4 ms·

He calls Bitcoin a bubble, and yet, he's launching a new $500 million fund to BUY Bitcoin -- including $150 million of his own money! WHY would he be doing thi

by cs702 9y ago

He calls Bitcoin a bubble, and yet, he's launching a new $500 million fund to BUY Bitcoin -- including $150 million of his own money! WHY would he be doing this? Quoting from the OP, here's his answer: "This is going to be the largest bubble of our lifetimes, and so .. remember, bubbles happen around things that fundamentally change the way we live. The railroad bubble, railroads really fundamentally changed the way we live; the Internet bubble changed the way we live. And so, prices are gonna get way ahead of what they should be. You can make a whole lotta money on the way up. And we plan on it. At one point you're going to have to sell."

empath75 9y ago
I’m gonna ride this Ponzi scheme all the way to the top!
- cs702 9y ago
  Was the railroad bubble of the 1840's [1] a Ponzi scheme? Was the dot-com bubble of the late 1990's [2] a Ponzi scheme? Were the electricity, automobile, aviation, radio, and television bubbles of the "Roaring 20's" [3] Ponzi schemes? Just because something is in an asset-price bubble doesn't necessarily mean it's a Ponzi scheme. Yes, many if not most investors ultimately lost money in the electricity, automobile, aviation, radio, television, railroad, and dot-com bubbles, but those bubbles left behind an enormous amount of investment in infrastructure from which we are benefiting to this day.[4] [1] https://en.wikipedia.org/wiki/Railway_Mania https://en.wikipedia.org/wiki/Railway_Mania [2] https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble [3] https://en.wikipedia.org/wiki/Roaring_Twenties#Economy https://en.wikipedia.org/wiki/Roaring_Twenties#Economy [4] Buffett wrote a great article touching on this in 1999, at the peak of the dot-com bubble: http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm http://archive.fortune.com/magazines/fortune/fortune_archive...
  - Luc 9y ago
    Could you have invested in any of those at the time without losing your shirt along the way? Possibly, maybe, with a lot of luck. Likewise, I don't doubt digital currencies will end up being bigger than they are today, I just don't see a way of investing in them at the moment that will survive the likely implosion of the bubble.
  - optimuspaul 9y ago
    You are comparing cryptocurrencies to highly regulated securities markets. I don't think that is a fair comparison yet. From the average person cryptocurrencies look exactly like a Ponzi Scheme. People who got in early are most likely to make money. Many other could as well. But the majority will not and if a majority tried to get out we'd find that there is not enough liquidity in the market to back it. Maybe someday it will be fair to compare cryptocurrencies to securities, but for now it's is closer to junk bonds or a ponzi scheme. And I don't think a marketing and branding campaign is what it needs, it's structure and security.
    - gruez 9y ago
      >You are comparing cryptocurrencies to highly regulated securities markets but SEC wasn't even founded til 1934, which makes that point only apply to the dotcom bubble.
  - NicoJuicy 9y ago
    Also, if it's a ponzi scheme. Who's the guy on top? Sathoshi who hasn't used any money of it. If you're doing a Ponzi scheme, don't use a platform where you can track every transaction.
    - optimuspaul 9y ago
      First off, we don't know that he/she hasn't used any of the money. We only know that this "person" hasn't used any of the coin we know to belong to them. We don't know how much other coin they have mined and subsequently spent. I don't think you at point to those first blocks as evidence it's not ponzi in nature. I don't think it is a ponzi scheme or at least I hope it's not. But I do think that it looks an awful lot like one.
      - rothbardrand 9y ago
        It can't be a ponzi scheme by definition, because you can see all the transactions. People aren't holding fake "bitcoin accounts" whose value is reported by a central controlling entity who is misrepresenting the value of the total system. "people bought early and profited" is not the definition of a ponzi scheme, or Picassos are a ponzi scheme as is anything where the value has gone up over time.
      - NicoJuicy 9y ago
        Perhaps you missed https://news.ycombinator.com/item?id=15299849 https://news.ycombinator.com/item?id=15299849
jermaustin1 9y ago
Also, by being "an authority" and calling it a bubble, he may be trying to influence the price downward in the short term. And he might actually believe it's a bubble, but that just means that it will grow quickly then burst. I'm no expert, and honestly, I don't even get what BTC actually is, nor do I care about it, so I look at it simply as a commodity. And I see the phenomenon of BTC trading more as a lot of little bubbles. Each time it bursts, you get a lot of new guys coming in at the lower price thinking it will go back up, and when it does, either someone hacks something to steal money, or people get cold feet and start selling, bursting that bubble, bringing the cost back down for more people to in on it. It is a vicious cycle that keeps happening, and people keep buying.
rothbardrand 9y ago
You seem to have missed the operative words "is going to be". eg: he thinks the bubble hasn't started. There's some support for that-- bitcoin is not widely held, most people are still in the denial stage ("it can't work") and it's not really something that has "crossed the chasm" yet. This is the first time a new, global form of money has been invented and it's going thru the technology adoption life cycle. But it's not a stock. It's not something that pays profits, so people aren't sure how to value it. It's not fiat which is relatively stable in price because it's a new technology whose price will have to rise to allow everyone who wants some to have some (assuming large numbers of people want some) so it doesn't fit the traditional paradigms. Comparing it to stock or money markets is going to risk making some false equivalencies or assumptions.
csomar 9y ago
His hedge fund is about "trading" not "investing". So he thinks he can make money out of the volatility.

