Hacker News new | comments | show | ask | jobs | submit login
[flagged] Everyone's Getting Hilariously Rich and You're Not (nytimes.com)
74 points by imjk 9 months ago | hide | past | web | favorite | 64 comments

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).

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.

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...

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?

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.

I think that people who suggest that are missing the point. Yes, the USD derives some of its usefulness from the fact that you have to pay US taxes in it, but there are other things, like that it's a currency backed by a major world power, and that so many sellers accept it as payment.

But that doesn't mean that there are other reasons a currency is useful. In the end it mainly boils down to network effects: if a lot of people accept a particular currency, then it's useful. There are also other properties that make it useful, like relative stability of value and easy/cost of use (Bitcoin falls down pretty hard on both metrics). Bitcoin perhaps has some other properties (that the USD does not have) that make it attractive, but at present it doesn't appear to be enough to make it a particularly relevant currency when it comes to actual economic activity.

Taxes are important, though: people need to feel like they can reliably, safely, affordably, and stably convert a particular currency into the currency they use to pay taxes. I'm not sure Bitcoin does a great job by that metric either.

Right now the #1 use of cryptocurrency seems to be speculation, and #2 is far, far, far behind on the list.

Not one of them has made a compelling case as to its value.

Say you want to buy something from a Chinese supplier and you are in the Americas. They get the money in minutes and the process of sending them the funds is as easy as sending an email. If crypto was used solely for this purpose it would be incredible value. I know this because when I wire money internationally we are all in suspense for days.

Is there a reason you couldn’t build that without resorting to a cryptocurrency? Couldn’t you build central clearing backed by reserves of fiat currencies? It could be built on a blockchain, but I’m not sure why a cryptocurrency needs to be involved.

The point is to illegally skirt regulations and obfuscate transactions. Many crypto believers are quite forthright about their anarchist bent.

Even a cursory attempt at second-order thinking might be enough to disabuse a reasonably intelligent person of such delusions. There’s also a funny tautology to be had here: when you design something to achieve anarchy... you get anarchy.

But really who gives a shit when you’re swimming in piles of cash? I certainly wouldn’t. And then again, once they reset to equilibrium and emerge from the stupor, they might feel more bad about what they wrought than the money feels good.

It is a different kind of bubble because there is a lot of idealism behind it.

Idealistic bubbles can last many generations. For example, communism in Russia lasted about 70 years and it flipped the social hierarchy upside down.

Also, bubbles have the potential to shape reality and become self-fulfilling prophecies.

To me, cryptocurrencies are the next NASDAQ/NYSE/LSE... In a few decades, nobody will do IPO, everyone will do ICO. It will be much more fair and transparent.

It's all about network effects; will the next generation of talented young people invest in NASDAQ companies or will they invest in blockchain companies?

When I read stories about wealthy cryptocurrency people partying I feel OK with that... Many of them had humble backgrounds and they took a huge risk. They earned it.

In fact, I accept the wealth of the cryptocurrency community as more legitimate than the wealth of the traditional elite.

To me, traditional wealth is almost entirely inherited wealth so it has little merit behind it.

Please. The bitcoin chart going up and to the right is what is driving most of the discourse and demand, not ideology. The "investment thesis" for most people is "it doubled in the last x weeks I need to buy asap." This is not sustainable and demand will shrink once the chart reflects that, resulting in a crash followed by a bear market of investment thesis doubt. Hence, bubble.

Speculation is driving up the price, but it's idealism that prevents it from dropping too much.

For example; I bought about USD $1000 of cryptocurrencies a few months ago, then it grew to $15K so then I sold $1000 worth to get my principal back. Now I feel like I have nothing to lose. My portfolio says that I have $14K of cryptocurrencies; that represents a lot of money for me and yet when it drops by $2K in one day, I don't feel anything and I have no plans to sell.

I don't care much about what happens to it in fact. I wouldn't mind if it dropped by 90%; then I would buy more. Cryptocurrencies will always exist from this point forwards so they will always have value and it'll always be proportional to user attention. User attention is fickle/volatile but when you have it, it's valuable.

It's like religion; religious organizations offer no intrinsic economic value and yet they make a lot of money and their assets are worth billions.

> I don't envy their financial successes either because I wouldn't want their lives

This seems like sour grapes. Investing does not necessarily mean adopting a lifestyle. You can make small, manageable investments without it taking over your life. You don't have to invest every single dollar of your savings.

It's easy to project sour grapes on folks, but I can attest that getting rich off speculative investments just plainly doesn't interest me. I just plainly don't want "money for nothing" which I consider the lottery and crypto to be.

