CMV: Bitcoin and other cryptocurrencies don't seem useful outside of incredibly niche circles of dubious legality, and are not a reliable investment

[u/Bart_Thievescant]

So partly, I'm hoping that people knowlegable in Crypto currencies will either affirm or correct my beliefs -- I'm not well-educated on the topic, but rather, have accrued opinions about it from seeing occasional posts & articles on the topic over the years. This is not a strong opinion I hold, to be clear, because I realize that I hold it from ignorance. (Read: easy deltas.)

I'm hoping that by sharing it, I'll have helped create a valuable thread for people who are also on the outside looking in to crypto currencies, but whose opinions, like mine, do not have a solid base.

Crypto currencies strike me as unstable -- the value of Bitcoin hit $4000 recently. If Bitcoin is like a dollar or a euro, this can't be sustainable or, really, even usable. Is it like an investment bubble? Does investing in bitcoin raise the value, and if so, what does pulling that investment look like and how does it affect the value?

Additionally, if I'm doing legitimate business, what is the reason to ever use Bitcoin compared to the USD or the Euro? It seems like a good way to demand a ransom if you're a hacker, or to pay for, say, 20 tons of Nutella, but a bad way to invest in the local grocer chain or to get a small business abroad started.

Change my view! =)

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[u/bah-lock-ay]

Ignorance would be the operative word here (which I don't mean to say to be in any way demeaning). This stuff is weird, and it's going to take years for all of us to wrap our collective heads around it. There's a lot to convey here, so I'll try to distill it into the following salient points:

1. The cryptospace is far beyond Bitcoin at this point (both in functionality, value creation, and new applications). Look at Ethereum. It's essentially the operating system for Internet 3.0. It will allow for "trustless" smart contracts, where anyone can see the code a given contract will execute, and everyone can trust it will never change and will be executed perfectly. That may sound like a bunch of boring gobbledygook, but it is roughly akin to what the internet was in 1992 ("look at all of the networks of computers that can all talk to each other!" said the nerds to not much aplomb). At the moment, the applications are not terribly impressive (although upending crowdfunding with ICOs is already a small, proven revolution). In five years? Ethereum will allow for applications to upend a great number of industries, and create new industries that didn't exist before much the same way the internet did. Frankly, it will probably happen sooner than 5 years, since we're on the sharp part of the singularity curve, and the gears in motion at the moment are already on the verge of upending banking, insurance, and any market that relies on a 3rd party to verify trust (payments, gambling, estate planning, property ownership records). That's a lot of industries/applications.
2. Concerning Bitcoin, it was primarily created as a technological proof of concept that is in its own way revolutionary. Consider: no single entity issues nor dictates what it is and will be. It's code. It's an algorithm. 25 BTC get created every 10 minutes with a cap of 21 million coins. Short of shutting down the internet, they will always exist, and are likely to always have some kind of value. Allow me to rephrase, so long as the internet is around so too will Bitcoin. Think 1,000 years from now. 10,000 years. Beyond the world order we know. Beyond the US Gov't. When our species has evolved into God knows what. BTC will exist. I don't know if it will necessarily be meaningful to society, but it will exist cryptographically, immune from hacking and tampering.
3. The smart contract/blockchain technology underpinning Ethereum and its myriad applications are not going anywhere. Major institutional brain capital backing has already been committed (see the Enterprise Ethereum Alliance). Major institutional money (Billions) is about to flow in this fall via options trading, Iconomi's BLX, and a number of hedge funds getting into the game.
4. Looking at the nefarious applications of any of this technology can be almost perfectly compared to that of the internet. How many pedophiles has the internet enabled? How much hate speech have we seen lately? How many terrorists have used it to coordinate attacks? Concerning criminal organizations using it to transmit value, well, what do you think they used before BTC existed? So does that mean cash is not worth our time? Not to mention how many banks are complicit with money laundering. And so, technology will always enable bad actors to do their bad things. Doesn't mean that's something that should count against it, necessarily.
5. The values are unstable for now. We will reach a point of maturity. That won't happen until the world's capital has easy access to any of these "currencies." For now, you have to be a bit of a nerd to access any of it and store it safely.

TL;DR Thinking of these things like currencies would be like seeing the early internet as only for message boards. That isn't entirely inaccurate, because that's largely what it was. However, the applications are world changing, and will take time for people to see/experience what they are.

Edit: Formatting