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People spend their entire lives focused on wealth accumulation. Bitcoin has endowed many people with financial means in a way completely orthogonal to their da

People spend their entire lives focused on wealth accumulation. Bitcoin has endowed many people with financial means in a way completely orthogonal to their day-to-day work. Say what you will about bubbles, but this "fund manager's" perspective is healthy check on reality.

mikepurvis 9y ago
While true, as someone with a number of friends just now "getting into" bitcoin, I find the zero sum aspect of it troubling. Assuming a crash/correction is coming, most of the wealth that accrued to the early adopters will be at the expense of these later, less-informed "investors" who bought in thinking it was a no fail quick buck.
- nihonde 9y ago
  That’s how markets work. Early adopters take risks that pay off when late-comers try to bet on a proven winner.
  - ISL 9y ago
    It doesn't have to be a "bet" on a proven winner. Later investors can simply accept lower returns from a proven winner.
  - frozenport 9y ago
    Another view is that markets are not about gambling but rather investing? For example, index matched funds grow because the economy of the world, as a whole, is growing.
    - randoramax 9y ago
      That is the theory. The practice is that markets crash and people cannot retire anymore. A lot like gambling
      - imtringued 9y ago
        Markets can recover. If you invest in stock you have to consider that you may not be able to liquidate it within the next 10 years. What if the markets don't recover? If they don't recover you will have far larger problems than your stock portfolio being in the red. The machines and people don't just disappear unless there is a war. Even if you fail to do that as long as you have started investing sufficiently early enough - let's say 30 years before retirement (around 35 years old) - you probably have experienced at least one recession and recovery until retirement. If suddenly markets crash during retirement by 50% on an asset that is up by 150% does it matter? You still got away with a profit. And nobody forces you to liquidate everything at once. So sure if you plan to draw out 4% of your stocks you will have decreased your portfolio by 8% every year.
    - nihonde 9y ago
      Index funds are pegged to a lot of activities that look like gambling, but the risks are somewhat hedged by a limited kind of diversification. It’s like betting every blackjack hand in the house at once (setting aside the house’s favorable odds).
      - deleted 9y ago
        [deleted]
      - greglindahl 9y ago
        Huh? If I have an S&P 500 Index fund, how is that an activity that looks like gambling, or has a limited kind of diversification? It's narrow index funds that are gambling. Not all index funds.
  - thkim 9y ago
    no, it is not how normal markets work. a stock, bond, real estate "generates income". that's why it has value. bitcoin does not.
    - ravingraven 9y ago
      A) Bitoin is not a stock, it's a currency. It'ss value lies in its utility. B) There are (a lot of) stocks that do not pay dividends and never will. There are a lot of stocks that were issued by companies that never made a profit. Both of those categories are traded with a value above zero, how do you explain that?
      - glastra 9y ago
        Bitcoin has absolutely no utility as a currency. Look at the current mempool [0] to see why. People then switch to arguing that it's a great store of value. Given its volatility this makes no sense. [0]: https://jochen-hoenicke.de/queue/#24h https://jochen-hoenicke.de/queue/#24h
        ravingraven 9y ago
        To clarify: Bitcoin is deeply flawed, and I agree with you that Bitcoin is probably worth less than many people speculate it is worth (but not zero). Cryptocurrencies in general have a lot of utility and solve real problems.
        Cthulhu_ 9y ago
        And yet they introduce a lot of new problems too - problems that have been solved by traditional currencies a while ago. Problems like exchange security and protection to citizens. If my bank goes bankrupt for whatever reason, the government has an insurance for up to 100K for me. When mtgox went down, everyone lost their money.
        Lunar_Lamp 9y ago
        I'm not sure I agree here. Those are definitely real issues that you've highlighted, but they're not because of crypto currency. There's no reason that a crypto-exchange cannot be as secure as a bank (or more), and that governments cannot insure crypto deposits up to some value. Those are purely problems for regulators/governments, which have been relatively slow to adapt legislation. The problems you highlight are real, and can be good reasons to favour traditional currencies, but they're also easy problems to solve - the thinking has already been done once for traditional currencies and the solutions for crypto are mostly identical.
