Comment by Ologn | Hacker News Reader

Comment by Ologn | Hacker News Reader

Ah Silicon Valley's big ponzi scheme. A year ago today a Bitcoin was worth $820, right now one is worth $360. How long until it hits its inevitable price, $0.00, considering it has no value whatsoever? Who knows? As Keynes said, markets can remain irrational longer than you can remain solvent. Marc Andreessen talks about how older people have dot-bomb hangover fears, but nothing screams bubble to me than this modern scam known as Bitcoin. It has all the attributes of a scam as well - the anonymous architect, all the big players running off with the money or getting raided by the police. Yet the big names in the Valley keep touting this worthless ripoff. Plenty of HN'ers are involved in the scam, so this post is sure to get downvoted to oblivion by them.

What we have here on HN is me, who over a year ago when Bitcoin was worth $460 said it was worthless ( https://news.ycombinator.com/item?id=6753545 ), and we also have the scam artists who were hyping it then, are hyping it now etc. The potential Bitcoin investor suckers who listened to me would have saved themselves from losing the $100+ dollars on each Bitcoin they bought since the current price is below $360. I've been prescient, they've been wrong, but they're still running their scam and will downvote me to oblivion - they still have some suckers to fleece. The real thing to note is how hard the big names in the Valley are pushing these hashes that they know to be worthless, which has been surrounded by an architect who hid his identity, and multiple ripoffs and police raids. Supposedly the Valley is about people who have insights that others don't. In this case though, the big names and big money have one insight, this is a scam, and try to hush those pointing that out, as there are still suckers left to fleece.

way to cherry pick your dates, thre were people calling it a scam when I got in at $5, there were people calling it a scam when I encouraged family to get it at around $10. there were people calling it a scam all the way up to the $260 peak and lost more when it dropped from there. People have called it a scam plenty of times and none of them have been right. the value has peaked and troughed and plenty of people have been fortunate to make a lot of money with it and you know what, it is not going away.

Your hypothetical day of a bitcoin worth $0.00 will come when something better replaces bitcoin, not because bitcoin failed against fiat/national currencies, but because it was superseded by a superior product.

Keep in mind that Bitcoin replaces itself all the time, and will continue to do so. It's an open source project that continues to be developed as we speak.

I know i just di not have the time to go into it.

> The potential Bitcoin investor suckers who listened to me would have saved themselves from losing the $100+ dollars on each Bitcoin they bought since the current price is below $360.

What would you have said in 2011?

Gold has no value whatsoever as well. Yet it's considered a commodity. Even money has no value whatsoever. Money is a promise from a government to grant some goods or services. If the government gives up, or its companies close down or leave, or decides to devalue its currency, you lose money regardless.

Commodities are assigned the value humans agree on, according to market. Bitcoin is no different. It's a digital commodity, but a commodity nevertheless. It will have its bubbles, but they are fueled by human greed, not the nature of bitcoin per se.

Gold has no value whatsoever as well.

You mean other than in jewelry and electronics?

Even money has no value whatsoever. Money is a promise from a government to grant some goods or services.

I think you are using a strange definition of "no value".

> You mean other than in jewelry and electronics?

What % of Golds value do you think is based on usage in jewelry and electronics? Hint, not much.

66% isn't a lot?

"In 2010, jewelry accounted for approximately 54% percent of gold demand, which totaled 3,812 tonnes, according to the World Gold Council and The London Bullion Market Association. ... Another 12% of demand is attributed to medical and industrial uses for gold, where it is used in the manufacturing of medical devices like stents and precision electronics like GPS units."

http://www.investopedia.com/financial-edge/0311/what-drives-...

He never said what amount of gold goes into jewelry, which your source gives (the demand). His point was not the demand, but the value of gold associated with its use in jewelry or electronics (which I would argue is also high, but that's just my opinion).

If you think about what they're implying instead of just being snarky, they're really saying that bitcoin/gold/other monetary commodities have no intrinsic value beyond their a) suitability as exchange technologies and b) broad recognition as desirable.

Another way of thinking this one through would be to say, okay, gold may be desired for jewelery and electronics, but so are many other metals, so why did gold become a principal money and other metals didn't? The answer doesn't have anything to do with gold's desirability for jewelery/electronics - it has to do with gold's: good mix of abundance and scarcity, impossibility to forge, durability, friability, etc.

It's a rhetorical exercise necessary to make people understand that while Bitcoin may just be a bunch of numbers someone invented, the combined decision of humans to value it gives it its real value (facilitated of course by its suitability as an exchange technology.)

No, he's right: Money is a fiat currency. As long as the US government backs paper money, it has perceived value. The moment the Fed stops backing it, it loses its perceived value and becomes only as valuable as its physical contents, i.e. paper and ink, so you could burn it or wipe your ass with it, but you can't eat it.

Let the apocalypse happen and see how valuable that paper money is, along with that bitcoin, and that bank account, and that credit card. That's when real, valuable things like salt, non-perishable food, fuel, certain metals, tools, and so on will have barter value. But the idea of a currency will (for a time at least) go away under those circumstances. Modern wealth is really a very fragile construction when you think about it; it's all just perceived value in the end.

