
Everyone's Getting Hilariously Rich and You're Not - imjk
https://www.nytimes.com/2018/01/13/style/bitcoin-millionaires.html?mtrref=www.google.com&gwh=7265BD557A47396F312075DDFEA80938&gwt=pay
======
pavlov
A housekeeper who invested $12k in cryptocurrencies in the past few weeks is
quoted as saying:

 _“And maybe I’m going to lose it,” she said. “Maybe I’m going to keep
cleaning houses. But something is telling me I can trust this generation. My
instinct is telling me this is the future.”_

This time is different?

Personally I don't feel any regret in ignoring the whole thing, even though
I've known about Bitcoin since pretty much day one (thanks to HN of course). I
look at the people who are crypto enthusiasts and it's obvious that I would
have to be a completely different kind of person to be in the game.

In that sense it's no different from Wall Street traders, YouTube
personalities, real estate agents or multi-level marketers -- I don't envy
their financial successes either because I wouldn't want their lives (and even
if I wanted it, I would most likely fail hard at the job because of
personality mismatch).

~~~
Aeolun
I still haven't found a way to buy crypto, and at this point am unlikely to
ever do so. I suspect the money is in the hands of people that were already
lucky somewhere in the first world and fairly rich before starting out.

As the article says, someone apparently 'invested' the meager sum of $400000
and is now super rich.

But people can only stay this rich as long as none of the initial investors
(e.g. the ones with a disproportional amounts of tokens) hold their stuff.

It still feels like a multilevel marketing scheme to me. It'll only stay great
as long as people keep buying more and for higher prices.

~~~
ellius
People from literally every social circle I have—friends, coworkers,
family—are talking about crypto currency. Not one of them has made a
compelling case as to its value. I tend to like the Matt Levine take: maybe
cryptocurrency really IS groundbreaking technology and will change the world,
and yet in our lifetimes maybe most of the market will be bogus pyramid
schemes. (He compares it to the early days of stock trading; the idea of stock
and limited liability really did change the world, but most of the early days
were centered around scams.) But yeah, when everybody and their brother is
talking about it, I have a hard time believing there are a lot of good
investment opportunities left. When the shoeshine boy is giving you stock
tips...

~~~
derekp7
I've often heard that the US Dollar gets its value in part because it is the
only thing you can use to pay taxes. And even if only a small percentage of US
Dollars is used to pay taxes, that is enough to drive the rest of the value.

When someone gets hit with a crypto virus, if they don't have backups then the
only way of getting their data back is to pay the ransom using cryptocurrency.
And participation in black markets is based on the same. So even if that is
overall only a small percentage of the use of cryptocurrency, it should be
enough to drive at least part of its ongoing value.

So my question is, does this idea (or either idea) have any merit?

~~~
ellius
It does. Another alternative is that nation states “impart” some of their fiat
value because they will potentially subsidize some speculative activity if the
whole thing implodes via consumer protections or whatever. The thing that is
interesting about Bitcoin is that it holds up a mirror to the largely illusory
nature of “value” and money, which are sort of a shared mass illusion anyway.
But it’s certainly different than the dollar insofar as fiat currencies are
backed up by all of the powers of a state: as you mentioned the power to
compel tax payments, and also the power to allow transactions within their
borders etc. Fiat money in some sense is an embodiment of the power of the
entity that issues it. Bitcoin has no power backing it, so its value, if it
has any, has to come from something else.

------
Giroflex
This articule just seems to revolve around some pretty skewed data.

> Recently the founder of something called Ripple briefly became richer than
> Mark Zuckerberg.

Became paper richer, which is really quite different. The "market cap"
calculations just don't represent reality; he couldn't realistically dump all
of his Ripple and expect price to not crash (not even taking into account the
huge natural correction in price after the peak of the bull run)

> The cryptocurrency community is centered around a tightknit group of friends

This statement implies that there are few people in the community at all,
which is just not true.

> some estimate that 95 percent of the wealth is held by 4 percent of the
> owners.

This links to an article that says that 95% of the wealth is held by 4% of the
wallets, which makes an absolutely huge difference. This is because:

\- Some of these wallets are held by exchanges, who hold all of their users'
crypto

\- Some of these wallets are lost early adopter wallets, from when a large
number wasn't something impressive (e.g. Satoshi's lost Bitcoin, accounting
for 4 million (!) Bitcoin)

\- Many of the wallets created are never used or have already been used just
for moving funds and thus have 0 balance (in fact, the article's graph states
that 41.93% of wallets hold just 0.01% of bitcoin)

~~~
panarky
_> Became paper richer, which is really quite different_

I hear this all the time but I don't understand it.

The Ripple guy's wealth isn't made of paper, it's an electronic ledger.

And if he trades his Ripples for dollars or euros, that wealth just moves to a
bank's electronic ledger.

If he uses his dollars or euros to buy shares in Google or government bonds,
the wealth moves to a broker's electronic ledger.

Then he sells his securities to buy real estate, and now his wealth is in an
electronic ledger of property titles.

So in what way is cryptocurrency wealth "only paper wealth" but other wealth
is somehow more substantial than "paper"?

