Bitcoin is probably the first Ponzi scheme where everyone in it knows it is a Ponzi scheme. So I agree with your take here.
Bitcoin is better at laundering money than many fiat currencies but otherwise it’s only wide scale utility is a speculative investment asset that only increases in value if more people create demand for its limited supply.
Also, every ponzi scheme gives amazing returns, before it inevitably collapses. For example Madoff was able to give decent returns to his investors for 17 years! 'Number go up' is not a refutation of a ponzi scheme.
Guess which governments have the most of both.
This comment is a great example of how little bitcoin enthusiasts tend to understand about investing. One of this things is very much not like the others.
"Fiat currency" is virtually never used as an investment asset. Even in the FOREX market you purchases pairs of currency rather than just a big pile of dollars. In your 401k when you want to go all "cash" you very often end up choosing investment vehicles that track cash.
The entire function of a currency is as a medium of exchange, it only has value in the process of exchanging. It makes no sense, at the individual investor level, to 'hold' dollars.
If you don't understand how a fiat currency differs from gold and fine art then you absolutely should not be "investing" in bitcoin.
I think HN is going to need a good explanation for this. The value is intrinsic, and can go up without any activity happening... I think there are other fools scouring about here in the comments.
I think you need to explain this. In what way does bitcoin have any intrinsic value?
And how can this value go up without activity? A currency with no activity is literally worthless.
More so explain to me how the USD is less of a Ponzi scheme when it is the super wealthy banks/institutions that are getting zero interest loans allowing them to make even more money while at the same time devaluating the currency.
https://www.ceicdata.com/en/switzerland/official-reserve-ass...
I hadn't considered how many reserves have probably shifted to euros since the euro, that's actually a big deal for the US. Anyway...
It’s value is in how robust it’s value it is. It isn’t robust at all and has lost 30% or more of its value since the start of the pandemic if you look at commodities.
I plugged it into Wolfram Alpha and it showed some solutions. Some go up to infinity and some go down to zero. So the first guy was right after all!
USD has inherent value, it's the only currency where you can pay taxes in, and if you want to do business with government or government employees - who are ever only paid in USD - you must accept USD.
Even something like gold with no value production - whose price is quite stable because of that by the way - has value because people want it for jewellery and industry.
“Most” is the key difference: a share of Tesla is fractional ownership in a real business which has proven capable of selling real products which people want. Some fraction of that is definitely speculative but far from all of it, and there's no reason to think that the value would decline to zero under any feasible economic situation.
A Bitcoin, in contrast, has no value other than what you can convince someone else to buy it for. Nobody needs it to conduct business, it's trivial to set up competing blockchains, and the deflationary model is designed to make you profitfrom everyone who starts buying later despite not having created any new value.
I don't know, I pay my taxes in EUR, I live in EU. But I get your point. Moreover, USD is the most dominant coin in the world. Even outside USA, a lot of people depend on it.
1. Immutability
2. Limited supply
3. Censorship-resistance
4. Independence of governments, nations, banks, institutions, corporations
5. Accessibility
You can also pay your taxes in crypto in many countries.
The dollar’s inherent value is very weak and not really tangible.
It’s 2022 and people still don’t get that.
The currency of a nation has inherent monetary value because it is backed by the state; the details of what that means will vary from jurisdiction to jurisdiction, but except in states undergoing massive crises, you can still be sure that if you hold their currency, you have something of value and can transact business.
Bitcoin is backed by nothing but other people holding Bitcoin.
As for the attributes you list:
1. Immutability is a double-edged sword. There are legitimate situations where you want mutability.
2. Artificial scarcity of a digital thing is only beneficial if you are among those holding large amounts of it.
3 & 4 (basically the same). This is both a huge negative for many people, and only true until those institutions' policies, laws, regulations, etc catch up with Bitcoin and either fit it within their existing structures or ban it entirely.
5. It's really not that accessible unless you're already fairly wealthy and digitally savvy.
Independence, you are very much dependent on the internet, miners, etc. Yes, you can use the tool to avoid detection of a nefarious state actor. But you'd be breaking the local law, willingly and knowingly. That's a risk. At one point, police are going to recognize these sweet 'lil Ledger and Trezor hardware wallets. Furthermore, if a large local economy would collapse, like say in my case EUR, it'd take Bitcoin with it. I admit, it makes sense to avoid currency in small economies in crook countries, but you're choosing for your own benefit instead of the state you live in.