But that said I don't judge anyone for making money off crypto. If that floats your boat then more power to you.

Is it the getting rich off of speculative investments part that doesn't interest you, or is it spending time thinking/talking about and actively investing in crypto on a recurring basis the part that doesn't interest you? To me, marking money off speculative investments is a good thing, and spending a little bit of time thinking about it is fine too. Lots of people act in that manner without it becoming a part of their life. This isn't a binary choice.

Not the parent poster, but the way I look at it is this:

Making money off speculation is a net negative for society as a whole. Very little has changed about Bitcoin except that people will pay more to buy some of it now than they would 5 years ago. There's not any fundamental reason for this; Bitcoin itself isn't even loosely related with any kind of commodity or anything "real" that could drive its growth. It's just people hoping that there will be a "greater fool" in the future that will pay more of it, and that there will continue to be greater fools for as long as they decide to stay in the game. More charitably put: it's people who really believe Bitcoin will change the world[0] of finance someday, and want to make sure they have a stake.

I'm not entirely opposed to making money via those means, but if I were to do so, it would be at someone else's expense. At least if I invest in, say, an index fund, that money goes toward actual economic activity: building things, selling things, etc. (no, that money doesn't go directly toward that, but after several convolutions, that's what it's supporting).

When I think of cryptocurrency specifically, I also think of several countries' worth of electricity being burned in support of the various currency networks, and I get a very sour taste in my mouth.

So I think it's hard to say that I'm for or against making money from speculative activity; it depends on the particular speculative play and how much I can stomach whatever external harm or negatives that speculation causes[1].

[0] I do believe blockchain tech (in general; not Bitcoin specifically) does have a lot of potential, but I don't think any of the current cryptocurrencies are going to be around for the long term. If the blockchain does change the world in some way, it'll be a new application of it that we probably haven't seen yet.

[1] I just want to be clear that I'm not trying to take a holier-than-thou attitude here... I'm likely comfortable with some negative externalities, just not all, I guess.

I think the reason that you believe that is because of the "loud" ones who have made their crypto money are almost omnipresent. I missed the boat, but I know of quite a few people who are crypto-rich yet do not bring it up all the time and live the same life they did before.

> I missed the boat

Why do you think you missed the boat? Yes, the 1st boat maybe, but I think there is still time and room for the rest of us who haven't invested. Only we can't expect the 10000% gains in 1 months like the early adopters and risk takers did.

I say that because mainstream brokerages are slowly getting into this space. Goldman Sachs said it will open a Crypto Trading desk this summer. Bloomberg has already added Bitcoin, Etherium and Ripple to its Quotes Terminal.

That's more of a reflection of the opportunities for Goldman and co to make money, rather than a reflection of the opportunity for you, me and GP to make money.

Look at the trading volumes and who is doing the trading; these prices are not the same as stockmarket prices.

> it's obvious that I would have to be a completely different kind of person to be in the game.

Many people, including, uhh, some guy I know, made a pretty penny just because their leftover $100 for buying weed off the dark market is worth so much now.

> Personally I don't feel any regret in ignoring the whole thing

Too bad, because thanks to crypto I learned a lot about Dollars and Euros, what those numbers on the bank really mean, etc.

Bitcoin made it clear to me that you are always in some kind of game. Before bitcoin I thought I own those numbers on the bank. I also thought those numbers are backed by real value. How very wrong was I.

At this point, you can still ignore it I guess, but assume the following (possibly crazy) scenario: you go to a regular shop down your street, and that shop keeper says "If you pay in Bitcoin, you will get 5% off". At that point, will you still ignore it? And if so, how safe are those numbers on your bank account?

Getting involved with cryptocurrency is by no means a prerequisite for learning those things. A fairly basic understanding of world financial markets will get you that.

> you go to a regular shop down your street, and that shop keeper says "If you pay in Bitcoin, you will get 5% off". At that point, will you still ignore it?

I'm not the parent poster, but nowhere did he say he's going to ignore it forever, just that, for now, his lack of interest hasn't been a problem for him. There's nothing wrong with ignoring something until it becomes relevant and useful to you, and things often become relevant to different people at different times.

In your hypothetical scenario, I, too, would probably start taking an interest in Bitcoin if a decent number of shops I frequent started offering discounts for paying in BTC. I just don't see that happening, and even if I did, I wouldn't expect it for quite a long time. BTC is way too unstable a currency for most vendors to accept it, let alone really try to encourage people to use it by offering deals.

> And if so, how safe are those numbers on your bank account?

