Bubble, Bubble, Fraud and Trouble • Hacker News Board

Re: Bubble, Bubble, Fraud and Trouble

#41

Post by dragonwriter » Wed, Jan 31, 2018, 12:23 AM UTC

bonestamp2 wrote: post #35

I realize this is an op-ed, but a good op-ed will still be based on well researched facts, otherwise the opinion is naive and useless. This reads like Krugman read a shitty blog from some 12 year old who doesn't know how to do independant research and simply copied some terribly uninformed social media arguments. For example, the US Dollar is valuable not because that's the only accepted currency for paying taxes but…

> For example, the US Dollar is valuable not because that's the only accepted currency for paying taxes but because it's the only currency that nearly every retailer in the country accepts.

The former is a significant part of the reason for the latter.

> There's a big difference between bitcoin use in general and bitcoin use on the dark web.

There's clearly a difference, but if a large share of the non-speculative trade is on the dark web, Krugman’s statement you criticize remains correct.

> I could go on but I think it's fair to say there is no need -- Krugman has gone full retard.

You have decidedly failed to make that case.

Re: Bubble, Bubble, Fraud and Trouble

#42

Post by ThomPete » Wed, Jan 31, 2018, 12:25 AM UTC

JumpCrisscross wrote: post #32

cableshaft wrote: post #27

Earlier quoted context omitted.

> In that sense, it's sort of like gold. Unlike gold, Bitcoin doesn't have millennia of heritage grandfathering in an informal consensus [1]. Yep. Exactly. Bitcoin doesn't have the history of other currencies and assets, by the simple fact that it has only existed for about ten years . Something that can't be changed because we don't have time machines to go back thousands of years and tell everyone how to build comp…

> So instead of people saying that Bitcoin is inherently worthless all the time, maybe we can just agree that it's going to take a lot longer than ten years and a lot of swings both up and down in the price before we start creating enough of a "heritage" to come to an informal consensus on how much they are worth The history of non-fiat money (like gold) is that of candidates being knocked off, practically never adde…

There is only one bitcoin and that bitcoin has a unique history that no other can have. It doesent need to be neue gold it just need to be bitcoin.

Re: Bubble, Bubble, Fraud and Trouble

#43

Post by charlesdm » Wed, Jan 31, 2018, 12:28 AM UTC

JKCalhoun wrote: post #25

eggbrain wrote: post #12

We've heard about Bitcoin being a bubble and having no intrinsic value the entire duration of its existence -- so much so that Paul making these his main arguments feel like traveling back to ~2013 when it was "bubbling" then. If people use Bitcoin and believe it has value, it _gives_ it value and credibility, in the same way that diamonds have value, even though they are no longer "rare". When people stop using Bitc…

> If people use Bitcoin and believe it has value, it _gives_ it value and credibility Unless what is driving up the price is speculation. I mean, do most of these new-to-bitcoin users actually "use" Bitcoin? Purchase with it? Or are they holding, waiting to dump?

The same can be said about diamonds and art, however. The only difference here is that it's a digital vs a physical asset.

Re: Bubble, Bubble, Fraud and Trouble

#44

Post by dmitrygr » Wed, Jan 31, 2018, 12:29 AM UTC

chrischen wrote: post #26

Serious question, how is Bitcoin fundamentally different from gold? Based on a "tether to reality", gold is massively overvalued if you consider its industrial or practical utility. Furthermore, gold is heavy and thus impractical to use in day to day transactions, just like Bitcoin. There are altcoins, but then there are also alt-metals (granted a lot fewer of them) such as silver, platinum, palladium, etc. The way I…

Actually, considering more than 70% of gold being bought is NOT for monetary purposes[1], I'd say it is not overvalued. It is valued exactly at its market value: for jewelry, for industry, for dentistry, etc.

[1] https://www.statista.com/statistics/299609/gold-demand-by-in...