Money represents work. When you do work, you get money. When you want work done, you give money to someone else. That's fundamentally what our economy runs on. You could argue that some people take advantage of this on the top, but the vast majority of any economy is based on people doing work. The dollar is backed by the US government. When you go to a store and say you want to buy something, they have to take your money. In fact it's illegal for someone to not accept legal tender. That is the value of the dollar.

So now you say, but the US government isn't anyone special. Countries come and go in dominance, why is the dollar worth more than any other currency? Because their really is no other country with which everyone else wants to trade with on a massive scale. Americans are willing to give more money for work than any other country, so it is in other countries best interest to take dollars, which in turn increases the demand for said dollar.

Wouldn't it be useful for a digital currency like bitcoin to replace all of that? Not really, unless it has actual ties with actual money. A digital currency's only real value is being able to send and receive money, fast. But once it gets wherever, it still has to be converted back to the local currency. Gold and other commodities have physical values with physical properties than can physically do things. That in itself makes them have a base value, when they go up or down, that's just the market being the market.

You could start talking about how more companies (like Microsoft) are accepting bitcoin, so potentially you'll never have to convert it back to local currency but that conversation leads to the dollar being essentially worthless and the US government could collapse any minute and you should save all your money in bitcoin. Which sounds stupid and goes into pump-and-dump territory.

>Money represents work. When you do work, you get money.

Yet the people with the most money get that way by minimizing the amount of work they have to do?

Money _should_ represent the _value_ of decision-making exchanges. It represents whatever it takes to overcome barriers to cooperation and communication. You might call that 'work', but that's a very narrow view of the matter. Anytime someone overcomes a barrier to communication or cooperation, they are producing value.

_Most_ of this value is not captured by any monetary system, and in fact, most of our monetary systems capture biased and unrepresentative portions of that value, and thus can be manipulated far easier than desired.

It has nothing to do with 'work.' Manipulating measures of value doesn't overcome barriers, it reinforces them. Creating unnecessary obstacles for people is not valuable, even if people are payed to do it, despite the fact that it is work.

> Money represents work.

Government money represents debt, not work, that's why it's called IOUs. And I wouldn't say actual money (eg: gold, Bitcoin) represents something. It's just a resource useful for trading and saving, because it has certain properties like scarcity, fungibility, etc. 1 Bitcoin doesn't represent $354 US dollars of work in 2014. 1 Bitcoin represents 1 Bitcoin, if anything.

> When you do work, you get money.

So what happens when you don't work and you get money? Fatal error? What does the new money printed by the government every year represent?

> That's fundamentally what our economy runs on.

No, that's just what the owners of the world taught you through the education system they regulate.

> Money represents work. When you do work, you get money.

If that were 100% true, I could make more money digging ditches than your average mid-level manager. But it's not that simple.

> In fact it's illegal for someone to not accept legal tender.

Bullshit. From the Federal Reserve's website[1] (emphasis mine):

"Section 31 U.S.C. 5103, entitled "Legal tender," states: "United States coins and currency [including Federal reserve notes and circulating notes of Federal reserve banks and national banks] are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise."

[1] http://www.federalreserve.gov/faqs/currency_12772.htm

I think that the only restriction is relative to taxes. You can only pay taxes in the legal tender, and since you have to pay taxes in any transaction even if the transaction is made in a different form of payment, it is convenient to have the transaction itself to happen in the local currency.

Taxes are an issue, but the other big things are:

(1) A tender of payment of a debt in legal tender currency, with some caveats and provisos, fulfills the obligation under the debt whether or not the person to whom the debt is owned wants to accept the currency, which has an effect if that person later tries to enforce the debt through the courts.

(2) If a US court awards damages, even if the injury consisted of deprivation of some other currency than the legal tender currency, it is going to award them in dollars. If the currency you actually hold is something else, you'll have to trade it for dollars to satisfy the debt thus created, unless the other party is willing to enter into an agreement to accept the other currency as a substitute.

> In fact it's illegal for someone to not accept legal tender.

No, its not illegal not to accept it (that is, the law does not punish failure to accept a tender of payment made in the currency designated as legal tender), however, the tender of payment in such currency may discharge the debt whether or not it is accepted, which would leave the party failing to accept the payment without any recourse through the legal system to collect the debt in the form it would prefer.

You don't need the apocalypse. You just need a monetary change, such as the one Europe did. By moving to the euro, all national currencies were becoming effectively worthless, redeemable in euros at a fixed exchange rate. Now, they are worthless.

> You mean other than in jewelry and electronics?

Again, it's perceived and agreed value. Gold is valuable because we decided it is. Jewels are as valuable as the fashion agrees them to be. In fact, you can find jewels worth thousands of dollars that are made of steel. Their intrinsic value for the material is a few cents.

> Even money has no value whatsoever. Money is a promise from a government to grant some goods or services. I think you are using a strange definition of "no value".

What I mean is that the value is just what the system agrees on. If the system decides that the US are insolvent, or can't back their currency (which is a _promise_ to deliver) its value goes down, potentially to the value of the paper it's printed on.

In the end, the value of something depends on what people agree it's backing in terms of goods and services. It's an agreement, a child's game among adults, and can change in a whim.

I downvoted - not because it's against Bitcoin, but because it's written like an absurd breathless hit piece. Every other word is scam, scheme, bubble, hype, fleece, ripoff, raid, etc, yet there are no meaningful examples of how it is any of those things. Let's at least try to make insightful points on here, and leave the hits and puffs for the mainstream media.

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