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Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

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Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#21

Post by yummyfajitas »

Roubini isn't laying out the full argument. Bitcoin has low value as a means of exchange currently, but that may change in the future.

If speculators are correct that it may go up in the future, it is in their best interest to bid the price up now and collect money in the future. That would make BTC not a speculative bubble, but merely an asset that speculators have properly valued.

If you want to argue BTC is or is not a bubble, do it right. Choose a theory of money, e.g. Baumol-Tobin. Then come up with predictions about future transaction costs, the size of the BTC NGDP, and the price level. Finally, use your theory of money to predict the value of BTC.

If that disagrees with the current speculative value, you've got a real argument.

(For those unfamiliar with the macroeconomics terms I used, I explain it all here: http://www.chrisstucchio.com/blog/2014/demand_for_bitcoins.h... )

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#22

Post by pjc50 »

sodastream wrote: post #5
api wrote: post #2

Are all currencies ponzi games? Seems to me that the deciding factor is: what percentage of Bitcoin's transactions are actual transactions for actual goods and services vs. what percentage are transactions related to speculation on Bitcoin itself. That is very hard to measure, especially since at least a double-digit percentage of transactions belong to the illicit economy.

Isn't 80% of world wide used currency all speculation and only 20% used in services and products ? I'm talking about the trillions of derivatives market ..

That depends on whether you mean "M0" or "M3".

Retail payments are now a little over 50% electronic: http://www.paymentscouncil.org.uk/media_centre/press_release... , so that's bank money rather than paper/metal currency.

Forex trading is huge: http://finance.yahoo.com/news/forex-market-size-traders-adva... : again, held on account rather than actual notes and coins changing hands. That's not even counting derivatives, but derivatives usually net out (for every put option there is a call option) and don't necessarily require settlement.

However, there's enough of a real market and taxation demand denominated in the US dollar that it's not going anywhere any time soon. The ECD made enough of a commitment to Euro liquidity that it's not going away any time soon.

Bitcoin's market cap is still tiny enough that it could be demolished by a single bored FX trader in an afternoon; but there's no real way to profit from that, as doing so would also demolish the fragile exchanges by which you might cash out.

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#23

Post by abstrct »

smacktoward wrote: post #11
abstrct wrote: post #4

TL;DR: Man spends 5 minutes thinking about Bitcoin on a plane and comes to conclusions which may or may not be correct. Shares them with people because he is super duper important.

I'll just leave this here for you: http://en.wikipedia.org/wiki/Nouriel_Roubini You can agree or disagree with his argument, but snidely dismissing him as someone without expertise who mistakenly thinks he is "super duper important" is silly.

I actually went straight to that page after reading the article to find out who he is, but I stand by my statement. Him being an expert just makes the tweets more pathetic.

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#24

Post by craigyk »

grej wrote: post #15

And in other news, global debt now exceeds $100 Trillion dollars - up 40% over the last 7 years: http://www.bloomberg.com/news/2014-03-09/global-debt-exceeds... . Which is the bigger Ponzi?

the system where you can help pay down the debt by printing money?

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#25

Post by bdcravens »

There are elements that are definitely Ponzi.

This weekend I played with altcoin mining. The goal of course to figure out how to turn those coins into money I can spend. Aside from maybe LTC, no one is taking altcoins for payment or exchanging for fiat; you convert to BTC on an exchange like Cryptsy, and then sell the BTC on Coinbase, etc.

At present, you can mine with the same hardware you could use for BTC 3 years ago, so it's attractive. Eventually, though, you'll run into the same issue as with Bitcoin: difficulty increases. If you use a Multipool, you get around this by shifting from altcoin to altcoin, based on profitability. (usually a direct product of coins with lower difficulty, which tend to be newer)

In general, all alts will increase in difficulty to the point where they're no longer profitable; the only way multipool mining can be profitable over any period of time is new coins coming out. That's pretty much the situation we see today. Eventually it'll collapse, as most Ponzi's do.

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#26

Post by craigyk »

yummyfajitas wrote: post #21

Roubini isn't laying out the full argument. Bitcoin has low value as a means of exchange currently , but that may change in the future. If speculators are correct that it may go up in the future, it is in their best interest to bid the price up now and collect money in the future. That would make BTC not a speculative bubble, but merely an asset that speculators have properly valued. If you want to argue BTC is or is…

who cares about your fancy pants arguments when it doesn't even pass the smell test? It has a lot of strikes against it: 1) deflationary 2) slow 3) energy hungry

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#27

Post by james1071 »

abstrct wrote: post #4

TL;DR: Man spends 5 minutes thinking about Bitcoin on a plane and comes to conclusions which may or may not be correct. Shares them with people because he is super duper important.

Perhaps I could ask you a simple question, then. How would you value a Bitcoin?.

I am not looking for a precise answer, but a rough range of what it should be worth.

It should be possible to do this for any financial asset.

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#28

Post by throwaway13qf85 »

grej wrote: post #15

And in other news, global debt now exceeds $100 Trillion dollars - up 40% over the last 7 years: http://www.bloomberg.com/news/2014-03-09/global-debt-exceeds... . Which is the bigger Ponzi?

An increase of 40% in 7 years is about 4.9% per year, which isn't so terrible when you consider (i) that this period includes the largest financial crisis for fifty years (ii) inflation.

Re: Nouriel Roubini: Bitcoin Is a ‘Ponzi Game’

#30

Post by james1071 »

yummyfajitas wrote: post #21

Roubini isn't laying out the full argument. Bitcoin has low value as a means of exchange currently , but that may change in the future. If speculators are correct that it may go up in the future, it is in their best interest to bid the price up now and collect money in the future. That would make BTC not a speculative bubble, but merely an asset that speculators have properly valued. If you want to argue BTC is or is…

You are not even asking the right questions. The most important one is the supply of alternatives to Bitcoin.
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