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"I am still quite bullish that a basked of cryptocurrencies will be worth in the trillions within the next 10 years. The primary short term driver for crypto va

by strgrd 8y ago

"I am still quite bullish that a basked of cryptocurrencies will be worth in the trillions within the next 10 years. The primary short term driver for crypto value with be the generational replacement of gold as a store-of-value for a specific subset of the population. The longer term drivers of crypto value will be new forms of programable money and on-chain securities." What subset of the population is going to replace gold with crypto? Because it won't be the entire generation burned by ICO scams and bullish investment into whitepapers they don't understand.

eladgil 8y ago
Thanks for the comment - My hypothesis is that people growing up today in their 20s and 30s who would have normally bought gold in their 40s and 50s will buy crypto instead. So it will be a generational shift versus a replacement for existing older gold holders. (Could be wrong of course).
- zechs 8y ago
  Isn't that a big shift to expect given gold's track record as a store of value going back to almost the beginning of recorded history?
  - eladgil 8y ago
    It is a big shift and I could be wrong. However, horses are also something we used for transportation going back to the beginning of recorded history... (lots of other examples too). Crypto has a lot of aspects that make for a superior store of value (easy to move, seizure and censorship proof etc). Obviously, also has some drawbacks too like difficulty to custody...
    - kamarg 8y ago
      I feel like the recent 51% attack against Etherium shows that seizure and censorship proof isn't strictly true.
      - wmf 8y ago
        Note that there was a 51% attack against ETC which is not Ethereum (ETH). ETC already had very little usage and was known to be insecure before the attack.
      - tuesdayrain 8y ago
        Probably less than 0.001% of the population considers ETC to be the "real Ethereum"
        kamarg 8y ago
        That may be the case but don't pretty much all coins have this potential issue?
- mattnewton 8y ago
  I don’t buy it - gold has a natural floor, for one thing. I can sell it to make pretty earrings or fancy computer cables. The risk of it losing all its value is basically the risk that we will move to a post-scarcity Star Trek style society with matter replicators. Crypto.. not so much.
  - gfodor 8y ago
    Why does this floor influence your choice to purchase it over some other commodity to store value (crypto or otherwise?) What do you think that floor even is? (My working assumption right now is gold could lose 99.9% of its value if it was priced based upon it's utility as a metal and not as a culturally agreed upon store of capital.)
    - sf_rob 8y ago
      I would think that most people buy gold as a safe-haven investment, so in this case its floor and/or non-correlation would be very important.
      - nostrademons 8y ago
        So your logic is that "people buy gold because other people believe it's a safe investment"? That same logic applies to crypto - if people stop believing that gold is a good investment and start believing that crypto is a good investment, gold will cease to be a good investment and crypto will become a good investment. I think gfodor is asking something more along the lines with "What can you do with gold that you cannot do with anything else you can buy?" There are valid answers to that - gold is a catalyst in several chemical reactions that won't work with any other metal, it's corrosion resistant, it's shiny, it's a very good conductor that's quite malleable. But I'm with him in surmising that if people only used gold for its metallurgical properties, absent any historical sentimental attachment, the price would drop 99.9%. Gold is actually quite abundant; 190kt have been mined so far [1], most of which is either locked up in jewelry or being hoarded as an investment, so if people ceased to believe it was valuable there'd be a very large oversupply for the few real industrial uses. [1] https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold https://www.gold.org/about-gold/gold-supply/gold-mining/how-...
deleted 8y ago
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ThomPete 8y ago
The coming generations who will need a store of value for digital assets which they value much more than older generations do. Those who grow up today who don't get burned by ICO scams but will get to know it as a natural thing, just like the internet was for the millinials.
helen___keller 8y ago
Also given the failures of crypto so far I don't see any evidence that a programmable money/securities revolution would come from crypto. I would bet that a conventional tech company (think a PayPal/Robinhood hybrid) could do it much better.
- Red_Pill_Phil 8y ago
  The whole point of crypto is that its not centralized. Your argument has little merit.
  - helen___keller 8y ago
    Why must programmable securities/money be decentralized?
