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Comment by dhsysusbsjsi | Hacker News Reader

I think this is simplistic. It’s viewing Bitcoin through a lens of a traditional Ponzi scheme assuming people that trade their fiat currency for Bitcoin are investing, with a view to one day take profits back into dollars.

What if people are seeing discussion of minting a trillion dollar coin, trillions in QE, 25% of all dollars created in the last 12 months…and concluding that fiat currency is in an endgame and they are permanently trading what fiat they have now for one of a finite number of digital assets that will ever be created.

As Michael Saylor once said in an interview: “It’s the superior asset, Laura”

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> What if people are seeing [...]

What if my grandmother had wheels?

More seriously, how many people do you know are seeing what you are talking about?

Everyone I know that invested in crypto did so hoping to trade it back later on for more fiat than they paid. Sure, maybe it's a biased sample, but it's a sizeable sample and I do not know even a single person that traded their fiat for crypto definitly.

English tends to describe things as they are. To me the key principle is the constant use of the words "invest", "investing", or "investment" when it comes to crypto assets.

I don't invest in a credit card for spending. I use a credit card, though.

Thank you. I love the idea of cryptocurrency for its utility… but it seems to me that this idea that crypto is an asset will eventually spectacularly collapse.

How about the stock market? Everyone I know that invested in stocks did so hoping to trade it back later on for more fiat than they paid.

Well the idea that stocks must go up is a kind of scheme in itself. The whole financialization of our economy is based on constant growth. So you could argue that it’s a Ponzi scheme as well. Our children will likely be caught holding the bag.

You could argue that civilization itself is a Ponzi scheme.

One day, there will be a final generation left holding the bag.

The difference is that both stocks and the general economy produces value. This is what separates them from a Ponzi which is only a redistribution of assets.

"Civilization is a Ponzi" is essentially my conclusion. The thing holding up government backing as the standard of real asset is simply its capacity as the just middleman enforcer. Subtract that and currency, real estate, stocks, bonds, contracts, credit ratings and IP rights all go poof. You're left with clothes-on-your-back and local community trust.

That's why I see crypto tokenization as an important step towards having another "financial material" to work with. It doesn't commandeer enforcement at a global level, so it doesn't compete with governments on their own terms, but it can help build trust at scale by being designed around the trustless scenario, which reduces reliance on enforcement and bureaucratic methodology in many applications. Crypto projects with a focus on achieving good governance are some of the most promising out there, even as they are hidden in the endless waves of scams.

Stocks produce value though. They represent shares of companies that make useful products that generate actual value.

When you own a share of Apple you literally own a fraction of their factories, IP, etc.

This is addressed in the article. As is gold, but it doesn't seem like people read it.

First off, you're hand waving over every person who has ever used bitcoin to purchase anything, which is a lot of people buying a lot of stuff.

When I started mining bitcoin no one was talking about it every have a USD value. It was just silly internet points that you could pass around to friends. I also know a lot of people who hold as a store of value believing that it will easily outlast the US dollar.

Just because all your friends are clowns doesn't mean that those are the only people that exist.

> which is a lot of people buying a lot of stuff.

Could you share some numbers?

If it's not about cashing out then why is the primary hype mechanism talking about the dollar-equivalent value of anything crypto related? Why does it matter if an NFT was sold for $300k worth of ether?

More and more, I'm hearing only the ETH value rather than dollar denomination. Personally, when I bid (or receive bids) on any of my NFTs, I'm only considering the ETH price.

It's a new shift, but I think quite profound.

Edit: If you're referring to mainstream media, the dollar value is all that most would be able to put into context. For those deep in the space, we're thinking about dollar values less and less. My primary benchmark on overall portfolio value is the value denominated in ETH, not USD.

But ETH is still tied to the dollar and that's where it gets its value, is in the comparison to the dollar. I don't accept ETH for a used car I'm going to sell. I accept dollars, though.

I'm not sure I understand. You could denominate ETH in dollars, yen, euros, gold, or any other form of money/currency.

Although USD might be your preferred, many would happily sell a vehicle for compensation in BTC, ETH, silver, gold, euros, etc.

Well... I wouldn't, nor would 95% of the US. I want to be paid in stable currency backed by the full faith and force of the US Government.

"Oh shit, the internet went out. Hope the value of my ETH doesn't crash through the floor while the internet is down...."

Yeah I can't keep track about the weekly times the whole internet went down. Probably a couple of times a week

It's not the whole internet, just you or the company that holds your BTC wallet. Just the other day Facebook was down for hours. Imagine had that been Coinbase.

