Why Bitcoin is worse than a Madoff-style Ponzi scheme • Hacker News Board

Re: Why Bitcoin is worse than a Madoff-style Ponzi scheme

#131

Post by danuker » Sat, Dec 25, 2021, 3:37 PM UTC

ucha wrote: post #77

This argument is so basic yet it keeps being repeated over and over on HN... It boils down to you can't expect a return on bitcoin hence it's shouldn't be worth anything. If that argument was true, then gold is a ponzi that shouldn't be worth anything and the same would apply to art. A slightly more advanced rebuttal would be to say, yes but gold has some industrial use and you pay for art because you can enjoy consu…

Indeed, the actual Ponzi scheme is the fiat monetary system, where the issuers of money gain at the expense of savers.

Bitcoin merely intends to offer a way out: long-term, if demand stabilizes, it should merely match inflation.

But for the next few years or so, I'd expect it to keep growing, which means a lot of volatility.

Re: Why Bitcoin is worse than a Madoff-style Ponzi scheme

#132

Post by Geee » Sun, Dec 26, 2021, 6:35 PM UTC

hiq wrote: post #123

Geee wrote: post #121

Earlier quoted context omitted.

Monetary inflation is the amount of new money that is created, i.e. how much the supply expands. In Bitcoin, inflation schedule is predefined and there's an absolute limit, and these rules can't be changed. This means that if Bitcoin's demand increases, then the price increases. In other currencies, supply will be expanded if demand increases to stabilize the price. This applies to everything else too, like commoditi…

I thought your were talking about price inflation, but you actually wrote "monetary inflation", my bad. But what's the point of taming monetary inflation if that does nothing for price inflation? I thought that price inflation was the practical consequence we have to deal with, isn't that the case? > Demand can't really be predicted, but historically we know that if supply expansion is predictably low (like in gold),…

Monetary inflation is a major component of price inflation. See this recent article by Lyn Alden, which explains it pretty well: https://www.lynalden.com/price-signals/

No, they are different pools of supply. Each currency has their own network effect, and building the network effect is not limitless. On the contrary, money tends to concentrate on a single or a few winners. People want to use the currency everyone else is using.

Re: Why Bitcoin is worse than a Madoff-style Ponzi scheme

#133

Post by hiq » Mon, Dec 27, 2021, 3:10 PM UTC

Geee wrote: post #132

hiq wrote: post #123

Earlier quoted context omitted.

I thought your were talking about price inflation, but you actually wrote "monetary inflation", my bad. But what's the point of taming monetary inflation if that does nothing for price inflation? I thought that price inflation was the practical consequence we have to deal with, isn't that the case? > Demand can't really be predicted, but historically we know that if supply expansion is predictably low (like in gold),…

Monetary inflation is a major component of price inflation. See this recent article by Lyn Alden, which explains it pretty well: https://www.lynalden.com/price-signals/ No, they are different pools of supply. Each currency has their own network effect, and building the network effect is not limitless. On the contrary, money tends to concentrate on a single or a few winners. People want to use the currency everyone el…

Your link mention historical correlations that contain the impact of central bank policies, it's not clear to me how well this generalizes to a given and strict supply policy such as the one bitcoin has.

> No, they are different pools of supply.

I guess we'll see in the long term what happens, I'll just say that the correlations between BTC/USD and ETH/USD make it less than obvious.