csomar 8y ago
10 years is enough for a newer generation to rise and make money. Those in the 15-25 right are quite adapt with Crypto. They'll be the next investors. Granted, if they are wise they won't put all of their liquid there. But if the 30-60 of the current world put a little in crypto; its' market value will fly out of the sky.
- ivalm 8y ago
  But why would they put money into crypto? There is some reason to use crypto as a currency (anonymous transactions), but there is no particular reason to use it as a store of value (hard to comply with anti-money-laundering regulation, hard to protect from fraud, hard to pass through audit, etc)
  - wmf 8y ago
    Because there's a chance it will go up 10x and no other asset will.
    - UncleMeat 8y ago
      There's a chance that lottery tickets go up 1,000,000x. There's a chance that vintage NES controllers go up 100x. There is a chance that baseball cards go up 100x. Literally all things have a an arbitrary growth ceiling.
    - ivalm 8y ago
      Sorry if I didnt understand sarcasm, but in case you are serious, "speculation" is not the same as "store of value." Whether crypto is a good speculation target is a difficult question, but most do not sell crypto as a "speculation target" as its primary attribute. It is also unlikely that something whose primary attribute is speculation can have a positive roi long term.
      - wmf 8y ago
        I'm not being sarcastic (this time). When crypto people say "store of value" I'm pretty sure they mean (long-term) speculation. Also consider that people may be investing for a different reason than what they say.
nostrademons 8y ago
There's been this pattern within crypto where each new bubble brings in new people, while the people burned in the last bubble leave in disgust and long-time hodlers from 2 bubbles ago cash out their winnings and do other things with their lives. Many of the most active developers and evangelists from 2011-2013 are doing other stuff now, and the ones that haven't are engaging in juvenile pissing matches with their millions (cf. Roger Ver and Craig Wright). Many of the folks burned by Mt. Gox left in disgust in 2014. Many of the current big exchanges (eg. CoinBase) were founded by people who got in after the 2011 bubble. Ethereum was founded by folks who got in after the 2013 bubble, and were initially skeptical of this whole cryptocurrency things. There's probably a wave of new cryptocurrency startups being founded in garages & dorm rooms right now by people who were too young to really participate in the 2013 or 2017 bubbles but don't want to miss out on the next one. The folks who got burned by ICOs are mostly already gone, or they're sitting around being bitter and predicting Bitcoin = $0. It's not all that different from the dot-com boom; I (mostly) missed out on the bubble from 1995-2000 since I was in high school at the time, but kept studying computers & web technologies in college and caught the mass adoption wave afterwards. I had a number of classmates and coworkers (at internships), slightly older than me, who rode the dot-com bubble right into the ground, losing both their jobs and their life savings. Many of them left tech altogether and became economists or traveled abroad or bounced around between temp work. They basically swore off investing in tech stocks, but one of the folks I'm thinking of thought she'd make a pretty penny by buying 3 houses and investing in hedge funds in 2007. It's human nature to believe that bad things that happened to other people aren't going to happen to you, and as a species we're remarkably bad at learning from other people's experience. The set of folks actually burned by ICOs is a relatively small subset of "all people" though - IIRC at the peak of the bubble there were only about 10M Bitcoin investors in the U.S. and only a small percentage of them actually invested in ICOs. That's like 3% of the population, still very much in early-adopter territory.
- danmaz74 8y ago
  Web technologies created immense practical usage value right from the start. The fact that cryptocurrencies will do the same is very, very debatable. For now, the only valuable use case I know of is for illegal activities (ransomware, tax evasion, buying illegal stuff). Which is a sizeable market, but not one which is going to see mass adoption.
southerndrift 8y ago
Some days ago: We can confirm that there was a successful 51% attack on Ethereum Classic [1] [1] https://news.ycombinator.com/item?id=18849961 https://news.ycombinator.com/item?id=18849961 The value of crypto currencies is strongly linked to the available processing power that can be rented for a short amount of time. An attack must never be profitable. So the value of cryptocurrencies cannot grow arbitrarily. Just Bitcoin is quite secure because you cannot easily rent the specialized hardware.
pxlpshr 8y ago
I don't even know that many people who "store value in gold". The ones that do are usually also the people screaming that the sky is falling, at which point I favor guns, ammunition, and food & water.