Re: Bubble, Bubble, Fraud and Trouble

#45

Post by acdha » Wed, Jan 31, 2018, 12:33 AM UTC

sxates wrote: post #8

Wouldn't be an article about Bitcoins without "bubble" and "tulip." It's really getting old - you'd think 7 years in there'd be something new to write about.

You’d think that 9 years in there’d be plenty of examples of it solving problems for normal people, too. The bubble talk will go away as soon as that changes.

Re: Bubble, Bubble, Fraud and Trouble

#46

Post by tlb » Wed, Jan 31, 2018, 12:34 AM UTC

chrischen wrote: post #26

Serious question, how is Bitcoin fundamentally different from gold? Based on a "tether to reality", gold is massively overvalued if you consider its industrial or practical utility. Furthermore, gold is heavy and thus impractical to use in day to day transactions, just like Bitcoin. There are altcoins, but then there are also alt-metals (granted a lot fewer of them) such as silver, platinum, palladium, etc. The way I…

Gold is pretty light for its value. A gram of gold is worth about $50, whereas a US dollar bill (of any denomination) also weighs 1 gram. So gold is 2.5x denser than $20s.

The main flaw with gold as a currency is that it's tempting to shave little bits off each coin so you can melt the shavings into some new coins. Or recast them with 20% lead. Paying in gold coins involved the buyer searching through his pockets for the lightest coins he could foist on the seller, and the seller skeptically hefting and biting them.

Re: Bubble, Bubble, Fraud and Trouble

#47

Post by vec » Wed, Jan 31, 2018, 12:53 AM UTC

chrischen wrote: post #26

Serious question, how is Bitcoin fundamentally different from gold? Based on a "tether to reality", gold is massively overvalued if you consider its industrial or practical utility. Furthermore, gold is heavy and thus impractical to use in day to day transactions, just like Bitcoin. There are altcoins, but then there are also alt-metals (granted a lot fewer of them) such as silver, platinum, palladium, etc. The way I…

> Serious question, how is Bitcoin fundamentally different from gold?

So there are a handful of assets (gold, silver, jewels; generally stuff you'd expect to find in your average pulp fantasy treasure chest) that are essentially ancient speculation bubbles that never popped. They're valuable because there valuable. The optimist view of Bitcoin is that it's going to be the newest member of that august club.

The bad news is that most of the list predates money as we understand it. It's not entirely clear if new gold-class assets even can be created anymore.

The worse news is that the list is getting shorter. Aluminum used to be the stuff of kings, now we make candy bar wrappers out of it. Indigo, spices, pearls, turquoise. They all spent centuries as treasures until they weren't. Diamonds are starting to fall off, although it'll probably take a few decades.

All of these were once extremely scarce and became a lot more common for one reason or another. And Bitcoin itself is limited, but any idiot can fork off their own altcoin.

It's possible that in a few hundred years a Bitcoin will be just as much "treasure" as a bar of gold, but that's still far from a certain thing.

Re: Bubble, Bubble, Fraud and Trouble

#48

Post by bonestamp2 » Wed, Jan 31, 2018, 1:16 AM UTC

dragonwriter wrote: post #41

bonestamp2 wrote: post #35

I realize this is an op-ed, but a good op-ed will still be based on well researched facts, otherwise the opinion is naive and useless. This reads like Krugman read a shitty blog from some 12 year old who doesn't know how to do independant research and simply copied some terribly uninformed social media arguments. For example, the US Dollar is valuable not because that's the only accepted currency for paying taxes but…

> For example, the US Dollar is valuable not because that's the only accepted currency for paying taxes but because it's the only currency that nearly every retailer in the country accepts. The former is a significant part of the reason for the latter. > There's a big difference between bitcoin use in general and bitcoin use on the dark web. There's clearly a difference, but if a large share of the non-speculative tr…

> The former is a significant part of the reason for the latter.

Obviously there's a feedback loop where people are paid in a currency and then people have that currency so retailers accept that currency and then they pay their employees with that currency, etc. But I don't think anyone has recently sat down to think about which currency they're going to use on a daily basis and selected that currency because it's the currency they have to pay their taxes in once a year. People use it because they have it, businesses accept it because that's what people have. Why? It's not because of taxes...

