NPR hit piece on Bitcoin. Planet Money - Bitcoin Divided

An in-depth look at what happens when you undermine utility.

I want to fully analyze the talking point that "Bitcoin is a store of value," because it's one that I see very frequently and people have different views on how the value of an asset is generated.
This one is also fun because I get to put on my Economist hat instead of my Computer Engineering hat which has always been a strong secondary interest of mine.
Please buckle in, because this is a longer read, but if you have any doubts about how value is generated, I really think it's a worthwhile one.
Other Assets that Bitcoin is Frequently Compared To
I'm going to (mostly) skip some of the more common comparisons of cryptocurrency to (Beanie Babies, Tulips, Pets.com, etc.).
I'll only briefly address it here in saying: Beanie Babies are a poor comparison because they had only had perceived scarcity in the way they were distributed so they were heavily undermined from the supply side. Tulips have a debatable history in general as far as the magnitude of purchase, and even if that history is fully accurate, their utility was only really derived from a brief social fad... not a continuing stable utility. Lastly, Pets.com is closer to being apt, except that they arguably had no major utility from the start in that it was (almost) always more expensive and slower to order through their service as opposed to going to the local pet store.
The Basis of the "Store of Value Argument
So the main argument of "Bitcoin [being] a store of value" is rooted in Bitcoin being scarce... with utility not playing a major role. The counterpoint against this view is that it takes both scarcity and utility to give a premium value to a good or service.
So let's try to separate out the two factors.
We'll first look at a good that has premium value due to both utility and scarcity where neither factor has been undermined.
Utility Plus Scarcity
We'll start by taking a look at a good that has both utility and scarcity. I think the one thing in the world that best exemplifies this status, (and my friends over at /magicTCG can attest,) is the Black Lotus. This is the mack-daddy of all Magic cards and as of this year, a mint condition version from the earliest set can fetch a six digit price point.
First, let's talk about the Lotus' scarcity: Wizards of the Coast has a strict reprint policy where no card functionally identical to the Black Lotus may be reprinted. That means with the rare exception of an undetected fake, the pool of Black Lotuses will never get larger, and in the case of damage or destruction, will certainly get smaller.
Next we'll talk about the Lotus' utility: As arguably the most impactful card in the game, anyone wanting to play Vintage format on a competitive level absolutely needs to have a Black Lotus as well as (almost) every other power-nine card. If you want to see people still playing with pieces of cardboard worth over $10,000+ each, you absolutely can. Even though these cards have utility for only a select few and the price outpaces their direct value-earning potential, the fact that they also have maintained utility means that someone will very likely be willing to purchase this card down the road at the same or higher price than the person that owns it now. Because utility is maintained, the value will continually increase.
I'm not saying this price rise will continue forever though; Something could happen to undermine the utility or scarcity of MTG cards. The pool of people playing Vintage, or MTG at all could shrink, Undetectable counterfeits could surface, WotC could suddenly change the reprint policy. Etc.
In fact, if you would like further information about the Black Lotus from an economic standpoint, I recommend listening to the Planet Money episode: The Curse of the Black Lotus
Scarcity with Shrinking Utility
What about a good that is still just as scarce as it ever was, but has experienced a reduction in utility?
The best example of this phenomenon is probably the New York Taxi Medallion. Taxi Medallions were first introduced around the great depression where less than 12,000 were made. That number has increased to somewhere in the mid 13,000 range today. Regardless, this is clearly a scarce commodity - especially with the extreme growth of NYC itself and thus, the increased demand for cabs. NYC enforced the medallion law relatively strictly for many years, but the introduction of Uber and Lyft also came with less enforcement of the Medallion law. That has caused the value to plummet. I strongly recommend two podcasts that deal with this exact topic:
The first is another Planet Money episode: "The Taxi King"
The second is a New York Times Daily titled "The Taxi Driver's Plight"
If you don't want to listen to the entirety of each episode, I think the most poignant take-away is in the Planet Money episode at timestamp 13:40:
"You can understand where the banks are coming from, they were lending Friedman money based on the rarity of the Taxi Medallions. Those precious taxi medallions. But now, if you can operate something that works pretty much exactly like a taxi without a medallion, the banks are figuring that these medallions are not worth as much as they used to be."
The banks absolutely understand that even though the rarity has not changed at all, their value is based quite heavily on their utility. With less utility comes less demand, and the price has, in response, suffered greatly.
In fact, in the update to that podcast, they note that the price of a taxi medallion is now below $200,000 and they not it doesn't look like things will be better anytime soon.
Value Requires Both Utility and Scarcity
It is pretty clear that value is not based upon scarcity alone.
I hope that users entering this space take a long look at what each cryptocurrency they are buying is useful for.
Cryptocurrencies that do the best job of maximizing their utility while remaining relatively scarce will do quite well. Cryptocurrencies that don't increase or expand their utility will certainly have their value proposition undermined.
TL;DR: Value clearly comes from both utility and scarcity. Invest responsibly.
Edit - ty for the gold, it's much appreciated. From here on out I would prefer tips as I am attempting to spur crypto adoption in my community. Now that BCH has good PoS solutions, it's great to have demo / tiny giveaway balances.
submitted by CaptainPatent to btc [link] [comments]

