Results 1 to 21 of 21

Thread: Bitcoin: The Future or Ponzi Scheme?

  1. #1
    Senior Member RandBlade's Avatar
    Join Date
    Jan 2010
    Posts
    13,665

    Default Bitcoin: The Future or Ponzi Scheme?

    To me Bitcoin seems like the moterlode of all bubbles/Ponzi schemes. People are getting into it primarily it seems not to actually buy and sell goods and services, the primary function of a currency, but to make money from the currency itself.

    The idea that 1 BTC = $13,000 or whatever it is at the time you read this is just absurd. Some people are making a fortune but many are going to lose it when the whole system collapses.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  2. #2
    Senior Member
    Join Date
    Jan 2010
    Posts
    6,188
    Quote Originally Posted by RandBlade View Post
    To me Bitcoin seems like the moterlode of all bubbles/Ponzi schemes. People are getting into it primarily it seems not to actually buy and sell goods and services, the primary function of a currency, but to make money from the currency itself.

    The idea that 1 BTC = $13,000 or whatever it is at the time you read this is just absurd. Some people are making a fortune but many are going to lose it when the whole system collapses.
    Partially agree however until BTC faces real competition from other currencies like it, it will serve a use for a lot of 'gray' markets which means I don't think the value is going to absolutely crater even with a correction.

  3. #3
    Quote Originally Posted by RandBlade View Post
    The idea that 1 BTC = $13,000 or whatever it is at the time you read this is just absurd.
    Its over 17k now. and the muppets think thats totally fine.


    Yesterday steam stopped accepting bitcoin because of how volatile it is and how high the transaction fees are.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  4. #4
    Unencrypted Wraith's Avatar
    Join Date
    Jan 2010
    Posts
    4,386
    I think we're at the point where there's a bubble, most people know there's a bubble, but nobody wants to get out too early. A lot of the rise is because of all the new entrants from all the recent bitcoin news.

  5. #5
    Senior Member GGT's Avatar
    Join Date
    Jan 2010
    Posts
    18,113
    I've never really understood Bitcoin, because it's virtual money....that relies on real money....to turn its profits into cold hard cash.

    It may not be a Ponzi Scheme, but cyber currency that bypasses all Central Banks, and subverts all international Banking laws, is definitely dubious.

    I heard that Venezuela is considering its own cyber currency (because their real money is shit) but maybe that's just a rumor

  6. #6
    Administrator Dreadnaught's Avatar
    Join Date
    Jan 2010
    Posts
    9,168
    All my Berlin friends have been ranting about Bitcoin for years. It's too bad they feel vindicated, but I don't think they are and I don't think they understand what they hold.

  7. #7
    All Worship Ragnarök Loki's Avatar
    Join Date
    Jan 2010
    Posts
    16,244
    Tulips.
    Hope is the denial of reality

  8. #8
    Senior Member RandBlade's Avatar
    Join Date
    Jan 2010
    Posts
    13,665
    Exactly Loki.
    Quote Originally Posted by Ominous Gamer View Post
    Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  9. #9
    Unencrypted Wraith's Avatar
    Join Date
    Jan 2010
    Posts
    4,386
    It's more dotcom stocks in 2000.

  10. #10
    All Worship Ragnarök Loki's Avatar
    Join Date
    Jan 2010
    Posts
    16,244
    Many of those companies were transforming the economy. Bitcoin, not so much.
    Hope is the denial of reality

  11. #11
    Isn't it possible it's a bit of both? I think it's eminently clear that the basic idea of a blockchain and trustless payments is a pretty big deal - big financial companies are looking into implementing something like that for settling payments (our current payments system is ridiculously outdated). The technology underlying bitcoin and other cryptocurrencies is indeed likely to have fairly profound impacts on our financial system, possibly the broader economy. I am just less than convinced that the specific implementation of this technology as a cryptocurrency (or, at least, these cryoptocurrencies) merit their rather exorbitant valuations. It's pretty obvious that this has veered rather far into bubble territory, and the similarities to tulips and other similar bubbles are hard to ignore - especially the difficulty in determining a rational valuation for the underlying item being traded. But I don't think it's fair to dismiss them as irrelevant.
    "When I meet God, I am going to ask him two questions: Why relativity? And why turbulence? I really believe he will have an answer for the first." - Werner Heisenberg (maybe)

