WHAT WE WANT CRYPTO & CURRENCY FOR:
1) Currency w/o a government
2) Stable/reliable for contracts
3) Inflation indexed store of value -- basket of items representative for me.
4) Rapid transactions
Can we do it?
#BTC failed to be currency, open-Ponzi speculative game. A currency must earn interest: currencies weren't born from govt design but from commercial credit. A deflationary currency blocks borrowing. #BTC is just an open Ponzi scheme: money made by someone is taken from someone else.
Stephen Diehl explains it better: Because on top of the zero-sum mechanics, if it siphons wealth off to insiders then the pool to pay out returns shrinks. What @nntaleb said is right, it's economically equivalent to an open Ponzi scheme.
Gold: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as jewelry though we could get by without that. Massive dollar and environmental cost from mining the stuff.
Ponzi scheme: Fraud where insiders take money from investors and use it to pay other investors. Collapses and the fraudsters run off or go to jail. No mining no utility.
Bitcoin: Asset that goes up and down in price according to demand. No central body controlling it. Some utility as a payments system though we could get by without that. Massive dollar and environmental cost from mining the stuff.
Gold has a certain permanence as the only element in the periodic table that has properties that has made it the #1 jewellery metal for the last few thousand years and probably the next few thousand though while Bitcoin was invented ten years ago and may well get outcompeted by a better invention/currency.
On the other hand, for btc to keep value, you need people to mine it from to the moment you buy it to the moment you sell it. This has a cost, which is currently paid by newcomers. But if btc becomes stable (i.e. there are no new entrants willing to pay a premium to get in), current holders have to accept depreciation to pay for mining costs. Since btc is not backed by any kind of real world asset, there is no other source of profit.
An investment that is only worthwile as long as it attracts newcomers is in essence a ponzi scheme.
Also, there is a 3rd group that thinks it is a hedge. With hedges you don't really care if the price is going up or down. You want it to give you options. For example, you may buy a stockpile of food or toilet paper, not because you are hoping to turn a profit, but to give you an option to avoid going to the grocery store during another panic buying situation.
I don't have an opinion on BTC (or gold for that matter) but this widely-distributed meme is simply untrue.
1) If I have a bar of gold, and it will buy me 1% more bread loaves in a year's time, but I can invest it in something that will trade for 2% more bread loaves next year, then I will spend it because despite appreciation it is not my best source of appreciation.
2) I have living/operating expenses that I consider to supersede my need for financial return. If I don't pay for shelter and food, I won't be around in a year to enjoy the 1% more bread loaves I would get from appreciation.
3) Empirically/historically, over long time frames, gold appreciates in real terms (slowly). And yet people spent gold coins and gold-backed notes regularly.
Now, if a currency is appreciating much faster than anything else in the economy I agree you can have a deflationary spiral and a liquidity problem. But this is because the economy is collapsing — ordinary sources of growth have disappeared or reversed. This is a very special situation, and is not a general argument that currencies must depreciate.
The purchasing power of a currency doesn't have to change, the government manipulators could target 0% inflations just as easily as they target 2-3%.
Most modern economies are driven by debt, thats what "creates" new wealth out of thin air. The main reason we target a low, steady level of inflation is to best incentivize lending and investing in debt. If currency value is allowed to swing wildly you can't put a predictable price on future money. If currency is allowed to lose value (deflation) you are incentivized to hold onto it rather than buy up debt. Noone buying debt means noone creating money out of nothing, meaning no GDP growth unless velocity increases.
Ah, that would explain why we abandoned the gold standard. No one ever spent those gold coins, and no trade existed before 1933.
Isn't this only true with the removal of the gold standard?
I'm not deeply steeped in macro-economics. Is this a theory, or an historical observation? Where can I find more about this?
In the context of Bitcoin we are talking about the modern world. The major forces in the modern world are Globalization and Technology. Assuming you don't want China to take over the world you need growth. Growth happens when investment and debts are created. Ray Dalio explains it well. https://www.youtube.com/watch?v=PHe0bXAIuk0&ab_channel=Princ... This is why successful countries like the USA target 2-3% inflation. It is theoretically possible to create a country where inflation was -1%, but technological growth, which is very hard to stop would create a deflationary spiral that would bring the economy to a halt.
Mining is only necessary for making transactions, and it doesn't have to be expensive. It only is because of the competition. That expensive competition is important for stability but in theory, the entire system could run on a smartphone.
And it could run without newcomers. If everyone in the world had bitcoins, making it impossible to have newcomers, it would still have value, in fact a lot more than it has now.
Bitcoin may be a bubble, but it is not a Ponzi scheme.
Gold has some value as a technical material and because of its (subjective) beauty, so it will never crash down to zero, but it could lose a lot of its value if we decided that it is not worth hoarding.
Also, what is not a bubble nowadays. Just look at the gold price, the housing price, etc.
It might actually be entertaining to bury a bottle with $10 worth of bitcoin - it might be worth quite a lot when dug up like that guys hard drive in a refuse tip he wants to dig up. Or not of course.
("A man who says he threw away a hard drive loaded with 7,500 bitcoins in 2013 is offering his city $70 million to dig it up from the dump" https://www.businessinsider.com/man-offers-council-70-millio...)
If I understand the tweets correctly, Taleb, et al, are basically saying that the mining pool functions as the insiders in a Ponzi scheme, by outcome if not intent.
The argument is that a Ponzi scheme isn't just zero-sum speculation, with some people winning and some people losing: it is negative-sum, for the speculators, because the insiders were siphoning off money the entire time.
In this situation, the siphoning comes in the form -- among other things -- of the 6.25 BTC / 10 minute block rewards [$20B / year at present], which the miners sell to pay their costs [$10B / year of electricity at present?] and their own paydays. Because these "insiders" have been taking out money the entire time, when all of the investors go to get their money back, there won't be anywhere near as much money as they put in left to get out.
The existence of a group of insiders runing the scheme is really a detail when it comes to understanding how the market works. If it works like a ponzi scheme, does it really make a difference for the victims whether or not some people get arrested?
There's ontologically, in the manner of pedants, where you're really asking "in this defined ontology of financial phenomena, schemes and frauds, where does Bitcoin fit in?"
There's descriptively, where you are asking if it is useful to model or think of Bitcoin as a Ponzi scheme, regardless of whether it is a fully accurate categorization.
And there's rhetorically, where you are really just using "Ponzi scheme" as a concise way to tell people, "Don't invest in it, people are trying to take advantage of you."
