Value vs. utility

[RavenDothKnow]

Much of the debate surrounding bitcoin's scaling problem seems to stem from two different visions of what bitcoin should be right now: a store of value or a peer-to-peer digital cash system. Both sides agree that in the long run both of these properties should be met, but the question is: Will bitcoin hold value even if TX throughput does not scale soon or do we risk losing our first mover advantage if bitcoin is not able to fulfil its promises as a peer-to-peer cash system soon.

I would love to hear some arguments from both sides of this debate

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[unamis76]

Yes, we will lose the "store of value" advantage if the currency simply... doesn't work, which would happen if nobody was worried in scaling Bitcoin. Which isn't the case. I think it's too early to question if we're losing out on what we have in one pocket to fill the other pocket, I don't think the scaling issue is affecting the store of value part (and people seem to be valuing Bitcoin quite a lot on markets lately).

Something that could help us better define an answer to this question is coin age and if the coins being moved are "old" (and probably came from cold storages) or "new". Then again, there's the "probably" part in this data that might not exactly relate to the issue... But it's the best we have, I think.

[manselr]

Much of the debate surrounding bitcoin's scaling problem seems to stem from two different visions of what bitcoin should be right now: a store of value or a peer-to-peer digital cash system. Both sides agree that in the long run both of these properties should be met, but the question is: Will bitcoin hold value even if TX throughput does not scale soon or do we risk losing our first mover advantage if bitcoin is not able to fulfil its promises as a peer-to-peer cash system soon.

I would love to hear some arguments from both sides of this debate

The irony is that in order to be peer to peer CASH you cannot have big blocks, and in order to have fast onchain transactions you would need HUGE blocks, which means the coin is no longer cash, it's just peer to peer payments...

So you have to choose:

1) Big blocks with centralized network and fast and cheap big volume onchain payments
2) Conservative blocks with decentralized network with second layer on top for the fast and cheap big volume payments

Option 2 is the common sense one: you dont want to centralize the network.

THERE ARE NO OTHER MAGIC SOLUTIONS.

[vrm86]

I think that actual meaning of BTC 'value' is an obstacle for adopting it as a common cash system. People see Bitcoin as a subject of speculation, that they also can participate in. How anyone can think about spending BTC on daily basis if its market price can swing +25%/-25% during one week? It would be like: "Oh god, suddenly I have 25% less money in my wallet, even though I haven't spend a satoshi!".
In other hand, if blockchain would suffer serious technical problems due to network traffic, people could stop using that even for trading.
  

[franky1]

expanding utility positively increase value
intentionally limit utility negatively decrease value

its not a case of one or the other. we need to expand utility to positively affect value.

in short if you cant spend bitcoin in the 300k+ merchants and it costs too much to withdraw your funds from a exchange (fee war gets too much)

they end up returning to fiat because fiat withdrawals are cheaper or
users end up losing funds due to 'hacks' out of fear of not wanting to withdraw...

people lose out and the value/utility and desire because they cant do anything with bitcoin and it costs too much to hold independently

[franky1]

1) Big blocks with centralized network and fast and cheap big volume onchain payments
2) Conservative blocks with decentralized network with second layer on top for the fast and cheap big volume payments

oh be quiet with your fake only 2 option scenarios..

thinking dynamic blocks leads to centralization is a failure of your understanding.

you do realise that having litenode, no witness mode, pruned mode, LN hub mode has far higher risk of diluting the full node counts.

as for dynamic blocks.. if nodes cant cope with a large rise in bandwidth, they wont vote for it..
dynamic blocks are also "conservative"(to use the scripted rhetoric buzzword of the core fanboys) by only activating extra buffer when the majority flag that they can cope with it. meaning sensible natural capable rises over time.

please slap whoever is passing you the fake rhetoric to repeat.

the obvious buzzwords repeated simultaneously by one sided biased people is becoming very clear its a script you lot are reading
"conservative" "bigblocks"

the funny thing is those wanting onchain scaling want 2mb.. the BIPS show this.
the group with the 4mb weight.. is actually the crew passing out the scripts of buzzwords pointing the finger in the other direction..

[HabBear]

Much of the debate surrounding bitcoin's scaling problem seems to stem from two different visions of what bitcoin should be right now: a store of value or a peer-to-peer digital cash system. Both sides agree that in the long run both of these properties should be met, but the question is: Will bitcoin hold value even if TX throughput does not scale soon or do we risk losing our first mover advantage if bitcoin is not able to fulfil its promises as a peer-to-peer cash system soon.

I would love to hear some arguments from both sides of this debate

This is a good question and debate. The more liquidity we see across the entire available coins the lower price we'll see, and certainly more stable. The more people hodl, the more the price will rise.

