Nassim Taleb says Bitcoin is an open Ponzi scheme and a failed currency

Ponzi one is baseless (in this piece).

Volatility one is incomplete. Clearly people use volatile currencies. Usually people avoid ones that are in downward spiral. If he (or even majority) can not wrap their heads around the question of how to transact under current conditions, it does not mean nobody can.

This also holds for all those shares that don't pay dividends: Alphabet, Amazon, etc.

And bitcoin won't be a better store of value until we can be sure the demand for it will last a very long time.

nothing stopping demand from collapsing in a panic

A helpful concept might be "the velocity of money". The crucial insight is that all the money spent in an economy in one year can be expressed in two ways:

Take the available quantity of money M, and assume that each dollar is used in to buy something V times per year. Then M x V is the total amount spent in a year. That must equal the gross national income, in nominal terms (ie in $ terms), namely P x Q (price level times quantity of goods produced).

Thus: MV = PQ.

(As a side note, I personally would definitely not look to Foucault for economic insight.)

My definition was very naive, I realize it now. So cryptocurrency can not call itself currency, correct?

People can trade crypto and NFT all they want, or they can exchange crypto or NFT's for pizza or the other way around. However, calling it a currency and making it convertible to fiat money creates an illusion that crypto is another currency just a bit too volatile (and a lot of people believe that it will pass as cryptos will eventually stabilize, which is likely wrong).

I think we should just stop calling it currency and thus put an end to a lot of confusion and unhealthy speculation.

https://arxiv.org/abs/1002.2284

The "Ponzi scheme" is enabled on bitcoin not by hiding the bank account, but manipulation of the value of the currency itself. In both cases, the n holder is benefiting from the n+1 holder by convincing them to pay more for what the sell as a profitable investment, and each transaction value should be greater than the one before it for it to work. So it is a form of a Ponzi scheme, not the traditional one you described. Sure, I have a transparent ledger, but what exactly do those numbers account for? I tell you, it is a great, wonderful investment, easy way to make money, it is the future, just pay me x amount more than what I paid.

The issue here is that bitcoin is not appreciating due to advancements, growth or the extra value it providers to society, in fact as it stands it has negative impact. No, it is appreciating only due to social hype in the intersubjective social reality. It is a scam.

In other words, fiat doesn’t really encourage saving.

This is not true for stores of value like gold and BTC

The differentiation is about monetary policy, BTC's policy is in code via incentives and PoW. It's decentralized and not controlled by a government. The currency is scarce and the maximum amount is predetermined. It's deflationary.

I'm not an 'inflation is bad' person. I'm not a hardcore anti-government crypto-anarchist. I think government monetary policy has a place and the QE policy after 2008 clearly worked based on the rapid recovery and loan repayment. I think when you have growth you need more currency to support that growth and newly created wealth. Some inflation in monetary policy is desirable and creates incentives you want (investment) vs. hoarding cash.

I am not an economics expert and people are often way too confident in this kind of stuff when they shouldn't be.

The reason BTC is more like gold than like fiat currency is because of the things in that article, but a quick summary:

- It's hard to actually trade with for goods (nobody is bringing little gold flakes into the 7/11 for a chocolate bar).

- It's scarce and takes a lot of energy to 'mine'. The supply of gold on earth is limited by nature. The supply of BTC is limited by code and math.

- People use it as a place to store value beyond its inherent value. Gold is shiny and has some utility as a metal, but its market value is mostly entirely unrelated to that.

- In some ways BTC is better than gold as a value store. It's easier to store and easier to transport.

You can move BTC to Zcash and then have shielded transactions.

The worst kind of outcome is what the CCP is building - a digital on chain currency to completely surveil their population's every financial transaction. There are some interesting things a government run digital currency can do though - expiring money stimulus (money that must be spent in a short time or somehow otherwise constrained). The ability to very quickly give money to people securely. Though obviously even with some of these interesting things, the CCP's currency is very bad for the privacy and freedom of their people - China is basically already in that dystopia.

I think this question doesn't totally make sense, but I get what you're getting at.

BTC because of PoW and mostly first mover advantage (more mining network capacity, therefore more secure) has more shared value. A lot of the other crypto products are relatively insecure proof of stake with problematic on chain governance. The scarcity is not that there are lots of crypto products, but that there will only be a maximum number of BTC mined ever. The existence of Venezuela dollars doesn't really impact the value of USD - they're different currencies with different reasons for their value. Many others 'coins' are ERC-20 tokens on ETH and while they support their applications/create shared incentives they don't have nearly the same network size as BTC (or shared sense of value) so they're less robust. Those tokens are less like a currency and more like company stock (where the 'company' is the on chain application). There are some others on their own block chains that have interesting properties (ZCash), but the risk there is adoption.

Lots of commodities are traded, but gold has a shared store of value property above its inherent value for social reasons. I'd argue BTC has that for similar social reasons.

Ethereum is different because of its programmable smart contracts, it has a lot more potential as a protocol that applications can be built on top of (and we're seeing a lot of cool stuff here, DeFi - Uniswap, Compound, see: https://medium.com/dragonfly-research/what-explains-the-rise...). As a result I think its token has value and its more exciting than BTC, but it's a different kind of thing - BTC is simpler.

Doge is a joke - just straight speculative gambling, you might luckily make money (and it's fun to gamble), but there's no scarcity built in. It definitely has the meme aspect going for it though.

What priors are there for a "currency" such as bitcoin? Genuine interest, not sarcastic tone here btw.