~~~
jstandard
Dollars, Euros, and stocks are all forms of highly liquid wealth which are
generally trusted and can easily be exchanged for goods and services. They've
all been around for many years and are backed by trusted entities. In
comparison to Ripple they're much less volatile.

Ripple isn't any of that yet and the "wealth" can evaporate much more quickly
if Ripple fails to gain those qualities.

~~~
panarky
_> They've all been around for many years and are backed by trusted entities_

That's so obvious it probably doesn't need to be stated.

The GP's argument is that cryptocurrency wealth is somehow lesser because it's
"paper" wealth.

You didn't really answer how cryptocurrency is any more or less "paper-like"
than other intangible assets.

~~~
jstandard
Everything I mentioned in my comment is why it's less than other intangible
assets. Not all intangible assets should be valued equally at their same level
of converted fiat. The riskiness of an asset in particular is an important
factor.

$100 of XRP is worth less to me than $100 of Google stock because it's 1) less
liquid, particularly in times of crisis. 2) More likely to be worth $0.

~~~
panarky
What you're saying is so obviously true that it's virtually meaningless.

Of course XRP is less liquid than Google common stock and more likely to go to
zero. XRP is also more likely than Google stock to increase 10x.

It's so obvious it should go without saying that some assets are more risky
than others. Nobody would disagree.

If the price of your Google common stock doubles, is that not a "paper gain"?
And if the price of your XRP is cut in half, is that not a "paper loss"?

All gains and losses in typical assets are "paper", so this seems to be a
distinction without a difference.

~~~
jstandard
It sounds like you're talking about a more binary approach to categorizing
wealth. It either "is paper" or "is realized". To me, not all paper is created
equal.

I see assets representing wealth as a spectrum. There are shades of paper
wealth that make it closer to realized wealth than others. Google stock
doubling is a paper gain that is more substantial than a paper gain in XRP
because Google stock has larger current utility than XRP.

Everyone has different ways of calculating utility which impact how
substantial they feel a gain in a certain asset is when compared to another.

That's my theory, how do you see things?

------
314
Kind of weird to watch.

It’s almost the definition of swimming naked: a tightly knit group who have no
source of income, relying on the promise of their illiqud assets, but burning
their small amount of liquid wealth on lifestyle.

Wonder why people say it will end badly?

~~~
jeandejean
This is such a good description of what's happening!

------
comboy
> founder of something called Ripple briefly became richer than Mark
> Zuckerberg

Want to try this at home? Create your own crypto. Sell one unit to your friend
for $1. Create additional 1T units under your control. And voila! Same thing.

~~~
keypress
I have some shares, and every once in a while, the company appears to generate
new shares out of thin air. Which to me, implies my share value will fall.

Admittedly I don't understand what's going on.
[http://www.telegraph.co.uk/investing/shares/santander-
rights...](http://www.telegraph.co.uk/investing/shares/santander-rights-issue-
everything-shareholders-need-know/)

------
jeandejean
It's amazing how people pretend to genuinely believe cryptocoins would change
the world, but immediately describe so proudly their lavish lifestyle to prove
their point. What exactly did they change? Attract and take advantage of the
world greed doesn't look new to me...

~~~
comboy
That's what sells in articles. You aren't going to get an interesting article
describing some guy who invested early in crypto but still spends days coding
and trying improve the ecosystem or just build something, even unrelated to
crypto. Not possible to get in touch with such people to write an article, not
possible to find them.

That's where the bias is coming from that is shaping how many people perceive
Bitcoin and crypto community in general. Those who want attention are more
likely to get it.

Even the Pineapple Fund, briefly mentioned here, being as awesome as it is,
doesn't get much recognition. Because it's not an interesting story. Specific
people make interesting stories, preferably with pictures. And saying some
controversial things.

But that's just how our brains work. Even though it's HN, we are both in this
thread, while there are many more tech oriented Bitcoin articles in new that
will never hit the frontpage.

------
dictum
> Recently the founder of something called Ripple briefly became richer than
> Mark Zuckerberg

Excuse me as I just came back from 2005, but nothing says "everyone's getting
hilariously rich and you're not" like the point of comparison being Mark
Zuckerberg.

------
redthrowaway
This is the dumbest bubble.

I put in about $1000 and took out $1500. It's gambling, pure and simple. It's
shits and giggles; I had my laughs and now I'm out.

Seriously though, the dumbest bubble. There's no value here. There's just
greater fool speculation.