by strgrd 8y ago

eladgil 8y ago

Thanks for the comment - My hypothesis is that people growing up today in their 20s and 30s who would have normally bought gold in their 40s and 50s will buy crypto instead. So it will be a generational shift versus a replacement for existing older gold holders. (Could be wrong of course).

zechs 8y ago
Isn't that a big shift to expect given gold's track record as a store of value going back to almost the beginning of recorded history?
- eladgil 8y ago
  It is a big shift and I could be wrong. However, horses are also something we used for transportation going back to the beginning of recorded history... (lots of other examples too). Crypto has a lot of aspects that make for a superior store of value (easy to move, seizure and censorship proof etc). Obviously, also has some drawbacks too like difficulty to custody...
  - kamarg 8y ago
    I feel like the recent 51% attack against Etherium shows that seizure and censorship proof isn't strictly true.
    - wmf 8y ago
      Note that there was a 51% attack against ETC which is not Ethereum (ETH). ETC already had very little usage and was known to be insecure before the attack.
    - tuesdayrain 8y ago
      Probably less than 0.001% of the population considers ETC to be the "real Ethereum"
      - kamarg 8y ago
        That may be the case but don't pretty much all coins have this potential issue?
mattnewton 8y ago
I don’t buy it - gold has a natural floor, for one thing. I can sell it to make pretty earrings or fancy computer cables. The risk of it losing all its value is basically the risk that we will move to a post-scarcity Star Trek style society with matter replicators. Crypto.. not so much.
- gfodor 8y ago
  Why does this floor influence your choice to purchase it over some other commodity to store value (crypto or otherwise?) What do you think that floor even is? (My working assumption right now is gold could lose 99.9% of its value if it was priced based upon it's utility as a metal and not as a culturally agreed upon store of capital.)
  - sf_rob 8y ago
    I would think that most people buy gold as a safe-haven investment, so in this case its floor and/or non-correlation would be very important.
    - nostrademons 8y ago
      So your logic is that "people buy gold because other people believe it's a safe investment"? That same logic applies to crypto - if people stop believing that gold is a good investment and start believing that crypto is a good investment, gold will cease to be a good investment and crypto will become a good investment. I think gfodor is asking something more along the lines with "What can you do with gold that you cannot do with anything else you can buy?" There are valid answers to that - gold is a catalyst in several chemical reactions that won't work with any other metal, it's corrosion resistant, it's shiny, it's a very good conductor that's quite malleable. But I'm with him in surmising that if people only used gold for its metallurgical properties, absent any historical sentimental attachment, the price would drop 99.9%. Gold is actually quite abundant; 190kt have been mined so far [1], most of which is either locked up in jewelry or being hoarded as an investment, so if people ceased to believe it was valuable there'd be a very large oversupply for the few real industrial uses. [1] https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold https://www.gold.org/about-gold/gold-supply/gold-mining/how-...

deleted 8y ago

[deleted]

ThomPete 8y ago

The coming generations who will need a store of value for digital assets which they value much more than older generations do. Those who grow up today who don't get burned by ICO scams but will get to know it as a natural thing, just like the internet was for the millinials.

helen___keller 8y ago

Also given the failures of crypto so far I don't see any evidence that a programmable money/securities revolution would come from crypto. I would bet that a conventional tech company (think a PayPal/Robinhood hybrid) could do it much better.

