Does anybody actually use bitcoin? And by use I mean transact actual business, and not just speculate. You know, buying and selling real world goods and services.
Or is it like gold reserves, people just hoard these digital numbers until they are ready to cash out.
I'm really curious for the hoarders, if they're doing it as a hedge against global financial collapse, how exactly do they expect to redeem their bitcoin for anything tangible?
These are serious questions, I've given bitcoin only a minimum of thought. It seems a great way to move value out of a closed economy like China, or for drug dealers to move cash across borders, but who else uses it?
I've held for several years now (~7 or so). My logic is this:
1. This is all 100% speculative at the moment. Anyone who tells you otherwise is a charlatan. You may make someone money if you're patient, but the point is acquiring a decent stake while it's still affordable on the off (IMO, not 0%) chance that Bitcoin or one of its derivatives become a secondary and then primary spending currency. Realistically, I see a boondoggled attempt by governments to create their own digital currencies with Bitcoin being used primarily as a store of value, a la gold.
2. Technologically, Bitcoin is an intelligent solution to the financial problems created by government mismanagement and greed. It's not perfect, but it's pretty damn creative. With time, most of the major issues seem to be fixable.
3. Also technologically, Bitcoin is not ready for the prime time. The lightning network being implemented at a large scale would be the first warning shot that Bitcoin could see massive, stable use. Until you match transaction volume of Visa, Amex, etc., it's not going to take.
4. The likely timeline this plays out will be loosely correlated with the government's intervention negatively impacting the purchasing power of the dollar (speaking relative to the U.S.). The current situation is actually surprising; I didn't expect anything like this to happen for at least another 2-3 years.
5. Due to the way that humans tend to overestimate change in the short-term, the likely timeline for this to all play out is throughout the 2020's and early 30's, with the mid-to-late 2030's being the "even grandma pays with Bitcoin" moment. I'd say right now is the 97'-98' era for Bitcoin if we're using the internet as a parallel.
6. The current marketing and messaging of Bitcoin is, to be blunt, a freakshow. Painful as it may be, normal folks don't want to be associated with things that seem grimy, shifty, or subversive. The only way to overcome this is to demonstrate that using Bitcoin is easier than the current payment options, or, not having it would mean seeing all of your financial assets rapidly devalue downward toward 0 (which means the U.S. is collapsing and is a whole other bag of chips).
The fact is that adoption times for new technologies have only become shorter over time. Modern smartphones came to the market at about the same time as BTC, and they have been ubiquitous for years now. Docker was first released 2013, and has been everywhere for a couple of years. If Bitcoin were actually useful, someone would have figured it out by now, and it would be widely adopted. But it's not, because it is fundamentally flawed in a way that cannot be fixed without starting over completely, if at all. It's a barely functioning CS experiment with little to no real world usefulness. And pretty much everything that came after has turned out to be either even more broken, or was an outright scam.
> Technologically, Bitcoin is an intelligent solution to the financial problems created by government mismanagement and greed.
That is complete nonsense. Bitcoin solves no actual problems, and instead tries to revert back to a previous monetary system that was abandoned because it was failing. The consensus among economists is that a deflationary currency is a terrible idea. This is the equivalent of medicine going back to routinely performing lobotomies: it doesn't solve anything, but causes a huge amount of harm.
Zero downtime since 2013. Visa has ten hour outages across entire continents.
> Bitcoin solves no actual problems
It's been moving billions of USD daily without fail for years. That's a non-trivial amount to anywhere on Earth. Try transferring money from say former Soviet bloc countries to Africa.
> The consensus among economists is that a deflationary currency is a terrible idea.
Bitcoin is inflationary until 2140 and then stops inflating. It's not a deflationary currency. Perhaps you meant to word this differently?
That would only be true if the demand for bitcoin was almost non existent. If it will ever be used as actual currency on a significant scale the demand for bitcoin would have to be magnitudes higher than can be produced by mining making it extremely deflationary.
> The consensus among economists is that a deflationary currency is a terrible idea.
How many currencies have failed due to deflation over the last <pick your time period> years?
Now how many currencies have failed due to inflation?
Look, economists know a thing or two that I don’t, I’m sure. But for all they claim to know, it sure does feel like they get things wrong on a pretty regular basis.