  - cryptodogemoon 9y ago
    Not with Bitcoin. Satoshi designed the supply to rapidly mint the majority of coins to the smallest group of users for the least amount of effort/capital/work input. It's designed to manipulate any user who joins the system after you. Satoshi could easily have chosen a linear curve to align with time, user growth, and increase in work input yet instead the manipulative log curve was chosen. Old users are now incentived to attempt to psychologically exploit new people by selling the asset for far more than the cost of production or acquisition.
    - celticninja 9y ago
      You bring this up in every crypto thread. Do you have an alternative suggestion as to how it should work that could actually be implemented now in a new crypto?
      - mikepurvis 9y ago
        Isn't it fundamentally a bootstrapping problem? A state can reasonably presume to sell a new currency in exchange for older (or foreign) currency— this is similar to issuing a bond or whatever else to raise money. And there's a guarantee of value in the sense that the state will accept the currency later on as your taxes. The Bitcoin network/ecosystem has nothing to offer in this sense— there's no plausible reason for it to be "raising" money by direct sales, and no one owes it taxes. So the initial tokens were distributed based on the fact that they were mined by early adopters before the difficulty got to be too great. There is indeed a basic unfairness in this, but it's not obvious to me how to resolve it for future projects of this kind.
      - cryptodogemoon 9y ago
        A linear distribution curve that matches work/watt input. This modestly levels the playing field, although it simply allows existing capital to match the input/output. Satoshi style curves are both capital dependent and skewed disproportionately to the first to arrive within the tiny timeframe. Anti-sybil attacks would be immensely beneficial. Encouragement of honest economic activity. Scaling of bandwidth and fees. The ideal solution is a PoW that is computationally useful and desirable, BOINC, folding@home. Ethereum almost does this, but PoW algos as they exist now are anti-scale by design, where increasing computational power does not improve the network at all. The foreseeable longevity of PoW is ungodly waste, when a world wide distributed computing network has potential far far beyond brute force hash puzzles.
- deleted 9y ago
  [deleted]
- EmielMols 9y ago
  This a 100 times. The crypto currency hype only (or at least mainly) redistributes wealth, in my eyes to (tech savvy) people-with-means-already. Yes there might be empowering stories of "smart single moms" making serious money by betting on Bitcoin, but as a whole it only enlarges income equality between people, arguably one of the issues of our time.
  - etoir 9y ago
    But who does it redistribute the wealth from? Is it broke people, people working several jobs on minimum wage, people who have to use food pantries, people trapped in debt? Not at all. It's people who already have a bunch of liquid assets to play with. People who have earned decent money, saved it and previously were invested in the stock market, gold, savings accounts. Not necessarily rich people (not just rich people), but well-off people who have money they don't need sitting around. I am young, have a high income and a tiny net worth. I got lucky by buying a tiny amount of bitcoin a few years ago purely because I was interested in the tech. There's lots of things about my situation, and the situation of other people in my society which are unfair. But baby-boomers with nest eggs cashing me out because they feel entitled to make an easy buck and are buying something they don't understand doesn't seem like the most important injustice.
    - EmielMols 9y ago
      > Is it broke people, people working several jobs on minimum wage, ... people trapped in debt? At least in Europe, it is not uncommon that bank/pension/state funds (in effect: everybody's money) buy in latest to these stocks. Allocating resources in society is a hard problem, and capital markets overall provide a valuable service in deciding where resources should go. But when some of these markets function more or less like a lottery (or ponzi scheme), I don't see why a society should support (or even worse: idolize) its participants.
    - rootlocus 9y ago
      > But baby-boomers with nest eggs cashing me out because they feel entitled to make an easy buck and are buying something they don't understand doesn't seem like the most important injustice. That's condescending, hypocritical bullshit. Why do you feel entitled to "cashing out" on their savings because you're tech savvy? > Not necessarily rich people (not just rich people), but well-off people who have money they don't need sitting around. This is straight up delusional. I'm appalled that you would spend so much time describing who you think invests in cryptocurrencies, just to justify yourself profiting off them. Actually, most people who invest in the stock market know better than to get involved with bitcoin. Most people who hyped its value lately are the kind of people who have no idea what's about, invest poorly and have fewer funds. [1] So yes, most likely your profit came from "broke people, people working several jobs on minimum wage, people who have to use food pantries, people trapped in debt". At least don't try to pretend it's otherwise. [1] https://www.engadget.com/amp/2017/12/12/bitcoin-mania-mortage-house-investors/ https://www.engadget.com/amp/2017/12/12/bitcoin-mania-mortag...