Have you heard about the miracle of decentralization? :)
Just to put some additional data to this:
Jewellery: 92,947 tonnes, 47.0%
Private investment: 42,619 tonnes, 21.6%
Official Holdings: 33,919 tonnes, 17.2%
Other: 28,090 tonnes, 14.2%
Below ground reserves: 54,000 tonnes
Since BTC has no underlying asset, it's hard to demonstrate a correlation with anything. So if you buy btc as a hedge, you could pretend you're hedging against anything. In reality, the only significant factor is btc's popularity.
That means you could probably buy anything that isn't correlated with Euro and get the same result.
We used to all rely on bonds and bills to stabilize our portfolios but central banks have killed that.
Gold is a scheme (not quite a ponzi scheme) in which we've all agreed to maintain the delusion that it's a good marker for totting up wealth. It happens to have nice material properties for that, and it's nearly unique in those properties. The main one being that you can't print more of it.
BTC has a lot of those properties... as does Doge, as does Ethereum, as does Bitcoin Cash, and every other cryptocurrency. BTC has the name recognition -- which it shares with gold -- and in doing so may or may not become Gold 2.0.
But once we've realized that there can be Gold 2.0, why not Gold 3.0, 4.0, etc.? Only gold can ever be gold 1.0. Even adding silver and platinum and such doesn't really substantially diminish that uniqueness. Whereas there's no one crypto... which means that the "you can't print more of it" goes away. The Dogecoin guy did it. So do thousands of others, every day.
Maybe BTC will become the one and only Gold 2.0 and it'll stop there, and if so it'll have a value of some sort -- hard to say what, but eventually it'll reach some kind of equilibrium. Until it reaches that point, it has only its hope to be The crypto, and for the moment that relies on a continuous flow of new investors.
Some original guy got rich by convincing others to take his lump of metal in exchange for goods and services. The fact that it's nice to look at helped. That happened thousands of years ago, and so we're all just living with it as a collective agreement. We could break it if we wanted to, but there's not much motivation to.
So that part of the D&D economy actually works pretty well; copper, on the other hand, is something like 3600x more common than gold.
1) require an initial investment and promise above-average returns
2) money cannot be withdrawn for a certain period of time in exchange for higher returns.
High investment returns with little or no risk.? Overly consistent returns?
Your argument is that if I buy an ETF for gold and they charge 2% to keep the gold safe and manage it. This etf is a ponzi scheme as they need have holders to keep the thing going.
As the transaction fees go to miners you could then argue VISA and mastercard are ponzi schemes?
That's not correct. Once you receive your transaction within a block, they are there forever assuming you keep a copy of that blockchain. If miners stop mining, you'll be able to mine yourself within 14 days with a regular computer.
Nothing like this in gold. It is an atom which does not require any extra belief from the society.
Burying bitcoin in a garbage pit hasn't paid off yet but given time and patience. Who knows?
If it’s nearly equivalent to overall population growth, it may not matter.
(For what it’s worth, I’m with you for the most part. Just curious. I’ve been short-term wrong on BTC since $102 and I’m trying to figure out if I’m long-term wrong as well.)
It has managed to outdistance both the dotcom bubble and the housing bubble at this point. Although the tulip bubble went from the 1590s to the 1630s, so there is some precedent for these boondoggles to run for a surprisingly long time before gravity catches up.
There’s a 5000 year history of gold. But only a few grams per person in this world; and a great number of people feel some sort of pressure to buy a few grams for their spouses.
Obviously what I’m saying is an oversimplification. But if we imagined a world where gold did not have its lustrous history, it might still be sold at the same price. In this world, gold would still cost around 800 dollars an ounce to mine; but the only difference would be the market cap for gold would be very small and would serve its niche applications (comparable to the market for terbium or platinum).
Gold might be overpriced a little bit. But the debate about bitcoin is if it’s worth anything at all.
Disclosure: I work for a bitcoin trading firm.
Historic precedence doesn’t exist... till it does.
No one wants to carry around chickens to trade.
The value of a monetary asset is in its interoperability, and backers of Bitcoin are working to enable that to a high degree.
Gold has its niche applications where you need a malleable and nonreactive metal (like dentistry). If this was the only use for gold, it would still be at least 800-900USD an ounce, because it that’s what it costs to extract.
The market cap for gold would be like 1 billion USD, rather than 11 trillion USD.
Ironically in a world where gold wasn’t ‘lusted’ after, it might even be more expensive because the market would be illiquid. And a small oligopoly of suppliers would be able to gouge buyers.
This is what happens in the rare earth metals market.
I can answer that question for BTC. To transfer the USD value equivalent of 17 tons of gold, it's currently around $27.50. This transaction can be made anywhere you can broadcast a hash string.
If you want to get fancy, you can trade wBTC on ethereum for, as of this moment, ~$8. If even that is too high a fee for you, you could bridge over to xDAI and trade for orders of magnitude less than the value of a penny. Again, you can do this anywhere you can broadcast a hash string.]
All of this is EXCHANGE, transaction, alone. Zero mention of the amazing utility of the financial instruments that are IMPOSSIBLE with legacy protocols. To go over which is not a comment or a blogpost but a detailed textbook or equivalent of a MOOC.
How's that for intrinsic value?
Everyone who tries to make the argument that moving physical Gold is the same as a Bitcoin transaction is deluding themselves. They're conflating the logistics of commodity transfer with transfer of ownership. These are completely different things.
How much does it cost to verify 17 tons of gold is not counterfeit? How long would that take?
You can comfortably bet your family's life that Bitcoin is not counterfeit about an hour after a transaction.
If we find a million tons of easily mineable gold tomorrow the price will dip below copper's. This can't happen to Bitcoin.
The problem with Bitcoin is that it is "international" in nature.
Yet, China holds the largest share of Bitcoins and thus ownership is unbalanced.
I think there is more value in Blockchain at the municipal or federal level of a country to improve transparency and such. Or somehow even the issuance of currency. Given geopolitical unrest and contention, or differing political views (USA vs. China), I can't see how this decentralized coin will continue over a 20 year period.
From the wiki for Ponzi scheme-
> The scheme leads victims to believe that profits are coming from legitimate business activity (e.g. product sales and/or successful investments), and they remain unaware that other investors are the source of funds.
TSLA has a P/E of 1,181 right now. Peloton is 1,660. Amazon is even 80. How is it any different right now?
Bitcoin lacks that, it only has money from new investors and it loses money from mining. Which means without new investment it’s value must crash which creates incentives for people that own Bitcoin to convince others to buy Bitcoin.
The only way to argue Bitcoin has long term value is it must provide inherent utility like land. Increasing the number of transactions per second would be one way to demonstrate that value, but talking about future value doesn’t.
Currencies aren't inherently valuable, but a measure of value and a medium of exchange. If you couldn't buy things, or settle your debts (taxes), with US dollars tomorrow they'd be worthless.
Something that is valuable, and is either subjectively or objectively going to become more valuable, is an investment.
