Bitcoin is a Ponzi • Hacker News Board

Re: Bitcoin is a Ponzi

#521

Post by democracy » Thu, Oct 07, 2021, 6:29 AM UTC

Not sure about Ponzi (which it probably is) - but I am looking at crypto as a "24/7 world-wide semi-legal horse-races". It is absolutely useless for 1st/2nd/3rd worlds. I can see its benefit for illegal activities - fair enough - but it's standing apart from the gambling potential.

But by understanding that it is a gambling machine - I can make a "reasonable" choice, buy some token, sell it at a "small" profit of 10-25% and move on.

The crypto is here, it's fact. It's not going anywhere soon. No one loud is out there with an agenda to deliver the message of its uselessness. Most people don't understand how crypto works - and not even trying - and I personally got over screaming "the emperor has no clothes" and now just quietly do some trades from time to time.

Just a bit of reality to the "lens of someone living in a wealthy" blah-blah-blah.

I did a SWIFT transfer of 30k USD from an eastern European country to a 1st world country. It cost me 20 USD to send and 10 USD to accept the cash within 3 working days. Yes I had to go the bank and it took some time - fair enough - BUT the fees were much lower than I would've paid to the exchanges. I had an ability to reverse the transaction (to an extent), it was an open and legal non-commercial transaction (and I don't have to explain it later to the tax man).

C'mon crypto, try to beat that :)

"Bank the unbanked", "inflation", "poor immigrants" - you know it's all BS.

We lived through crazy inflation periods - basically you either convert your local cash to USD/EU as soon as you can or buy some local products (that you can resell) if the currency is not available. Thus people buy fridges/TVs, etc. There is probably a local village smart-ass who would use crypto for it, sure. But it's just an exception. These people have zero trust in anything, including their governments, so crypto is even lower in this chain of trust.

Immigrants and refugees have 101 ways to transfer their money. There are so many companies/networks that it makes your head spin. And their amounts are so small so very often it all goes under the radar anyways.

Basically all the crypto-mania as is is a big joke AND a great opportunity to make a quick buck :)

Re: Bitcoin is a Ponzi

#522

Post by darawk » Thu, Oct 07, 2021, 6:29 AM UTC

fshbbdssbbgdd wrote: post #473

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…

One reason you can’t call gold a Ponzi scheme is that gold isn’t a scheme at all. There is no inventor of gold who owns 5% of the gold.

Bitcoin isn't really a scheme either. Its creator does not access or use his coins, and may no longer even have access to them. If this was a get rich quick scheme for him, it sure doesn't seem like he's making much use of his success.

Anyways, i'm sure there was a first person to discover gold. And i'm sure that person had the most gold when the discovery was made. That doesn't really have much bearing on whether gold is a ponzi scheme, though.

Re: Bitcoin is a Ponzi

#523

Post by XorNot » Thu, Oct 07, 2021, 6:30 AM UTC

anonporridge wrote: post #374

qaq wrote: post #339

Earlier quoted context omitted.

So you or you child is being tortured but you are "happy" that your bitcoins are safe ? This whole thing omits the question of how a person under oppressive regime came into possession of bitcoin in the first place

It's more a matter of game theory. With wealth like gold, land, oil, or any other physical resources, an oppressive regime can just kill all dissenters and take control of everything. The payoff to violence is huge. But with a digital wealth like bitcoin, which can flee the country at the speed of light, even if the owners can't go with it, the payoff to violence evaporates. The oppressive regime that spends a lot of…

Except who is buying it and for what?

The only wealth people could offer for Bitcoin is wealth in a country with an oppressive regime. Who internationally can even take possession of that to cover their expenses?

The only plausible option would be to actually just setup a mining rig and mine the Bitcoin, since presumably for a while their might be an electricity grid their and the BTC network ascribes value to that activity...except you can't mine on commodity hardware to anymore either.

Re: Bitcoin is a Ponzi

#524

Post by ogogmad » Thu, Oct 07, 2021, 6:30 AM UTC

TawandaMoyo wrote: post #391

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…

Thanks for pointing this out. People have different reasons why they believe in bitcoin (and other cryptos). Where I live the government has in the past 20 years wiped out citizens' savings at least 3 times, arbitrarily, without any notice. In such a situation using bitcoin, regardless of the risk/skepticism, is a far better alternative than having all your money disappear on the whims and or experiments of politicia…

It's sad to hear this. Is there no way for you to buy foreign currency like dollars instead? Bitcoin might be an attractive asset to speculate in, but I'm not sure if it's the safest way to hold onto your wealth, because of its inefficiency, volatility, the need for endless mining to sustain it, and so on. It might multiply your wealth by 10 or reduce it to zero -- do you really want to take the risk? I understand that what I'm saying might be boring, but foreign currency is tried and truer.

Re: Bitcoin is a Ponzi

#525

Post by hackingforfun » Thu, Oct 07, 2021, 6:30 AM UTC

nightski wrote: post #475

arcticbull wrote: post #406

Earlier quoted context omitted.

Nope, people do not hold USD because they expect a gain. They are willing to pay the inflation penalty because holding the dollars in question provides them something. Generally that means either a sense of security or liquidity on short notice. Holding dollars is paying a fee for liquidity.