> That is complete nonsense. Bitcoin solves no actual problems, and instead tries to revert back to a previous monetary system that was abandoned because it was failing. The consensus among economists is that a deflationary currency is a terrible idea. This is the equivalent of medicine going back to routinely performing lobotomies: it doesn't solve anything, but causes a huge amount of harm.
There are economists I respect that hold cryptocurrencies in good regard. Exhibit A: Jeffrey Tucker.
>If Bitcoin were actually useful, someone would have figured it out by now, and it would be widely adopted.
Diffuse benefits, concentrated costs, and a set of governments which gain much of their power through monetary policy blows this assertion out of the water.
>The consensus among economists is that a deflationary currency is a terrible idea.
There are a few fiat currencies that have negative interest rates. They are not going anywhere. Most notably the European central bank.
But the euro is not deflationary. Negative interest rates actually have an opposite effect of what you're assuming, they should discourage hoarding and encourage borrowing which results in a higher money supply.
> and instead tries to revert back to a previous monetary system that was abandoned because it was failing. The consensus among economists is that a deflationary currency is a terrible idea
Much like how usury (aka interest) is such a great idea? It's no wonder those economists will say that, in order to push a corrupt and parasitic economic system which religions have warned about for thousands of years now. Building an economic system on usury is not sustainable, and we're seeing it today.
The previous monetary system worked just fine, it's just that it didn't sit well with the greedy who need interest to live and profit off of people's hard work.
You are probably forgetting its purpose as a digital gold. It is more practical than gold thanks to its easy splitting to milliBTC, microBTC, ... an can be transferred world-wide in the matter of minutes. Both real gold and money takes hours or days to transfer. There is also some amount of anonymity and greedy governments or bankers can't touch it.
It is used as a toy, as speculation, for criminal activity, and for money laundering.
There is not much actual legitimate usage. It is pretty bad for privacy as the whole idea is that the entire transaction history is public and permanent.
There are lots of trading bots shuffling amounts back and forth without actually buying anything. High speed trading is no different, it's not like the computers are buying, say, actual physical bananas; they are just trading back and forth.
No -- since the early days of the "World-Wide Web", there were plenty of uses: colleges all hopped onto it, entertainment websites popped up, the first version of IMDB was mind-blowing, Yahoo! v1.0, James Berardinelli's movie reviews site... the list goes on and on.
Anyone saying it was just porn and drugs would just be disingenuous.
But Bitcoin, I'm not sure I've encountered a single "Pay with Bitcoin" option in any online shopping I've done. So where are the legit use cases hiding?
I've seen it from time to time. For a while, Dell was accepting BitCoin transactions, so you could, say, purchase a laptop with BTC (they seem to have since shut it down)[1].
More recently (last year) I came across a VPS provider accepting BTC. I think there are VPN providers accepting BTC, but I'm not familiar with that market space.
That's just what I've stumbled across. Google searches seem to bring up more, but... yeah. Seems to me to be a pretty large chicken-and-egg problem. Something that could take off, but needs a substantial catalyst.
I sold a motorcycle over craigslist a couple years ago and I would have much preferred to have the buyer send me bitcoin instead of giving me stacks of 50s. I wasn't able to demand a cashiers check and I wanted to make sure the sale would go through that day. Cryptocurrencies are amazing for large (legit) p2p transactions.
Exactly
1) possibility of a miscount & time it takes to count all those bills
2) fear of forgery/fake bills
3) carrying the cash on my person to the atm while living in a sketchy neighborhood
4) no “proof” of how much he paid if it came down to a court/tax dispute
Sorry, I am not saying early WWW was for porn or drugs. I am saying that was what ordinary people thought of internet. Similar concept is happening for Bitcoin as well.
> It is pretty bad for privacy as the whole idea is that the entire transaction history is public and permanent.
Yeah, I get that there aren't a lot of options besides Bitcoin for unbanked transactions, but there are a lot of potential ramifications around the radical publicity inherent in blockchain-based currency.
If whoever held the coins 3 transactions ago ends up getting in big-time hot water, should I expect the feds to try to confiscate them? I would at least be under additional scrutiny in order to determine what association I had with the illegal enterprise, being so close in the chain. Bitcoin tumblers and mixers only do so much to prevent this, especially as people have started discriminating against "tumbled" btc.
