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Bitcoin is a Ponzi

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Re: Bitcoin is a Ponzi

#511

Post by graeme »

bb88 wrote: post #483
graeme wrote: post #410

Earlier quoted context omitted.

> They do not pretend making your money work for you by some magical scheme. No. They instead take your money, buy coal, and burn it. Nothing is left. As you say, Ponzi schemers take money for themselves and keep it. Most of what Madoff stole was recovered, for instance. Whereas virtually 100% of all money invested into crypto has been burned by miners. This is pretty easy to model. So there’s nothing left to recover…

> No. They instead take your money, buy coal, and burn it. Nothing is left. Interesting, I never thought of it that way, and it makes sense. Since money is not created or destroyed the balance sheet on inflows and outflows of BTC to dollars must be zero at all times. And some x% (which is variable) of it is transferred to miners which is the so-called "transaction" cost. I guess there must be a point at which the bub…

Yeah pretty much. Except the miners don’t take the money, they burn the money. Mining has low barriers to entry (more or less) so you’d expect low profit margins. And the major costs are energy (lost forever) and ASICs (unfit for other purpose)

So while most industries have costs that feed back into economy, mining costs are just burnt.

But yeah beyond that it’s just musical chairs. Depends entirely on inflows.

And those aren’t too high. Coinbase’s USD volume is $300,000,000-$1,500,000,000. And that’s buying and selling. You couldn’t sell the whole $1,500,000 and exit without crashing price. 2% depth negative is a bit over a million.

So with an apparent $1 trillion in value in the btc market, the exit door is thin.

Re: Bitcoin is a Ponzi

#512

Post by ipaddr »

Closi wrote: post #390
idontwantthis wrote: post #332

Earlier quoted context omitted.

$5-$20 for any amount is comparable or much less than almost any international transaction fee. If you're other option is transferring money out of the authoritarian country into your destination then this could be very attractive.

I mean my bank (Monzo) charges $0.40 for a small international transfer, and $3.20 for one that is $1000, so depending on the transaction size in most scenarios for me personally bitcoins fees would be WAY higher and will presumably only grow more if Bitcoin gains further adoption. The problem is that the Bitcoin fee is also payable on all domestic transfers too, which of course are free in traditional banking.

If your account is frozen for whatever political reason your bank can't help you. Bitcoin fees can be 15 cents. I think it is a dollar now. Plus the 10,000 or 100,000 limit you would have could prevent you.

Re: Bitcoin is a Ponzi

#513

Post by rank0 »

gunshai wrote: post #500
rank0 wrote: post #438

People in the crypto debate have very short memories. BTC is up like 1000% in the past 18 months and everyone is so quick to point at the current price declaring that "crypto is here to stay!" I mean christ in what world is 18 months long enough to declare that crypto is eating the world? It's clear as day from my perspective that everyone is jumping on the speculative mania bandwagon. It used to have some utility in…

An entire country is using btc as their currency of exchange. Is it a major economy no but now its your turn to move the goal post.

El Salvador’s recent decision is a Hail Mary attempt at solving a tiny impoverished country’s crippling financial situation. They make their citizens use a government approved wallet where they process transactions off chain. This is the antithesis of what crypto used to stand for.

The worlds largest country just banned Bitcoin too. I don’t think either event is indicative of btc’s intrinsic value.

Re: Bitcoin is a Ponzi

#514

Post by oh_sigh »

glenvdb wrote: post #51

A lot of the "Common Objections" relate to the REASONS people choose to own Bitcoin and how those cases make it a Ponzi. There are many different reasons to own Bitcoin, however the author seems to only view it through the lens of someone living in a wealthy and developed country with financial stability. The properties of it being difficult/impossible to confiscate and its privacy make it valuable in oppressive regi…

How exactly does a refugee convert their wealth to bitcoin before leaving their country?

Re: Bitcoin is a Ponzi

#515

Post by gunshai »

ipaddr wrote: post #455
bb88 wrote: post #293

Earlier quoted context omitted.