I realize that throughput constraints may turn some folks off, it will lower liquidity. But that doesn't mean it will lower the value of bitcoin. A decrease in value will only come when there are more sellers than buyers, literally. So if liquidity becomes tough, but people still see "store of value" value in bitcoin we'll continue to see the price rise over the long term.

The shorter term fluctuations will always  occur and are indicative of direct buying an selling moves. We see a dip after the holidays, perhaps people are taking earnings in bitcoin to replinsh their fiat reserves or simply because there has been a run up.


The greatest challenge in trying to find causation in bitcoin price movements is doing so with social or business events...the currency is so global that it's hard to attribute one country's actions to the movement of the price of bitcoin.

[franky1]

This is a good question and debate. The more liquidity we see across the entire available coins the lower price we'll see, and certainly more stable. The more people hodl, the more the price will rise.

I realize that throughput constraints may turn some folks off, it will lower liquidity. But that doesn't mean it will lower the value of bitcoin. A decrease in value will only come when there are more sellers than buyers, literally. So if liquidity becomes tough, but people still see "store of value" value in bitcoin we'll continue to see the price rise over the long term.

The shorter term fluctuations will always  occur and are indicative of direct buying an selling moves. We see a dip after the holidays, perhaps people are taking earnings in bitcoin to replinsh their fiat reserves or simply because there has been a run up.


The greatest challenge in trying to find causation in bitcoin price movements is doing so with social or business events...the currency is so global that it's hard to attribute one country's actions to the movement of the price of bitcoin.

"store of value" has a limit.

some people think scarcity is a thing.. but if only 10 people hold say 42coin.. this does not make 42coin worth a few billion dollars..
utility plays a part of it.

if it has no utility then it doesnt matter how rare it is, no one needs to use it so no one wants it so no one asks for it.
its why all of the altcoins with small supply fail. because they think scarcity alone is a value creator

another example.

housing market.
people think if they buy a house at say $500k their asset will always hold a store of value of $500k..

check out the last 9 years and see if thats true.

when there is no demand for houses because people cant afford them or doesnt see the need of a 5 bedroom house or there is something else people see that does have utility for them thats not your house.. after a while you start dropping your ask price below $500k to tempt a quicker purchase. thus the house loses value.

now imagine it for something someone doesnt "NEED" at all because it does nothing tangibly..
scarcity is no longer something to rely on as a value store

[Senor.Bla]

Store of value was a byproduct that took over. However i think we can have both. And Bitcoin should see to it, that the problem will be solved quickly, because People will realise that they can have both somewhere else and migrate to an altcoin.

[pooya87]

Much of the debate surrounding bitcoin's scaling problem seems to stem from two different visions of what bitcoin should be right now: a store of value or a peer-to-peer digital cash system. Both sides agree that in the long run both of these properties should be met, but the question is: Will bitcoin hold value even if TX throughput does not scale soon or do we risk losing our first mover advantage if bitcoin is not able to fulfil its promises as a peer-to-peer cash system soon.

I would love to hear some arguments from both sides of this debate

i do not agree with this statement be with "or" or "vs" these two need an "and" because they go hand in hand with each other.
if the peer-to-peer digital cash system part fails then in my opinion bitcoin is a number on the screen that people pay real money for, and nothing more.
the adoption as currency can help bitcoin more forward, not having a small group of traders buy and sell bitcoin from each other until they get tired and move on. when new merchants start accepting bitcoin, new services start adding bitcoin payment,... more people will come and price goes up too. and for that we need bitcoin to be able to handle more transactions as it does now.

and as i said these go hand in hand, as people use it as store of value and a trading toy, price becomes volatile and it prevents the other side (being a currency) to shine and be a viable option.

[Amph]

think ab out it, if you have one you have the other, if you have store of value it mean tht bitcoin has a very biug value or it will have one in the future, this translate in having a big adoption

and therefore its utility will also be very big as a result, they are connected, it's like the connection between adoption and high price

[ipanks]

Much of the debate surrounding bitcoin's scaling problem seems to stem from two different visions of what bitcoin should be right now: a store of value or a peer-to-peer digital cash system. Both sides agree that in the long run both of these properties should be met, but the question is: Will bitcoin hold value even if TX throughput does not scale soon or do we risk losing our first mover advantage if bitcoin is not able to fulfil its promises as a peer-to-peer cash system soon.

I would love to hear some arguments from both sides of this debate

i think bitcoin still hold value even if the transaction is need time to get confirms, and value is related with utility and i am sure that in the future, the transaction is no need too long to gets confirmed. but i am agree that we should solve the problem in confirming transaction because no one wants to be waited too long to see for full confirmed of transaction.

