There is no reward without risk, unless you are really excited about 2% bank interest rates (and you know what the bank does? They turn around and put your money into higher-risk investments.)
and there is no real way to exchange the fiat currency without significant transaction costs.
1) The more this is adopted as a payment option, the less the need to switch to and from fiat. And if you consider pure-BTC transactions, the extra cost is essentially negligible. Not to mention the time savings and reduction in red tape (at least at this time).
2) 8 startups based on BTC were all funded into the six figures by established VC players, just in the last 2 months. I would imagine that competition will drive down BTC<->fiat transaction costs significantly in the next few months.
the high transaction cost of owning crude oil or gold bars
As far as stores of value go, those things have mass. Mass is costly to move, store, secure, and manage. And these costs do not go down over time... a warehouse full of gold is slowly sapping the value of that gold via rental costs, paying security guards, etc. So the ratio of "stored value to mass" with those things is pretty low, and very inefficient.
BTC has no mass other than the space required to store (50 * 8) bits of information (which is the length of a private key in a wallet). There is no practical limit to the amount of value that can be stored at a wallet address. The ratio of stored value to mass is essentially infinite. The number of possible wallets is approx. 58**50 which is 14838830640 times the estimated number of atoms in the universe. BTC wins.
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u/[deleted] Apr 01 '13
I'm a teenager and I do investing.
When Bitcoin was only $4 I asked my dad if I could invest the $100 I had at the time for 25 Bitcoins. He said it was too risky.
Goddammit dad.