Isn't that the "Greater Fool Theory"?
Here's my view on GFT in general terms: When you have an irrational bubble brewing, it is usually an excellent trend following opportunity. Some prefer to trade trends using trailing stops; I may do that sometimes, but in other cases I prefer to use trailing puts because a price collapse might gap through a stop. It's a trade-off: I pay extra in the form of the premium in order to hold better protection. (Incidentally, by using modelling I buy options for cheaper than I otherwise would if I just bought them indiscriminately.)
I'm not saying that BTC is GFT, but even if it is, I don't care. I'll still make profits and keep most of them even when the music stops. If it isn't, then so much the better.
I can actually see it's value as a "store of value". If you're Russian or Ukrainian even more so.
I agree here. I've spent some time in much less politically stable parts of the world. (Incidentally, I believe you live not to far from me in this rainy province...)
I know of many people who illegally open USD-denominated bank accounts so as to have some of their wealth in USD and so they can pick up remote work from clients outside of their home countries. (Illegal in their home country. Most of my knowledge is about specific African countries.) IF one day it becomes commonplace to pay for goods and services with BTC, direct from purchaser to seller, then this would be an overwhelmingly better solution for such people. It will exacerbate problems for their home currency (which is why foreign accounts are illegal in these countries) but that's a separate problem. Incidentally, I read an article recently where it was claimed that Ukrainians are doing this right now.
It's the uncertainty of something virtual, that I can't get my hands on that has me concerned
I get nervous buying something today at 40K that could be worth either 38 or 42K by the end of the day.
I don't think you mean the uncertainty of the ownership of BTC being registered virtually, unless you put physical stock certificates in a vault; I think you mean that BTC is neither a productive asset (eg: company producing something tangible) nor a physical commodity with intrinsic utility?
My reply here forks into the first two responses, above. If there is no tangible or intrinsic value to BTC, then I'm just trend following an irrational bubble. Fine.
However, I suspect that there IS something of intrinsic value and that is that it is a decentralized medium of exchange. I think that that is extremely valuable to many people and my evidence is that it is commonplace in certain parts of the world to break the law to try to avoid the home currency. A lot of these people don't care that much, by the way, if the value of BTC fluctuates 10% in a day, especially if they want to hold it for the long term anyway. It also doesn't matter too much to them if the value fluctuates wildly (by "western" standards) if their home currency constantly falls relative to "world" currencies and they like to spend time internationally. (I know people in this category, too.)
There is just no way to value it.
That is just false.
I value BTC the same way I value sugar #11 - supply and demand. There are other methods to value BTC, too, that are more crypto-centric.
Now, you may not AGREE with some of the valuation methods out there, and that would be fair, but there are lots of ways to try to calculate its value. I think what you mean is there is no way to value it like we might value a company (price-to-book, price-to-earnings, debt-to-equity, etc) and you are worried it doesn't have intrinsic value, like lumber or orange juice?
We value commodities in similar ways to how many value BTC, it's just that forecasts for demand are constructed very differently for other commodities compared to BTC. Well, so also are forecasts for supply very different between the two... but for BTC the supply forecast is easy, so we're just left with demand, which is very different and perhaps trickier. Perhaps.
Way too many selling the missed opportunity dream. Don't miss this chance to get rich without doing any work.
That is a very interesting comment and it resonates with me. In the very early days, I was first introduced to BTC by someone who didn't really know much economics or finance. I started searching for information and found many of the people touting the virtues of BTC had theories about central banks with which I did not fully agree. I kind of dismissed it at that point as another GFT and one that was too volatile to want to participate in. Later on, my thinking changed, especially as I started researching more about it.
I have zero interest in "selling the dream," although that may just be me. I avoid talking about BTC with people in my regular life because I don't want them to think that my wealth "just" comes from BTC (whatever that means). There's a perception out there that wealth from crypto just means someone bought a winning lottery ticket and was lucky. I don't think this is the case (although I'm sure for some who bought just on the "advice of a friend" it was luck for them.) I don't want my friends and family to know that I trade it. I prefer for them to know about the models I build on "serious" instruments such as stocks and futures. More respect, even if I don't think it should be that way.
If BTC provides something of value then its price is going to be driven mostly by non-western participants first, partly because it is so volatile (although my analysis suggests this is decreasing). Only when volatility dies down substantially, will it become more popular in the west for actual transactions. I'm honestly not sure if that will happen in my lifetime and I truly think that either way, it will be here longer than me.
However, as I explained at the outset, even if I'm wrong, I've already won. I love trading bubbles, too.
