Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme • Hacker News Board

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#211

Post by goblin89 » Sat, Apr 17, 2021, 10:46 AM UTC

faustlast wrote: post #158

strogonoff wrote: post #149

Earlier quoted context omitted.

> Stocks: you buy them because they increase earnings and eventually produce dividends at a very high yield to your initial investment. No, you buy them because you want to support good, non-nefarious companies with sound business models. (I know that’s idealistic, but focusing purely on speculative uses of stocks is another extreme and paints a very incomplete picture.)

> No, you buy them because you want to support good, non-nefarious companies with sound business models. No, you really are buying the company stock because of current and future profit prospects. None of this supporting thing... a shareholder is just the owner of the share, nothing more.

Feel free to speak for yourself, but don't make it seem like everyone is the same.

There are shareholders buying parts of companies purely for personal gain. They may not care if the business is shady, as long as the stock technically performs well they will join in and try to get out in time so that a less lucky investor is left holding the bag.

There are also shareholders who approach investment with other goals in mind. They buy parts of companies that they believe in, maybe because they find the idea valuable and the implementation viable, and/or find the people running the company trustworthy.

Under ideal conditions, those objectives align and a well-intentioned and well-managed initiative should succeed. In practice, of course, things don't always work like that. Some companies successfully abuse the system and inflate valuations riding on hype and speculative investments without a fundamentally good business model to back it, while others may fail despite being honest due to factors outside of their control.

Investors of the latter kind don't need to be rosy-eyed and buy into companies with noble intentions that they believe will never succeed, but they would be wary of investing into something they know is profitable but ethically questionable.

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#212

Post by Closi » Sat, Apr 17, 2021, 10:50 AM UTC

entropic88 wrote: post #52

rvz wrote: post #51

Earlier quoted context omitted.

'Investing' at an all time high, is going to upset lots of late comers. Signalling a great big crash, waiting to happen.

This isn't even close to what will be the all time high. I know HN has a significant aversion to cryptocurrency (which absolutely befuddles me for the foundational societal concepts it modernizes) but love it or hate it if you think this is close to the peak you've been in a cave the last decade. *Edit: speaking about crypto as a whole not specifically doge coin. BTC and ETH first to market with digital solutions to…

> This isn't even close to what will be the all time high.

The problem is nobody can tell where the top is, and there IS a top, these things don't grow forever (you can't have infinite growth and it becoming infinitely valuable).

Now there are multiple things that might happen when growth stops:

* 1) The price stabilises and bitcoin/crypto becomes a major standard currency, which people want to use and spend. This certainly isn't going to happen for btc due to transfer fees, but could feasibly happen to a different coin. I think this is unlikely because there are several factors that actually stop crypto being an ideal currency (e.g. non-reversibility in case of fraud or dispute resolution).

* 2) The price stabilises and everybody keeps their money in crypto because it is a store of value. Personally I find this unlikely as I think most bitcoin 'investors' actually want to see their money increase in value rather than the value stay static.

* 3) The price stabilises and crypto doesn’t manage to become a standard currency which is easy to use everywhere - and although initially people hold their money in bitcoin to see if there is another rise, when it doesn't come people start to withdraw funds to realise their gains (if bitcoin isn't growing what's the point holding it?). As people sell bitcoin the value drops and never goes back to it's high. As more people exit the bubble is burst.

I personally think number 3 is by far the most likely outcome, however it's impossible to tell where the top is. I think the most sensible approach is to acknowledge it’s likely a bubble, and if you invest funds to acknowledge you are effectively making a gamble that the bubble won’t pop yet (and you are confident that you will realise when to sell before the rest of the market does and not hodl all the way down like we saw with gme).

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#213

Post by iso1631 » Sat, Apr 17, 2021, 10:52 AM UTC

jacquesm wrote: post #173

throwaway4good wrote: post #121

Earlier quoted context omitted.

There are a number of Bitcoin variations out there (Bitcoin Cash and BSV) which are tuned in manner that gives faster and cheaper transactions. None of them seem to have caught the eye of investors. My interpretation is that investors like their ponzi and don't really care about whether the technology is useful. I could try and scold them but I don't think it works, therefore I choose just to accept them as they are…

In this sense bitcoin is just like any other currency: it works because we all believe it works. The second people stop believing in a currency is when it will implode, there are plenty of historical examples of this.

Bitcoin's value in terms of pizzas you can buy with one has balooned ever since it was created, with massive fluctuations. It's awful as a currency because of that - why would I buy a pizza today when tomorrow I could buy two?

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#214

Post by corty » Sat, Apr 17, 2021, 10:52 AM UTC

wslh wrote: post #206

ABeeSea wrote: post #189

Earlier quoted context omitted.

It’s a decentralized Ponzi scheme. It’s why Bitcoin owners are so aggressive in convincing others to buy Bitcoin.

While you can be tempted to define Bitcoin in that way, the Ponzi scheme definition doesn't apply [1]. As the parent comment: in Bitcoin no investor has the precise information of when to exit to defraud others. [1] https://www.investopedia.com/terms/p/ponzischeme.asp

I think the Tether people know quite well when to exit, because their implosion will bring Bitcoin down.

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#215

Post by kqr » Sat, Apr 17, 2021, 10:54 AM UTC

mateuszf wrote: post #104

dazc wrote: post #88

Earlier quoted context omitted.

