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

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

#281

Post by Retric »

JohnJamesRambo wrote: post #271
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.

What investment is not a Ponzi scheme? Real estate and stocks rely on a greater fool that was later to the party to come buy them at a later date. Stocks have appreciated in value so far past what they are worth for a dividend that we have had to give up that charade long ago. From the wiki for Ponzi scheme- > The scheme leads victims to believe that profits are coming from legitimate business activity (e.g. product…

Stocks have dividends, loans have interest, land has either rents or utility from using it. It’s that income stream beyond the initial capital that turns something into an investment.

Bitcoin lacks that, it only has money from new investors and it loses money from mining. Which means without new investment it’s value must crash which creates incentives for people that own Bitcoin to convince others to buy Bitcoin.

The only way to argue Bitcoin has long term value is it must provide inherent utility like land. Increasing the number of transactions per second would be one way to demonstrate that value, but talking about future value doesn’t.

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

#282

Post by alwillis »

sebmellen wrote: post #62
entropic88 wrote: post #59

Earlier quoted context omitted.

Last peak was pretty much 100% retail investors like your disc golf gang. The amount of institutional investment this round offer legitimacy and absolute scale of potential that can't be overlooked by anyone that's been paying attention. Honestly, for the amount of forward thinking technologists that call this nook of the internet home, there is a ridiculous blind spot for cryptocurrency. It's actually ridiculous to…

I have been around in the crypto space for a significant amount of time (think $700 BTC) and have started two startups which use blockchain tech to a significant degree. But I am very disappointed in BTC and ETH. BTC did not become “A Peer-to-Peer Electronic Cash System,” and we haven’t seen the explosion of uses-cases I hoped to see from ETH (like tokenization and trading of real-world assets). There’s a ton of frot…

BTC did not become “A Peer-to-Peer Electronic Cash System”…

It certainly has when you consider that by cash Satoshi meant cash as a bearer instrument.

Unlike a federal reserve note—a piece of paper—that represented the thing that’s valuable—gold, bitcoin itself is the thing of value.

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

#283

Post by GuB-42 »

pyrale wrote: post #259
tim333 wrote: post #179

Earlier quoted context omitted.

Economically it's much more like gold than a ponzi scheme: Gold: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as jewelry though we could get by without that. Massive dollar and environmental cost from mining the stuff. Ponzi scheme: Fraud where insiders take money from investors and use it to pay other investors. Collapses and the fraudsters run off or go to j…

Gold is stable in isolation. If you bury gold in your backyard, and dig it up 20 years later, you will still have the exact same amount of gold. The exchange rate between gold and other things won't change that. On the other hand, for btc to keep value, you need people to mine it from to the moment you buy it to the moment you sell it. This has a cost, which is currently paid by newcomers. But if btc becomes stable (…

Bitcoin will stay forever as long as someone has a copy of the blockchain (around 300GB now). The cost of which is negligible today.

Mining is only necessary for making transactions, and it doesn't have to be expensive. It only is because of the competition. That expensive competition is important for stability but in theory, the entire system could run on a smartphone.

And it could run without newcomers. If everyone in the world had bitcoins, making it impossible to have newcomers, it would still have value, in fact a lot more than it has now.

Bitcoin may be a bubble, but it is not a Ponzi scheme.

Gold has some value as a technical material and because of its (subjective) beauty, so it will never crash down to zero, but it could lose a lot of its value if we decided that it is not worth hoarding.

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

#284

Post by tonfa »

JackFr wrote: post #220
throwaway4good wrote: post #156

Earlier quoted context omitted.

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.

> And it’s impossible with Bitcoin.

I'm sure bitcoin purist will hate it, but afaik there's a lot of btc being held at exchanges (e.g. coinbase).

Technically instead of holding BTC there, you could be holding cBTC (value in a coinbase btc deposit account) and coinbase could issue cBTC loans similar to banks.

(The issue is that there's no backstop like in the real world, where central bank can step in as lender of last resort to avoid bank runs)

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

#285

Post by naravara »

iambateman wrote: post #269
pyrale wrote: post #259

Earlier quoted context omitted.

Gold is stable in isolation. If you bury gold in your backyard, and dig it up 20 years later, you will still have the exact same amount of gold. The exchange rate between gold and other things won't change that. On the other hand, for btc to keep value, you need people to mine it from to the moment you buy it to the moment you sell it. This has a cost, which is currently paid by newcomers. But if btc becomes stable (…

Do you have a sense of what that depreciation factor is? If it’s nearly equivalent to overall population growth, it may not matter. (For what it’s worth, I’m with you for the most part. Just curious. I’ve been short-term wrong on BTC since $102 and I’m trying to figure out if I’m long-term wrong as well.)

