Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Bubble, Bubble, Fraud and Trouble

nytimes.com

Post reply on HN
Print view View original

31–40 of 62 posts

Re: Bubble, Bubble, Fraud and Trouble

#31

Post by pesmhey »

chrischen wrote: post #26

Serious question, how is Bitcoin fundamentally different from gold? Based on a "tether to reality", gold is massively overvalued if you consider its industrial or practical utility. Furthermore, gold is heavy and thus impractical to use in day to day transactions, just like Bitcoin. There are altcoins, but then there are also alt-metals (granted a lot fewer of them) such as silver, platinum, palladium, etc. The way I…

One thing that maybe differentiates it in the way you’re defining it: you can really see it.

Gold jewelry, trinkets have social significance, and have for quite a long time. Crowns, regal adornments, religious altars, etc. are all ostentatious displays of gold, and whatever power structure exists to show it off.

The counterpoint to this Is maybe that all of the US gold is housed in secret? Most nations don’t actually display gold wealth in the ‘traditional’ way? These aren’t rhetorical questions, I’m genuinely curious if I’m seeing this from a sound point-of-view.

Nobody’s wearing bitcoin crowns or sitting on bitcoin thrones. Is there an equivalent? Does it even matter?

Re: Bubble, Bubble, Fraud and Trouble

#32

Post by JumpCrisscross »

cableshaft wrote: post #27
JumpCrisscross wrote: post #19

Earlier quoted context omitted.

> FIAT currency and Bitcoin have value as long as people believe it has value This argument precludes any rational discussion of the price of Bitcoin. Bitcoin at $50,000? Correctly priced, because people feel like it! Bitcoin at 50¢? Correctly priced, because people feel like it! Contrast that to national currencies, where fundamental relationships between rates, real GDP and other factors relating to the economy can…

> In that sense, it's sort of like gold. Unlike gold, Bitcoin doesn't have millennia of heritage grandfathering in an informal consensus [1]. Yep. Exactly. Bitcoin doesn't have the history of other currencies and assets, by the simple fact that it has only existed for about ten years . Something that can't be changed because we don't have time machines to go back thousands of years and tell everyone how to build comp…

> So instead of people saying that Bitcoin is inherently worthless all the time, maybe we can just agree that it's going to take a lot longer than ten years and a lot of swings both up and down in the price before we start creating enough of a "heritage" to come to an informal consensus on how much they are worth

The history of non-fiat money (like gold) is that of candidates being knocked off, practically never added to, the list. Over time, new financial technologies (e.g. better refining, bimetallism, paper money, central banks, deposit insurance, et cetera) were demonstrated to be superior to gold (and its subsequents) in the context of a growing modern economy. People debated--extensively--each shift. Rational arguments were put forward, tested (and rejected), refined and, when fruitful, propagated.

Each of gold --> bimetallism, commodity money --> redeemable paper money, redeemable money --> "backed" money and backed money --> fiat had a rational argument (and demonstration) for their transition. Those arguments are one way; they don't work going backwards.

Gold remains as a legacy, a memory of where we came from. It's here, and has been replaced. (Analogous to old programming languages which remain in light use because of legacy code. You wouldn't clone their obsolete elements, justifying said clone with the legacy language's use.) There is no argument for "neue gold" because the same arguments that worked, cumulatively, over the centuries as society progressed, against gold work against the new thing. The comparison to gold is one of false equivalence; hence the fallback to "whatever we feel it's worth."

Re: Bubble, Bubble, Fraud and Trouble

#33

Post by acdha »

sf_rob wrote: post #22

Some of the worse points of this article: 1) "Bitcoin turns out to be a clunky, slow, costly means of payment". This is missing the phrase "right now". There is nothing inherent/unfixable in Bitcoin or competing cryptocurrencies that make them bad for payments in a technical sense (maybe in a exchange rate risk sense but that's not the claim being made). Yes Scaling, Speed, Security, and UX are issues, no those aren'…

> This is missing the phrase "right now". There is nothing inherent/unfixable in Bitcoin or competing cryptocurrencies that make them bad for payments in a technical sense

It’s been a decade and Bitcoin has never delivered on that promise despite heavy marketing pushes and huge amounts of capital. At some point it’s not reasonable to give the benefit of the doubt until something ships.

Re: Bubble, Bubble, Fraud and Trouble

#34

Post by prostoalex »

ThomPete wrote: post #16

> Bitcoin, by contrast, has no intrinsic value at all. The idea of intrinsic value should die. It's fundamentally a complete misunderstanding of what value is based on. FIAT currency and Bitcoin have value as long as people believe it has value. Value isn't some objective criteria it's a highly subjective one, what one considers valuable another might not. depending on what we are talking about, you can then add some…

This argument did not exist with BTC at two- and three-digit price levels. Instead BTC was advertised as useful for (a) microtransactions on the Web, such as paying Web publishers or e-mail recipients (21.co second business model), (b) buying a drink at the trendy neighborhood coffee shop that accepted BTC, (c) transacting with strangers on sites like Silk Road, (d) buying stuff from Newegg, Overstock and ever-expanding universe of e-commerce shops accepting BTC, (e) international money transfers and remittances, where fees historically have been quite high.

All of that activity has died down due to better ROI on hoarding (whoever spent 2,739 BTC on this house must have quite a buyer’s remorse by now https://www.wsj.com/articles/lake-tahoe-property-sells-for-1...) and high transaction fees. The only argument one reads nowadays online is based on the bigger fool theory - buy now, sell later, pocket the profit.