- Tepix 9y ago
  "no fail quick buck"? If you listen to mass media for the last several years whenever they mention bitcoin they tell you it's an incredibly risky investment.
  - Cthulhu_ 9y ago
    Yes, but at the same time you hear 30-100% gains in the span of one day and people going "I just bought a lamborghini" - survivorship bias and all that.
    - Tepix 9y ago
      I don't know - whenever I read about bitcoin rising it is immediately followed by something like "last thursday bitcon went down by 20%" so people who only read that will get the impression that it's dangerous to invest.
- PineappleFund 9y ago
  Hi, creator of the Pineapple Fund here (pineapplefund.org/verification.txt) I am actually quite sad to see the current state of the cryptocurrency community, and how people in it these days widely misrepresent the risk and intricacies of bitcoin/crypto. When I first got into bitcoin, most people were there because they were fascinated in building a decentralized currency. Profit seeking was always a part, but not the predominant part. I'm a little bit sad to see where crypto is today. But I think the original faction is still alive.
  - rootlocus 9y ago
    Not everyone will be able to profit off of bitcoin. Worse, those who will, will do so at the expense of everyone else. There's only two ways this bubble will burst: 1. Inflation: the value of fiat currencies drops to match the supposed value of bitcoin, which negatively affects everyone 2. Only the first people to cash out actually turn a profit. Every other person who invested will lose everything. Either way, the money you now made from bitcoin, came from people who will probably lose their savings contributing to the bubble.
  - pretentiousPear 9y ago
    How do you see the current risks present in bitcoin/crypto? How should it be represented? Genuine question.
  - deleted 9y ago
    [deleted]
thkim 9y ago
bitcoin is just extortion on craze of the crowd. if no income is been generated by it, then its value is arbitrary. an investment asset needs a cash flow to repay investment and then some. bitcoin has none. i admit bitcoin is not the only asset that has this characteristic.

mikepurvis 9y ago

While true, as someone with a number of friends just now "getting into" bitcoin, I find the zero sum aspect of it troubling. Assuming a crash/correction is coming, most of the wealth that accrued to the early adopters will be at the expense of these later, less-informed "investors" who bought in thinking it was a no fail quick buck.

nihonde 9y ago
That’s how markets work. Early adopters take risks that pay off when late-comers try to bet on a proven winner.
- ISL 9y ago
  It doesn't have to be a "bet" on a proven winner. Later investors can simply accept lower returns from a proven winner.
- frozenport 9y ago
  Another view is that markets are not about gambling but rather investing? For example, index matched funds grow because the economy of the world, as a whole, is growing.
  - randoramax 9y ago
    That is the theory. The practice is that markets crash and people cannot retire anymore. A lot like gambling
    - imtringued 9y ago
      Markets can recover. If you invest in stock you have to consider that you may not be able to liquidate it within the next 10 years. What if the markets don't recover? If they don't recover you will have far larger problems than your stock portfolio being in the red. The machines and people don't just disappear unless there is a war. Even if you fail to do that as long as you have started investing sufficiently early enough - let's say 30 years before retirement (around 35 years old) - you probably have experienced at least one recession and recovery until retirement. If suddenly markets crash during retirement by 50% on an asset that is up by 150% does it matter? You still got away with a profit. And nobody forces you to liquidate everything at once. So sure if you plan to draw out 4% of your stocks you will have decreased your portfolio by 8% every year.
  - nihonde 9y ago
    Index funds are pegged to a lot of activities that look like gambling, but the risks are somewhat hedged by a limited kind of diversification. It’s like betting every blackjack hand in the house at once (setting aside the house’s favorable odds).
    - deleted 9y ago
      [deleted]
    - greglindahl 9y ago
      Huh? If I have an S&P 500 Index fund, how is that an activity that looks like gambling, or has a limited kind of diversification? It's narrow index funds that are gambling. Not all index funds.