Minor correction: Radical publicity is not inherent to all blockchain-based currencies. Take Monero as a counter-example. AFAIK in Monero no one can query the balance of any address except the key holder for that address, and no one can see the sender, recipient, or value of a transaction except those party to it.
I believe I've read about people in developing countries with high inflation in their government's currency rely on bitcoin but I don't know how true that is. I've never bought anything with bitcoin and I hope I never have to.
Which in most cases wouldn't be legal locally, which fits under money laundering. Morality might be a little more indeterminate depending on the situation.
It's only money laundering if you're using cryptocurrency to get out of paying taxes or to hide criminal activity. It's not money laundering to buy something instead of keeping your money in a currency undergoing inflation.
Money laundering is attempting to hide the source or destination of funds. Hyperinflation states will usually have strict currency controls in place and Bitcoin is useful in that situation to get around those controls, the whole idea being... its usefulness in hiding the flow of funds.
I use USD-C and DAI to give out grants to a team of international volunteers. Could not get payments to a guy in Turkey through venmo, paypal, square cash, or transferwise. Now we just send everything via stablecoins.
Curious what products to use to send the stablecoins with?
Working on an app that lets you send USDC to any email or phone number globally. Let me know if you want to hear more.
No, the maintainers have purposely neutered its usability in favor of it becoming a "digital gold" or a "digital reserve". Fees are far to high for common uses, and this is entirely intentional. If you are looking for usable crypto currencies, you should look at Ethereum, Bitcoin Cash, Monero, or many others who have set up their chains to accommodate actual day to day use.
Average != actual, though. You can pay whatever fee you want.
I'm pretty sure that if you set a fee of $0.10, your transaction will be verified much sooner than you might think. It would be interesting to quantify, at least.
Waiting more than a few minutes eliminates all in-person, food delivery, and probably most same-day delivery transactions. Who’s going to wait an hour for the purchase to go through for an Uber Eats or Prime Now delivery?
A vast majority of transactions don't need to wait for a full confirmation, simply existing in the mempool is enough. Just like my electric bill doesn't need to wait for the ACH transfer to complete before it's considered paid.
But that's because a company is extending credit to you, the customer, that money is being deposited next day or a few days at most into the merchant account. Without someone willing to be left holding the bag (credit card company) it's a bit of apples and oranges I think.
The blockchain has no support for this kind of feature. That's rather antithetical to Bitcoin. How do you propose to achieve this without a central bank figure?
The "blockchain" doesn't need to support this - the GP's point is that transactions don't need to irrevocably settle for all transaction types. If you're spending $5 to buy coffee, the chance that you are going to defraud the store is low, and there are a number of less complex ways you could accomplish this anyways (just take the item off the shelf, and leave without paying).
And I'll note that there are other ways to accept bitcoin payments without high fees or long wait times (lightning).
I strongly disagree. I think you are overestimating the morality of the common man. If you enable anonymous purchasing of items with no proof of funds being sent, it will be abused. A lot. No storefront will sign up for this. This is very different than physical shoplifting.
It's anonymous enough if you never reveal your identity. It would be like driving somewhere, paying cash, then later the cash is revealed to be fake. And there's no way for the storefront to test for legitimacy until an hour later.
1. Credit card fraud is an extremely small percentage of credit card activity. What you are proposing would likely not be.
2. Chargebacks are disputed, and as a storefront you can prove that you are not liable. Merchants can review the identifying documents of the cardholder for legitimacy and take other security steps, like using a chip-enabled card terminal, to further confirm the validity of the purchase. If they follow the process correctly, they are not liable for fraudulent purchases, the cardholder’s issuing bank is. Visa and MasterCard’s contracts generally put the burden of fraud reimbursement onto the bank.
People certainly used to use it before transaction fees became too high. It saw a lot of real use in dark net markets which AFAIK now use more privacy-preserving coins, since the bitcoin blockchain is simply pseudonymous. For regular payments Bitcoin has some tradeoffs, theoretically the high hash power makes it "safer" (though it's quite consolidated), it's somewhat less volatile than other coins due to trading volume, but its fees are quite high. It's basically dead for on-chain transactions under a certain amount.
