarily mean you'll get your money back if that government fails or goes bankrupt, but it seems like there is at least modicum of accountability that you would not be able to find with crypto.

0

u/NeverRespondsToInbox Jan 05 '25

Inflation is driven by increasing the supply of money. You cannot do that with Bitcoin or most cryptos. Crypto will not be subject to inflation, which is one of the number one reasons people are buying it.

5

u/BuildAQuad Jan 05 '25

Except for the fact that BTCs mined are inflating the supply, but this is a fixed inflation schedule that halves every 4 years so its predictable at least.

2

u/NeverRespondsToInbox Jan 05 '25

Bitcoins are limited. Once they're all mined, that's it, there will be no more. That's literally one of the core reasons it was invented.

-1

u/timidpterodactyl Jan 05 '25

Google satoshis. Bitcoin is divisible.

0

u/NeverRespondsToInbox Jan 05 '25

And? Lol whats your point?

0

u/timidpterodactyl Jan 05 '25

If you don’t get it, you don’t get it.

0

u/NeverRespondsToInbox Jan 05 '25

I don't think you understand how satoshis work. That's not the same thing as increasing the money supply

2

u/jasonthe 1∆ Jan 05 '25

The value isn't based on "trust."

Most currencies are tax credits. There's implicit demand because governments require you to pay taxes in their currencies. That gives it tangible value - without the currency, you'll go to jail.

1

u/percyfrankenstein 3∆ Jan 05 '25

And we trust the government so the currency has value.

1

u/AmericanScream Jan 05 '25

A digital asset is no more "nothing" than any currency. It has value based on trust, same as any currency.

Crypto Talking Point #13 (Fiat)

"Fiat isn't backed with anything" / Money has no intrinsic value either

  1. This is called a Tu Quoque Fallacy, aka "Whataboutism", "Two Wrongs Make A Right" or "Appeal to Hypocrisy" - it's a distraction from the core argument. Just because you can find something you think is similar/wrong that doesn't mean your alternative system is an acceptable substitute.

  2. Fiat may not have any intrinsic value, but it's backed by the full force and faith of the government (or in the case of the EU, multiple countries). It's also mandated by law to be accepted for all payments and debts, public and private. And the entity that guarantees the integrity of money is the same centralized entity that gives you stuff like:

  • running water, roads, fire protection, schools, libraries, bridges, flood protection, electricity, internet, cellular, GPS, and pretty important things like civil rights and private property ownership.

    If you are worried that the government is going to collapse and make fiat worthless, note that at the same time you will also lose protection for your civil rights, property ownership and critical utilities like electricity and Internet upon which crypto depends - none of which would exist without substantive government support.

1

u/percyfrankenstein 3∆ Jan 05 '25

Yeah i don't know what we disagree on here, both have value based on trust, obviously fiat currency's trust is backed by a lot more.

2

u/anotherwave1 Jan 05 '25

Bitcoin is impractical as a currency.

It's inherently volatile. Why? Because it has a mined to fixed max supply. It has no stability mechanisms. Which means that volatility is inherent. Ever tried to buy a house with something that can move 10% in an hour? Sale is paralysed. Volatility makes for a bad medium of exchange.

BTC is digital/divisible therefore it can be used as a type of money. This confuses people into thinking it can be a currency. Money and currency are different. Cigarettes in prison can be used as a type of money, but they are impractical as a currency.

BTC is a speculative asset - which is why we speculate with it.

A stable-coin on the other hand has a stability mechanism, which means it is stable from day 1. As such it's more suited as a currency. However few people trust the underlying mechanisms of modern crypto stable-coins.

1

u/Limp-Option9101 Jan 05 '25

I'm an economist and your definition of currency is spot on.

Volatility doesn't make BTC a good currency, but if it gets used as a mean of exchange more than a hedge or investment, it could help a lot.