~~~
2_listerine_pls
Same as stocks, same as gold, etc... the only difference is that there isn't
an intrinsic base value.

~~~
ant6n
That's a pretty big 'not the same'.

------
amriksohata
Most aren't getting super rich, they're making a decent raise but you only get
rich if you were very early on in the game

~~~
majani
You could still make 19x if you invested in January 2017 and sold in December

~~~
dragandj
That would be two big IF's.

------
mratzloff
Another bubble that passed me by, it seems. If I were one of these paper
millionaires, I'd be investing in property and precious metals—there are a few
companies that accept BTC for those.

------
chillydawg
I wonder when the kidnappings will start? Pulling finger nails for wallet keys
is a pretty lucrative business, if you're already in that world.

------
OscarTheGrinch
Currently each digital currency is a wild ecosystem, a watering-hole that
entices many herbivore investors and attract all manner of predators: hackers,
scammers and rent seekers at the periphery.

------
infinity0
Pretty much every sentence in here is jokes, well trolled NYT:

"Over long hours in [..] Settlers of Catan game nights, they talk about how
cryptocurrency will [..] [change] the world order.

"[..] There are only a few winners here, and [..] [they] also remember who
laughed at them and when. [..] his Facebook post from 2014 telling everyone to
buy ether. [..] “It got one like.”

"[..] He said his closest friends are moving to Puerto Rico to get around
paying taxes. [..] “They’re going to build a modern-day Atlantis out there,”
he said. “But for me, it’s too early in my career to check out.”

"[..] “I was given this necklace and was told my net worth would go up, and
it’s gone up six x since then,” he said.

"[..] Nearby is a building residents call the Crypto Crackhouse. [..] Long
hallways called Bitcoin Boulevard and Ethereum Alley lead to communal
bathrooms.

"[..] “My neurons are fried from all the volatility,” [..] "I’m numb to it.
I’ll lose a million dollars in a day and I’m like, O.K.”

"[..] “The worse regular civilization does and the less you trust, the better
crypto does,” Mr. Hummer said. "It’s almost like the ultimate short trade.”

"[..] There’s a common paranoia among the crypto-wealthy that they’ll be
targeted [..] so many are obsessively secretive. [..] This also allows people
to pretend to be wealthier than they are, of course.

"[..] They talk about buying Lamborghinis, the single acceptable way to spend
money in the Ethereum cryptocurrency community.

"[..] “When I meet people in the normal world now, I get bored,” Mr. Hummer
said. “It’s just a different level of consciousness.”

"[..] “Sometimes I think about what would happen to the future if a bomb went
off at one of our meetings,” [..] “[that] would set back civilization for
years.”

"[..] James Fickel, 26, lives in a high-rise with a Russian blue cat called
Mr. Bigglesworth. Mr. Fickel is known in the community for “going full YOLO”
and investing $400,000 when Ethereum was at 80 cents. Now, with a fortune he
says is in the hundreds of millions [..]

"[..] Today, Mr. Fickel is outlining the endgame for cryptocurrency true
believers. [\n] “It’s the entire world reorganizing itself,” Mr. Fickel said.
“We could get rid of our armies because for the first time you’ll have people
saying, ‘I want to vote for a global order.’ [..]" [..] Mr. Hummer is
skeptical. [\n] “All I know is the price of ether is going to go up,” Mr.
Hummer said.

"[..] Nearby was Chante Eliaszadeh, 22, a law student [..] who started the
Berkeley Law Blockchain group. [\n] “Obviously the bubble’s going to burst and
everyone’s going to need a lawyer,” she said.

"[..] As the holiday party filled up, a cryptocurrency rapper called CoinDaddy
[..] was getting ready to perform. [\n] Formerly a commercial real estate
agent, Mr. Bahmanyar works full time at CoinDaddy after becoming a self-
described crypto-millionaire (“you think I would dress up like this if I
wasn’t?”). “Right now all our entertainers come from outside crypto culture —
not inside crypto, and we’ve got to change that,” he said.

^ LOL probably 2 best quotes of the article

\----

Serious points:

"[..] The goal may be decentralization, but the money is extremely
concentrated. [..] 95 percent of the wealth is held by 4 percent of the
owners.

"[..] Pieter Wuille, 33, a Bitcoin core developer, kept his backpack on as he
wandered the party. [..] Mr. Wuille said. "This infusion of interest is
bringing the wrong kind of attention. Some people believe Bitcoin can’t fail
or this technology solves many more problems than it does. [..]”

"[..] Maria Lomeli, 56 [..] [a] housekeeper from Pacifica, Calif., she said
she had invested $12,000 in cryptocurrencies over the last few weeks after
reading about it in the news. [..] She invested $1,000. It went up. So she put
in $10,000 more, she said, along with $1,000 in a currency called Litecoin.
Both her children have discouraged this. [..] “And maybe I’m going to lose
it,” [..] "[..] But something is telling me I can trust this generation. [..]”
She had to leave the party early because parking downtown is expensive, she
said. She zipped up her jacket and left on her own."