You can make a case for almost anything being an investment, since value can be subjective and speculation is rife
The issue is crypto currency is a digital asset so you need a buyer to do anything with it. That buyer could be a 3rd party uninvolved in the transaction, but someone needs to hold it after the sale even if it’s just to look for the next buyer.
when was the last time TSLA paid out a dividend?
>Boeing, which has been struggling for the past year with the safety of its 737 Max jet, has spent over $43 billion buying back stock over the past decade. The six airlines—Southwest Airlines, Alaska Air, Delta Airlines, United Airlines, American Airlines and JetBlue—have spent about $47 billion over the same period.
If you own X% of a company and it buys back 20% of it’s shares, congratulations you now own 1.25X% of the company. If you don’t want 1.25% of the company sell 1/5th and it’s equivalent to a dividend. Alternatively, if it does this for long enough without you selling then you end up owning 100% of the company and the next buyback is again equivalent to a dividend.
The point is that the company is pumping share price, not through actually creating value, but by tweaking but by engineering scarcity, and othogonal to the corporation's reason to exist. GP is conflating the end to which buybacks are a means with the actual goal of what Boeing was colloquially for; baking safe airplanes.
This more pervasive than anyone in the business world wishes to admit.
With dividends you can't really rely on a future amount, i.e. you can receive more (or less) than you actually need. Also it can come at a different date that you want. Plus creates a tax event event when you maybe don't want to have it. And so on.
So it become more convinient to just have stock which you sell when you want and you sell exact amount as you need to. Also the tax rate on dividends is usually higher, especially if you hold the stock long enough.
You can buy real estate and generate returns by renting it out. A smart real estate investment can generate money for y you regardless if its market value.
Stocks are the same: they represent a real piece of a company. If the company doesn’t issue dividends, the value is retained in the price of the stock. Warren Buffet almost never sells stock, his whole strategy is to hold forever.
Stocks and real estate are zero sum in the short term. In the long term, they are not
Unless it loses 50%+ of value suddenly. Then it may take you 10+ years to return back to profit.
>> If the company doesn’t issue dividends, the value is retained in the price of the stock.
Unless your company go bankrupt. You may lose the whole investment.
You didn't understand what I said. It doesn't matter about short term fluctuations of market value. If you are pulling in rent (or not paying rent because you are using the house) then it doesn't matter what the market price is right this minute. Flipping assets in a hot market is a zero sum game, and is more akin to gambling than capitalism. Traditionally capital generates profit by producing real value, in this case by providing shelter to you, or to someone paying you. Ownership of a company is the same thing (that's what a stock is). It produces value or provides a service.
This is a thread about bitcoin. Which is a virtual (read intangible), currency whose value is determined entirely by other people's belief that it is worth something. It can't be used for anything except as an incredibly unstable store of value. It can't provide shelter, people won't give you real value to temporarily hold it. Bitcoin as an algorithm is unkillable. As an investment it is, very, very fragile.
If I were sitting on a bunch of USDT, but I wanted to be holding USD stablecoins, just generally speaking, why not swap them into a different stablecoin?
Maybe another question I should be asking is what proportion of Tether is being used to collateralize leveraged long positions in other crypto assets? Maybe that's why this is a tinder box?
Sorry for all of the questions, but legitimately trying to understand what people are talking about.
It's an interesting time in the history of bitcoin as we are starting to see a move from small speculators (number go up) to institutions buying in (it's sensible to diversify 5% of your portfolio into crypoassets as they have historically high returns and low correlations).
Its just wrong to think all people in crypto are evangelising others into their ponzi investments
I mean I wish I had listened because BTC was $50 a coin the first time someone tried to convince me to buy in.
I see lots of people fall into the "If I only had done X back in year Y, then I would be rich." fallacy. No, you wouldn't be rich, because the information available at the time didn't justify such a decision. If that information were available, Bitcoin would have been worth $60k in 2009.
Right now nobody can tell you what will happen to Bitcoin, because all available information is already priced in. At this point it might go up but it might go down as well.
The crypto-famous NFT collector “Silver Surfer”, known for dropping hundreds of thousands of dollars on NFTs , tweets “celebrities that fail to get engaged with their communities will continue to have weak secondary [NFT] sales.”  That’s weird, I wonder why the money would stop flowing if the artist stopped tweeting about NFTs? Doesn’t their art still have value?
The truth is, if you spend enough time around the crypto art community, you realize that there aren’t any “real” art collectors in the space. There are crypto speculators, and there are artists who feel obliged to “engage with the community”. The lack of real money flowing into the space is what leads me to label this as a marketing campaign, as opposed to a completely organic movement. It’s a somewhat decentralized marketing campaign, but it’s a marketing campaign nonetheless.
Bitcoin can be transferred around the world easily, The way gold achieves permanence is partially by being extremely hard to move around and store.
Gold can be outcompeted too, aluminum used to be more expensive than gold.
Taleb at it again. He's decided on his definition of a currency and, lo and behold, Bitcoin doesn't make the cut, much to the chagrin of the coin bros who will flock to its defense.
Normal currency is zero-sum from certain contexts. If I have a dollar and I give it to you then you won and I lost. The only reason that fiat currency earns interest is that the promise of payment tomorrow is almost as easily tradeable as the product itself which, given BC's volatility, is difficult.
Bitcoin is a currency in that it is a medium of transaction, no matter what Nicholas Taleb has to say about it. It is not failed at being a currency but it has failed at being a stable currency so far.
The idea of a permanently-inflationary cryptocurrency with a stable inflation rate doesn't sound bad
However, bitcoin as digital gold will still survive.
I 'm pretty sure what he describes it the current banking system as well: banks loan the plebs who pay back interest, who then the capitalists convert to gold,art,real estate, permanently enriching themselves. Even the data from piketty etc shows it's true. Bitcoin ecosystem is just the digital version of this.
1) a) There can only be 1 currency for an economic area - this is because we need price stability. The 'second currency' with the promise of 'less dilution' wouldn't be useful for transactions - people are not going to accept it widely, therefore it becomes more of a potential 'store of value' (but most cryptos are not good at that either).
b) A currency or any store of value is as good as the entity backing it. There is no avoiding that. You cannot have magic numbers represent value. Currency is a contract between you, and the people that use that currency.
2) Stable/Reliable for contracts. Contracts are agreements that are only valid in a legal regime. They are completely pointless without a legal framework to judge them in - and where there is enforcement. They always require interpretation. An 'independent document' doe nothing to help.
3) 'Storage' - you can't 'store' value in a bunch of numbers. You can buy land, commodities, stocks, bonds, commodities with some underlying value. We could feasibly use Gold as a kind of 'historical agreement' about what we value and do not (which has incumbency) - but the volatility of crypto makes it poor for 'store of value'.
