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Bitcoin Makes Even Smart People Feel Dumb

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Re: Bitcoin Makes Even Smart People Feel Dumb

#101

Post by runeks »

albertgoeswoof wrote: post #83
phailhaus wrote: post #53

I've noticed this about Bitcoin. It's not hard to understand at all, but everyone attempts to dive into the technical details right from the start and this loses most people. The core conceit that people gloss over is the fact there is no such thing as a "wallet" that "stores" bitcoins. The only thing that exists is a public record of numbers saying they're giving bitcoins to other numbers. When you create a "wallet"…

What's really hard is to get your head around is the random number- what are the chances someone will have the same number as me? For anyone that asks, the answer is basically 0, because maths For a trustless currency there's a lot of trust going on there!

It’s not really hard to explain: the probability of two people generating the same random 256 bit number is roughly equal to buying four tickets to the national lottery four weeks in a row, and winning the jackpot on all four of them.

No one has ever won the jackpot even two times in a row, so do we really need to worry about someone doing it four times in a row?

(Two people generating the same 256 bit number is a collision, which means the probability is 1/sqrt(2^256))

Re: Bitcoin Makes Even Smart People Feel Dumb

#102

Post by Taek »

thephyber wrote: post #52
puranjay wrote: post #30

Earlier quoted context omitted.

Which is what makes Bitcoin's democratic credentials so ridiculous. "It will free us from fiat money!" No it won't. It's just a transfer of wealth from educated elite to other educated elite. 99% of the world's population can't understand it. 99.5% can't mine it. It's so damn elitist that it's not even funny.

> 99.5% can't mine it. Not relevant. Mining is no longer profitable for any new entrants without some incredible innovation in computing power or electricity costs. Even the miners are unlikely to make money from mining only from holding their mining gains as investments. > 99% of the world's population can't understand it. That's underselling the human population. I would posit 10-20% are probably mentally incapable…

Mining is plenty profitable if you've got access to cheap electricity. I think 7 cents per kWh is low enough to run a decent operation right now, and there are places with 2 cent electricity.

Re: Bitcoin Makes Even Smart People Feel Dumb

#103

Post by dang »

dsego wrote: post #32
puranjay wrote: post #30

Earlier quoted context omitted.

Which is what makes Bitcoin's democratic credentials so ridiculous. "It will free us from fiat money!" No it won't. It's just a transfer of wealth from educated elite to other educated elite. 99% of the world's population can't understand it. 99.5% can't mine it. It's so damn elitist that it's not even funny.

F*k 'em, they can eat their prayers and nationalism.

Comments like this break the HN guidelines. Please post civilly and substantively, or not at all.

Re: Bitcoin Makes Even Smart People Feel Dumb

#104

Post by charlesdm »

csuwldcat wrote: post #96
charlesdm wrote: post #77

Earlier quoted context omitted.

Aren't you just transferring from one asset (bubble) into another? Holding your wealth in shares of a company is a way to combat that, so is holding real estate and other assets (e.g. IP rights). Something can't be a reliable store of value if it can drop (or increase) 50-100-200% in a day. That is, in the best case, a speculative instrument. If I had $50m, why wouldn't I invest it in property rather than in Bitcoin?

Property is subject to bubbles, and in almost any economic recession prices of real estate tend to fall (demand drops, and sellers/supply grows). Bitcoin is a far better asset hedge, as it possesses almost every property of commodities, like gold, without almost all of their negatives.

Property is indeed subject to bubbles, but why wouldn't / couldn't Bitcoin be?

Gold is prone to bubbles as well. Personally I'm not a gold bug and I don't really see why (in the current day and age) it still acts as a safe haven asset.

Ultimately, it has little economic use, meaning most of its value is just derived from it "being gold". Land, that I get, that makes total sense. You can't make more, and you definitely can't make more land in good locations. But gold -- that seems very artificial to me as well.

But you're right, if I had to a pick, Bitcoin probably makes more sense over gold.

Re: Bitcoin Makes Even Smart People Feel Dumb

#105

Post by logfromblammo »

wmf wrote: post #91
logfromblammo wrote: post #67

Earlier quoted context omitted.

Predicting the price is only an intermediate step to answering the question "How much should I invest in this stock?" In the case of the penny stock with no business activity, you can usually just skip the valuation step and go straight to "invest nothing". There are exceptions, of course, but all of them involve you having some information not generally available to the public.

Which leads to a conclusion of "never invest in crypto-anything" which works fine for me but is not what many people want to hear.