It's because nearly every modern country has a central bank or a "pseudo-central bank" (like the federal reserve) that issues the trade currency for that country. That central bank issues that currency because they want to control the economy (as Krugman mentions). It's not because they want to receive that currency to pay taxes -- accepting it as the payment method for taxes is a consequence of issuing that currency, not the reason for it.

> but if a large share of the non-speculative trade is on the dark web, Krugman’s statement you criticize remains correct.

Well sure, but there's no evidence of that and an article about usage of bitcoin on the dark web is not a useful source for such an argument -- in fact, using it in that manner discrets the author entirely.

Re: Bubble, Bubble, Fraud and Trouble

#49

Post by [deleted] » Wed, Jan 31, 2018, 1:21 AM UTC

charlesdm wrote: post #43

JKCalhoun wrote: post #25

Earlier quoted context omitted.

> If people use Bitcoin and believe it has value, it _gives_ it value and credibility Unless what is driving up the price is speculation. I mean, do most of these new-to-bitcoin users actually "use" Bitcoin? Purchase with it? Or are they holding, waiting to dump?

The same can be said about diamonds and art, however. The only difference here is that it's a digital vs a physical asset.

[deleted]

Re: Bubble, Bubble, Fraud and Trouble

#50

Post by gooseus » Wed, Jan 31, 2018, 1:35 AM UTC

cableshaft wrote: post #18

gooseus wrote: post #14

Earlier quoted context omitted.

Well, your quote seems to be writing off Bitcoin, not cryptocurrencies in general... but I don't understand this logic that keeps being put out. The most powerful government in the world with long established laws and multiple powerful institutions guarantees USD as "legal tender for all debts, public charges, taxes, and dues."[0] and has been stable for decades, if not centuries. The concept of cryptocurrencies didn…

If a solar flare brings down the internet (presumably you mean via EMP), the amount of USD wealth that would be lost would be equally if not more catastrophic, because most of it is not kept in physical bills, but in 1's and 0's on computer systems as well. "In fact, economists estimate that only 8 percent of the world's currency exists as physical cash. The rest exists only on a computer hard drive, in electronic ba…

I'm not actually talking about an EMP, I believe it's more of a CME[0]. Coronal mass ejections would have more of an impact on the long lines, so pretty much the core power and networking infrastructure.

But yes, this would affect the ability to take out cash from ATMs and banks wouldn't be able to check your account balance, though most have local generators or they would pretty quick, so local credit unions might still be operational. However, anyone with cash on hand would be able to utilize it to make purchases and the local/state/federal government would fly into emergency mode to protect the ability for hard currency to be used.

They would also make sure that financial institutions are the first ones back online in order to get the economy flowing again and the Fed would make sure that a dollar was worth the same after the lights came back on as it was before. Laws exist which ensure that manipulation of the currency and even opportunistic price gouging would be punished afterwards.

Not so for bitcoin or any other cryptocurrency... no government guarantees it and if the network went down unevenly who knows what sort of manipulations would be attempted on those networks that now had players with over 51%...

Since Chinese mining companies control well over 60% of the network, would the remaining miners be able to handle the load? Especially since many miners would just keep rolling in isolation and immediately start publishing simultaneous blocks when they reconnected with each other...

If intercontinental infrastructure weren't repaired for many months, would Europe, US and Asia all end up with their own branches of the blockchain? Has the bitcoin community even run a model of what to do in a similar disaster situation? I know that after 9/11 every bank has super rigorous disaster recovery plans and backup mechanisms, so they for sure have hardened backups and power generators at core locations.

I mean, this is ridiculous, bitcoin can't even be used to buy something and isn't accepted anywhere useful and probably never will. So if this scenario happened, the first thing that would happen is the price would collapse as everyone waited on Coinbase's doorstep to sell their coins to get cash so they can actually buy something useful.

[0] https://sciencing.com/effects-solar-flares-technology-20402....