Does it really make sense to hold USD if your only goal is liquidity? Maybe if you need it immediately , but honestly stocks and some other investments can usually be sold with the money accessible in seconds (or you can use credit). Really what I feel the value prop is for cash is low volatility (aka security as you mentioned). With low inflation like we have seen in the past, risk adjusted it might be a better spot…

I don't think you can sell traditional investments like stocks in seconds unless it is within designated trading hours. Crypto you can trade 24/7, although fiat wires out to traditional bank accounts still operate within certain hours (at least in the US, maybe this is different elsewhere). I still hold a small amount of my portfolio in USD, even considering inflation, but this is because it's less volatile than crypto, and I think holding actual cash is better than holding a stablecoin.

Re: Bitcoin is a Ponzi

#526

Post by graeme » Thu, Oct 07, 2021, 6:31 AM UTC

scottyp21 wrote: post #480

graeme wrote: post #459

Earlier quoted context omitted.

> at what price point and time would you start to consider that you may be tragically wrong? In theory Bitcoin can keep growing as long as people believe in it. It has a strictly negative EV though. * it returns no revenue * At current mining levels, it burns about 1.8% of its market cap annually. By burns I mean literally burns energy and ASICs. (About $18 billion at current market prices) * That’s just for mining c…

Many of these same arguments apply to gold. Do you think gold is (mostly) useless today? If yes, when did it stop becoming useful? Do you think it was always useless?

When you mine gold, you get gold, and gold is nice. If we could magically make 100x the gold, that would be great! Current gold investors would be sad but it would be a win for the world.

Bitcoin mining produces heat, and maintains the bitcoin network. It doesn’t actually increase the supply of anything: the total number of bitcoins is arbitrary. The real value is whatever the network produces (happiness in its hodlers, money laundering, some future use case)

Gold’s utility is: some industrial uses, it looks pretty and has special properties, and if you had to bury some treasure for some descendants in 500 years you could reasonable figure some gold coins would probably be worth something comparable in the future, no maintenance required

That’s about it. Never been a big gold fan but those three uses seem pretty indisputable.

The people arguing for bitcoin present it as a store of value but you need a hell of a lot of costly ongoing maintenance for that. Gold would still have those uses even if all mining stopped. Without mining, bitcoin is defunct, conversely.

Edit: oh yeah, I suppose gold lets you keep some value anonymously and take it with you across borders. I think Bitcoin wins on that count but since I’m listing the uses of gold I shouldn’t omit that. There may be others I’m forgetting

Re: Bitcoin is a Ponzi

#527

Post by graeme » Thu, Oct 07, 2021, 6:32 AM UTC

darawk wrote: post #517

graeme wrote: post #470

Earlier quoted context omitted.

> 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.…

> 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.

This isn’t true. Gold has about kept the same value, adjusted for inflation.

The economy grew enormously since medieval times. Anyone managing to keep reinvesting since then would be enormously rich.

Re: Bitcoin is a Ponzi

#528

Post by DeathArrow » Thu, Oct 07, 2021, 6:34 AM UTC

What are the differences between Ponzi schemes and gambling? Both are negative sum games. In both someone is going to profit from people's greed and stupidity and take part of their cash. Both casinos and Ponzi schemes operators create high expectations in some people's minds.

Re: Bitcoin is a Ponzi

#529

Post by koonsolo » Thu, Oct 07, 2021, 6:34 AM UTC

democracy wrote: post #521

Not sure about Ponzi (which it probably is) - but I am looking at crypto as a "24/7 world-wide semi-legal horse-races". It is absolutely useless for 1st/2nd/3rd worlds. I can see its benefit for illegal activities - fair enough - but it's standing apart from the gambling potential. But by understanding that it is a gambling machine - I can make a "reasonable" choice, buy some token, sell it at a "small" profit of 10-…

> C'mon crypto, try to beat that :)

Nano has instant transactions and 0 fees. Try to beat that.

Re: Bitcoin is a Ponzi

#530

Post by nightski » Thu, Oct 07, 2021, 6:35 AM UTC

gretch wrote: post #228

nightski wrote: post #183

People do not invest in USD because they expect a gain? Anyone holding cash is doing exactly this. Because the only rational reason to hold USD instead of spending it or converting it to some other asset/investment is because you think it's value is going to either hold or grow more than other options. If people expected no gain in USD (or inflation) then they would not hold USD and instead choose assets or other inv…

No, people hold cash because they can get things done on short notice. Like if a storm blows over your fence, you can write a check and have it replaced. If you held stocks, bonds, or real estate, you’d have to sell that asset and withdraw cash to get your fence back up which is pretty unacceptable. I hold cash knowing full well that I’m bleeding due to inflation, but the versatility is well worth it. That’s pretty m…

A credit card or some other line of credit is the best form of liquidity, more widely accepted than cash (I can easily use it internationally or online).

The reason to hold cash is its low volatility. You can store it in a savings account and even with inflation potentially driving your return negative when risk adjusted it may beat other assets and you don't even have to speculate on forex!