Probably pretty safe, barring some sort of financial collapse. I think you underestimate the stability of the world financial system, and vastly overestimate cryptocurrency's chances at supplanting fiat currency. Maybe in 50 years the situation will change a bit (doubt it, but maybe), but still... there's no rush to get into it now for the sake of anyone's financial stability. On the contrary, significant "investment" in Bitcoin today is a guaranteed ticket to personal financial instability.

> Getting involved with cryptocurrency is by no means a prerequisite for learning those things. A fairly basic understanding of world financial markets will get you that.

You can't believe how many people I came across that still thought money was backed by gold (including myself I must admit). This topic is under the discussion thanks to Bitcoin.

> I think you underestimate the stability of the world financial system, and vastly overestimate cryptocurrency's chances at supplanting fiat currency.

I agree that the financial system is stable, and that cryptocurrency has only a tiny chance of succeeding in that. But when it does, this would mean a huge overhaul of our current system. The federal reserve would be pretty powerless in such an event (even now with the low interest rates, it has a problem keeping control). Which means things would go really fast. That in combination with fraction reserve banking, doesn't look pretty.

So I agree with you that the chance of that is really tiny. But when it occurs, the impact is enormous and fast.

> You can't believe how many people I came across that still thought money was backed by gold (including myself I must admit). This topic is under the discussion thanks to Bitcoin.

Crediting Bitcoin for an even remotely significant number of people learning that money isn't backed by gold is a bit silly. There are other, more effective ways of learning about that. If you're right in that a lot of Bitcoin fans previously didn't know money wasn't backed by gold, that just tells me that a lot of Bitcoin fans in particular are very ignorant of basic finance, and their developing Bitcoin fandom is likely in part driven by that ignorance.

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)

> he couldn't realistically dump all of his Ripple and expect price to not crash

Likewise Zuckerberg for Facebook

Zuckerberg's stock a bit different: the stock represents future income flows - they have real value - whereas cryptocurrency value is a function of confidence.

Yes, the stock would go down on Zuckerberg selling, but that's because people would infer from it an estimate of a decline in future income flows. But the future income flows won't go away just because Zuckerberg sells; it's not just confidence putting a floor on the stock.

Whereas Mark Zuckerberg could exchange his shares for dollars ... which supposedly represent future tax income of the united states government ... paid in dollars.

Fiat currencies, including somewhat non-intuitively shares, dollars and every currency (including most forms of gold I might add) ultimately depend on confidence.

It's a lot easier to have confidence that the US Government will exist in 50 years than one of one thousand fake currencies on the internet.

> 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"?

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

It's a colloquialism. A lot of Zuckerberg's wealth is "paper" wealth as well.

I think there are two things here that make people dismiss crypto wealth so easily.

1) The first is perhaps a little unfair, but in some ways justified: crypto wealth isn't actually founded on anything. Say what you want about Facebook, but even the most cynical of folks have to admit that it's built on a ton of economic activity, and we can predict at least some amount of stability in Facebook's share price going forward for some amount of time. With Ripple, it's anybody's guess. Ripple guy's net worth in terms of dollars could double, or halve, or sink to near-nothing in a matter of days or weeks, and none of those outcomes would be particularly surprising.

2) The other thing is liquidity. Zuck certainly can't dump all his shares of FB and expect the price not to tank. But a decent chunk of his net worth isn't tied up in FB anymore, and he can likely liquidate a lot of that fairly quickly. The Ripple guy presumably is an otherwise "normal" person who has 99.999999% of his net worth tied up in Ripple. Liquidating even a relatively small fraction of that would crash the price of Ripple, so in real terms, the Ripple guy doesn't have access to that money. Also, all (or nearly all) of Zuck's wealth exists in mature financial markets with clear rules and regulations and predictable expectations. The Ripple guy's net worth exists in something that is basically the opposite of that.

As an aside, I'm not the parent poster, but I think dismissing it as "paper wealth" isn't really getting across what he probably actually means. Even if Zuck's wealth was all "paper wealth" as well (in that hypothetically let's say nearly all his net worth was tied up in shares of FB, and that liquidity there was difficult), I'd still give more credence to Zuck's wealth due to #1.

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.

> 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.

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.

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.

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?

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?

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

> 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.

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...

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...

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.

> 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.

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.

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

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

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

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

That would be two big IF's.

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.

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.

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.

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."

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

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

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:


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/).

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.

> 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.

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.

> 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.

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


Is your second ~~sentence~~ paragraph a self contradiction? Anyways it’s not very humble.


A little bit lost as to what dog breeding has to do with bitcoin.

>>You realise that your dog adores you not because you're a nice person, but because it is bred to act like it adores you.

Um, what?

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact