When it comes to Bitcoin, I kind of see it as being similar to gold in the modern world. See Buffett's 2011 letter:

> The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

> What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.

[…]

> Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

> Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

[…]

> A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

* https://www.berkshirehathaway.com/letters/2011ltr.pdf

In some ways this is a form of Greater Fool Theory: you'll only make a profit if someone comes along later and is willing to pay more for it, as it otherwise doesn't not have any productive use.

* https://en.wikipedia.org/wiki/Greater_fool_theory

And given it was designed to have a finite amount, that means it is deflationary over the long-term which incentivizes hoarding.

An observation from a paper I ran across:

> An ECB publication states that bitcoin’s theoretical roots are in Austrian economics[11]. Bitcoin corresponds with Austrian economic ideas in that bitcoin was intended to provide a monetary alternative that is beyond the reach of governments to regulate. Bitcoin has correspondence with libertarian ideas, which have some relationship with Austrian ideas. In the USA, my experience is that bitcoin proponents appear to have obtained their theory from science-fiction, radical libertarian popular literature, anti- government/anti-tax activism, and often from nothing that is apparent except their own thoughts.

* https://arxiv.org/pdf/1312.2048.pdf

* https://arxiv.org/abs/1312.2048

I remain skeptical about any mainstream use. Though having a bit (<5%) in one's portfolio isn't crazy as some 'play money'.

Similarly I don't bother holding gold (bullion or ETFs), but if someone has a portfolio with a few percentage points' worth it isn't unreasonable. Generally gold isn't as useful as many people think it is:

* https://www.pwlcapital.com/will-gold-save-the-day/