Planet Money Episode 891: Who Won The Bet Over Bitcoin?

I don't know if anyone here listens to "Planet Money", a pop economics podcast by NPR. Their most recent episode was about widespread adoption of Bitcoin.
Specifically, it was about a bet between Ben Horowitz, a venture capitalist who believed that Bitcoin was on its way to becoming a widespread payment platform, and Felix Salmon, a finance journalist who thought it was going to go to zero. They made a bet 5 years ago, whether or not 10% of Americans would be using Bitcoin at least once a month, and they finally got the results today:
GOLDSTEIN: As promised, we went out and got Ipsos, a real polling firm, to ask 900-and-some Americans - a representative sample of Americans this question. Have you purchased anything using bitcoin as your payment in the last month? The percentage of Americans who said, yes, is three - three.
HOROWITZ: All right.
GOLDSTEIN: Now, they did ask those people - the people who said they had, they said, at what merchant did you make the purchase? And I have some of those answers. And it suggests that the 3 percent is a little high.
HOROWITZ: Yup.
GOLDSTEIN: If you go down this list, somebody said Gaia Ethnobotanical, which I looked up - in fact, does accept bitcoin. Subway - I think some Subways accept bitcoin. But there's also a bunch that say - this one says Litecoin. A few say Coinbase, which is a bitcoin cryptocurrency exchange. So these people are using bitcoin to buy other cryptocurrency.
Horowitz ended up admitting to something that a lot of people on this sub have been saying for a while as well:
KESTENBAUM: That's what Ben thought would happen with bitcoin. He thought the code that powers bitcoin would just get better and better and, very quickly, it would obviously be this safer, faster, more private, cheaper way for people to buy stuff online. That did not happen.
GOLDSTEIN: No. Bitcoins just became so valuable that the people who worked on the system didn't want to make it any better. They just wanted to lock everything down and keep it the way it was.
HOROWITZ: I think that what happened with bitcoin is that there is kind of one very, very strong need among the kind of investors/miners, which is that the code and the meaning of the code would not change.
And Salmon, the guy who bet against Bitcoin, hits on the real paradox of Bitcoin:
SALMON: I - honestly, I was looking back. I mean, there were two things which I expected would happen which didn't happen. One is I expected the price would probably go to zero, and it didn't. It went way up and to the right.
And the other is that I expected that there would actually be use cases over the following five years that, even if people weren't using it to buy stuff in stores, and that was my side of the bet, I imagined it would be used for remittances, or, somewhere along the line, it would have evolved. Especially if it had grown to be worth thousands of dollars per bitcoin, then it would be used for something.
GOLDSTEIN: So it's more valuable and less useful than you thought.
submitted by michapman2 to Buttcoin [link] [comments]

How to help the Nano ecosystem # 2018.11.02

Rules for the thread:
 

Chapter 1 - Basics

Upgrading the global monetary system: Nano is a deflationary digital currency that has instant transactions and zero fees: https://nanolinks.info
 

Chapter 2 - Infrastructure | Payment Gateways

 

Chapter 3 - Infrastructure | Exchanges

 

Chapter 4 - Infrastructure | POS

 

Chapter 5 - Infrastructure | ATM

 

Chapter 6 - Usability | Hardware Wallets

 

Chapter 7 - Usability | Programming and Design

 

Chapter 9 - Media

 

Chapter 10 - Social Media

Upgrading the global monetary system: $NANO is a deflationary #cryptocurrency that has instant transactions and zero fees: https://nanolinks.info
 