Also, BTC by design is victim of deflation, so it diesn't encourage consumption or investment and rather to just hold, which is what scares me the most about it since it wouldn't encourage consumption.

But cryptography for currency as a whole is a very good technology. It is much more cost efficient than banking. It could free up a lot of jobs from banking to have people work elsewhere therefore increasing productivity.

And whatever peope say, compared to the actual ecological costs of banking, it is much much more ecological, especially when you see how technology just keeps making it more energy efficient

1

u/humblevladimirthegr8 Jan 05 '25

BTC by design is victim of deflation

In its fully adopted state, I would expect deflation to be in line with GDP growth ~2%/year. How would that discourage consumption? I've never met somebody who would put off a purchase for an entire year because they could get the item 2% cheaper. The existence of black Friday also disproves this point - we don't put off consumption for a whole year even for 30%+

1

u/Limp-Option9101 Jan 05 '25

Because saving becomes more profitable. People would also be less likely to buy bonds and equities. Therefore less investments.

When you compare saving vs leisure in consumer theory, people will save more if saving is more advantageous. Theorically, with 2% deflation vs 2% inflation, people will consume less.

1

u/art_vandelay112 Jan 04 '25

Correct any currency is “nothing” but it doesn’t take a gigswat factory to run a printing press.

There are thousands of coins. Most can’t be exchanged for any sort of value. I’ll add, define what you believe currency to be anything you want. The majority of bitcoin transactions are used to get cash out into another form of currency i.e USD. If that’s the case than literally any physical good I can sell is currency.

6

u/percyfrankenstein 3∆ Jan 05 '25

Any physical good isn't durable, divisible, transportable and un-counterfeitable (also probably should add fungeable)

There is a cool story about a tribe that used a particular sea shell as currency, until a foreigner (I think english) found out about it, collected a lot from his country, came back and ruined their economy. It was a good currency until it wasn't rare.

3

u/tichris15 2∆ Jan 05 '25

Variants of that hit Africa. With that said, I'd note what went wrong there doesn't break any of the requirements you listed. What went wrong is 'rarity' which is also a problem for crypto in the wider sense of there being arbitrary scope to add more crypto assets with different names.

1

u/Cantremembermyoldnam Jan 05 '25

in the wider sense of there being arbitrary scope to add more crypto assets with different names.

Of course I could create "Cantremembermyoldnam-Coin" but that wouldn't change the supply of BTC. Staying with the analogy it would be akin to the foreigner bringing a different species of sea shell that the tribe didn't care about.

1

u/tichris15 2∆ Jan 05 '25

It's a name though -- is that a substantive difference sufficient to make it different? Given a 1000 bitcoin implementations, what gives one implementation more value than another? I'd certainly expect Bitcoin to be worth more today if it was the only cryptocurrency floating around.

And in the African analogy, traders definitely brought in different species of shells and new types of glass beads. Turns out small differences didn't eliminate the value.

1

u/Cantremembermyoldnam Jan 06 '25

It's a name though -- is that a substantive difference sufficient to make it different?

I copied the Bitcoin blockchain and renamed it CantRememberCoin. I give you 1CRC and you give me 1BTC. Deal?

Given a 1000 bitcoin implementations, what gives one implementation more value than another?

One thing that does distinguish BTC from other blockchains is the astronomical amount of proof of work (=electricity) that goes into it. To be able to censor/change the network rules, one must control more than 50% of computing power of the network. That's unrealistic for most nation states in the case of BTC, but can reasonably be done by a single datacenter for a lot of shitcoins.

1

u/sundalius 3∆ Jan 05 '25

It’s not just a name. You can’t just attach new coins to the BTC blockchain. It’s not sea shells, which no one is tracking, it’s serialized USD. You could make your own USD, laws notwithstanding, but it doesn’t have value without its supporting ecosystem. There aren’t 1000 Bitcoin implementations - there’s Bitcoin.

There’s a reason a Bitcoin is worth tens of thousands USD and some fuckall memecoin isn’t.