4) Rapid transactions. We already have those.
Finally - we lose monetary policy and hand it over to an algorithm. No thanks.
The crypto world fail to understand what currency is, why it is used, and why we do the things we do but most fundamentally that money is a contract ultimately.
When China stores $1T in USD as excess reserves, surely, it would like to not have to depend on the US Government but there is no other way.
A USD is a contractual IOU from the economy of America - there is no way around that, no way to just magically extract the value of those trade surpluses into something that has intrinsic value.
A kind of Crypto that is backed by real assets, to replace VISA - merely to make transactions easier, might work. But any crypto backed by assets has centralized trust (fine for most people) and it would be hard to promote because it would need price stability and with price stability means you don't have millions of GenZ on their iPhone buying in.
Crypto might have a legit future but nothing on the horizon seems to fit just yet.
As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature.
People are stuck at home and cannot go to the cinema. Investing in Bitcoin and watching Elon's twitter is an ok replacement for now.
> As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature.
People who want to use it as a currency and people preferring to avoid losing their investment in a dumb bubbles.
(it is more OK if it is a dumb gambling with what someone is considering as entertainment funds, but nearly noone is doing that)
In the money as credit model, the money supply expands and subtracts with economic activity. And the best suited money have price stability so the market of credit can focus "pricing" risk correctly.
This model of money could be supported by some kind of cryptocurrency, however right now the investors don't seem to have an appetite for sponsoring that sort of thing.
If you're going to let the future determine your transaction patterns too much you will quite literally starve in the present. So even in that scenario there will be transactions and people will be happy to take your coin because they too hope that its value will go up. Obviously once a large fraction of world trade would be in a currency like that the currency itself would start to exhibit the same traits as the global economy and this effect would mostly cancel out any inherent properties.
Effectively: bitcoin was underpriced at the beginning to the point that it could only go up, the question is how far it will do that before it will have expanded to fill the niches where it fits. As soon as that has happened it will cease to increase.
That's the problem with this doublespeak, where people intentionally fool themselves into cognitive dissonance.
The whole point of currency is not investment. It's the exact opposite of investment. Currency is intended to have stable value over time, because it's whole point is to serve as a unit of account, store value, and serve as a medium to exchange value in an economy.
By it's very definition "investing" implies the expectation of profit. Think about it for a second: how can something intended to have a stable value be considered apt for speculation?
Point is that even with stable prices, there is plenty of room for speculators.
Even if you feel the need to equate crypto-things to bonds, first you need to argue why buying, say, bitcoins can be argued as lending money to someone, which makes no sense whatsoever.
Cryptos are nothing more than speculation vehicle, and it's pretty obvious that they are massively used as a pump-and-dump scheme. The only point in time where cryptos played a relevant role as a currency was way back in the silk road times where cryptos were used with the expectation of laundring transactions. That usecases quickly went out the door ages ago.
So some people of reinvented fractional reserve banking. But now with the problem that it’s unregulated, unbackstopped by a lender of last resort and ultimately through rehypothecation you’ve virtually eliminated any advantage gained by using blockchain technology.
I'm sure bitcoin purist will hate it, but afaik there's a lot of btc being held at exchanges (e.g. coinbase).
Technically instead of holding BTC there, you could be holding cBTC (value in a coinbase btc deposit account) and coinbase could issue cBTC loans similar to banks.
(The issue is that there's no backstop like in the real world, where central bank can step in as lender of last resort to avoid bank runs)
In my opinion, in most people's dictionary, these things describe the same things and when we use these words, there is no good, measurable way to classify them, we just act on our instincts, yet when we use words like investment, we feel safe and clever.
Good point about the currency part, I don't think BTC is going to be a good currency, it's expensive, slow, traceable, public.
My parents lost a lot in the 2000 crash, so were spared from the 2008 crash. Between those two I decided buying shares was a mugs game
(Nasdaq was 4000-5000 before crashing to 1300 back in 2000. It recovered to 2500 by 2008 before crashing back to 1500.
It's now 14,000 - massive gains in the last 10 years I've missed out on because of not trusting.
If you'd have bought $1k of Nasdaq and 1k of Bitcoin 5 years ago, you'd have $3k from nasdaq - an amazing return.
I can sort of see why the nasdaq is so high though. Crypto though?
That same $1k would mean you'd have $137k from bitcoin. If that's sustainable I don't know what unsustainable is.
DOGE? You'd be a millionaire.
But the political decisions of the economy seem to be built around driving these things up. It makes the UK house price boom of the 90s and 00s look tame - 500% in 25 years? A measly 6% roi?
25% per year gains on stocks, 170% per year on bitcoin? 300% per year on DOGE?
In 2018 people were saying about tulipmania with bitcoin and how the price would collapse. It did. $1k invested at the height of the bubble in 2017/18 when it reached $20k - 20 times what it was earlier in the year, was soon worth just $150.
It would now be worth $3k, 45% per year roi from investing at the worst possible time
Putting a measly $10 a month into bitcoin every month for the last 5 years would have cost $600 and left you with $14,620 today.
The market can remain retarded longer than I can remain solvent. The only thing I've learnt waiting for things to crash is that I'm an idiot, and people who fall for hype are rich.
Every single thing can lose its value. In addition:
Real estate can be bombed in a war or confiscated and is not mobile for obvious reasons.
Gold can be stolen, confiscated - and it happened already more than once.
Companies can go bankrupt.
Items - either productive like machinery or various stores of value like art are not immune.
Cash/bank accounts - well, money printing will get you here.
Cryptocurrency - ridiculously volatile, many exciting dangers, can be stolen remotely with no recourse.
You are looking for an unicorn.
 For "real estate will never go down in value" fans: https://en.wikipedia.org/wiki/File:Destroyed_Warsaw,_capital... https://en.wikipedia.org/wiki/File:German_Brennkommando-firi...
 Fun fact: Polish words for real estate is "nieruchomości", "nonmovables"
Same in NL, "onroerend goed" translates (literally) as "non-roaming goods".
You realise that these properties in the picture (Plac Defilad right in the centre of Warsaw) are worth a lot nowadays. And descendants of the original owners get compensated (the land had been confiscated after WW2 by communist government). So I would rather say that real estate could be illiquid with temporarily depressed prices occasionally.
What about people who owned a flat? Have they got compensations restoring entire value? AFAIK no in general.
Or even a noticeable part of original value?
One of my friends recently got compensation (after 60 years old legal battle initiated by person who died before it completed). But that was for property that survived WWII and got confiscated after it.
> And descendants of the original owners get compensated
In other words value of original property went down (especially given opportunity cost).
And they were quite lucky, in similar cases many lost without recourse.