#money #forex #business #startup #finance #investing #trading #markets #economy #blockchain #bitcoin #ethereum #crypto
 

Chapter 11 - Other

 

Now actually choose something and do it!

submitted by laurbyteball to nanocurrency [link] [comments]

How to help the Nano ecosystem # 2018.12.04

Rules for the thread:
 

Chapter 1 - Basics

Upgrading the global monetary system: Nano is a deflationary digital currency that has instant transactions and zero fees: https://nanolinks.info
 

Chapter 2 - Infrastructure | Payment Gateways

 

Chapter 3 - Infrastructure | Exchanges

 

Chapter 4 - Infrastructure | POS

 

Chapter 5 - Infrastructure | ATM

 

Chapter 6 - Usability | Hardware Wallets

 

Chapter 7 - Usability | Programming and Design

 

Chapter 9 - Media

 

Chapter 10 - Social Media

Upgrading the global monetary system: $NANO is a deflationary #cryptocurrency that has instant transactions and zero fees: https://nanolinks.info
 
#money #forex #business #startup #finance #investing #trading #markets #economy #blockchain #bitcoin #ethereum #crypto
 

Chapter 11 - Other

 

Hopefully subscribers start pitching in, and we'll see some comments here about it.

submitted by laurbyteball to nanocurrency [link] [comments]

How to help the Nano ecosystem # 2018.11.25

Rules for the thread:
 

Chapter 1 - Basics

Upgrading the global monetary system: Nano is a deflationary digital currency that has instant transactions and zero fees: https://nanolinks.info
 

Chapter 2 - Infrastructure | Payment Gateways

 

Chapter 3 - Infrastructure | Exchanges

 

Chapter 4 - Infrastructure | POS

 

Chapter 5 - Infrastructure | ATM

 

Chapter 6 - Usability | Hardware Wallets

 

Chapter 7 - Usability | Programming and Design

 

Chapter 9 - Media

 

Chapter 10 - Social Media

Upgrading the global monetary system: $NANO is a deflationary #cryptocurrency that has instant transactions and zero fees: https://nanolinks.info
 
#money #forex #business #startup #finance #investing #trading #markets #economy #blockchain #bitcoin #ethereum #crypto
 

Chapter 11 - Other

 

Now actually choose something and do it!

submitted by laurbyteball to nanocurrency [link] [comments]

NPR Planet Money: Government Investment in Roads Why The Price Of Coca-Cola Didn't Change For 70 Years  Planet Money  NPR The First Short Sell Was Made For Revenge  Planet Money  NPR Adam Davidson - NPR Planet Money The Tax On Trucks  Planet Money  NPR

Planet Money The economy explained. Imagine you could call up a friend and say, "Meet me at the bar and tell me what's going on with the economy." Now imagine that's actually a fun evening. In a recent episode of Planet Money, a podcast and blog produced by National Public Radio (NPR), an independent American non-profit media organization, venture capitalist Ben Horowitz and financial journalist Felix Salmon were brought together to discuss the result of a bet on Bitcoin adoption that they made in February 2014 (during another episode of Planet Money). A modern-day “Gunfight at the OK Corral” is occurring on TV, but no, it is not a western; it’s a venture capitalist and financial journalist going head to head over the futu NPR’s Planet Money does a brilliant job explaining the personal impact of economic issues. If there’s one finance-related podcast I don’t miss, it’s this one. The team at Planet Money does a fantastic job of taking broad economic issues and translating them to personal finance, and vice versa. Bitcoin is the currency of the Internet: a distributed, worldwide, decentralized digital money. Unlike traditional currencies such as dollars, bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin.

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NPR Planet Money: Government Investment in Roads

In this first episode of Planet Money Shorts, witness the making of an automotive juggernaut — the story of how a tax on frozen chicken helped define the U.S. market for trucks. ... NPR is also ... To explore and explain the global economics behind a simple t-shirt, Planet Money and NPR Visuals first designed and sold t-shirts to their listeners, and then followed the shirts around the world ... The thing about prices is they tend to change. But for 70 years, between 1886 and the late 1950s, the price of a Coca-Cola was a shiny nickel. Think about how crazy that is: Between 1886 and the ... This video is unavailable. Watch Queue Queue. Watch Queue Queue Adam Davidson - NPR Planet Money ... (Startup Podcast, Planet Money & This American Life): ... Why The Price Of Coca-Cola Didn't Change For 70 Years ...

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