~~~
dictum
I kinda hope it's the "harsh realm" interview
([https://en.m.wikipedia.org/wiki/Grunge_speak](https://en.m.wikipedia.org/wiki/Grunge_speak))
of this generation.

------
ohiovr
Money money money, pretty funny, in the bitcoin world.

------
hal9000xp
Many people, even within crypto-community, failed to recognize that
_speculation is one of fundamental factors_ which bring _real value_ to
cryptocurrencies.

To understand that you have to think about a concept called _self-fulfilling
prophesy_ :

[https://en.wikipedia.org/wiki/Self-
fulfilling_prophecy](https://en.wikipedia.org/wiki/Self-fulfilling_prophecy)

Bitcoin started as a fixed-supply currency. Fixed-supply attracted early
speculators who are willing to put their fiat into gamble about future utility
of Bitcoin.

As speculators started to trade, guys who sell drugs over internet got idea
that they can use these new unknown strange tokens for transactions _because
they could dump these weird tokens on speculators in exchange of fiats_.

So gamble about unknown future became reality which attracted even more
speculators
([https://www.wired.com/2011/11/mf_bitcoin/](https://www.wired.com/2011/11/mf_bitcoin/)).

This in turn attracted wealthy people in countries like China because they
wanted to move money out of their country.

Do you see here _a loop_?

If Bitcoin wouldn't have huge financial incentive for early adopters, then
nobody would give a shit about these weird p2p internet tokens!

So key factors of early cryptocurrency value: speculation, war on drugs,
excessive cross-border transfer regulation.

Since most people are politically left-wing, they can't get rid of negative
bias towards words like speculation and bubble.

There are good bubbles and bad bubbles. Every bubble eventually burst but it
doesn't automaticaly make them bad.

Dot-com bubble was good as it was wealth transfer towards programmers with
lack of social skills. Some one them created something cool and interesting,
some of them are don't.

2005-2008 housing bubble was bad as it was wealth transfer towards snobbish
conservative bankers who live in their exclusive Wall-Street club protected
from competitors by excessive regulation ironically supported by left-wing
voters.

Cryptocurrency bubble is very good. It's not just wealth transfer towards
programmers. It's wealth transfer towards _open-source protocol creators_. Of
course, there will be clowns in the space but come on, it's life, nothing is
perfect. It's way better bubble since in the center of this bubble some random
nerds, not snobby privileged Harvard-type Lehman Brothers top managers.

~~~
thebokehwokeh2
> It's way better bubble since in the center of this bubble some random nerds,
> not snobby privileged Harvard-type Lehman Brothers top managers.

You're being incredibly naive. Programmers are not the ones moving the needle
on this bubble. They may have been the early adaptors, but it's the people
with incredibly large sums of money who are making out like bandits.

~~~
hal9000xp
You are either naive or troll or just don't understand crypto-market.

The whole beauty of crypto-market is that there is very low barrier of entry
and at the same time very, very, very huge possible upside. This make possible
for very small players to become bigger, much bigger.

On the other hand, traditional stock market is very efficient so you may hope
for 20% per year at best. Therefore, 20% from approximately zero (say 1000
USD) is still zero. In this case, only wealthy people make money there, others
suck collecting pennies.

I'm on this market, I'm programmer and I'm much more successful on this market
than I could never dream of on any other market.

So if you didn't make any money on crypto-market, please, don't waste my time
arguing with me.

~~~
kelnos
> _Therefore, 20% from approximately zero (say 1000 USD) is still zero._

Only if you consider the market as a whole, but how is that useful? I'm
actually pretty thrilled to be able to collect $200/yr based on doing nothing
but putting up $1000 to start. I'm even more happy when I look at the
volatility of cryptocurrencies, and also the fact that crypto isn't actually
backing much in the way of economic activity; it's just doing some minor-
league capital reallocation and burning several countries' worth of
electricity.

Not saying I didn't mine a bit back in 2011 or so (and subsequently lost the
wallet, doh) or that I'm not interested at all, but calling crypto an
"investment" is laughable at best. It's a pure speculative play, only
marginally better than a lottery.

------
noemit
I think this keeps getting reposted. Anyway, It's worth the read just for Coin
Daddy.

~~~
Fnoord
Dupe indeed [1]

[1]
[https://hn.algolia.com/?query=Everyone%27s%20Getting%20Hilar...](https://hn.algolia.com/?query=Everyone%27s%20Getting%20Hilariously%20Rich%20and%20You%27re%20Not&sort=byPopularity&prefix&page=0&dateRange=all&type=story)

