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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

#391

Post by Viliam1234 »

bob33212 wrote: post #277
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 (…

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.

Ah, that would explain why we abandoned the gold standard. No one ever spent those gold coins, and no trade existed before 1933.

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

#392

Post by ykevinator3 »

sygma wrote: post #118
ykevinator3 wrote: post #58

Earlier quoted context omitted.

Right but you can make a new crypto out of thin air, you can't do that with gold. There is no value in it because you can just make a new one. It's more fiat than the fiat the kids complain about.

Right, but you can make a new WhatsApp out of thin air. There is no value in it because you can just make a new one.

Agreed. It's just fashion. Disco will not live forever, some day punk will come along and people with leave disco in droves.

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

#393

Post by orestarod »

birdyrooster wrote: post #385
ArchD wrote: post #291

Earlier quoted context omitted.

How is BTC mining a Ponzi scheme in a way that gold mining isn't? Neither require any insider information and new entities can join in the mining. In fact BTC mining has lower barriers to entry because it doesn't require license, land rights, etc.

Well for one, gold is a precious metal with great electro-conductivity properties, never rusts and can be worked at low (relatively speaking) temperatures. Kinda useful for all these chips we need and other electronics. Try to do that with Bitcoin.

That's not where its high value comes from though. And the vast majority of gold is not used in the industry.

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

#394

Post by timoth3y »

prepend wrote: post #161
timoth3y wrote: post #61

I know it's a losing battle, but I can't help but tilt at this particular pedantic windmill. Not all financial scams are Ponzi schemes. Most are not. Ponzi schemes involve shady bookkeeping by the operator that conceals the source of fake profits. If Bitcoin were an actual scam (and I don't think it is) it would be a pump-and-dump. Most ICOs were clearly pump-and-dumps. There is a huge variety of financial scams, and…

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.

> I think this applies to Bitcoin because it’s payouts are solely based on speculation and new cash coming in.

Bitcoin does not pay out anything. There is no cash flow. You can only sell it.

It's true that price increases depend on later investors, but that is true of all investable assets; art, gold, comic books, etc.

Bitcoin is likely a bubble. It may be a pump-and dump, but it is not a Ponzi scheme.

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

#395

Post by timoth3y »

ghaff wrote: post #254
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.

Personally I think it makes sense to distinguish between deliberate Ponzi schemes and speculative bubbles but, at the end of the day, both depend on new money coming in to inflate value. One difference is that Ponzi schemes are pretty much guaranteed to collapse at some point and someone knows with certainty that it is in fact a Ponzi scheme. Whereas whether something is a bubble can only be definitively determined a…

> both depend on new money coming in to inflate value

This is true of all investable assets that don't produce cash flow. It's true for art, gold, comic books, baseball cards, wine, classic cars, everything.

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

#396

Post by sebmellen »

didroe wrote: post #209
sebmellen wrote: post #64

Earlier quoted context omitted.

IMO what’s neat about cryptocurrencies is that they are programmable money. This means you could build inflationary cash which inflates at a fixed, fair rate, in an open and transparent manner (Dogecoin did this, for example). Bitcoin has obviously failed at being what the whitepaper said it would be: “A Peer-to-Peer Electronic Cash System.” A fair and open inflationary currency might stand a better chance.

All of the cryptocurrencies I've seen so far seem to based on a simplistic and fundamentally flawed view of economics. A long term trend (whether inflationary or deflationary) in the overall supply is insufficient to target price stability. A currency's supply needs to increase/decrease in response to what's circulating at this moment in time. If the overall supply is increasing but everybody is squirrelling it away…

Have you looked at https://reserve.org? Might interest you!

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

#397

Post by alohahacker »

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…

"I know HN has a significant aversion to cryptocurrency (which absolutely befuddles me for the foundational societal concepts it modernizes)"

I can't for the life of me figure out why HN keeps hating on bitcoin for the past 10 years since ive been following this site has but has been pretty much spot on about every other tech related subject. It initially discouraged me back in the early days but once you GET it, you realize its one of the biggest technological breakthroughs in the history of mankind.

I think with bitcoin you simply can't read about it but actually get your hands dirty and fully use it to really understand the potential it is going to have.

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

#399

Post by paulgb »

Sammi wrote: post #389
paulgb wrote: post #245

Earlier quoted context omitted.

Yes, because the amount of inflation goes to zero over time. That doesn't mean that there's no inflation now (i.e. that new Bitcoin aren't created every day until that time). (I guess you could argue semantically that mining doesn't “create” Bitcoin but “unlocks” it or something, but it doesn't affect the dynamics I mentioned where the cost of running the network is currently subsidized by the newly unlocked Bitcoin…

The total Bitcoin supply doesn't inflate. And so your assets won't be inflated away.

Again, it’s a semantic distinction. I think it’s more accurate to say it inflates at a known rate than “doesn’t inflate”, but I’m not going to argue semantics.

It doesn’t address the problem of the network being subsidized by the diminishing pool of remaining unmined bitcoin, and what happens when that pool is exhausted.

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

#400

Post by JackFr »

quickthrowman wrote: post #329
JackFr wrote: post #220

Earlier quoted context omitted.

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.

Why is it impossible with Bitcoin? This is already taking place. How do you think the interest bearing crypto accounts work? Rehypothecation, lending the same coin possibly multiple times. https://blockfi.com/an-introduction-to-rehypothecation-with-...

I’m not sure I get it. Only one person can own a Bitcoin at a time.

So some people of reinvented fractional reserve banking. But now with the problem that it’s unregulated, unbackstopped by a lender of last resort and ultimately through rehypothecation you’ve virtually eliminated any advantage gained by using blockchain technology.

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