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Bitcoin is a massive ponzi-scheme and it will crash imminently. Or, you know, it isn't and it won't. It's really interesting to me to follow on the side-lines

Bitcoin is a massive ponzi-scheme and it will crash imminently. Or, you know, it isn't and it won't. It's really interesting to me to follow on the side-lines of crypto as the price it's exchanging at moves up. In the last week I've had non-techies mention how they were buying Bitcoin (ostensibly to make fast, easy money). What intrigues me most is that amid the hysteria, a lot of posters on reddit and elsewhere seem to be of the belief that everyone can get rich on Bitcoin - and that if everyone buys in the price won't crash. Moreso, most of the people I'm seeing discuss it don't seem to have any knowledge of similar financial events from the past (e.g. the dotcom bubble, tulip mania). I'm not going to begrudge anyone that's made money from Bitcoin, nor am I going to judge anyone else for putting money in at this stage (anecdotally, the chatter I'm hearing in work from non-techies points to an ample supply of greater fools), but I think it should raise alarm bells that financial literacy is so low in the general populace that in most cases people are making these decisions with so little information to hand of what they're buying (I think it's fair to believe at this point that most of the buyers at this level aren't familiar with what the blockchain is as a concept - they just see rising valuations).

dingaling 9y ago
> massive ponzi-scheme Existing investors are making profit through financial transactions, so it's not a Ponzi. A Ponzi requires newcomers to contribute funds to the scheme without any exchange of assets.
- headmelted 9y ago
  > Existing investors are making profit through financial transactions Is this true? Are people exchanging bitcoin for anything other than fiat currency? (Outside of a few marginal use cases, are people actually bartering with bitcoin in real trade?)
  - nlperguiy 9y ago
    Why would bitcoin mempool be oversaturated year after year at Christmas time if not for the people buying stuff?
    - headmelted 9y ago
      There could be a bunch of reasons. Primarily I would think transaction volume would peak as people move to-and-from fiat currencies to spend money at Christmas. It would explain likewise traffic without necessarily having Bitcoin be directly used in the purchasing, which seems much more likely.
em3rgent0rdr 9y ago
> "it should raise alarm bells that financial literacy is so low..." This. Even though I'm a bitcoin proponent, I get very concerned when I hear acquaintances talking about investing in Bitcoin while not being aware of much safer diversified investments like Vanguard index funds.
- headmelted 9y ago
  This. I tried to explain how index funds were safer (and what they were) and I got told "the stock market is a casino run by the banks". People believe what they want to believe.
nlperguiy 9y ago
Of course, if they knew this was still early stage technology that does not even work as it is meant to be working and that a bunch of new developments are research level discoveries that take years to finetune, they would never put in that much money. Bitcoin being the oldest, 2 years ago had some serious implementation troubles, today it shows scaling issues due to popularity rise. All other coins have identical issues that aren't visible because they aren't popular.
opportune 9y ago
What we're seeing isn't the utility of Bitcoin going up, we're seeing what happens when supply meets demand. The total number of Bitcoins that can ever be mined is fixed, but I think the real reason the price is going up is that the current rate of mining can't sustain the rate at which people want to get into crypto. But what change in utility is driving the increase in demand? Right now Bitcoin isn't good at (and no amount of revisionism will change this) it's original purpose of being currency, which is literally Bitcoin's only utility other than the fact that there are a limited number of them. So it's actually less useful now than in the past... meaning the increase in demand is in spite of that change, leading me to believe it's all due to more people wanting crypto. I feel the same way as you, I think a lot of people who don't know anything about crypto are making rash decisions and it's setting off alarm bells in my head too. I don't even know why people are buying Bitcoin over most alts because to me Bitcoin has so much less utility compared to what BCH, ETH, Monero. Not that Bitcoin is worthless, it's just that it seems like people are only buying it because it has the name "Bitcoin". That's why I think it's going to crash.
- headmelted 9y ago
  I think most of this can be explained by thinking of Bitcoin not as digital dollars, but as digital gold (a perpetually limited, deflationary value store that is immune to central-bank meddling). A lot of us in tech are really excited about crypto, but the economic realities mean it's very likely that for any particular token to be treated seriously as a currency it would need central bank support - which is anathema to Bitcoin's stated purpose.
  - opportune 9y ago
    Yes, I am aware of that. I'm not confusing crypto with Bitcoin, actually I'm bullish about crypto in general. I'm saying that Bitcoin the currency is like pewter or lead compared to BCH or ETHC. That's why it's not gold. It's like a version of gold that's heavier and more useless than some other perpetually limited, deflationary value store. In fact I think I'm going to start calling Bitcoin "digital lead" because it's so hard to move it around.