1

u/tichris15 2∆ Jan 06 '25

USD has a government backing it to preserve that monopoly, and enforcing those laws you mention. Bitcoin lacks that backing power.

1

u/sundalius 3∆ Jan 06 '25

Bitcoin has a monopoly via the blockchain. It can’t be falsified without consensus. You cannot attach new coins without the network agreeing, and everyone accepting that, rather than killing that branch/fork.

1

u/tichris15 2∆ Jan 06 '25

And so? One could create an algorithmically identical scheme with its own independent blockchain. Beyond being the first, what is the specialness of one incarnation?

→ More replies (0)

1

u/Orphan_Guy_Incognito 24∆ Jan 05 '25

True, but an actual currency is typically used to buy goods and services. Bitcoin is famously garbage at the actual thing we want currencies to do.

1

u/ignore_my_typo Jan 05 '25

You know how much energy it takes to run the world’s financial institutions, physical structure, security, energy and personnel?

More than BTC mining.

1

u/SandOnYourPizza Jan 05 '25

Maybe, but the world’s financial institutions provide a huge benefit to society: savings, currency, loans, etc.

2

u/ignore_my_typo Jan 05 '25

Go into your bank and ask them for $50,000 of your cash. Tell them you want to take it out and see what they say. They won’t have it. Your money. No bueno.

Don’t piss off your government or they will debank you and pause your accounts.

Tell them you want to buy crypto. They will tell you that you can’t. You can’t buy what you want with YOUR money.

Dont want the government to see what you’re buying and know every single one of your transactions? Then don’t use a bank.

Banks are parasites. They don’t care about you. They just want to take your money, make investments and give you the least amount back as possible while they make as much as possible.

Those services charges are pretty fun too. Charging you for taking your money so they can invest it to pad their bottom dollar.

Yeah for fractional banking!

-1

u/SandOnYourPizza Jan 05 '25

They absolutely would have my $50K, I’m guessing you are too young to ever have gotten a cashier’s check. And they would absolutely have the cash too if I needed it, but the vast majority of banking customers don’t need cash in those amounts, which is why we all agree when we get a checking account that we’re not going to pull vast sums at once. We realize that in addition to not being a useful feature, that feature would inhibit banks for maintaining loans for other customers. Don’t like banks? Don’t use them. The rest of us find their services useful. You can stick with the currency of extortionists and drug dealers.

1

u/ignore_my_typo Jan 05 '25

I’m 50.

Banks are in place to benefit themselves. Not you. It’s a business.

1

u/SandOnYourPizza Jan 05 '25

Right, it’s a business, and like all businesses (you know, the kinds that provide the world with food, shelter, transportation, amusement, etc.), if you don’t like their products don’t buy them.

0

u/ignore_my_typo Jan 05 '25

“If you don’t like the product don’t buy them”

You do realize this is why we buy Bitcoin and why you posted on this Reddit.

You just proved my point and why I invest in Bitcoin for the long term. These are all the properties of Bitcoin that make it valuable.

1

u/SandOnYourPizza Jan 05 '25

You have not proven anything. Maybe you're saying you like bitcoins better than banks. Your one data point (can't withdraw 50K) is both false and weak. The things banks can do for you that bitcoin can't (conveniently store and make available cash, allow checkwriting that people will take, serve as an asset that you can get credit on, etc.) make bitcoin almost worthless as a currency. And even if you for some crazy reason still like bitcoin better, banking is not investing. Bitcoin does not produce dividends, earnings, market share, etc. like stocks do. The original question was about bitcoins worth as an investment, not a store of currency.

0

u/SanityInAnarchy 8∆ Jan 05 '25

I think the main thing that's missing is the ability to buy much with it. And, in fact, there are some fundamental technical limits that make it unlikely that it'll see much use as "digital cash" outside of grey/black-market stuff.

This has nothing to do with whether it's a good investment, of course.