Red_Pill_Phil 8y ago
The whole point of crypto is that its not centralized. Your argument has little merit.
- helen___keller 8y ago
  Why must programmable securities/money be decentralized?

csomar 8y ago

10 years is enough for a newer generation to rise and make money. Those in the 15-25 right are quite adapt with Crypto. They'll be the next investors. Granted, if they are wise they won't put all of their liquid there. But if the 30-60 of the current world put a little in crypto; its' market value will fly out of the sky.

ivalm 8y ago
But why would they put money into crypto? There is some reason to use crypto as a currency (anonymous transactions), but there is no particular reason to use it as a store of value (hard to comply with anti-money-laundering regulation, hard to protect from fraud, hard to pass through audit, etc)
- wmf 8y ago
  Because there's a chance it will go up 10x and no other asset will.
  - UncleMeat 8y ago
    There's a chance that lottery tickets go up 1,000,000x. There's a chance that vintage NES controllers go up 100x. There is a chance that baseball cards go up 100x. Literally all things have a an arbitrary growth ceiling.
  - ivalm 8y ago
    Sorry if I didnt understand sarcasm, but in case you are serious, "speculation" is not the same as "store of value." Whether crypto is a good speculation target is a difficult question, but most do not sell crypto as a "speculation target" as its primary attribute. It is also unlikely that something whose primary attribute is speculation can have a positive roi long term.
    - wmf 8y ago
      I'm not being sarcastic (this time). When crypto people say "store of value" I'm pretty sure they mean (long-term) speculation. Also consider that people may be investing for a different reason than what they say.

nostrademons 8y ago

There's been this pattern within crypto where each new bubble brings in new people, while the people burned in the last bubble leave in disgust and long-time hodlers from 2 bubbles ago cash out their winnings and do other things with their lives. Many of the most active developers and evangelists from 2011-2013 are doing other stuff now, and the ones that haven't are engaging in juvenile pissing matches with their millions (cf. Roger Ver and Craig Wright). Many of the folks burned by Mt. Gox left in disgust in 2014. Many of the current big exchanges (eg. CoinBase) were founded by people who got in after the 2011 bubble. Ethereum was founded by folks who got in after the 2013 bubble, and were initially skeptical of this whole cryptocurrency things. There's probably a wave of new cryptocurrency startups being founded in garages & dorm rooms right now by people who were too young to really participate in the 2013 or 2017 bubbles but don't want to miss out on the next one. The folks who got burned by ICOs are mostly already gone, or they're sitting around being bitter and predicting Bitcoin = $0. It's not all that different from the dot-com boom; I (mostly) missed out on the bubble from 1995-2000 since I was in high school at the time, but kept studying computers & web technologies in college and caught the mass adoption wave afterwards. I had a number of classmates and coworkers (at internships), slightly older than me, who rode the dot-com bubble right into the ground, losing both their jobs and their life savings. Many of them left tech altogether and became economists or traveled abroad or bounced around between temp work. They basically swore off investing in tech stocks, but one of the folks I'm thinking of thought she'd make a pretty penny by buying 3 houses and investing in hedge funds in 2007. It's human nature to believe that bad things that happened to other people aren't going to happen to you, and as a species we're remarkably bad at learning from other people's experience. The set of folks actually burned by ICOs is a relatively small subset of "all people" though - IIRC at the peak of the bubble there were only about 10M Bitcoin investors in the U.S. and only a small percentage of them actually invested in ICOs. That's like 3% of the population, still very much in early-adopter territory.

danmaz74 8y ago
Web technologies created immense practical usage value right from the start. The fact that cryptocurrencies will do the same is very, very debatable. For now, the only valuable use case I know of is for illegal activities (ransomware, tax evasion, buying illegal stuff). Which is a sizeable market, but not one which is going to see mass adoption.

southerndrift 8y ago

Some days ago: We can confirm that there was a successful 51% attack on Ethereum Classic [1] [1] https://news.ycombinator.com/item?id=18849961 https://news.ycombinator.com/item?id=18849961 The value of crypto currencies is strongly linked to the available processing power that can be rented for a short amount of time. An attack must never be profitable. So the value of cryptocurrencies cannot grow arbitrarily. Just Bitcoin is quite secure because you cannot easily rent the specialized hardware.

pxlpshr 8y ago

I don't even know that many people who "store value in gold". The ones that do are usually also the people screaming that the sky is falling, at which point I favor guns, ammunition, and food & water.