Accessibility, since a lot of people use mobile smartphones, they cannot sync the blockchain to it. Many are dependent on third party like exchanges. Hardly independent of corporations.
Immutability, you can lose your private key and be done with it. If I lose my bank card, I can disable it and just get a new one. With NFTs, these depend on a third party resource. Which depends on USD or EUR or whatever in order to be paid. These also depend on authority of whoever made the blockchain or smart contract.
You didn't mention anonymity, because Bitcoin isn't. Yes, it takes effort, but it can be anonymized. The reason it supposedly doesn't happen is 1) if you are investigator and know a vulnerability to do so, you're best to keep it private for reuse 2) you apply parallel construction instead. But specialists who can do this exist. Its just that they're expensive, so they only go after big fish not Pablo who sends some Bitcoin from El Salvador to USA.
> You can also pay your taxes in crypto in many countries.
(It is called cryptocurrency, not crypto, but yes you can recognize cryptocurrency proponents by the way they call their asset.)
No, I cannot, as Bitcoin is not a currency. I have to pay my tax in EUR.
> It’s 2022 and people still don’t get that.
This kind of straw man is useless.
1. Immutability - clearly a negative feature, no way for humans to manage transactions and correct mistakes.
2. Limited supply - very bad for a "currency"
3. No censorship resistance in bitcoin, but ease of tax evasion due to exterritorial nature. IRS may find you easily but can't do anything. On the other hand oppressive regimes can both find you can prosecute you because in that case you are physically in the regime's country.
4. Dependence on a handful of anonymous guys in the non extradition offshore printing tokens to pump price with zero oversite. I pick governments. Also Bitcoins are not really independent from governments for the lawful citizens.
5. Zero accessibility after more than a decade in production.
Here is a very direct question:
How does BTC or any other currency protect itself from a goverment?
Imagine that a very big government decides to mine BTCs, will not they control the BTC if they have enough miners? And when I say a government controls imagine: slowing down mining, making it illegal, or limiting it in general population, forcing people to declare thei cryptocurrencies, putting a cap on how much one person can hold personally and forcing you to keep them in an official wallet ...
So how can a crypto currency be independent from a government. The government makes laws and as a citizen you are forced to follow them. Crypto cannot escape this, no matter the technology as the control is not technological, is legal, political and social. It is a social contract that I agree a technology can make it harder to discover some nasty business a citizen is doing, but that does not mean it cannot be control.
Don't get me started on corporations. Imagine Google or AWS decides to use his computing power to mine BTCs or whatever crypto. They will in fact control de market.
Please hypothetically prove me wrong with arguments.
This all already happened multiple times, but miners are so distributed across the globe that this has nearly no impact.
It’s also pretty hard for a country to spin up this much mining power, because it simply takes a lot of time to manufacture ASICs.
It’s also very expensive. $34B at the very least and rather $100B. https://gobitcoin.io/tools/cost-51-attack/
No country has this much free cash available for shenanigans like this, not even the US.
In assets there is can of course be inherent value (food, a sturdy house, land, etc.).
What value has a premium steak to a vegan?
If your house is on 0.5 acre of land and you add another acre it might great but if you had 500 acres of land and added another one you wound't even notice.
Why people tend to value diamonds more than water which is essential to live? If you receive two copies of the same magazine you like to read does the second copy holds some value to you?
The steak has calories and nutrients, regardless of who holds it (until it goes bad). Those are inherently valuable to any human being.
Your secondary point is about the law of diminishing returns, it’s a non-sequitur.
Water is inherently valuable for obvious reasons. Diamonds have inherent value in their hardness although that has little to do with their market value, that isn’t based on inherent value.
The magazine isn't inherently valuable. The information in it could be if one can decipher it. But additional copies of information don't make new information, so one or a hundred magazines, it makes no difference in inherent value.
"Inherent" implies independent of any individual buyer demanding it. Even if the buyer is federal govt.
Crypto currencies if anything are a bit like distributed pump and dumps, but at that point you're just talking about asset speculation.
Are you saying it’s inherent value comes from it being a protection racket.?