You can denominate ETH in whatever you want, but come April 15th you’d better exchange enough for dollars to meet your dollar denominated tax obligation.

> But ETH is still tied to the dollar and that's where it gets its value,

For people that look at it like that, sure. That's not how everyone looks at it though. I personally look at it with the aim of acquiring as much ETH as possible because I can see that the future economy will be built on it and eventually things will be priced in ETH.

Just because the transitions are slow and you don't see it happening, doesn't mean that there's not a transition happening.

Presumably because people are currently most familiar with the price of everything else in dollars.

Dollars are accepted everywhere. BTC is not.

Edit: Not sure why the downvotes, but it's still true and still likely true for the forseeable future.

For now. Wayne Gretzky has a quote about this.

Blame financial news media, things like Fortune magazine's list of new crypto billionaires.

The author of this blog post's claim that 99.99% of people in crypto are only participating because of expectations of future profit is unsourced and a fiction that he has created based on preconceived notions.

Don't participate if you don't want - I like participating in a system that isn't being tracked by agencies especially with news of Treasury actively building out systematic functionality to investigate any bank accounts with transactions exceeding $600

> Blame financial news media, things like Fortune magazine's list of new crypto billionaires.

The crypto financial news community was writing about this long before Fortune picked it up.

financial news media is a superset of the crypto financial news media; my statement remains true

Okay, so what you're saying is that the crypto community is what pushed crypto in that direction.

This does not follow from what I said at all.

Are you claiming that crypto-finnews was not dominated by the crypto community prior to, say, 2018? The same community that complained at every turn that real media/finance is not taking crypto seriously?

I mean focusing on whether it's a Ponzi scheme in particular vs the entire breadth of reasons to like or not like Bitcoin brings up whether it should attract _more regulation_, the question of free choice to participate or not is moot because it's considered misleading and fraudulent.

I'd bet that cryptocurrencies are much more vigorously tracked than US dollars. The fraction of cryptocurrency transactions related to scams, fraud, money laundering, tax evasion, and other financial crime must be at least a couple orders of magnitude higher than that for real money.

This gets to the heart of the issue with these discussions - people like yourself asserting non-factual statements based on the equally (if not more so) incorrect assertions they hear from others. Where are your sources? Why do you feel like you need to state things as fact when you just don't like something?

You are exactly incorrect.

Cash represents the overwhelming supermajority of laundered funds and ongoing credit extended across criminal elements.

https://www.swift.com/sites/default/files/files/swift_bae_re...

Cash is the heart of the criminal economy, crypto is creating a transparency that doesn't exist in traditional peer to peer physical transaction systems like cash or IOUs.

I'm done with this, nothing productive is coming out of this conversation.

You talk about sources but like where in that pdf does it speak to your claim (cash is the majority of laundered funds) or to the parents separate claim (the percentage of crypto that is used for scams, fraud, etc. is higher than the percentage of cash used for the same). It just talks about _how_ the crime works, not the statistics in question.

I didn't state any facts. I started with "I bet" and included "must be". Those are pretty clear opinion markers.

Your reply is also confused. Is the majority of money laundering denominated in USD and other real currencies? I'd believe it, because that's where the money is. But I'm saying the proportion of Bitcoin transactions that are fincrime-related is surely much higher than that of total USD transactions.

This seems pretty obvious to me given that Bitcoin is much less useful for quotidian transactions, but much more useful to people engaged in assorted financial crime. That's unsurprising given how much cryptocurrency advocates tout privacy/anonymity as features. But if you think otherwise, feel free to show the data that has convinced you otherwise.

Also, it's bad form to read something, go on a rant, and then declare the conversation over. Especially when the rant is incorrect.

From https://www.unodc.org/unodc/en/money-laundering/overview.htm...

> The estimated amount of money laundered globally in one year is 2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars. Due to the clandestine nature of money-laundering, it is however difficult to estimate the total amount of money that goes through the laundering cycle.

From Treasury via ABA Banking Journal (https://bankingjournal.aba.com/2015/06/treasury-u-s-money-la... and https://home.treasury.gov/system/files/136/2018NMLRA_12-18.p...):

> The United States continues to estimate that domestic financial crime, excluding tax evasion, generates approximately $300 billion of proceeds for potential laundering, based on the sources and analysis cited in the 2015 NMLRA. Criminal prosecutions and law enforcement investigations indicate that most of the money earned from crime in the United States stays in the United States, but also that the United States is an attractive destination for illicit funds generated abroad.

Ok? None of that contradicts my notion.

Stolfi has been around the crypto scene a long time, long enough to have gotten a pretty good idea of what motivates people.

