Couldn't you make the same argument for pets.com stock in early 2000? "Diversification" is a conveniently vague reason to invest in something when there are no "fundamentals" that can be evaluated. At the very least pets.com had some assets that could be sold off after the company went under. Bitcoin can't even claim to have that.
If this was 2013, I would agree with you, because the risk of it being worth nothing was much larger, but today the Bitcoin blockchain moves thousands of bitcoin per day (worth billions of dollars in value) and it's network effects are stronger than ever before and you can see usage go high through on-chain metrics (like # wallets, transfers) and increase in lightning network usage (1ml.com).
So I would say, investing in Bitcoin in 2013 probably has the same risk as investing in pets.com, but today, it would be like investing in Amazon a couple years after the dot com bubble when the trajectory is clearer. Just my 2 cents.
I think this is actually an argument for investing in crypto.com, other exchange companies, or some of the huge bitcoin mining operations. These are the entities creating value by keeping the bitcoin network running and moving $millions worth of bitcoin around between wallets. Owning bitcoin itself does not grant you any equity in these profit-making entities that actually make bitcoin work.
That's one way of looking at it, but most stocks don't pay dividends, so that "equity" is also not that tangible either, unless you're like a majority shareholder that you can change company direction. When you buy a stock, that money doesn't go to the company, it goes to previous investor, unless the company issues more stock (usually the opposite happens).
Also, Bitcoin's success doesn't mean those companies will succeed because it's decentralized and there's thousands of companies across the world and competition is very stiff. But those companies can't succeed without Bitcoin.
A stock literally represents a unit of ownership of the underlying company. No, it's not tangible in the "I can touch it" sense - unless you get a LOT of it as you said, but it's backed by hundreds of years of contract law precedent. When I own stock I get quarterly reports on the performance of the company - revenue, profit, etc. - these allow me to evaluate whether I think the company is doing well or poorly and gauge if I want to continue to invest.
Whether the stock pays dividends or not isn't really relevant to my argument. My point is that the price of Bitcoin is completely divorced from any sense of economic "value". There are no earnings to forecast, no revenues to examine. The only way to determine if bitcoin is going to go up or down is gauging sentiment (i.e. groupthink) or just faith. Even sports betting provides more information for decision making like past performance of the athletes.
When you buy bitcoin you are _investing_ in the possibility that the bitcoin will be part of the economic network.
The earlier you invest the better the returns. As time passes and bitcoin grabs hold a position the S curve of possible returns will be less. Same as investing in stocks.
The value is brought by being early adopter. Historically bitcoin is gaining adoption, but one would argue we're still early.
Paradoxically if you think that bitcoin is useless, it's early, if you think it's a sure thing, it's late.
That has nothing to do with bitcoin though, it's universally true for any type of risk investment.
"Investing" in a possibility that something might happen that is completely outside the control of the entity I'm investing in sounds like plain old gambling. Not that you can't do that with stocks also (see penny stocks, for example). It's like saying I'm "investing" in the ball landing on "00" when I put my chips on the table.
You can evaluate Bitcoin by how many users it has, how many transactions it facilitates, what kind of new concepts it enables, the usefulness of un-censorability, how many countries are adopting it (or likely to adopt it), etc.
If you're going to use athletes past performance for betting, you can always use Bitcoin's past performance of 300% YoY appreciation for forecasting it's price too, but we both know that's useless.
> how many users it has, how many transactions it facilitates, ... how many countries are adopting it (or likely to adopt it)
By these metrics, isn't fiat currency vastly more valuable? Yet even when a new fiat currency is created, you don't get a rush to "invest" in it.
> what kind of new concepts it enables, the usefulness of un-censorability
These are extremely squishy and any measure of value here is extremely subjective. Plus the latter property is not yet proven. Bitcoin, in particular, makes it very easy to trace the source/destination of a transaction. The same anti-money-laundering KYC practices that allow taking down drug dealers[1] could be used to censor someone from receiving donations/payments.