But overall I agree with the main point: real estate is one of best stores of value, some of it can survive even that.
But describing it as never, ever loosing value is not true - in many cases it lost part or all value, permanently, without compensation.
But there is another asset class beside real estate - arable land. People see gold as store of value which is false to some degree - gold was historically more of mean of exchange (of landed wealth) while the universal asset class paying regular dividends since Roman Empire until Industrial Revolution was arable land. And to a degree still is but since Industrial Revolution there are many alternative assets available that provide better/competitive returns (like government bonds)
Of course land could also be taken away but that happens very rarely (Communist revolutions in Russia, China, Central Europe). Historically land-owning class is stable. For example in largest wealth grabs in European history (Burgundians in France, Vandals in North Africa and best of all Norman conquest of Britain) there was generally sharing and mixing between old and new land-owners.
As a city dweller posting on internet I somehow missed arable land in a comment about good stores of capital. Go me!
Despite that my cousin owns large farm. Staying for so long in my family that it was located in 5 countries since my family moved into that specific location.
But still, it is not a magic pixie dust: your land can be confiscated, or taken by sea/river or polluted by industry/salt.
Or it may be turned into wetland/desert by some other external changes beyond your control.
Indeed. I believe that succinctly sums up the outcome of the investment for the actual person who did the investing.
For most people, the word temporary is not a good description for situations that persist until after you’re dead.
By bruteforcing into the wild? What are ypu referring to?
In some cases password (private key) as sole and sufficient method to have full control over asset, executable by anyone is a problem not a benefit.
You can't just login to paypal from another IP. You can't just login into most emails these days ( 2FA)
Crypto wallets have none of those protections.
Other than that:
EOS (dPoS) reversed transactions multiple times while being top 10 at the time: https://cointelegraph.com/news/eos-reverses-previously-confi...
Ethereum Classic was attacked multiple times with chain reversing double spends due to not enough energy being committed to immutability: https://www.coindesk.com/ethereum-classic-attacker-successfu...
Ethereum reversed the "DAO hack" with a hard fork.
Which is simply not true, there at least 100 Wallets just in the Android Store. You think none of them has some kind of additional protection?
But gold is not a currency either, so hmmm.
In all earnest, I wonder when the mainstream will realize that in a digital world the store of value and a currency can be different because they are easily interchangeable.
Just like bonds or gold for long term investment (store of value) and dollar (currency).
gold - the real thing - i guess you should have some, but this is more like insurance than asset, don't ever sell unless the world is ending stuff.
I used to take part in "Dogecoin Socks for the Homeless" events. It was wonderful, everyone was trying to make something good out of what we all knew to be a meme. I am shocked now to look back on those wallet addresses which once held ~$1,500 and see they'd be worth $285,000 (had I held). Of course, it might be that I'm just angry I wasn't the one to become rich, but the mania right now is really, seriously, insane.
Many people who are FOMO-ing in thinking this will make them millions with a few hundred dollars invested will be hurt when the "number go up, number go down" cycle turns to "number go down."
Gold is less useful than most people think:
> In a 2012 paper entitled "The Golden Dilemma", Claude Erb and Campbell Harvey examined some common assumptions about gold. First they looked at gold as an inflation hedge, analyzing gold returns from 1975 (the year the U.S. came off of the gold standard), through March 2012. They found that, due to its real-price volatility, gold had not been a good inflation hedge over the short- or long-term.
It's only of note because of historical accident and it's use in certain cultures (along with silver as well). The Incas had piles of gold, but only used it for jewelry and such, and not as a currency.
If we didn't have the culture references of the Gold Standard, I don't think most people would accept a shiny rock as anything special. Or at least gold (Au) specifically, and not any other Period 6 element:
Is there perhaps something special about Group 11 element (Cu, Ag, Au) that they should be treated as "currency"?
They are certainly useful from a tooling perspective in some ways, but beyond that?
Gold isn't being treated all that differently to the other period 6 or 11 elements. Although it does sometimes get randomly good tax treatment due to its history which keeps it entrenched as the first choice for a monetary metal. But fundamentally it is being sold at cost to mine + a margin, same as everything else. My memory is anything with similar properties to gold has a similar price. The bulk of its value comes from nobody being able to produce the stuff for much less than $50k/kg US.
If history was erased, the price of gold would go down a bit because demand drops, but it would still be somewhere similar to $50k/kg US - to a first approximation people can't produce gold more cheaply than that. The price might even go up if the cheap producers are big bulk-mining operations.
Just because something is expensive to produce doesn’t mean that it’s worth that much.
Well ... it kinda does? If a commodity cannot be produced for less than $X, then the price of that commodity is not going to be that far below $X. The price can vary away to anywhere you like to signal for producers to open and close in the short term, but the equilibrium price point is ~= cost of production and the market will trend in that direction.
I'm going off one article  but there is enough gold to make a 28m x 28m x 28m cube. That isn't a lot of gold when compared to the 8 billion humans in the world and the amount of metal we go through (of iron, aluminium, copper, etc). Unless something really novel happens in the mining space, the price is never going to be low enough that an ordinary person can have a big block of gold. It will stabilise on the cost to mine pretty quickly.
There are other metals that are just as good as gold (like platinum) that get less press but are similarly priced.
This sparks an interesting thought (for me) - gold mining (and really, any mining) is intertwined in modern times; copper mining produces gold as a by-product for example. We derive palladium and platinum from refining for other metals, we get sand for concrete from gold mining, etc. Point being, the mining industry is interwoven as to what is extracted for refinement, the by-products of that refinement (and the environmental destruction :() which of course is all economically intertwined. A mine probably won't shut down, it would probably shift to another focus?
But Bitcoin is mined for one thing (itself) and produces environmental waste (heat, etc.) with no by-products (another coin?) and no other mining (Monero?) produces Bitcoin as a by-product. So it makes me think that while it sounds good on paper to compare Bitcoin to Gold, it really doesn't work like that in real life.
I don't think this says anything about why the gold price is what it is. If gold suddenly gained lots of value then it would still be cost + margin, because new mines would open up in places where gold mining had previously been unprofitable.
This price chart, especially since early 2019, seems to suggest otherwise:
> These metals, especially silver, have unusual properties that make them essential for industrial applications outside of their monetary or decorative value.
Sounds special to me. There are lots of things we would make out of gold and silver if they were more common. Gold has quite a bit of inherent value independent of cultural accidents regarding beauty.
> But copper—used in shell casings—was a high-priority commodity during the war. So Marshall and Nichols struck on the idea of using silver as a substitute. Congress had authorized the use of up to 86,000 tons of Treasury Department silver for defense purposes.
