Bitcoin Is a Ponzi
openblockchains.github.io
openblockchains.github.io
Whether Bitcoin as investment makes more sense than gold is unclear to me (though gold does have some real-world needs; probably not sufficient to justify its value), but comparing to productive assets makes no sense to me.
There is over $7.5 Trillion in gold in reserves held by governments and institutions as a store of value. [1]
Only around $17B worth of gold is used for electronics annually (~320 tons) [2].
Thus annual electronics usage is around 0.22% of the world's gold reserves. Pretending like the "intrinsic value" of gold is from its use in industry is ridiculous and ignorant. The value of gold comes from the fact that the world uses gold as a store of value -- because it does not oxidize and is relatively rare.
The same attributes that make gold a good store of value make bitcoin an even better store of value -- one that isn't simply a protection against inflation but is naturally deflationary given the limited supply.
[1] https://en.wikipedia.org/wiki/Gold_reserve
[2] https://unu.edu/news/news/only-15-of-gold-and-silver-used-in...
And even if industry doesn't use a lot of gold, it has its merits; you can store it, it's persistent, and you can use it as a means of payment.
Bitcoins are virtual, a promise with no government guarantee; you can't put your hands on them; they're too complicated for most people to handle, and if there's no electricity or computer networks available, there's little you can do with them.
Gold's value is based on people wanting it. Bitcoin's value is based on exactly the same thing: higher demand than supply.
Already the monetary currency of most countries is built on sand and one is well advised not to hold all one's assets in cash. Until someone finds a formula to produce gold cheaply (like diamonds), it will continue to be a useful currency with good inflation protection; of course, you wouldn't invest your entire fortune in gold either. But with Bitcoins, we have more of a situation like we had with investment certificates; they may also protect against inflation if everything works as promised, but they can also vanish into thin air very quickly.
There are also dividend investors and critics of today's high valuations, buybacks, et cetera. Stocks are an interest in a company that in ideal terms should be creating value. Bitcoin is a medium of exchange at best. Even if you accept that it is a store of value, that is distinct from a company that turns profits.
I don't disagree that there are plenty of shenanigans going around, but nor do I accept that as excusing the problems with BTC.
That's true. But there are plenty of investors who are conscious about what the investments are used for AS WELL. I mainly buy stocks in renewables and technology. A big part of that is that I feel like I know enough there to make informed investments that'll generate some return. But it's also because I want companies making renewable energy solutions to have access to capital, because I believe that what they're doing is good for the world. As long as my returns are equal or better than interest in my savings account, I'm happy.
There's a lot of people only focusing on pure speculation too. They serve a purpose in making stocks more liquid. But that alone is not the point of the stock market. If it was it'd be banned by now.
This is the main reason why I'm not buying BitCoin. I don't see what good the money I'm putting in will do in the economy.
I'm curious why the revelations around Tether hasn't led to Bitcoin crashing yet. I would definitely have sold if I had any (well I did, I mined a bit in the very beginning, but that's lost). Is it that others haven't heard about it, or is it that they don't believe that Tether will take down Bitcoin with it?
It seems like it may have stalled the growth of BTC for now though.
Source (yes, the lawyer shared the document on Twitter): https://twitter.com/bitcoinlawyer/status/1351642006020366343
Mr Krugman is just one voice in the collected "Yes, Bitcoin is a Ponzi" articles. As you surely know - the most outspoken economist on the bitcoin investment fraud / bubble is Mr Rubini. See this US Sentate testimony, for example, https://bitsblocks.github.io/crypto-bubbles
There is value in a medium of exchange if users agree upon those terms. HODLing isn't that.
To the extent that the medium of exchange is valued, it is because it would be more convenient, less costly, less regulated or otherwise useful. BTC's mining, fees and slow transaction speeds subtract utility. Instead of moving onto better technologies, maximalists retreat to the illogical digital gold arguments. Ironically the inefficiencies are defended as creating value.
Also (as an aside irrelevant to my above question), I think you greatly overestimate the number of people who subscribe to a labour theory of value. Personally, I don't recall encountering people who subscribed to it other than far-left shitposters on twitter (who are definitely a minority, although a rather vocal one).
You don't need to look far to find posters using this argument to rationalize the value of BTC. Many contend that BTC's proof of work is the only possibility for a truely secure ledger, that the masses of computing power invested create the value of BTC.
Then I would agree even as a HODLER.
Some pay-as-you-go (vs funded) pension systems are considered as Ponzi scheme by their characteristics. The population/age pyramid in western countries is an issue. Which is why the subject is hot.