[Kakmakr]

For me the security should be the biggest concern. If we rush into bigger blocks and this pose a threat to the security, then trust will be influenced and we will lose both options. Satoshi made provision for scaling as needed in small increments and in my opinion this is not done lately or rather delayed to pave the way for SegWit or LN. The main thing to determine is, if this scaling is necessary and how much scaling needs to be done. Take away all the unnecessary additions to the code and do what needs to be done.

You will get much faster consensus, if smaller scaling was done. ^hmmmmm^

[deisik]

Much of the debate surrounding bitcoin's scaling problem seems to stem from two different visions of what bitcoin should be right now: a store of value or a peer-to-peer digital cash system. Both sides agree that in the long run both of these properties should be met, but the question is: Will bitcoin hold value even if TX throughput does not scale soon or do we risk losing our first mover advantage if bitcoin is not able to fulfil its promises as a peer-to-peer cash system soon.

I would love to hear some arguments from both sides of this debate

I don't know if both sides actually agree but I can say with certainty that a store of value function of Bitcoin pretty much excludes its use as a peer-to-peer digital cash system (basically, as a currency). You don't even need to scry into the future since it has always been the case in history, where you can look for examples proving this point of view. Back then, gold coins were stashed (and paid taxes with) while silver specie was actually used for circulation...

Therefore, I don't think that the paradigm of bad money driving out good from circulation is going to change any time soon (or ever)

[Jet Cash]

Store of value, and utility are not dependent on each other. Did gold drop in value because gold coins ceased to be used as a payment method? Increased value may well reduce use as a payment system. The current UK £100 gold coin will cost you getting on for £1,000 to buy, so who would use that for a £100 purchase. I can see Bitcoin being used as a proof of stake for an alternative currency in the future. How will that affect Bitcoin? I believe it will reduce pressure on the blockchain, and stabilise the price, this could lead to a gradual increase in value.

[calkob]

After a recent poll something like 79% of those surveyed said they cared most about decentralisation.  but i dont think the average user would care how we achieve that, so core need to just come up with an idea that will make bitcoin usable to the masses but yet keep that decentralised nature,  nobody wants to go back to a system where you are told how and when to use your own money. 

[franky1]

Store of value, and utility are not dependent on each other. Did gold drop in value because gold coins ceased to be used as a payment method? Increased value may well reduce use as a payment system. The current UK £100 gold coin will cost you getting on for £1,000 to buy, so who would use that for a £100 purchase. I can see Bitcoin being used as a proof of stake for an alternative currency in the future. How will that affect Bitcoin? I believe it will reduce pressure on the blockchain, and stabilise the price, this could lead to a gradual increase in value.

the gold coin rose in value ven when not used as legal tender because gold had other UTILITY. EG jewellery, circuit boards. so it was not just about scarcity as the remaining feature. it still had utility which impacted scarcity.

but if bitcoin ever got to a point of no transactional use. and people just treated them as hoarded assets. then there is no utility, no "NEED" so desire shrinks and the supply/demand ratio changes to less demand.

just look at all the altcoins that have no utility even if they have scarcity. such as 42 coin..
42coin is not 500,000x the value of bitcoin.. its not even 1x the value of bitcoin.. even if its scarcity is 500k more scarce.

in short bitcoin needs utility to have value.

anyone desiring to remove bitcoins utility should just go play with the fiat they dream and hope about everynight

[deisik]

Store of value, and utility are not dependent on each other. Did gold drop in value because gold coins ceased to be used as a payment method? Increased value may well reduce use as a payment system. The current UK £100 gold coin will cost you getting on for £1,000 to buy, so who would use that for a £100 purchase. I can see Bitcoin being used as a proof of stake for an alternative currency in the future. How will that affect Bitcoin? I believe it will reduce pressure on the blockchain, and stabilise the price, this could lead to a gradual increase in value.

the gold coin rose in value ven when not used as legal tender because gold had other UTILITY. EG jewellery, circuit boards. so it was not just about scarcity as the remaining feature. it still had utility which impacted scarcity

You evidently totally neglect the financial aspect of gold (and gold derivatives), i.e. its utility as a speculative asset

just look at all the altcoins that have no utility even if they have scarcity. such as 42 coin..
42coin is not 500,000x the value of bitcoin.. its not even 1x the value of bitcoin.. even if its scarcity is 500k more scarce.