  12. #12
    All Worship Ragnarök Loki's Avatar
    Join Date
    Jan 2010
    Posts
    16,244
    They clearly have a niche use. But that doesn't begin to justify the current price nor the rapid increase to this price level.
    Hope is the denial of reality

  13. #13
    Quote Originally Posted by Loki View Post
    They clearly have a niche use. But that doesn't begin to justify the current price nor the rapid increase to this price level.
    It's not really niche - if the entire financial industry switches to trustless settlements, that's a pretty big deal. And that's just the obvious parallel to cryptocurrencies. There's scope to use blockchains for supply chain management, EMRs, even some government tasks like collecting VATs or other transaction-based taxes. I think the technology underlying cryptocurrencies may in fact have wide-ranging uses once people figure it out. It might not be 'disruptive' per se - mostly it's just a better way of enabling some sort of transaction or recordkeeping that used to be cumbersome - but it certainly has the potential to be important.

    That's why I kinda see the comparison Wraith makes to the dotcom boom. A lot of those companies had products that were never going to make money and they were bid up to unreasonable prices without any understanding of the business fundamentals. But the technologies they were based on - and that they were in the process of developing - went on to fundamentally change the global economy, and eventually produced companies that did indeed have wildly profitable products. So I think it's fair to argue that the technology underpinning cryptocurrencies is indeed important and valuable, even if the specific application and iteration of it as a cryptocurrency may end up fleecing a lot of people. And it's even possible to argue that while they're almost all overvalued now, some cryptocurrencies might end up being decent investments in the future, much as was the case with a minority of dotcoms in the 90s (and many in the 2000s).

    The analogy breaks down when you realize that cryptocurrencies aren't a 'product' per se in the way that dotcom companies ostensibly were selling. It's modeled as a currency that is roughly analogous to a forex version of gold that has no storage costs. In that context it's challengin to understand bidding it up past any reasonable approximation of its value when there's no underlying return - it's just a consensus store of value, and the volatility and poor governance make it very hard to fathom why someone would actually desire to use it as a store of value.

    So: the technology underpinning it has some comparisons to the dotcom boom, though likely not quite as momentous, but the 'product' itself might be more akin to a tulip bubble where there is no underlying value to drive price discovery.
    "When I meet God, I am going to ask him two questions: Why relativity? And why turbulence? I really believe he will have an answer for the first." - Werner Heisenberg (maybe)

  14. #14
    All Worship Ragnarök Loki's Avatar
    Join Date
    Jan 2010
    Posts
    16,244
    Bitcoin doesn't have a monopoly on this technology. So the main uses for this technology are unrelated to the availability or price of bitcoin. The niche I was referring to was illicitly transferring funds. It has a clear use for criminal elements, but also governments trying to bust sanctions, and individuals who operate in areas without ready access to currency.
    Hope is the denial of reality

  15. #15
    SEŃOR Member Aimless's Avatar
    Join Date
    Jan 2010
    Posts
    12,447
    Most promising crypto assets should not be thought of as currencies. The underlying value in bitcoin's case, for example, is the value of its decentralized payment processing network which has all the advantages of blockchain technology. Other crypto assets have other foundations for their value. While it is difficult to deny that bitcoin has all the characteristics of a speculative bubble, the value of bitcoin--like other crypto assets--is also dependent on network effects. Bitcoin doesn't have a monopoly on blockchain technology, but it is unchallenged within its actual niche.
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  16. #16
    Quote Originally Posted by Loki View Post
    Bitcoin doesn't have a monopoly on this technology. So the main uses for this technology are unrelated to the availability or price of bitcoin. The niche I was referring to was illicitly transferring funds. It has a clear use for criminal elements, but also governments trying to bust sanctions, and individuals who operate in areas without ready access to currency.
    I think it's an open question whether the majority of bitcoin assets are held by people who want to use it in this manner. While I don't deny that this seems to be a major use of it *as a currency*, and that's problematic to say the least, I question whether that is what is driving pricing or constitutes a big part of bitcoin assets (though it might indeed constitute a decent percentage of the *transactions*). Most people view it not as a currency, but a speculative asset - they're banking on other people (essentially criminals of one sort or another) finding value in bitcoin in the future, so they're pouring money into it now. In fact, I'd bet most don't even view it the way I do (as essentially gold); I think they're not even thinking of this as a 'flight to safety' kind of move, but a purely speculative one.