- thkim 9y ago
  no, it is not how normal markets work. a stock, bond, real estate "generates income". that's why it has value. bitcoin does not.
  - ravingraven 9y ago
    A) Bitoin is not a stock, it's a currency. It'ss value lies in its utility. B) There are (a lot of) stocks that do not pay dividends and never will. There are a lot of stocks that were issued by companies that never made a profit. Both of those categories are traded with a value above zero, how do you explain that?
    - glastra 9y ago
      Bitcoin has absolutely no utility as a currency. Look at the current mempool [0] to see why. People then switch to arguing that it's a great store of value. Given its volatility this makes no sense. [0]: https://jochen-hoenicke.de/queue/#24h https://jochen-hoenicke.de/queue/#24h
      - ravingraven 9y ago
        To clarify: Bitcoin is deeply flawed, and I agree with you that Bitcoin is probably worth less than many people speculate it is worth (but not zero). Cryptocurrencies in general have a lot of utility and solve real problems.
        Cthulhu_ 9y ago
        And yet they introduce a lot of new problems too - problems that have been solved by traditional currencies a while ago. Problems like exchange security and protection to citizens. If my bank goes bankrupt for whatever reason, the government has an insurance for up to 100K for me. When mtgox went down, everyone lost their money.
        Lunar_Lamp 9y ago
        I'm not sure I agree here. Those are definitely real issues that you've highlighted, but they're not because of crypto currency. There's no reason that a crypto-exchange cannot be as secure as a bank (or more), and that governments cannot insure crypto deposits up to some value. Those are purely problems for regulators/governments, which have been relatively slow to adapt legislation. The problems you highlight are real, and can be good reasons to favour traditional currencies, but they're also easy problems to solve - the thinking has already been done once for traditional currencies and the solutions for crypto are mostly identical.
- cryptodogemoon 9y ago
  Not with Bitcoin. Satoshi designed the supply to rapidly mint the majority of coins to the smallest group of users for the least amount of effort/capital/work input. It's designed to manipulate any user who joins the system after you. Satoshi could easily have chosen a linear curve to align with time, user growth, and increase in work input yet instead the manipulative log curve was chosen. Old users are now incentived to attempt to psychologically exploit new people by selling the asset for far more than the cost of production or acquisition.
  - celticninja 9y ago
    You bring this up in every crypto thread. Do you have an alternative suggestion as to how it should work that could actually be implemented now in a new crypto?
    - mikepurvis 9y ago
      Isn't it fundamentally a bootstrapping problem? A state can reasonably presume to sell a new currency in exchange for older (or foreign) currency— this is similar to issuing a bond or whatever else to raise money. And there's a guarantee of value in the sense that the state will accept the currency later on as your taxes. The Bitcoin network/ecosystem has nothing to offer in this sense— there's no plausible reason for it to be "raising" money by direct sales, and no one owes it taxes. So the initial tokens were distributed based on the fact that they were mined by early adopters before the difficulty got to be too great. There is indeed a basic unfairness in this, but it's not obvious to me how to resolve it for future projects of this kind.
    - cryptodogemoon 9y ago
      A linear distribution curve that matches work/watt input. This modestly levels the playing field, although it simply allows existing capital to match the input/output. Satoshi style curves are both capital dependent and skewed disproportionately to the first to arrive within the tiny timeframe. Anti-sybil attacks would be immensely beneficial. Encouragement of honest economic activity. Scaling of bandwidth and fees. The ideal solution is a PoW that is computationally useful and desirable, BOINC, folding@home. Ethereum almost does this, but PoW algos as they exist now are anti-scale by design, where increasing computational power does not improve the network at all. The foreseeable longevity of PoW is ungodly waste, when a world wide distributed computing network has potential far far beyond brute force hash puzzles.
deleted 9y ago
[deleted]
EmielMols 9y ago
This a 100 times. The crypto currency hype only (or at least mainly) redistributes wealth, in my eyes to (tech savvy) people-with-means-already. Yes there might be empowering stories of "smart single moms" making serious money by betting on Bitcoin, but as a whole it only enlarges income equality between people, arguably one of the issues of our time.