> Nichols met with Undersecretary of the Treasury Daniel Bell on August 3, 1942, to inquire about borrowing 6,000 tons of silver from Treasury vaults. In his memoirs, Nichols relates that Bell indignantly informed him that the Treasury’s unit of measure was the troy ounce—though not all present at that meeting recall any unpleasantness.
> Scrap recovery and cleanup operations were so successful that over the course of processing, more than 1.5 million pounds of silver were collected and returned to Treasury, much of it likely originating from earlier and unrelated silver processing. That more than offset a much smaller amount—11,000 pounds—of borrowed Treasury silver that was unaccounted for.
> The busbars were massive conductors about a foot square that carried current to the magnet coils. During their manufacture, armed guards again stood by, this time with pieces of paper positioned to catch drill dust as workmen bored holes in pieces of silver in preparation for fastening them together.
It's the sign of the peak of the bull market. There is going to be hangover.
They are all struggling with poor transaction throughput/high fees, huge bandwidth for nodes, deflationary money supply, etc...
Signalling a great big crash, waiting to happen.
*Edit: speaking about crypto as a whole not specifically doge coin. BTC and ETH first to market with digital solutions to antiquated economic problems. But I'm not joking when I say the cut of Musk's jib puts a significant non-zero chance that he announces Doge will be the official martian currency. PT Barnum or not, I wouldn't completely discard the idea.
The problem is nobody can tell where the top is, and there IS a top, these things don't grow forever (you can't have infinite growth and it becoming infinitely valuable).
Now there are multiple things that might happen when growth stops:
* 1) The price stabilises and bitcoin/crypto becomes a major standard currency, which people want to use and spend. This certainly isn't going to happen for btc due to transfer fees, but could feasibly happen to a different coin. I think this is unlikely because there are several factors that actually stop crypto being an ideal currency (e.g. non-reversibility in case of fraud or dispute resolution).
* 2) The price stabilises and everybody keeps their money in crypto because it is a store of value. Personally I find this unlikely as I think most bitcoin 'investors' actually want to see their money increase in value rather than the value stay static.
* 3) The price stabilises and crypto doesn’t manage to become a standard currency which is easy to use everywhere - and although initially people hold their money in bitcoin to see if there is another rise, when it doesn't come people start to withdraw funds to realise their gains (if bitcoin isn't growing what's the point holding it?). As people sell bitcoin the value drops and never goes back to it's high. As more people exit the bubble is burst.
I personally think number 3 is by far the most likely outcome, however it's impossible to tell where the top is. I think the most sensible approach is to acknowledge it’s likely a bubble, and if you invest funds to acknowledge you are effectively making a gamble that the bubble won’t pop yet (and you are confident that you will realise when to sell before the rest of the market does and not hodl all the way down like we saw with gme).
The amount of institutional investment this round offer legitimacy and absolute scale of potential that can't be overlooked by anyone that's been paying attention.
Honestly, for the amount of forward thinking technologists that call this nook of the internet home, there is a ridiculous blind spot for cryptocurrency. It's actually ridiculous to me that such forward thinkers could be such luddites.
Will it take another decade before you realize we're there - or if not yet, where this is going?
But I am very disappointed in BTC and ETH. BTC did not become “A Peer-to-Peer Electronic Cash System,” and we haven’t seen the explosion of uses-cases I hoped to see from ETH (like tokenization and trading of real-world assets). There’s a ton of froth and solutionism in this space, which is OK, but it also understandably puts off a lot of people who see it as a scam-ridden wasteland.
That’s to say nothing of the Tether black swan to come.
I understand that people are disappointed by this thus seeing the idea of BTC as a whole as a "failure", but given the fundamental properties of the system (finite supply, distributed network) it was never possible for BTC to become a currency used widely in everyday high volume transactions. Impossible.
Hal Finney even recognized this in early discussions predicting BTC wouldn't be used in high volume but more likely as a reserve asset, which BTC can absolutely be. Functioning as a digital gold, despite people's aversion or annoyance at this concept. Acting in concert w/ other payment methods or fiat currencies used for payments, taxes, commerce, transactions. A store of value to complement inevitable debasement or dilution of uncapped supplied fiat.
And that's fine, because the beauty of satoshi releasing it as open source spawned an entire ecosystem of ideas and implementations, so while his 'baby' may not be what he envisioned the basic idea and problems solved live on through evolution.
Monero is the 'ideological' best cryptocurrency in my opinion, and I've hedged my bets across a handful of coins that I think at least offer something valuable to the future space.
Bitcoin has the first mover advantage and although bastardized into a 'gold like store of value' completely detached from its original use case I'd still want to own a decent amount because why fight momentum.
I agree with everything you say (wild west token scams, tether backing and sketchy accounting) but I think there is too much benefit at the core for one to disregard the entire space. The cream will rise to the top.
It certainly has when you consider that by cash Satoshi meant cash as a bearer instrument.
Unlike a federal reserve note—a piece of paper—that represented the thing that’s valuable—gold, bitcoin itself is the thing of value.
For ETH to trade real-world assets it needs everything else that the real world already provides: laws, courts, verification systems. Hell, it actually needs that even for digital systems.
This is why, try as people might (in over a decade) they have yet to achieve literally anything that isn't a currency with it.
You can represent them, but that's about it.
For Ethereum contracts to be enforceable in the real world (and even in the digital world) you need significantly more than just representation.
Black swan refer to unexpected events, right?
There are literally no fundamental societal aspects that cryptocurrencies modernize. Unless you call speculation "not modern".
These are all just words that amount to nothing but marketing. To be all that these coins need to painstakingly re-create all the institutions that make passports, money etc. possible: laws, courts, trust systems, enforcement etc.
There's literally nothing in the "fundamental societal concepts" that they modernise.
You realize that this a) doesn't constitute a fundamental societal concept and that b) sending secrets outside of government control isn't even a novel idea?
> and fundamental development of the society.
There's still nothing new or fundamental introduced by cryptocurrencies, and they rely on existing concepts old as time to even function outside their bubble.
Eth 2.0 for example was talked about for years, I'm still here getting wrecked on fees.
Lightning network for reducing BTC fees is another beauty we hear less about now days.
Wondering what's the chance of it becoming the speculative anything-goes plaything of the entire big biz financial world without a central bank to keep them (at least marginally) in check.. and with lotsa money of the 'small people' on the line?
I can't for the life of me figure out why HN keeps hating on bitcoin for the past 10 years since ive been following this site has but has been pretty much spot on about every other tech related subject. It initially discouraged me back in the early days but once you GET it, you realize its one of the biggest technological breakthroughs in the history of mankind.
I think with bitcoin you simply can't read about it but actually get your hands dirty and fully use it to really understand the potential it is going to have.