    I don't really think we disagree here - AIUI we both think that bitcoin pricing is ridiculous and in no way related to its actual value. But I think there's a kernel of innovation in there that is the reason for the justified excitement about it, even if this particular instantiation of the technology has little to recommend it. It's too easy to dismiss bitcoin as a fad, and while I agree that bitcoin is a fad, I don't think the technology that underpins it is irrelevant in the slightest. In fact, I'm pretty sure it and its descendants will have profound impacts on our society.
    "When I meet God, I am going to ask him two questions: Why relativity? And why turbulence? I really believe he will have an answer for the first." - Werner Heisenberg (maybe)

  17. #17
    SEŃOR Member Aimless's Avatar
    Join Date
    Jan 2010
    Posts
    12,447
    Scroll down for some interesting applications for blockchain-based altcoins:

    https://arstechnica.com/tech-policy/...ot-be-all-bad/
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  18. #18
    SEŃOR Member Aimless's Avatar
    Join Date
    Jan 2010
    Posts
    12,447
    Information about bitcoin is currently dominated by the speculative bubble discussion, but there's a lot of very interesting material out there about the development of blockchain-based technology eg. in the form of smart contracts and alternative digital tokens. Discussions about various Ethereum apps are especially interesting. Here's an article about one approach to building a blockchain-based prediction market that seeks to not only predict future outcomes but to also provide a verified and permanent record of outcomes: https://www.wired.com/2017/03/forget...oday-tomorrow/

    The challenges that arise from the meeting between prediction markets and blockchain are very interesting. How much would the best prediction markets be worth?
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  19. #19
    Junior Member
    Join Date
    Jan 2010
    Posts
    7
    Bitcoin is a bubble primarily because of lack of liquidity, if any holder of consequence tries selling their bitcoins the rate will take a major hit. The growth is fueled by miners who sell all they mine immediately, however as it becomes longer and longer to mine it further reduces the amount of available bitcoins driving the price up while the hype is still running strong.

    On the other hand it is an attractive instrument for transactions when you want to avoid the financial institutions that have been strangled by regulation making it extremely difficult to operate even a legitimate business. The speculative hype is actually hurting this aspect of the money as the volatility makes it very difficult fix prices in bitcoins.

    Not that I am not biting my nails for not skipping a meal in a restaurant an buying a few hundred bitcoins some years back or even mining them on my gaming pc when it was possible

  20. #20
    Quote Originally Posted by Asmo View Post
    Bitcoin is a bubble primarily because of lack of liquidity, if any holder of consequence tries selling their bitcoins the rate will take a major hit.
    and thats why bitcoin will eventually be surpassed by a cryptocurrency with better planning. Only 1000 people own about 40% of bitcoin. The Winklevoss twins are "bitcoin billionaires." One person owns 7% off all bitcoin, about $15 billion, and while people have convinced themselves that those bitcoin are lost, all its going to take is a single transaction from that closely watched wallet and the entire bitcoin economy collapses.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  21. #21
    SEŃOR Member Aimless's Avatar
    Join Date
    Jan 2010
    Posts
    12,447
    A pretty cool and useful application of blockchain technology that isn't super nerdy:

    https://guts.tickets/#intro

    Been following this and its competitors due to their relevance to another project. There was a crowdsale that ended today and it'll be very interesting to see if their forecast of a million tickets sold next year proves accurate. Still looks like the strongest competitor for this niche, esp. in Europe, and the market is both huge and largely untapped.
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •