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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

#301

Post by tim333 »

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 (…

That's not really true. You could bury a bottle in the backyard with the address and private key written on paper and still have the bitcoins in 20 years. If no one is running the blockchain software you could get the most recent copy of the chain / software and start it up. With both gold or bitcoin if there are no buyers then you won't be able to sell it for much.

It might actually be entertaining to bury a bottle with $10 worth of bitcoin - it might be worth quite a lot when dug up like that guys hard drive in a refuse tip he wants to dig up. Or not of course.

("A man who says he threw away a hard drive loaded with 7,500 bitcoins in 2013 is offering his city $70 million to dig it up from the dump" https://www.businessinsider.com/man-offers-council-70-millio...)

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

#302

Post by sonthonax »

Icedcool wrote: post #297
sonthonax wrote: post #290

Earlier quoted context omitted.

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 ima…

I’d contend that money(any fiat), like Bitcoin, like gold has no intrinsic value. Historic precedence doesn’t exist... till it does. No one wants to carry around chickens to trade. The value of a monetary asset is in its interoperability, and backers of Bitcoin are working to enable that to a high degree.

I think you’ve misunderstood me.

Gold has its niche applications where you need a malleable and nonreactive metal (like dentistry). If this was the only use for gold, it would still be at least 800-900USD an ounce, because it that’s what it costs to extract.

The market cap for gold would be like 1 billion USD, rather than 11 trillion USD.

Ironically in a world where gold wasn’t ‘lusted’ after, it might even be more expensive because the market would be illiquid. And a small oligopoly of suppliers would be able to gouge buyers.

This is what happens in the rare earth metals market.

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

#304

Post by samvher »

Sammi wrote: post #177
prepend wrote: post #161

Earlier quoted context omitted.

The key characteristic of Ponzi schemes, I think, is that there is no real value and returns are paid based solely on new cash coming in. There’s shady bookkeeping only as an artifact to hide the cash-in/cash-out structure. I think this applies to Bitcoin because it’s payouts are solely based on speculation and new cash coming in.

Bitcoin has two well understood and valuable use cases: 1) Bitcoin can do trustable and reliable transactions with unlimited amounts of assets across the world in 10 minutes. What else can do that? It's the perfect settlement layer for large actors. 2) It doesn't inflate, which makes it a perfect store of value. Even gold inflates.

Maybe I'm being pedantic but it seems to me that inflation properties are separate from (though related to) total supply/printing. If prices denominated in bitcoin go up (e.g. because bitcoin crashes), isn't that still inflation?

I always have some difficulties with the "printing is limited so it's a store of value" argument: it's only a store of value if people keep assigning it value. That property doesn't purely come from supply but also from demand.

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

#305

Post by acjohnson55 »

saalweachter wrote: post #279
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 (…

I'm sympathetic to the argument that Ponzi schemes inherently have a small group propagating the fraud while presenting the illusion of a real business, so describing Bitcoin as a Ponzi scheme may be technically inaccurate. If I understand the tweets correctly, Taleb, et al, are basically saying that the mining pool functions as the insiders in a Ponzi scheme, by outcome if not intent. The argument is that a Ponzi sc…

> I'm sympathetic to the argument that Ponzi schemes inherently have a small group propagating the fraud while presenting the illusion of a real business, so describing Bitcoin as a Ponzi scheme may be technically inaccurate.

Have you heard about the miracle of decentralization? :)

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

#306

Post by csomar »

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 (…

> 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.

That's not correct. Once you receive your transaction within a block, they are there forever assuming you keep a copy of that blockchain. If miners stop mining, you'll be able to mine yourself within 14 days with a regular computer.

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

#307

Post by DonHopkins »

lai-yin wrote: post #272
DonHopkins wrote: post #268

Earlier quoted context omitted.

>"seeing its community almost unanimously oppose the COVID lockdowns" Say what?!? Is there some coverage of this, or do I need to read millions to tweets?

Yes, you need to read millions of tweets. Have a nice weekend.

Good thing there's a lockdown! I'll get started.

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

#308

Post by freeone3000 »

gruez wrote: post #296
bob33212 wrote: post #277

Earlier quoted context omitted.

Good point. The problem is that some people think it is a currency instead of an investment. Other people think it is an investment instead of a currency. It can't be both. Currencies have to be less valuable over time, otherwise no one would ever spend the currency. Investments have cost more overtime otherwise no would would invest. But both groups are buying and driving up the price. Also, there is a 3rd group tha…

>Currencies have to be less valuable over time, otherwise no one would ever spend the currency. Isn't this only true with the removal of the gold standard?

It's part of the reason the gold standard was removed. Currency deflation made loans expensive, for two reasons: the time value of money was higher in 1933 than it was any point since; and since loans are in nominal dollars, deflation causes loans to be more expensive in real dollars, even disregarding interest. 1932 had -10.3% inflation -- this added an additional 10% interest to every loan, on top of the 17% prime rate (because why lend money?). A 27% effective loan rate is ruinous for business, especially agriculture. The gold standard was removed in 1933, interest rates dropped to 12%, inflation increased wildly to 0.3%, and people could borrow money again.

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

#309

Post by almost_usual »

Icedcool wrote: post #297
sonthonax wrote: post #290

Earlier quoted context omitted.

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 ima…

I’d contend that money(any fiat), like Bitcoin, like gold has no intrinsic value. Historic precedence doesn’t exist... till it does. No one wants to carry around chickens to trade. The value of a monetary asset is in its interoperability, and backers of Bitcoin are working to enable that to a high degree.

If you couldn’t exchange gold for fiat it would still have value. Bitcoin would plummet in value.

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

#310

Post by acjohnson55 »

corty wrote: post #214
wslh wrote: post #206

Earlier quoted context omitted.

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.

Why? There are other stablecoins, with better reputation. Could people just switch to them?
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