The news media did not create the gold rush mentality around crypto, it has been there almost from the beginning. Go and read the bitcointalk forums for evidence, if you want.

I have been involved in crypto since 2013, I get it. But I have given up engaging in these conversations. You either get the anti-statist thesis and economic liberation angle or you don't. If you don't then OK, best of luck.

I like having spending power that isn't immediately based on CIA organized crime or boomers at the Fed/Treasury

I agree with your sentiment, however I wouldn't use Michael Saylor's quotes as strong ground to stand on, he also said BTC can scale to millions of transactions per second which is impossible.

IMO he comes off a grifter who needed to save his company and kept buying loads of BTC to start the "institutions are buying" FOMO.

> he also said BTC can scale to millions of transactions per second which is impossible

He's probably referring to the lightning network, which is theoretically capable of handling millions or even someday billions of bitcoin transactions per second.

> One of a finite number of digital assets that will ever be created.

That would have been a plausible explanation, if not for the abundance of digital currencies. There are now many more times crypto assets than there are actual currencies in the world, and new ones seem to be created every day. There is absolutely nothing "finite" about crypto anymore.

That objection is addressed, with its own subsection, in the post.

It is absolutely not finite. Coinmarketcap.com lists 7048 cryptocurrencies, with 96 of them having nominal values over $1 billion.

OP mispoke and meant the supply is finite.

It's not finite. The supply of cryptocurrencies is effectively infinite. There's almost no barrier to entry. In the closest historical equivalent, the wildcat banking era, at least you had to have state-chartered bank. [1] But what's it take to launch a cryptocurrency these days? Is it anything beyond a tech guy, a marketing guy, and a a credit card with a little room?

[1] https://en.wikipedia.org/wiki/Wildcat_banking

You don't really need a room to do it...

Sorry, I mean a little room on the credit card for the initial spending.

The supply in different cryptos is infinite, but the supply of any particular crypto may or may not be infinite. In the case of bitcoin which was the topic of discussion, it's finite. To say it's not is plainly false. Your (clear) bias is blinding you.

Bitcoin is no longer the only cryptocurrency, and is competing for investor money with all the rest. If all of those were basically unused, I'd say you had a point. But since that's not the case, I stand by my view that "people that trade their fiat currency", as mentioned in the post I'm replying to, are a crucial part of the analysis.

What percentage of the current value of Bitcoin do you believe is driven by demand from people with that outlook?

Who cares? Whenever this bull run stalls and crashes, people who don't think this way will sell out thinking the party is over.

Meanwhile, the total number of people who view bitcoin as a permanent allocation in their asset portfolio will have increased drastically, and they'll keep on stacking sats.

Each boom bust cycle operates this way. A minority of new investors become true believers, and the rest of the chaff wash away in the crash.

0%* of Bitcoin holders are in it for the currency aspects.

* Within margin of error

Quantum computing is going to bring this entire house down.

Money without an army is just paper. Or, in this case, imaginary numbers.

There will be no one to cry to when the machines start cracking all the hashes and wipe away the entire ecosystem.

I'd wager the NSA already has this capability, but they won't blow it on something so stupid.

They'll make new quantum proof encryption - isn't this an active area of cryptography research?

JQI at UMD, NIST's Quantum Computing Group - these teams must be doing something with all the grant money

QRL is a thing https://www.theqrl.org

It uses XMSS, and does it fairly well.

I'm talking about real technology. I think I owned like 100K of these at some point lmao

Ethereum already has quantum resistant algorithms ready to go for each part of the system but they perform worse so it doesn't make sense to start using them until quantum computers are more real. There is no long term threat from quantum computing to Ethereum or other systems like it.

I see your point.

But if quantum computers start breaking encryption, crypto currency is probably pretty low on the list of worries…

Quantum proof encryption already exists.

sigh...you haven't even begun to understand how bitcoin actually works.

https://en.bitcoin.it/wiki/Quantum_computing_and_Bitcoin#Mit...

> It’s viewing Bitcoin through a lens of a traditional Ponzi scheme...

And? Should we should look at it through a lens of a non-traditional Ponzi scheme? Ponzi 2.0 is better than Ponzi 1.0?

> What if people are seeing discussion of minting a trillion dollar coin, trillions in QE, 25% of all dollars created in the last 12 months…and concluding that fiat currency is in an endgame and they are permanently trading what fiat they have now for one of a finite number of digital assets that will ever be created.

If the Debt Bubble is nearing its end and fiat currency is in grave jeopardy, what is the mechanism by which the people holding these "digital assets" will save themselves from the economic hell that awaits the world?

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