Personally I think Bitcoin has great historic value and may become a collector's item similar to how a denarius still has value now, but its properties make it pretty bad for everything you would want a currency to be, except that it's deflationary and well-known. For anything you would want to do with it other than speculate, there is probably a better cryptocurrency (based on the actual tech/design of the currency) or non-crypto tool - it's like the Model T of crypto.
that's why there are thousands of altcoins which always have seen a spark of popularity and their slow decay while Bitcoin still being #1 cryptocoin today
I use Bitrefill to buy pre-paid credits from my daughter's mobile phone. Paying with Lightning gives me a small discount and the payment process is easy. I use the "Bitcoin Lightning Wallet" app on my Android phone (BLW). I had to transfer some coins into the wallet initially and then use some of those coins to "open a lightning channel". Once that's done, paying for something on Bitrefill takes a couple of touches. The transaction completes nearly instantaneously (like less than 10 seconds) and the fees are small (0.1% fee on 15 USD payment).
Ease of use for Lightning is not to the point where I think it is good enough for the average user. However, in the early days getting on the Internet was also not easy (remember dialup, PPP and SLIP? I do). I think Lightning is interesting because anyone has the ability to set themselves up as a merchant and receive payments. Right now it is complicated and a bit clunky but it is actually possible.
I'd guess a lot of "hoarders" of BTC are in a similar boat to me: mined/bought some in the early days (pre-2013), and have recouped their initial investments and then some, and still had some left over. I'm not holding it as a hedge per se, but more as part of a diversified portfolio, with set exit points to rebalance into other assets.
I used some of the lumens that I got through keybase. Mostly because I was buying something online and saw crypto as a payment option.
But out of all the people I know with crypto, they treat them like potions in Skyrim. One day, I'll need all of these different coins. Until then I'll just hold them in my wallet.
According to BitPay–a merchant/consumer Bitcoin processing application—they've been processing >$1B in transactions for the past few years.[1][2] That is just from one centralized service, and there are many other similar ones, private transactions, etc.
So, to answer your question, yes, apparently a lot of people use BTC for conducting actual business.
Lots of people use it for legitimate business. It's not that uncommon to see it as a payment option online and I use it because it's more convenient and more secure than a credit card. For example, I frequently use Bitcoin to pay for domains on Namecheap.
In the early days, Nakamoto wrote to somebody and said Bitcoin can scale larger than VISA for a fraction of the cost. Was he wrong about that, or has something changed since then?
VISA scale is roughly 10,000 transactions per second. If you count Lightning network, that's theoretically possible, but I don't think the network is currently doing anywhere near that and has some scaling and liquidity issues from what I understand. Maybe it will get there, but it's not there yet.
As for fees, however, Bitcoin does not care how much BTC you're sending in a single transaction, whereas VISA charges 1-2% as a fee. So, if you want to transact in large amounts (tens of thousands to millions of dollars) across borders, it's hard to beat Bitcoin.
Personally I have more faith in Ethereum community to solve the scalability problem with blockchain vis-a-vis zkRollups, Optimistic Rollups, and Sharding. Ethereum already scales to 2,000 TPS and after ETH2 is launched, will exceed 100K transactions per second.
> So, if you want to transact in large amounts (tens of thousands to millions of dollars) across borders, it's hard to beat Bitcoin.
No, it's actually very easy. Moving 100k across borders with a SWIFT transfer would cost me $20-30 (and I'm a nobody, someone doing that a lot would switch to a business account and pay maybe half of that). And if you time it well (i.e. during office hours for the emitting, intermediary and receiving banks) it shouldn't take more than a couple hours.
And that's using USD. Switch to Euro as your medium and now it's costing you literally nothing or a few cents.
> it shouldn't take more than a couple hours
That's simply not true. It takes days for most banks to "settle their books", before which any money they've transferred hasn't really gone anywhere.
For day-to-day expenses for us common folk that's not really a concern but for big sums of money the recipient will want a little more certainty of the transaction having completed.
This is another good point. Even for day-to-day transactions, VISA is not instant. The only thing that's instant is the authorization that you can spend X amount of money. But the actual transfer of funds from customer account to merchant account takes days. Whereas, again, with Bitcoin or crypto, it's minutes to settle.