You’re right that fiat currency has little of intrinsic value, but nobody with large enough wealth treats it as such. People might have 1-, 3-, 6-, 12-month cash cushions but (outside of people on ForEx forums) nobody is entertaining an idea of selling everything and investing in a large bag of GBP or CAD. Or telling their friends to buy NZD because it’s bound to go big.

Fiat currency is a plain transaction medium that people are quick to diversify from once they have accummulated decent amount of it to cover the everyday stuff. And those other investment mechanisms generally do have intrinsic, or backstop, value.

Re: Bubble, Bubble, Fraud and Trouble

#35

Post by bonestamp2 »

I realize this is an op-ed, but a good op-ed will still be based on well researched facts, otherwise the opinion is naive and useless. This reads like Krugman read a shitty blog from some 12 year old who doesn't know how to do independant research and simply copied some terribly uninformed social media arguments.

For example, the US Dollar is valuable not because that's the only accepted currency for paying taxes but because it's the only currency that nearly every retailer in the country accepts.

> much actual Bitcoin use seems to involve drugs, sex and other black-market goods

There's a big difference between bitcoin use in general and bitcoin use on the dark web. You can't cite an article about bitcoin use on the dark web as a source for how all bitcoin is used. That's like saying hot dogs are only sold at baseball stadiums when your source is just about hot dog sales at baseball stadiums.

I could go on but I think it's fair to say there is no need -- Krugman has gone full retard.

Re: Bubble, Bubble, Fraud and Trouble

#36

Post by philipwhiuk »

sf_rob wrote: post #22

Some of the worse points of this article: 1) "Bitcoin turns out to be a clunky, slow, costly means of payment". This is missing the phrase "right now". There is nothing inherent/unfixable in Bitcoin or competing cryptocurrencies that make them bad for payments in a technical sense (maybe in a exchange rate risk sense but that's not the claim being made). Yes Scaling, Speed, Security, and UX are issues, no those aren'…

Having to verify 'n' times is a core part of why Bitcoin is time consuming to process transactions and also why it's hard to fix.

It's not also sufficient for a technology to say 'maybe something awesome will be invented to make this useful' in order for us to consider the base tech useful.

Maybe in the future we will discover a fantastic use for mud that allows us to travel faster than the speed of light. Until then, telling people how awesome mud is and that everyone should mine some mud, is just absurd.

Bitcoin is modern day mud. Maybe in the future Lightning or some tech will solve the problems it has. But right now it's useless.

Re: Bubble, Bubble, Fraud and Trouble

#37

Post by [deleted] »

Ftuuky wrote: post #7

"It’s a nifty trick. But what is it good for?" The last time Krugman said this it was about the internet. “The Internet’s impact on the economy has been no greater than the fax machine’s….ten years from now, the phrase “information economy” will sound silly. (1997)”

[deleted]

Re: Bubble, Bubble, Fraud and Trouble

#38

Post by justinzollars »

Ftuuky wrote: post #7

"It’s a nifty trick. But what is it good for?" The last time Krugman said this it was about the internet. “The Internet’s impact on the economy has been no greater than the fax machine’s….ten years from now, the phrase “information economy” will sound silly. (1997)”

wow. He can't see the future. After working with blockchain smart contracts for 6 months I'm certain he's wrong. Even if it crash's this year cool things will come.

Re: Bubble, Bubble, Fraud and Trouble

#39

Post by philipwhiuk »

bonestamp2 wrote: post #35

I realize this is an op-ed, but a good op-ed will still be based on well researched facts, otherwise the opinion is naive and useless. This reads like Krugman read a shitty blog from some 12 year old who doesn't know how to do independant research and simply copied some terribly uninformed social media arguments. For example, the US Dollar is valuable not because that's the only accepted currency for paying taxes but…

Why do they accept it though? Because they pay taxes in it.

UK retailers mostly don't accept USD even though it's the global reserve currency? Why. Because they'd have to change it back into GBP to pay tax on the profit they just made.

> There's a big difference between bitcoin use in general and bitcoin use on the dark web

At a time when multiple retailers are switching away from BTC, it seems more reasonable. In any case there's no study saying most of it isn't the dark web stuff.

> I could go on but I think it's fair to say there is no need

I disagree, most of your points are poor.

Re: Bubble, Bubble, Fraud and Trouble

#40

Post by ThomPete »

JumpCrisscross wrote: post #19
ThomPete wrote: post #16

> Bitcoin, by contrast, has no intrinsic value at all. The idea of intrinsic value should die. It's fundamentally a complete misunderstanding of what value is based on. FIAT currency and Bitcoin have value as long as people believe it has value. Value isn't some objective criteria it's a highly subjective one, what one considers valuable another might not. depending on what we are talking about, you can then add some…

> FIAT currency and Bitcoin have value as long as people believe it has value This argument precludes any rational discussion of the price of Bitcoin. Bitcoin at $50,000? Correctly priced, because people feel like it! Bitcoin at 50¢? Correctly priced, because people feel like it! Contrast that to national currencies, where fundamental relationships between rates, real GDP and other factors relating to the economy can…

Gold had little value in the beginning. Diamonds only recently started to get value. Van Goghs paintings had no value until his death. Thats how value work. Its messy and thats ok, long term will prove individual assets valuable or not.
Post reply on HN