by cs702 9y ago

empath75 9y ago

I’m gonna ride this Ponzi scheme all the way to the top!

cs702 9y ago
Was the railroad bubble of the 1840's [1] a Ponzi scheme? Was the dot-com bubble of the late 1990's [2] a Ponzi scheme? Were the electricity, automobile, aviation, radio, and television bubbles of the "Roaring 20's" [3] Ponzi schemes? Just because something is in an asset-price bubble doesn't necessarily mean it's a Ponzi scheme. Yes, many if not most investors ultimately lost money in the electricity, automobile, aviation, radio, television, railroad, and dot-com bubbles, but those bubbles left behind an enormous amount of investment in infrastructure from which we are benefiting to this day.[4] [1] https://en.wikipedia.org/wiki/Railway_Mania https://en.wikipedia.org/wiki/Railway_Mania [2] https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble [3] https://en.wikipedia.org/wiki/Roaring_Twenties#Economy https://en.wikipedia.org/wiki/Roaring_Twenties#Economy [4] Buffett wrote a great article touching on this in 1999, at the peak of the dot-com bubble: http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm http://archive.fortune.com/magazines/fortune/fortune_archive...
- Luc 9y ago
  Could you have invested in any of those at the time without losing your shirt along the way? Possibly, maybe, with a lot of luck. Likewise, I don't doubt digital currencies will end up being bigger than they are today, I just don't see a way of investing in them at the moment that will survive the likely implosion of the bubble.
- optimuspaul 9y ago
  You are comparing cryptocurrencies to highly regulated securities markets. I don't think that is a fair comparison yet. From the average person cryptocurrencies look exactly like a Ponzi Scheme. People who got in early are most likely to make money. Many other could as well. But the majority will not and if a majority tried to get out we'd find that there is not enough liquidity in the market to back it. Maybe someday it will be fair to compare cryptocurrencies to securities, but for now it's is closer to junk bonds or a ponzi scheme. And I don't think a marketing and branding campaign is what it needs, it's structure and security.
  - gruez 9y ago
    >You are comparing cryptocurrencies to highly regulated securities markets but SEC wasn't even founded til 1934, which makes that point only apply to the dotcom bubble.
- NicoJuicy 9y ago
  Also, if it's a ponzi scheme. Who's the guy on top? Sathoshi who hasn't used any money of it. If you're doing a Ponzi scheme, don't use a platform where you can track every transaction.
  - optimuspaul 9y ago
    First off, we don't know that he/she hasn't used any of the money. We only know that this "person" hasn't used any of the coin we know to belong to them. We don't know how much other coin they have mined and subsequently spent. I don't think you at point to those first blocks as evidence it's not ponzi in nature. I don't think it is a ponzi scheme or at least I hope it's not. But I do think that it looks an awful lot like one.
    - rothbardrand 9y ago
      It can't be a ponzi scheme by definition, because you can see all the transactions. People aren't holding fake "bitcoin accounts" whose value is reported by a central controlling entity who is misrepresenting the value of the total system. "people bought early and profited" is not the definition of a ponzi scheme, or Picassos are a ponzi scheme as is anything where the value has gone up over time.
    - NicoJuicy 9y ago
      Perhaps you missed https://news.ycombinator.com/item?id=15299849 https://news.ycombinator.com/item?id=15299849

jermaustin1 9y ago

Also, by being "an authority" and calling it a bubble, he may be trying to influence the price downward in the short term. And he might actually believe it's a bubble, but that just means that it will grow quickly then burst. I'm no expert, and honestly, I don't even get what BTC actually is, nor do I care about it, so I look at it simply as a commodity. And I see the phenomenon of BTC trading more as a lot of little bubbles. Each time it bursts, you get a lot of new guys coming in at the lower price thinking it will go back up, and when it does, either someone hacks something to steal money, or people get cold feet and start selling, bursting that bubble, bringing the cost back down for more people to in on it. It is a vicious cycle that keeps happening, and people keep buying.

rothbardrand 9y ago

You seem to have missed the operative words "is going to be". eg: he thinks the bubble hasn't started. There's some support for that-- bitcoin is not widely held, most people are still in the denial stage ("it can't work") and it's not really something that has "crossed the chasm" yet. This is the first time a new, global form of money has been invented and it's going thru the technology adoption life cycle. But it's not a stock. It's not something that pays profits, so people aren't sure how to value it. It's not fiat which is relatively stable in price because it's a new technology whose price will have to rise to allow everyone who wants some to have some (assuming large numbers of people want some) so it doesn't fit the traditional paradigms. Comparing it to stock or money markets is going to risk making some false equivalencies or assumptions.

csomar 9y ago

His hedge fund is about "trading" not "investing". So he thinks he can make money out of the volatility.