> As for fees, however, Bitcoin does not care how much BTC you're sending in a single transaction, whereas VISA charges 1-2% as a fee. So, if you want to transact in large amounts (tens of thousands to millions of dollars) across borders, it's hard to beat Bitcoin.
Bitcoin was designed to have lower fees than traditional payment processors. From the introduction of the Bitcoin whitepaper:
> The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services.
The current narrative of BTC being "digital gold" and "only for big transactions" is not what it was originally designed as. In this sense Bitcoin Cash (BCH) [1] split from BTC to follow the original plan of electronic P2P cash that works for transactions of any size, including cents.
No, he was right.. what changed since then was who maintains bitcoin. They stubbornly refuse to raise the max block size past 1MB, despite Satoshi putting it in as a temporary bug fix back when the average block size was more like 1KB. Bitcoin could easily scale larger than visa with sub-penny fees today simply by upping or removing a hard-coded constant. It’s insanity imho.
You refer to Bitcoin Cash (BCH) [1]. You are right that it split from Bitcoin BTC to follow the original scaling plan: increase the maximum block size and improve the software to make such bigger blocks work in a P2P network. Its adoption has been slow, but don't forget that it had to begin from scratch, as BTC was the one who retained the network effect. That's one of the difficult problems of cryptocurrencies: bootstrapping.
The big question for me is where would we be today if Bitcoin BTC hadn't sidetracked the original scaling plan and its adoption hadn't stopped in its tracks 3 years ago. Remember when Steam accepted Bitcoin? Microsoft Xbox Online? Dell? NewEgg? It was almost every week I read about some big company starting to accept Bitcoin. Then when they realized people were not using it because of the raising transaction fees and long confirmation times they dropped it.
>Was he wrong about that, or has something changed since then?
Nope he was right about that. What changed is blockstream took control of bitcoin development. They dont agree that on chain scaling is possible, and instead push proprietary alternatives to scale bitcoin where they can extract fees.
I have friends in VZLA that use it in the current cash crunch / hyper inflation. Also know people in Peru/Colombia that use it as a transport layer to get money home into Venezuela.
Recently a shop had a ~15% off sale if you paid in Bitcoin. Considering taking advantage of it, I did some research and even bought a small amount of Bitcoin to test it out.
Purchasing Bitcoin legally is a pain. If you have an online bank account, most of them do not allow cryptocurrency purchases via debit or credit. Even some traditional banks will not allow cryptocurrency purchases via debit or credit. If you have to go the route of bank transfers, you'll have to pay transfer fees and sit through 1 - 3 days of BTC price fluctuations. If you want to use cash or bank deposits via LocalBitcoins, you'll be paying a significant markup over Bitcoin's trading price, and most sellers have a KYC policy that would allow them to easily steal your identity.
Say you have a credit or debit card that can be used to buy cryptocurrency. Registering with an exchange is a hassle requiring a camera, a phone and multiple forms of photo ID. There is a waiting period before being allowed to purchase cryptocurrency. Exchange fees are high, as are transaction costs. I bought a small amount of BTC and wasn't allowed to transfer it from the exchange for 24 hours because of fraud protection.
I did the math and I would lose more than the 15% discount would have saved me just by buying and transacting with Bitcoin. On top of that, the entire process was unpleasant.
Bitcoin is useful for when other payment methods are made impossible by financial censorship. For example, if you want to buy a 4chan pass you must pay with digital currency (Bitcoin, Bitcoin Cash, Ethereum and Litecoin).
I _have_ used it - for example, Visa/Mastercard won't allow you to buy marijuana seeds, even in jurisdictions where it's legal, so crypto is great for that.
But over the last few years, bitcoin has gotten _harder_ to use for transactions, as the blockchain has gotten more crowded. In theory, the "lightning network" is fixing that problem, but at this point I usually transact in other cryptocurrencies - there are plenty of them that have stable enough prices for that! But I still own bitcoin as speculation and as a sort of savings account :shrug: It's been a good investment so far
I bought my wife a painting (~$3k USD) with Bitcoin. I also receive part of my salary in Bitcoin. Primarily, I hold it because it's better than holding USD.