> With a decentralized digital asset there is no sole person or company that profits from just lying to you about where your Dollar goes in exchange for the digitals. Ponzi schemes don't have to run by single individuals, but perhaps by multi-person organizations like the mafia. The mob was the reason the RICO laws came to be. And undoubtedly, the mafia organizations would collaborate to break up their crime into reg…

The mob isn't running bitcoin as a Ponzi scheme. People who buy bitcoin are not mobsters. There are different waves of investors from the true believers who mined because the idea was powerful to the mt gox crowd, coinbase newbies, wall street / hedge fund crowd. Each group has a different reason. The latest groups are looking to make money and the earlier adopters have moved to a less popular more ideological coins…

This isn't even true you can track wallet addresses and see their movement overtime. Look up a graph called hash ribbons. People hold btc for very long periods of time.

Re: Bitcoin is a Ponzi

#516

Post by sillysaurusx »

CheezeIt wrote: post #460
sillysaurusx wrote: post #443

Earlier quoted context omitted.

That’s sadly the catch. I’m sorry — I completely forgot to mention that this works for me because I’m consulting, so businesses pay my LLC rather than me. However, I will say that one business wanted to hire me full time, and I refused and asked for a higher consulting rate, which they agreed to. So it’s not impossible for your next job to end up similarly. But then you don’t get benefits (my wife’s health insurance…

> . If you try to maintain a $20k balance for a year, for example, you’ll discover that this balance counts against your deductions for that tax year (effectively a negative $20k deduction). Or at least that’s my understanding so far. You don’t get taxed on having a balance; you do get taxed on the income that generated it. (Or am I missing something crazy?)

My notes so far: https://shawwn.notion.site/Business-Taxes-e9f602855f524618b0...

In one of these links, I am quite certain I saw words to the effect of "if you maintain a balance in the business, then the following tax year, it will count as a negative deduction for the shareholders (i.e. you), because the business type is a pass-through entity, and pass-through entities are expected to pass all of their income through to the shareholders."

The fact is, I don't know whether it was an LLC or a sole proprietorship, and I'm now second guessing what I thought I knew. Because yes, it does sound pretty ridiculous that an LLC needs to maintain a $0 balance or else it will penalize the owners of said LLC. That doesn't sound right.

And yet, words to that effect were located in one of these links. (Hunting for it now.)

EDIT: Welp. Can't find it anywhere. At least I admitted from the outset that "ask your accountant, do not trust me" is reasonable advice for anyone thinking of taking business advice from random HN comments.

I'll downshift to "I don't know whether it's a bad thing to maintain a long term balance in an LLC, but I'll be finding out the answer before the end of this tax year."

If there's no disadvantage to keeping a balance in an LLC, then I revert to "Just form an LLC for yourself; it costs $50 to do so. And you can keep as much money in it as you want, as long as you don't mind paying income tax simply for transferring money into your LLC."

It's possible I was thinking of a negative tax basis for an S corporation, if the S corporation has a long term account balance. But a tax basis is certainly not the same thing as a tax deduction, so I throw my hands up in the air and say "I'll be using a portion of my consulting income to clarify these questions with both an accountant and a lawyer; all advice should be considered suspect."

Re: Bitcoin is a Ponzi

#517

Post by darawk »

graeme wrote: post #470
darawk wrote: post #306

> First, few if any gold investors have expectations of profits. They generally invest in gold as a hedge -- a "store of value" -- that they hope will retain its value in case other assets go sour. Lol. Bitcoin is exactly comparable to gold. Plenty of people buy gold expecting it to appreciate...because other people use it as a hedge. Even if it were true originally that Gold's only purpose was as a hedge (protip: it…

> Plenty of people buy gold expecting it to appreciate...because other people use it as a hedge. Long run? I think not. Gold hasn’t really risen over millenia, just stayed in a certain band. Buffett made a good argument that you could either buy a giant gold cube and fondle it, or a large number of productive assets in the states and collect the revenues. He’d bet on the assets being worth more over the decades, and…

> Long run? I think not. Gold hasn’t really risen over millenia, just stayed in a certain band.