> For what it’s worth, I’m with you for the most part. Just curious. I’ve been short-term wrong on BTC since $102 and I’m trying to figure out if I’m long-term wrong as well.)

It has managed to outdistance both the dotcom bubble and the housing bubble at this point. Although the tulip bubble went from the 1590s to the 1630s, so there is some precedent for these boondoggles to run for a surprisingly long time before gravity catches up.

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

#287

Post by dghlsakjg »

JohnJamesRambo wrote: post #271
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.

What investment is not a Ponzi scheme? Real estate and stocks rely on a greater fool that was later to the party to come buy them at a later date. Stocks have appreciated in value so far past what they are worth for a dividend that we have had to give up that charade long ago. From the wiki for Ponzi scheme- > The scheme leads victims to believe that profits are coming from legitimate business activity (e.g. product…

You cite real estate and stocks:

You can buy real estate and generate returns by renting it out. A smart real estate investment can generate money for y you regardless if its market value.

Stocks are the same: they represent a real piece of a company. If the company doesn’t issue dividends, the value is retained in the price of the stock. Warren Buffet almost never sells stock, his whole strategy is to hold forever.

Stocks and real estate are zero sum in the short term. In the long term, they are not

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

#288

Post by alwillis »

PKop wrote: post #270
sebmellen wrote: post #62

Earlier quoted context omitted.

I have been around in the crypto space for a significant amount of time (think $700 BTC) and have started two startups which use blockchain tech to a significant degree. But I am very disappointed in BTC and ETH. BTC did not become “A Peer-to-Peer Electronic Cash System,” and we haven’t seen the explosion of uses-cases I hoped to see from ETH (like tokenization and trading of real-world assets). There’s a ton of frot…

>BTC did not become “A Peer-to-Peer Electronic Cash System,” I understand that people are disappointed by this thus seeing the idea of BTC as a whole as a "failure", but given the fundamental properties of the system (finite supply, distributed network) it was never possible for BTC to become a currency used widely in everyday high volume transactions. Impossible . Hal Finney even recognized this in early discussions…

Sure but Hal probably didn’t realize layer 2 solutions such as Lightning Network were possible, with low fees and fast transaction times using bitcoin.

https://en.wikipedia.org/wiki/Lightning_Network

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

#289

Post by gher-shyu3i »

GhostVII wrote: post #35

What I want is an inflationary cryptocurrency, not a deflationary one. Make an actual currency, not something to speculate on.

Obviously people think otherwise. We're tired of inflationary currencies that allow the government to devalue our hard work at their whims, because of their bad decisions and their borrowing money with usury. It's their problem, me and so many other people don't want to be a part of it. Deflationary is the way to go.

People keep complaining of the growing wealth gap, where inflationary currencies sit at the very center of the whole pyramid scheme. Look at what's happening in Venezuela or Lebanon.

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

#290

Post by sonthonax »

tim333 wrote: post #179
throwaway4good wrote: post #84

The full tweet is actually easier to read: https://twitter.com/nntaleb/status/1382446478539550727 WHAT WE WANT CRYPTO & CURRENCY FOR: 1) Currency w/o a government 2) Stable/reliable for contracts 3) Inflation indexed store of value -- basket of items representative for me. 4) Rapid transactions Can we do it? #BTC failed to be currency, open-Ponzi speculative game. A currency must earn interest: currencies weren't bor…

Economically it's much more like gold than a ponzi scheme: Gold: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as jewelry though we could get by without that. Massive dollar and environmental cost from mining the stuff. Ponzi scheme: Fraud where insiders take money from investors and use it to pay other investors. Collapses and the fraudsters run off or go to j…

Gold has a lot more intrinsic value than bitcoin will ever have. It’s quite reasonable to explain a large part of gold’s price as speculation on continued demand for jewellery.

There’s a 5000 year history of gold. But only a few grams per person in this world; and a great number of people feel some sort of pressure to buy a few grams for their spouses.

Obviously what I’m saying is an oversimplification. But if we imagined a world where gold did not have its lustrous history, it might still be sold at the same price. In this world, gold would still cost around 800 dollars an ounce to mine; but the only difference would be the market cap for gold would be very small and would serve its niche applications (comparable to the market for terbium or platinum).

Gold might be overpriced a little bit. But the debate about bitcoin is if it’s worth anything at all.

Disclosure: I work for a bitcoin trading firm.

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