I don’t think anyone needs to exchange cryptocurrencies for “something of value” for the investment to work, they just have to believe the currency itself holds value, where value is defined by supply vs demand. If enough people think others will believe it has value, then demand will increase. It’s basically how MLMs work, but it can sustain itself once it reaches a sufficient number of investors.
Adding transactions for real goods and services in the mix expands the reach of the currency and can stabilize demand a bit once the initial speculators have lost interest. So yeah, there’s absolutely a motivation for speculators to try to get others on-board. But it’s not necessarily a requirement, as we can see with other collector fads like Beanie Babies or Baseball Cards (the only value is in trading with other collectors), but just changed to be digital (NFTs are the strongest analogue).
However, just because speculators are rewarded if you use a cryptocurrency for transactions doesn’t mean you should avoid it. Use it if it provides value to you. The value proposition is:
lower transaction fees, especially for international transactions - Bitcoin fails for small local transactions, but works well for large and international transactions; the lightning network helps for small transactions, and other currencies exist for small transactions as well
privacy - banks can and do sell your data, and governments may be interested in your transactions as well; you can’t use cash for online transactions, so there aren’t many good options
security - breaches and scams happen, and if you don’t notice the issue soon enough, you could end up paying for fraudulent transactions; with cryptocurrencies, you never share your private key, so you’re as safe as wherever you store that key; you can also move money between keys, so you can keep the bulk of your money safe
Even without any kind of physical backing, cryptocurrencies offer an attractive value proposition. We could probably solve the above with fiat, but that currently is not a thing. I don’t recommend using cryptocurrencies for everything, nor do I recommend using it as an investment, but I do recommend using it for a few transactions here and there until you feel comfortable with it because of that value proposition.
It seems like you’re arguing against a position that I don’t hold? I’ve been invested in Bitcoin for a long time, and I’m quite familiar with its technical and socioeconomic dynamics. I’m skeptical of altcoins specifically, not of cryptocurrency as a concept.
Maybe? It reads like you’re arguing that you shouldn’t buy cryptocurrencies at all if you don’t understand how transactions are handled. I don’t think that’s true, and that will just discourage the normal, everyday person from getting started. You may need that info if you’re interested in investment/trading, but you don’t really need to get into the weeds if you just want to pay for some online services.
The important thing for lay-people is to recognize the value cryptocurrencies can provide, understand which cryptocurrencies are “stable” (as in, not some altcoin scam), and understand transaction times and costs. That’s honestly it. If we can achieve that, more people will start using cryptocurrencies for transactions where it’s available, more vendors will see it as a viable payment source, liquidity will improve, and developers will address the issues as they come up.
If you’re buying something other than the top few cryptocurrencies, then yes, I agree with you. But you’re not going to do that if your goal is to use it as a currency, because no real vendors are going to accept whatever that new altcoin is. If you stick with the big coins and your goal is to spend those coins, you’re not likely to get screwed. Bitcoin can work w/ Lightning, and Monero (my preference) is great on its own. Those are also the two that are most commonly accepted by vendors.
Maybe we agree there, idk. I think your comments read a little gatekeepy and from a “cryptocurrencies are investments” standpoint, and I think the focus should be “cryptocurrencies are currencies.”
Alright, fair enough. Keep in mind though that this comment thread started with an assertion that Bitcoin didn’t get it quite right, and Monero did, which is more of a big-picture analysis thing than merely “can I buy something with this”. My responses have been in that vein.
That’s fair. The Lightning network really is an interesting solution to the problem Bitcoin had, and I’m interested to find out if/when Monero will run into a similar problem.
I don’t think anyone needs to exchange cryptocurrencies for “something of value” for the investment to work, they just have to believe the currency itself holds value, where value is defined by supply vs demand. If enough people think others will believe it has value, then demand will increase. It’s basically how MLMs work, but it can sustain itself once it reaches a sufficient number of investors.
Adding transactions for real goods and services in the mix expands the reach of the currency and can stabilize demand a bit once the initial speculators have lost interest. So yeah, there’s absolutely a motivation for speculators to try to get others on-board. But it’s not necessarily a requirement, as we can see with other collector fads like Beanie Babies or Baseball Cards (the only value is in trading with other collectors), but just changed to be digital (NFTs are the strongest analogue).
However, just because speculators are rewarded if you use a cryptocurrency for transactions doesn’t mean you should avoid it. Use it if it provides value to you. The value proposition is:
Even without any kind of physical backing, cryptocurrencies offer an attractive value proposition. We could probably solve the above with fiat, but that currently is not a thing. I don’t recommend using cryptocurrencies for everything, nor do I recommend using it as an investment, but I do recommend using it for a few transactions here and there until you feel comfortable with it because of that value proposition.
It seems like you’re arguing against a position that I don’t hold? I’ve been invested in Bitcoin for a long time, and I’m quite familiar with its technical and socioeconomic dynamics. I’m skeptical of altcoins specifically, not of cryptocurrency as a concept.
Maybe? It reads like you’re arguing that you shouldn’t buy cryptocurrencies at all if you don’t understand how transactions are handled. I don’t think that’s true, and that will just discourage the normal, everyday person from getting started. You may need that info if you’re interested in investment/trading, but you don’t really need to get into the weeds if you just want to pay for some online services.
The important thing for lay-people is to recognize the value cryptocurrencies can provide, understand which cryptocurrencies are “stable” (as in, not some altcoin scam), and understand transaction times and costs. That’s honestly it. If we can achieve that, more people will start using cryptocurrencies for transactions where it’s available, more vendors will see it as a viable payment source, liquidity will improve, and developers will address the issues as they come up.
If you’re buying something other than the top few cryptocurrencies, then yes, I agree with you. But you’re not going to do that if your goal is to use it as a currency, because no real vendors are going to accept whatever that new altcoin is. If you stick with the big coins and your goal is to spend those coins, you’re not likely to get screwed. Bitcoin can work w/ Lightning, and Monero (my preference) is great on its own. Those are also the two that are most commonly accepted by vendors.
Maybe we agree there, idk. I think your comments read a little gatekeepy and from a “cryptocurrencies are investments” standpoint, and I think the focus should be “cryptocurrencies are currencies.”
Alright, fair enough. Keep in mind though that this comment thread started with an assertion that Bitcoin didn’t get it quite right, and Monero did, which is more of a big-picture analysis thing than merely “can I buy something with this”. My responses have been in that vein.
That’s fair. The Lightning network really is an interesting solution to the problem Bitcoin had, and I’m interested to find out if/when Monero will run into a similar problem.