Does anyone actually use stocks? I mean, it's not like I can show up at AAPL and demand their espresso maker because I own enough shares of their stock. The "partial ownership of the business" is a complete myth. In reality, unless a corporation pays a dividend, or goes bankrupt and is liquidated and shareholders are paid, stocks are just liquid vehicles of speculation.
The question about gold is more fair. There have been times when actual gold coins were used as currency, and until 1971 the dollar was on a gold standard, meaning dollars gained at least some of their credibility from the fact they could be traded for a fixed amount of gold; i.e. paying in dollars was in effect paying in gold.
But now, no, gold's status as a "currency" is mostly from tradition. Still, it's relatively easy to use and its value is comparatively stable. And people can't just up and make a new one at any time.
Over time I think it became clear that Bitcoin was misnamed. If it's like any coin, it's a $1700 1 oz Gold coin - not the nickels and dimes people generally think of. It's a great store of value (if you have a strong stomach to short-term fluctuation) but not great for small transactions.
> Well, yes, and the same could be asked about gold…
>Does anybody actually use gold? And by use I mean transact actual business, and not just speculate.
Well, in some parts of the world (most notably South Asia, but elsewhere too), gold is used to varying degrees to "transact" marriages, so there's that. I've never seen a wedding ring made of BTC, but that would be an interesting bit of performance art ;)
Well that's the point. The right way to think of bitcoin is a digital version of gold. It's mostly being used for speculation and as a store of value by some.
Bitcoin is "hard money", the hardest the world has ever seen. People prefer to spend softer money (like paper currency) and hoard hard money (Bitcoin, gold).
If there was money less trusted than the US dollar that was widely accepted, and US citizens had it, they would choose to spend that money before US dollars.
In countries with very poor fiat currencies, people will hoard USD and spend their local fiat currency where ever they can, only spending their USD when they are forced to, because it's better money.
There's more to money than spending. Saving is a valid use case for money. Turns out that Bitcoin is a best fit too. The daily tx limit doesn't really concern this use case too much. The spending use case is much more impacted by it though.
One might suspect that if there is enough demand for the spending use case, then some other solutions might develop to increase the transaction throughput for that use case.
>One might suspect that if there is enough demand for the spending use case, then some other solutions might develop to increase the transaction throughput for that use case.
The only valid solution is to increase the block size limit, as stated in the conclusion of the lightning network whitepaper. A layer 2 is still constrained by layer 1.
Maybe the "spending" use-case doesn't need the hardness properties that Bitcoin has, but the "saving" use-case does.
I don't like the idea of undermining the latter to promote the former, when it's not obvious the former is even in high enough demand, and when it can be done in alternative ways (L2 solutions, sidechains, custodians etc).
Increasing the block size limit is not a solution to anything.
People hold gold in order to protect themselves against “unprecedented times”. You don’t need a full monetary collapse to make a profit. They are volatility harvesting and cashing out many times over a long period of time and rebalancing into other assets.
Modern portfolio theory says you can’t predict the market; however, you can be absolutely certain people in a group will overreact and over buy or sell an asset group. This is a well studied fact. You can capitalize on this. It’s called volatility harvesting. Look into risk parity portfolios. That said if everyone did this, the hard stance on modern portfolio theory would hold true. At this time humans aren’t capable of acting rationally as a total group.
I've bought a handful of ordinary things (bookshelves, a t-shirt, tire chains, coffee and pastries) with bitcoin, just for the heck of it. These are real-world things I would have spent other kinds of money on if I couldn't pay with bitcoin. I used bitcoin for its novelty.
Bitcoin itself is obviously unsuitable to replace cash (or banks, etc) in general, but I've been fascinated by cryptocurrencies since the David Chaum days, so I like to play with it. Speculating on it is more effort than it's worth, to me.
My USD$25 in bitcoin holdings did require me to check a box on my tax forms this year, though...
> I'm really curious for the hoarders, if they're doing it as a hedge against global financial collapse, how exactly do they expect to redeem their bitcoin for anything tangible?
You can sell and buy in OpenBazaar [1] or Purse.io [2] for example. In my opinion growing the native cryptocurrency economy and decoupling it from fiat currencies is the most important step to take for their adoption.
In any case, there is a number of ways to spend cryptocurrencies without having to go through exchanging them into fiat, which was the point I wanted to make to OP.