Exactly. Even if I were a gambler, I would prefer by far Blackjack or Roulette to Poker. I'd rather play against the randomization of the equipment than directly pit my skill against a bunch of people that I know are all far better at playing that game than I am.

I'll just continue to invest in robot-managed index funds, thanks.

If you can't use the cryptocurrency effectively without buying in early, there is a fundamental problem with it, and the people who bought in early probably should not have done so. So the obvious conclusion is to not buy in early. Those stories I keep hearing about people who made fortunes off of Bitcoin are fun and inspiring, but there is no way I would have been any of those people, because I didn't have the extra disposable cash to invest in Bitcoin at the times when it would have been most advantageous to do so, and it has never matched my risk profile since 2009. If it had been invented in 2000, yeah, I could have been a Bitcoin millionaire. But that's not how it worked out. Those grapes aren't sour; I just couldn't reach them.

And right now, this very instant, the next big thing could be staring me right in the face, and I would still choose not to invest in it, because I don't have enough investment money left after the sure things, boring but prudent choices, and dubious but exciting possibilities to put a single penny into moon-jumping unicorns that fart nuclear-powered rainbows. I'd rather have 98% confidence of retiring at 65 than make a gamble between between retiring two years from now and never retiring at all.

So cryptocoins can be the playground of the young and foolish, the old and treacherous, and the financial geniuses.

Re: Bitcoin Makes Even Smart People Feel Dumb

#106

Post by codingmyway »

charlesdm wrote: post #88
jstanley wrote: post #87

Earlier quoted context omitted.

My theory is that Fiat currencies and their central banks are beneficial only to the state, and not to individuals. And that for any system to be viable in the long-term, it needs to benefit individuals else they won't use it. 1.) To a first approximation, central bank policy consists of creating lots more money, all the time. That is a bad thing for anybody holding the currency (everyone). Therefore these people (ev…

What you're saying makes sense to some extent and I don't necessarily disagree. But instead of holding currencies, why not hold assets? Any asset, for that matter. Whether it's property, one or multiple businesses, royalty generating IP rights, etc. You describe Bitcoin as a currency. To me, while it looks like a currency, it's not actually a currency. It seems more like a pure asset class. I mean, maybe I'm a minori…

"asset holders (i.e. mostly the upper classes) essentially made bank, because debt got extremely cheap and the value of the currency declined. The average saver lost money, or at least yield, because it didn't make any sense to save money"

So if you're a saver, this is the problem that bitcoin solves. A way for savers to protect themselves from being robbed by central bankers to bail out asset speculators.

Bitcoin is also easier to take with you when you relocate. Bitcoin is a weapon is the battle of savers vs debtors.

Re: Bitcoin Makes Even Smart People Feel Dumb

#107

Post by charlesdm »

codingmyway wrote: post #106
charlesdm wrote: post #88

Earlier quoted context omitted.

What you're saying makes sense to some extent and I don't necessarily disagree. But instead of holding currencies, why not hold assets? Any asset, for that matter. Whether it's property, one or multiple businesses, royalty generating IP rights, etc. You describe Bitcoin as a currency. To me, while it looks like a currency, it's not actually a currency. It seems more like a pure asset class. I mean, maybe I'm a minori…

"asset holders (i.e. mostly the upper classes) essentially made bank, because debt got extremely cheap and the value of the currency declined. The average saver lost money, or at least yield, because it didn't make any sense to save money" So if you're a saver, this is the problem that bitcoin solves. A way for savers to protect themselves from being robbed by central bankers to bail out asset speculators. Bitcoin is…

But Bitcoin is an asset as well. And savers don't generally like buying assets, especially not if they're very (very, very) volatile. The average joe could've bought stocks, in 2009, yet mostly didn't. And for those that didn't, then they probably wouldn't have bought Bitcoin either.

Re: Bitcoin Makes Even Smart People Feel Dumb

#108

Post by exelius »

atemerev wrote: post #13
exelius wrote: post #8

The hard part here is market making. Market making is almost pure game theory, and unless you worked at a big market making trading house (i.e. Goldman, JP Morgan, etc) the learning curve can be really expensive. In this type of work, it's not that bitcoin is making people feel dumb, it's that the smartest people playing in Bitcoin are making money at the expense of everyone else. There are a lot of really smart peop…

So are other currencies. FX market is strange, to say the least.

Yeah, the whole FX market operates largely outside international law unless you're talking about a handful of currencies. And even there the conversion path for almost everything runs through USD or EUR (with some regional exceptions).
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