dingaling 9y ago

> massive ponzi-scheme Existing investors are making profit through financial transactions, so it's not a Ponzi. A Ponzi requires newcomers to contribute funds to the scheme without any exchange of assets.

headmelted 9y ago
> Existing investors are making profit through financial transactions Is this true? Are people exchanging bitcoin for anything other than fiat currency? (Outside of a few marginal use cases, are people actually bartering with bitcoin in real trade?)
- nlperguiy 9y ago
  Why would bitcoin mempool be oversaturated year after year at Christmas time if not for the people buying stuff?
  - headmelted 9y ago
    There could be a bunch of reasons. Primarily I would think transaction volume would peak as people move to-and-from fiat currencies to spend money at Christmas. It would explain likewise traffic without necessarily having Bitcoin be directly used in the purchasing, which seems much more likely.

em3rgent0rdr 9y ago

> "it should raise alarm bells that financial literacy is so low..." This. Even though I'm a bitcoin proponent, I get very concerned when I hear acquaintances talking about investing in Bitcoin while not being aware of much safer diversified investments like Vanguard index funds.

headmelted 9y ago
This. I tried to explain how index funds were safer (and what they were) and I got told "the stock market is a casino run by the banks". People believe what they want to believe.

nlperguiy 9y ago

Of course, if they knew this was still early stage technology that does not even work as it is meant to be working and that a bunch of new developments are research level discoveries that take years to finetune, they would never put in that much money. Bitcoin being the oldest, 2 years ago had some serious implementation troubles, today it shows scaling issues due to popularity rise. All other coins have identical issues that aren't visible because they aren't popular.

opportune 9y ago

What we're seeing isn't the utility of Bitcoin going up, we're seeing what happens when supply meets demand. The total number of Bitcoins that can ever be mined is fixed, but I think the real reason the price is going up is that the current rate of mining can't sustain the rate at which people want to get into crypto. But what change in utility is driving the increase in demand? Right now Bitcoin isn't good at (and no amount of revisionism will change this) it's original purpose of being currency, which is literally Bitcoin's only utility other than the fact that there are a limited number of them. So it's actually less useful now than in the past... meaning the increase in demand is in spite of that change, leading me to believe it's all due to more people wanting crypto. I feel the same way as you, I think a lot of people who don't know anything about crypto are making rash decisions and it's setting off alarm bells in my head too. I don't even know why people are buying Bitcoin over most alts because to me Bitcoin has so much less utility compared to what BCH, ETH, Monero. Not that Bitcoin is worthless, it's just that it seems like people are only buying it because it has the name "Bitcoin". That's why I think it's going to crash.

headmelted 9y ago
I think most of this can be explained by thinking of Bitcoin not as digital dollars, but as digital gold (a perpetually limited, deflationary value store that is immune to central-bank meddling). A lot of us in tech are really excited about crypto, but the economic realities mean it's very likely that for any particular token to be treated seriously as a currency it would need central bank support - which is anathema to Bitcoin's stated purpose.
- opportune 9y ago
  Yes, I am aware of that. I'm not confusing crypto with Bitcoin, actually I'm bullish about crypto in general. I'm saying that Bitcoin the currency is like pewter or lead compared to BCH or ETHC. That's why it's not gold. It's like a version of gold that's heavier and more useless than some other perpetually limited, deflationary value store. In fact I think I'm going to start calling Bitcoin "digital lead" because it's so hard to move it around.