Oh, you seem to have learned the lesson that scarcity itself means nothing

Namely, that being scarce without being useful doesn't amount to anything. That's good but the next thing that you should understand is that there is no absolute scarcity, scarcity is always relative in respect to some amount, quantity, or number. In this way, 42 shitcoins may be less scarce that 21 million bitcoins. For example, when 21 million people are interested in Bitcoin (1 bitcoin per capita) and only one individual in that shitcoin (42 shitcoins per capita), Bitcoin will obviously be more scarce on the whole per unit of coin

[franky1]

Store of value, and utility are not dependent on each other. Did gold drop in value because gold coins ceased to be used as a payment method? Increased value may well reduce use as a payment system. The current UK £100 gold coin will cost you getting on for £1,000 to buy, so who would use that for a £100 purchase. I can see Bitcoin being used as a proof of stake for an alternative currency in the future. How will that affect Bitcoin? I believe it will reduce pressure on the blockchain, and stabilise the price, this could lead to a gradual increase in value.

the gold coin rose in value ven when not used as legal tender because gold had other UTILITY. EG jewellery, circuit boards. so it was not just about scarcity as the remaining feature. it still had utility which impacted scarcity

You evidently totally neglect the financial aspect of gold (and gold derivatives), i.e. its utility as a speculative asset

just look at all the altcoins that have no utility even if they have scarcity. such as 42 coin..
42coin is not 500,000x the value of bitcoin.. its not even 1x the value of bitcoin.. even if its scarcity is 500k more scarce.

Oh, you seem to have learned the lesson that scarcity itself means nothing

Namely, that being scarce without being useful doesn't amount to anything. That's good but the next thing that you should understand is that there is no absolute scarcity, scarcity is always relative in respect to some amount, quantity, or number. In this way, 42 shitcoins may be less scarce that 21 million bitcoins. For example, when 21 million people are interested in Bitcoin (1 bitcoin per capita) and only one individual in that shitcoin (42 shitcoins per capita), Bitcoin will obviously be more scarce on the whole per unit of coin

i know your trying to think outside the box, which is commendable compared to other people. but im a few boxes outside of your box.
im just downplaying it to the most simplistic explanation for normal people to grasp.

as for scarcity. knowing that once it reaches X production, thats it.. no more.. means scarcity.
unlike renewable resources, such as tree's that produce seedlings which can produce more tree's endlessly and forever..
bitcoins scarcity is a known number, right from day one.. its a fixed number.

supply and demand then takes over within this scarcity amount. which is about speculation.
for anything that has utility, speculation has resistance points, there is always a resistance point where people refuse to sell for anything less because thats the point of what some deem true value. due to the utility element undrlying the speculation. and the value on top of the resistance point is the more variable amount where supply and demand plays out.

golds "speculative asset" as you said is not based on scarcity(supply). its based on demand. and gold has UTILITY which drives the demand. which drives the speculatory value both with the resistance point(normally not known about) then the variable bit on top...

however gold will not ever sink to absolute $0 because it has other utility (jewellery/circuits) so there is always an underlying resistance point of cost of production, utility and other factors keeping it above some level. yet bitcoin IF it has no utility CAN sink to $0... like many altcoins have proven.
one of bitcoins key resistance points is actually cost of production.. (usually about 25-75% lower than exchange rate price depending on volatility and miners costs)
but if demand and utility die off.. so will the miners. thus the resistance point can drop too when the difficulty drops due to less miners. double impacting the drop.

yes its not going to be an overnight occurrence. but a long slow drop to $0.. but it is possible IF bitcoin loses its utility

bitcoin is a payment currency. without being used as payment(merchants drop it because the fee's become too high to handle) then demand drops. the variable speculative xchange rate drops. miners dont make profit so they drop out, the resistance point drops.. and a snowball effect occurs slowly(compared to other alts) down to $0.
bitcoin has no other utility to eat up supply, such as jewellery creation, circuit creation. so bitcoin cannot speculate based on a supply..
yes you can throw some coin into some 'bitcoin eater' addresses. but we already agreed scarcity does not help something with no utility or desire


unlike gold.. monetary currency can tank to the bottom its monetary utility is lost.. even if they have some behind the scenes banking products (you mentioned derivatives for instance).. but even with these banking products in the background pretending to be 'of value' to hold up the front end currencies value.. they too are speculative. and again can tank to $0..

check out the zimbabwe dollar or other world currencies that have no utility.. they have no value at all!! even if they had banking products backing them.

so in a paradigm where no one needs to use it and supply is not even a factor.. demand drop = value drop = further demand drop.. snowballing into an endless drop of value.

bitcoin needs to have UTILITY to have VALUE

[Xester]

The biggest concern of bitcoin today is not the issue on value versus utility but the survival of bitcoin. The issue should be bitcoin versus fiat virtual currency. The biggest threat to bitcoin is now closing and will be released this year and it is a big question if bitcoin will still be up to the challenge and continue to survive or will be replaced by the fiat currency.