I said they expected it, not that it did. I know plenty of people who buy gold expecting it to appreciate. Whether or not it does appreciate is irrelevant.

> Buffett made a good argument that you could either buy a giant gold cube and fondle it, or a large number of productive assets in the states and collect the revenues. He’d bet on the assets being worth more over the decades, and over the long run he was right.

No he wasn't. If you invested all your money in the medieval equivalent of an index fund, it'd be worth far less today than if you had invested in gold. You can't just cherry pick the last century.

Re: Bitcoin is a Ponzi

#518

Post by arcticbull »

gunshai wrote: post #510
bb88 wrote: post #483

Earlier quoted context omitted.

> No. They instead take your money, buy coal, and burn it. Nothing is left. Interesting, I never thought of it that way, and it makes sense. Since money is not created or destroyed the balance sheet on inflows and outflows of BTC to dollars must be zero at all times. And some x% (which is variable) of it is transferred to miners which is the so-called "transaction" cost. I guess there must be a point at which the bub…

If you're so certain short it. The amount of wealth you would gain by being correct is immense. You should be spending every waking moment attempting to predict it. Something about anti btcers I don't get you'll wax how smart you are and how everyone else is dumb. Just put your money where your mouth is.

This is dreadful advice that nobody should follow.

(1) Shorting has a completely different risk profile than going long. If you're short, you can lose an infinite amount of money. If you're long, the most you can lose is what you put in. Unless you're familiar with what it means to take a short position in traditional markets, for the love of God don't do it in crypto.

(2) The market can remain irrational longer than you can remain solvent, and Herbalife has been chugging along since 1980 - in spite of the widely publicized 5-year-long short Bill Ackman took. Even if the shorts are right, timing it is extremely hard, and chances are you'll lose your shirt before then.

(3) Most exchanges that permit short positions are criminal enterprises, all the major non-US ones are under investigation. Binance is under investigation by every major world financial authority including the Cayman Islands. They'll require you post collateral in crypto as well, which adds yet another layer of counter-party risk. Even if you're right, and you time it right, a collapse would likely wipe out Binance (or your collateral) - or it wouldn't and they just wouldn't pay you out, SFYL.

(4) All exchanges have a huge interest in seeing the game continue, and are more than likely colluding to keep the price up.

Most of us bears believe that Bitcoin exchanges are crooked Mob casinos - entirely in isolation of the fundamental Ponzi nature of the underlying asset. What you're suggesting amounts to telling someone who believes the casino is crooked to bet on red instead of black. The only way to win is not to play.

[edit] Yes, you can short CME futures (with massive 200% collateral requirements), yes I've done it, yes I've made money, not you shouldn't. Nobody should.

Re: Bitcoin is a Ponzi

#519

Post by DeathArrow »

dusted wrote: post #489

While I agree that crypto[speculation] generally seems to have the structure of a Ponzi scheme, I don't see any problem with that, as I assume everyone participating has the same idea. It's just a matter of who has the guts to stay on for long enough to cash out big, who gives up too early, and who does not get off before the train crashes into the mountain.

You describe a gambling game.

Re: Bitcoin is a Ponzi

#520

Post by sillysaurusx »

DeathArrow wrote: post #497
sillysaurusx wrote: post #313

Earlier quoted context omitted.

I’m sorry but what? Was this in the US? Because the intro was “oppressive regime,” and then you gave an example of an oppressive regime, and now I’m realizing you might very well be in the US. I’m just shocked; never considered this could happen. Was this related to your employer, and… Well, I should just ask rather than guess :) thank you for sharing, and I’m really sorry that happened. One of the best decisions I’v…

If you want to protect your money, wouldn't it be easier to open an account in another country and transfer the money there? In Europe we can do it very simple with Revolut or Monese. When you have money in the Revolut account you can spend them in any country and it would be very difficult for some entity to block your funds.

That's a good point! I don't know anything about that. I assumed it was difficult for a US resident to open a long term bank account in Europe without having to reside in Europe. But that assumption is probably wrong.

Thanks for the hint about Revolut and Monese. Now I'm curious what their requirements are...

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