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And scarcity, especially of anything with cultural value, gives prestige/significance to whoever owns it. Like rich people buying cool old but relatively useless cars. It's just a cool think to have that everyone else will think is cool too. Most don't care about its appreciation. Some may buy it for that purpose, but not all.

Valuable art pieces also confers prestige on any institutions that hold them. Everyone can oggle at how much the art is worth and assume this must be one of the best museums in the world.

Think of it like buying an overpriced but cool pair of limited edition shoes (Yeezy's or whatever). Most people will wear them to show them off, but some people will never take them out of the box because they know in the future other people who want to wear them to show them off will pay even more for them. With art, showing it off doesn't depreciate it so it's like having LE shoes that never wear out.

It can't just be scarcity. People have to want the art for some other reason for it to have that value. I can create an equally scarce piece of art by doing one painting, signing my name to it and never doing painting again. Picasso's are valuable because they are great, famous for their greatness and scarce meaning it's a big significant prestigious thing to own one.

I think it's safe to say it doesn't have a unique value proposition anymore. It just has market share.

I think expensive art gets its value from the fact that really rich people are willing to buy it for social significance. On top of that intelligent art invesors will also buy it knowing that rich people in the future will still want to buy it, but there will be more competition because of the increased number of rich people and the scarcity created by it being held over time by a private seller (the longer it gets held the less likely you'll get another chance to buy it in your lifetime). What's your theory on where the value comes from?

Agree on your inflation point. However then your BTC is only a trade away from the less volatile USD. The value propostion seems tough with all the superior competition and better uses. Kinda psyched for the one with a prediction market attached.

Thanks. I get your first paragraph. That's what I was meaning to say.

On Bitcoin vs Gold: Gold has physical properties that make it very valuable. It is a great conductor of heat and electricity, the most corrosion resistant of all metals, highly maleable, aesthetically pleasing and scarce. Gold may have some degree of cultural/signalling effect driving its price up but I don't know this for sure.

On Bitcoin vs Art: Art has its aesthetic value but obviously most of the price comes from its cultural/signalling value and scarcity.

Bitcoin obviously has scarcity in common, but if it doesn't get market share as an actual goods and services trade currency then its inherent value just comes from whatever other people are willing to pay for it and not what it does (unless the fast, secure transactions feature is valuable enough on its own). Normal currency is scarce and backed by the government and therefore the entire economy of its country meaning you can use it to trade for X amount of goods/services in that country. Bitcoin is worth USD, which you can use to do all the above, but only because people are willing to pay lots for it. And people are only willing to pay lots for it because they expect in the future it will be worth more. Eventually people will stop wanting to buy it so then why would you hold it? Then you'd just put your money in stocks to get returns again.

I guess the question I'm really chasing an answer to is what would a future look like that justifies Bitcoin's price?

Re 3rd paragraph: You're right there. I wrongly assumed government would do the will of the central bank. In more authoritarian countries like China this may be the case soI'd expect them to be the first to implement such a policy.

Is this taking the assumption that it was a sound investment based on its underlying value and therefore predictable? Or is this saying that the explosion in price was predictable even if unjustified?

My belief on bitcoin is that it isn't a viable fiat currency alternative and won't be (nor will any other crypto) because governments won't allow it. I believe this because it wouldn't make sense for a central bank to volunarily give up one of its few economic levers. A government could kill the bull proposition for bitcoin by making it illegal for all transactions to registered businesses and making you pay tax in fiat currency as well. If law abiding businesses are unable to use it then it can't be a good currency. Then it's only useful as a volatile currency store and for buying drugs on the internet, although cryptos with better anonymity will eventually take that over.

If you think I'm missing or wrong about something here please let me know. I'm really curious as to how this will play out.