It's basically like gold with extra features, such as being cheaper and faster to move than physical gold and also it requires much less physical security (which is expensive). You can't encrypt a bar of gold.
The value of gold, bitcoin, land, etc is simply there is a stable amount of it. The price may jump wildly due to speculation but it's more likely to go up than down over the long term just because the amount of fiat in circulation is constantly increasing.
I put $200 in, and pulled $600 out, and bought my Pixel XL on it. The entire time (6-12 months) I regarded it as a learning exercise in gambling, post-hoc reasoning about value, addictive behaviour, speculation.
I was unable to buy the pixel in bitcoin, I wish I had been able to. The fragments left behind I donated to charities online (the FreeBSD foundation)
No I didn't. I declared it and showed all transactions and my accountant factored it into my tax return. I kept a diary of all transactions. Casual Bitcoin with no intent to derive a long-term investment income and for sums below 1,000 do not necessarily incur capital gains tax. If you used 'know your customer' aware FinTech it's next to impossible to hide income from the ATO these days in australia and that's not a bad thing either.
HODLing is using bitcoin. It is probably the primary motivating use-case for it. To HODL is not necessarily to speculate, but simply to save money. Money is multi-purpose, and saving is a valid use case as much as spending is - although modern monetary theorists think that saving is not a valid use of money, and thus have fixed their money systems to making saving impossible.
There is a distinction between HODLing and merely speculating, although there is overlap in these uses. A speculator is typically somebody who wishes to see their USD holdings increase in the short to mid term as a result of exchanging bitcoin on the market at the right time. A HODLer is somebody who expects their 1BTC to still be 1BTC in 1 year, 4 years, 40 years, ...
There is no implication that there needs to be a financial collapse. There is only the implication that fiat money is guaranteed to be devalued through inflation, which is decided upon by self-interested, unelected, unaccountable men in the shadows, who benefit from being the issuers of new money at the expense of the later recipients of the new money (The Cantillon Effect).
If $1 now is worth more than $1 in 1 year, or 4 years, or 40 years, then anybody of sound mind is not going to save in dollars because their purchasing power when they come to spend the money will not be worth the effort they underwent to earn it. One option for people wishing to save over a long period is to invest in risky enterprises - which is speculation, as much as any investment in bitcoin is. Those other markets are also subject to manipulation, insider-trading and other ill-doings which don't benefit regular savers.
But bitcoin presents an option which is intrinsically different from all of the others: it has an absolute maximum supply which is directly measurable by anybody, which means that its value is subject only to the subjective opinions of market participants trading bitcoin for other commodities and any shadow bankers are absolutely powerless to change this.
The BTC/USD exchange rate is not what is interesting. There are potentially infinite dollars, but there are potentially only a maximum of ~21M bitcoin and no more, ever (but possibly less). There has never been such a hard form of money in history, and even the closest analogue, gold, has been subject to inflation on the discovery of new gold mines, or even through manipulation of the matter (fools gold, coin clipping, etc). Unlike gold, Bitcoin is also easy and cheap to verify for anybody.
It gets more difficult to release new bitcoin with time due to this block subsidy decrease. There is a race to accumulate as much as possible as early as possible under the concern that it will cost you much more later (either in money, or in labour) to obtain the same amount. You're effectively bidding for a share of the potential maximum of 21M, and those shares are getting harder to obtain. To give a historical account: if you had purchased 1 BTC in dollars 10 years ago, it would've only cost you 1/8000 the amount now. Translate that into labour, and it means you'd be working for several months to years to obtain the same share which could've been obtained for 5 minutes of work if you'd done it sooner.
There's still ample possibility that Bitcoin could see 10x, 100x or even 1000x gains over the next years/decades. If you hold fiat money in a bank account, you are risking missing out on all of that. Are you willing to take such risks? How is holding dollars no less of a risk than holding bitcoin?
Or is it like gold reserves, people just hoard these digital numbers until they are ready to cash out.
I'm really curious for the hoarders, if they're doing it as a hedge against global financial collapse, how exactly do they expect to redeem their bitcoin for anything tangible?
These are serious questions, I've given bitcoin only a minimum of thought. It seems a great way to move value out of a closed economy like China, or for drug dealers to move cash across borders, but who else uses it?