+1 for Money by Jacob Goldstein. An easy read and no degree in economics needed to understand. Re bitcoin, he makes the argument that all currencies face a moment of crisis and only survive when Govt's do 'whatever it takes' to save them. Who's going to come to the rescue of Bitcoin when that day comes, he doesn't say since the answer is rather obvious.

Worth mentioning is the fact that currencies often fail because of increasing money supply and in effect loss of value. In the case of bitcoin the monetary policy doesn't allow for reckless printing.

The quantity theory of money you are referring to is not universally accepted. The competing theory is that monies die because of decreased demand, not increased supply.

Example 1: reduced faith in a government to repay its debt decreases the demands for its fiat bills, which decreases their relative value, which prompts them to print more to repay its debt, and so on.

Example 2: Cowrie shell money stopped being accepted by colonial power to settle debts with it, it's value decreased, requiring private companies to import more of it to pay for what they want.

With those feedback loops it's hard to know what came first, but it's not obvious that excess supply prompted reduced demand -- it might as well be the other way around.

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#216

Post by throw0101a » Sat, Apr 17, 2021, 10:55 AM UTC

roenxi wrote: post #93

throw0101a wrote: post #32

Earlier quoted context omitted.

> Perhaps there is an argument to Bitcoin being a kind of "digital gold" even if it is all but useless as a currency. Gold is less useful than most people think: > In a 2012 paper entitled "The Golden Dilemma",[1] Claude Erb and Campbell Harvey examined some common assumptions about gold. First they looked at gold as an inflation hedge, analyzing gold returns from 1975 (the year the U.S. came off of the gold standard…

> I don't think most people would accept a shiny rock as anything special. Gold isn't being treated all that differently to the other period 6 or 11 elements. Although it does sometimes get randomly good tax treatment due to its history which keeps it entrenched as the first choice for a monetary metal. But fundamentally it is being sold at cost to mine + a margin, same as everything else. My memory is anything with…

> But fundamentally it is being sold at cost to mine + a margin, same as everything else.

This price chart, especially since early 2019, seems to suggest otherwise:

* https://fred.stlouisfed.org/series/GOLDAMGBD228NLBM

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#217

Post by strogonoff » Sat, Apr 17, 2021, 10:56 AM UTC

jstanley wrote: post #203

strogonoff wrote: post #149

Earlier quoted context omitted.

> Stocks: you buy them because they increase earnings and eventually produce dividends at a very high yield to your initial investment. No, you buy them because you want to support good, non-nefarious companies with sound business models. (I know that’s idealistic, but focusing purely on speculative uses of stocks is another extreme and paints a very incomplete picture.)

If that's what you want to do, there's no need to buy shares. You can just donate.

Why the dichotomy? I want to support good businesses. I also like me some return on investment, if possible. The mechanism of owning shares is great precisely because it addresses both wants (at least in theory).

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#218

Post by HPsquared » Sat, Apr 17, 2021, 11:01 AM UTC

CPLX wrote: post #175

chewz wrote: post #165

Earlier quoted context omitted.

> [0] For "real estate will never go down in value" fans: You realise that these properties in the picture (Plac Defilad right in the centre of Warsaw) are worth a lot nowadays. And descendants of the original owners get compensated (the land had been confiscated after WW2 by communist government). So I would rather say that real estate could be illiquid with temporarily depressed prices occasionally. https://pl.wiki…

> descendants of the original owners Indeed. I believe that succinctly sums up the outcome of the investment for the actual person who did the investing. For most people, the word temporary is not a good description for situations that persist until after you’re dead.

"In the long run we are all dead" -Keynes

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#219

Post by enlyth » Sat, Apr 17, 2021, 11:02 AM UTC

entropic88 wrote: post #52

rvz wrote: post #51

Earlier quoted context omitted.

'Investing' at an all time high, is going to upset lots of late comers. Signalling a great big crash, waiting to happen.

This isn't even close to what will be the all time high. I know HN has a significant aversion to cryptocurrency (which absolutely befuddles me for the foundational societal concepts it modernizes) but love it or hate it if you think this is close to the peak you've been in a cave the last decade. *Edit: speaking about crypto as a whole not specifically doge coin. BTC and ETH first to market with digital solutions to…

Does Musk have authority over a whole planet or is this just more mindless celebrity worship?

Re: Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme

#220

Post by JackFr » Sat, Apr 17, 2021, 11:03 AM UTC

throwaway4good wrote: post #156

rualca wrote: post #148

Earlier quoted context omitted.

> None of them seem to have caught the eye of investors. That's the problem with this doublespeak, where people intentionally fool themselves into cognitive dissonance. The whole point of currency is not investment. It's the exact opposite of investment. Currency is intended to have stable value over time, because it's whole point is to serve as a unit of account, store value, and serve as a medium to exchange value…

Not to go into too much detail. But in a debt based system you have bonds and currency. A bond has the risk of not being repaid, speculators speculate in the likelihood of that and their individual decisions give a market price for that bond. Likewise bond may have repayment price-indexed and speculators then speculate indirectly in the currency's price stability. Point is that even with stable prices, there is plent…

But Bitcoin specifically excludes credit. I put $100 in the bank. The bank lends $50 to an entrepreneur. Now there is $150. That’s the magic of credit. And it’s impossible with Bitcoin.