Of course not. Anyone is free to make a settlement on Mars and choose their own currency.
i don't believe that anyone trading doge isn't aware this is a ponzi. the only question may be if it's by design or by accident.
or maybe memes have value after all...
The book Money by Jacob Goldstein is the best thing I have read on this. It covers the useful fiction that is money and how it has has shaped societies.
From the inception of coins in ancient Greece, the first stock market to current day cryptocurrencies. When people first came up with coins and paper money, don't you think people questioned their value?
"At the heart of the story are the fringe thinkers and world leaders who reimagined money. Kublai Khan, the Mongol emperor, created paper money backed by nothing, centuries before it appeared in the west. John Law, a professional gambler and convicted murderer, brought modern money to France (and destroyed the country's economy). The cypherpunks, a group of radical libertarian computer programmers, paved the way for bitcoin.
One thing they all realized: what counts as money (and what doesn't) is the result of choices we make, and those choices have a profound effect on who gets more stuff and who gets less, who gets to take risks when times are good, and who gets screwed when things go bad."
For the record I am in on crypto including Dogecoin, just as I am in on FAANG, just as I am in on index funds, just as I am in on property. I honestly people not diversifying would be hubris.
The major popular currencies are very sticky and very difficult to stop believing in them.
Whatever you might think about the US declining compared to China and other issues, there's still a $21T economy with the economic activity of 330M people behind it.
And if you're doing business in this country the US government will demand that you pay your taxes in USD. There's a lot more inertia in the USD than people into crypto give it credit for. Everyone in the country could, in theory, wake up tomorrow and all decide to use something different, but in reality that won't happen.
Crypto can (and most likely will) crash hard and while its getting big enough now that the damage will likely ripple through the economy a bit, but the US economy will go on.
And I'd strongly recommend Galbraith:
All but one of those is positive sum. One of them is negative sum.
> I honestly people not diversifying would be hubris.
There's an infinite set of things you can diversify into. Speculative mania does't have to make the list. It can, but it certainly doesn't have to.
I personally believe everyone should allocate 5% of their portfolio to GameStop. There's only 69 million shares outstanding, that's not enough for all the world's millionaires to own just two! I'm as in on GameStop as I am index funds, and real estate, and various tech picks.
Therefore you will get the denomination requested whether you believe it or not.
And since that rule applies everywhere in the world now there is nowhere to hide.
Thank you! This is the book I've been looking for. I've recently read about adjacent subjects like value and finance, but this is the thing that links those things together that I've wanted to read.
It goes straight to the top of my reading queue.
Here’s my beef, though: Dogecoin, BTC, etc. have failed to replace cash money or be used for any sort of significant, regular, money-like use-case.
Monero is maybe the most legitimate cryptocurrency at the moment, as it allows for (and is really used for) darknet purchases. That’s a real use-case.
This is the point Taleb is making too.
And also that established payment services have kept improving their services enough that BTC's superior agility isn't that pronounced anymore.
Not only that, but it's a derivative (or perceived derivative!) of an underlying value, which in turn can be another derivative!
A long time ago, that was Gold, which in turn is a derivative of food and everything else that can be purchased by Gold.
Early U.S. pennies, for example, had pictures of wheat stalks on them, the idea "you can use this coin to buy wheat (food)" (storage of value of food) is present in that picture...
If you really want to go back in time, when you have food that doesn't rot and doesn't decay over long periods (for example, dry noodles), then we can see the noodles themselves as "storage" for the "value" of the underlying wheat (which decays much faster when not in noodle form).
In fact, you might argue that nature's nuts (walnuts, hazelnuts, peanuts, etc., etc.) -- because they were food that could be stored for a long periods of time without rotting -- were the first historical "storage of value", and thus the first currency...
Perhaps that's why everyone is so "nutty" -- about money! <g>
Also, in any system where object A (stock certificate, money, IOU, metal, physical object, digital identifier, etc.) -- is a storage of value for some underlying value, or something which is value derived from somewhere else, or a chain of derivatives -- you have the potential (in those systems) for
a) Ponzi Schemes (correctly or incorrectly called this)
d) The possibility of eventual worthlessness from either extrema...
Fun Fact: Ancient Rome, near its end of life, resembled a giant Ponzi Scheme... <g>
(Bernie Madoff, in the scope of his crimes, was "small potatoes" -- compared to the last days of Ancient Rome! <g>)
Then, on a related note (same principle, in effect), there's the following "Rick And Morty" clip:
"Changing 1 to 0"
Re bitcoin, he makes the argument that all currencies face a moment of crisis and only survive when Govt's do 'whatever it takes' to save them.
Who's going to come to the rescue of Bitcoin when that day comes, he doesn't say since the answer is rather obvious.
Example 1: reduced faith in a government to repay its debt decreases the demands for its fiat bills, which decreases their relative value, which prompts them to print more to repay its debt, and so on.
Example 2: Cowrie shell money stopped being accepted by colonial power to settle debts with it, it's value decreased, requiring private companies to import more of it to pay for what they want.
With those feedback loops it's hard to know what came first, but it's not obvious that excess supply prompted reduced demand -- it might as well be the other way around.
At the end of the day it’s just another phenomenon. Cryptocurrencies are many things to many people. You may lament for the person that looses a few hundred dollars but what about all the people who spent money on Pokémon Go just because they wanted to get involved in an activity with their friends.
There’s nothing wrong with getting hurt if you chose to ignore the risks and risked more than you were willing to lose.
Why is such low quality filler getting traction on HN? Is it because anti-crypto posts push people's buttons? Every day there is something like this posted, and like clockwork the comments are full of the same arguments both on the pro and anti crypto sides.
Am I an idiot for expecting better from HN?
This remark smarts only slightly less than if someone like Satoshi or Nick Szabo came out and called Bitcoin a failure, or at least admitted it was fated to become a naturally occurring Ponzi all along.
unfortunately I suspect that Taleb is merely setting up a pivot into some other crypto ponzi wherein he is better positioned to realize gains (and the guru praise he craves) from diverting his followers away from Bitcoin. I wouldn't be surprised if that "not Bitcoin" turns out to be Ethereum.
I’m sold on Bitcoin as “digital gold”, but for highly-visible entities it’s way too easy to game without repercussions. E.g. Musk likely has a bunch of patsies ready to buy and sell before or after one of his outbursts. You do that with actual commodities or companies, you go to jail; you do it with bitcoin, and people just shrug, “oh well, anyone in that market knows it’s wild”.
I think he prepares his readers for a future book "Why Bitcoin failed", written as soon as the price tanks. Well, it might already be in the process of writing.
I wish the rules got stricter over time (stay strictly within the hacker/startup/tech mindset), but also as software is now a multi-trillion dollar market, politics has to be involved.
That was never a rule to begin with.