- etoir 9y ago
  But who does it redistribute the wealth from? Is it broke people, people working several jobs on minimum wage, people who have to use food pantries, people trapped in debt? Not at all. It's people who already have a bunch of liquid assets to play with. People who have earned decent money, saved it and previously were invested in the stock market, gold, savings accounts. Not necessarily rich people (not just rich people), but well-off people who have money they don't need sitting around. I am young, have a high income and a tiny net worth. I got lucky by buying a tiny amount of bitcoin a few years ago purely because I was interested in the tech. There's lots of things about my situation, and the situation of other people in my society which are unfair. But baby-boomers with nest eggs cashing me out because they feel entitled to make an easy buck and are buying something they don't understand doesn't seem like the most important injustice.
  - EmielMols 9y ago
    > Is it broke people, people working several jobs on minimum wage, ... people trapped in debt? At least in Europe, it is not uncommon that bank/pension/state funds (in effect: everybody's money) buy in latest to these stocks. Allocating resources in society is a hard problem, and capital markets overall provide a valuable service in deciding where resources should go. But when some of these markets function more or less like a lottery (or ponzi scheme), I don't see why a society should support (or even worse: idolize) its participants.
  - rootlocus 9y ago
    > But baby-boomers with nest eggs cashing me out because they feel entitled to make an easy buck and are buying something they don't understand doesn't seem like the most important injustice. That's condescending, hypocritical bullshit. Why do you feel entitled to "cashing out" on their savings because you're tech savvy? > Not necessarily rich people (not just rich people), but well-off people who have money they don't need sitting around. This is straight up delusional. I'm appalled that you would spend so much time describing who you think invests in cryptocurrencies, just to justify yourself profiting off them. Actually, most people who invest in the stock market know better than to get involved with bitcoin. Most people who hyped its value lately are the kind of people who have no idea what's about, invest poorly and have fewer funds. [1] So yes, most likely your profit came from "broke people, people working several jobs on minimum wage, people who have to use food pantries, people trapped in debt". At least don't try to pretend it's otherwise. [1] https://www.engadget.com/amp/2017/12/12/bitcoin-mania-mortage-house-investors/ https://www.engadget.com/amp/2017/12/12/bitcoin-mania-mortag...
Tepix 9y ago
"no fail quick buck"? If you listen to mass media for the last several years whenever they mention bitcoin they tell you it's an incredibly risky investment.
- Cthulhu_ 9y ago
  Yes, but at the same time you hear 30-100% gains in the span of one day and people going "I just bought a lamborghini" - survivorship bias and all that.
  - Tepix 9y ago
    I don't know - whenever I read about bitcoin rising it is immediately followed by something like "last thursday bitcon went down by 20%" so people who only read that will get the impression that it's dangerous to invest.
PineappleFund 9y ago
Hi, creator of the Pineapple Fund here (pineapplefund.org/verification.txt) I am actually quite sad to see the current state of the cryptocurrency community, and how people in it these days widely misrepresent the risk and intricacies of bitcoin/crypto. When I first got into bitcoin, most people were there because they were fascinated in building a decentralized currency. Profit seeking was always a part, but not the predominant part. I'm a little bit sad to see where crypto is today. But I think the original faction is still alive.
- rootlocus 9y ago
  Not everyone will be able to profit off of bitcoin. Worse, those who will, will do so at the expense of everyone else. There's only two ways this bubble will burst: 1. Inflation: the value of fiat currencies drops to match the supposed value of bitcoin, which negatively affects everyone 2. Only the first people to cash out actually turn a profit. Every other person who invested will lose everything. Either way, the money you now made from bitcoin, came from people who will probably lose their savings contributing to the bubble.
- pretentiousPear 9y ago
  How do you see the current risks present in bitcoin/crypto? How should it be represented? Genuine question.
- deleted 9y ago
  [deleted]

thkim 9y ago

bitcoin is just extortion on craze of the crowd. if no income is been generated by it, then its value is arbitrary. an investment asset needs a cash flow to repay investment and then some. bitcoin has none. i admit bitcoin is not the only asset that has this characteristic.