Also there are some topic based bans, which is really hard to do well, as there are new things happening in Bitcoin (i.e. a new soft fork, or ETF being approved or not approved) that should be able to go through the filter.
There isn't actually a rule against making jokes, humor tends to get downvoted because few people are as funny as they think they are, and HN has a thin skin.
And as far as other forums go, you can find plenty of niche subreddits which moderate humor and off-topic conversation far more strictly than HN does, such as /r/askhistorians.
Bitcoin shills also produce huge quantities of hot air and CO2 by endlessly repeating false claims like "Bitcoin doesn't run on coal".
>How Accidents in Chinese Coal Mines Are Affecting Bitcoin Mining
>The explosions took nearly a quarter of Bitcoin's hashrate offline, but the network is operating normally and these miners could be back online in as soon as a week.
>Disruptions in coal plants in Xinjiang and other parts of China have knocked out bitcoin miners in the region, clipping as much as 35 exahashes from the Bitcoin system’s global hashrate, CoinDesk has learned.
>Figures shared with CoinDesk show F2Pool, Antpool, BTC.com and Poolin, the four largest pools in the world, have collectively lost 86% of their share of Bitcoin’s global hashrate over the last 24 hours. Primitive Ventures partner Dovey Wan, who operates mining equipment in one of the regions, told CoinDesk the coal-fired plants are down after “a massive explosion under the plants.”
>The coal plant shutdowns follow coal mine accidents in Shanxi, Xinjiang and Guizhou provinces, which collectively have left nearly a dozen dead and, in the case of the mine in Xinjian, 21 people trapped. Coal-abundant Xinjiang and Inner Mongolia are popular spots for Chinese bitcoin miners in the autumn and winter, when the rains that usually supply cheap hydro energy in regions like Sichuan are low.
>China’s vast bitcoin mining empire risks derailing its climate targets, says study
>China powers nearly 80% of the global cryptocurrencies trade, but the energy required could jeopardise its pledge to peak carbon emissions by 2030
>Bitcoin miner Huang inspects a malfunctioning mining machine during his night shift at the Bitcoin mine in Sichuan Province, China.
China’s bitcoin mines will generate 130.5m metric tons of carbon emissions by 2024, the Nature study found.
>China’s electricity-hungry bitcoin mines that power nearly 80% of the global trade in cryptocurrencies risk undercutting the country’s climate goals, a study in the journal Nature has said.
>Bitcoin and other cryptocurrencies rely on “blockchain” technology, which is a shared database of transactions, with entries that must be confirmed and encrypted. The network is secured by individuals called “miners” who use high-powered computers to verify transactions, with bitcoins offered as a reward. Those computers consume enormous amounts of electricity.
>About 40% of China’s bitcoin mines are powered with coal, while the rest use renewables, the study said. However, the coal plants are so large they could end up undermining Beijing’s pledge to peak carbon emissions before 2030 and become carbon neutral by 2060, it warned.
>Bitcoin's damage to the planet - the coal-powered Chinese phenomenon that uses more electricity than the whole of Argentina
>There's good reason for environmental campaigners and academics to worry about the effects of Bitcoin, cryptocurrencies, and Blockchain on the planet, not to mention on geopolitics and the distribution of wealth.
>However, while China is the world’s leading investor in clean energy, it remains highly reliant on fossil fuels. Indeed, between 1990 and 2019 China's coal consumption nearly quadrupled, according to US think tank the Center for Strategic and International Studies (CSIS). So the environmental impact of its electricity habit is massive.
>The CSIS estimates that coal still powers almost 58% of all Chinese electricity usage. Roughly 21% of the world’s carbon emissions came from China between 1990 and 2019, and the CSIS estimates that nearly 80% of those emissions were from coal.
>So the subtext ought to be clear: despite its promise of digital newness and disruption, Bitcoin is largely a coal-fired technology whose energy usage is soaring and its carbon footprint growing. That should be something for mega-fan Elon Musk to ponder while the world’s richest man develops his electric vehicles and plays 'billionaire bottle-toss' with space rockets.
This is why I disgust this Taleb guy: he usually has good insights but defends them with the worst arguments. Or no arguments at all.
I felt his "Black Swan" book is a very good idea stretched into hundreds of pages of arrogance and condescendence.
It’s intentional: https://mobile.twitter.com/nntaleb/status/129716309534169907...
I do recall Taleb admiring himself, though. A lot.
His books are mostly unoriginal fluff that could be expressed in a few pages.
Not all financial scams are Ponzi schemes. Most are not. Ponzi schemes involve shady bookkeeping by the operator that conceals the source of fake profits.
If Bitcoin were an actual scam (and I don't think it is) it would be a pump-and-dump. Most ICOs were clearly pump-and-dumps.
There is a huge variety of financial scams, and it would be a fiscally safer world if more people knew about them.
I think this applies to Bitcoin because it’s payouts are solely based on speculation and new cash coming in.
1) Bitcoin can do trustable and reliable transactions with unlimited amounts of assets across the world in 10 minutes. What else can do that? It's the perfect settlement layer for large actors.
2) It doesn't inflate, which makes it a perfect store of value. Even gold inflates.
It does currently inflate (currently 900 coins per day), the distinction is that the inflation will decrease over time to zero.
One reason this is an important distinction is that the network which secures Bitcoin is currently ~85% subsidized by that inflation. A big unknown is whether transaction fees will go up enough to support the current level of security in the network in its non-inflationary state.
(I guess you could argue semantically that mining doesn't “create” Bitcoin but “unlocks” it or something, but it doesn't affect the dynamics I mentioned where the cost of running the network is currently subsidized by the newly unlocked Bitcoin and that subsidy will disappear over time.)
It doesn’t address the problem of the network being subsidized by the diminishing pool of remaining unmined bitcoin, and what happens when that pool is exhausted.
I always have some difficulties with the "printing is limited so it's a store of value" argument: it's only a store of value if people keep assigning it value. That property doesn't purely come from supply but also from demand.
In contrast to today's financial markets where size gives you huge leverage and access that you don't get otherwise. This is why the rich are getting richer currently.
But the future of financial markets and wealth will be as distributed as the crypto assets and protocols will be.
Wow, all the 'large actors' seemed to have not figured that out?
If it's the 'perfect settlement' process, then why are literally zero large actors using it for settlement?
Nobody uses it as a currency.
Bitcoin does not pay out anything. There is no cash flow. You can only sell it.
It's true that price increases depend on later investors, but that is true of all investable assets; art, gold, comic books, etc.
Bitcoin is likely a bubble. It may be a pump-and dump, but it is not a Ponzi scheme.
This is true of all investable assets that don't produce cash flow. It's true for art, gold, comic books, baseball cards, wine, classic cars, everything.