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I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin as anything other than an elaborate pyramid scheme. Said another way, why would anyone "in

I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin as anything other than an elaborate pyramid scheme. Said another way, why would anyone "invest" in Bitcoin unless there is an expectation that the price of Bitcoin will increase? At some point, the price of Bitcoin will level off, investors will exit, and then the price will fall, quickly and steeply.

solotronics 9y ago
why would anyone invest in anything unless there is an expectation that the price will increase? investing isnt charity
- danielbarla 9y ago
  We could say that many had an educated guess that Bitcoin would be the way of the future. It's initial promise was brilliant, however at the time of writing it seems to have lost much of its use (e.g. cheap micro-transactions between peers), due to technical and economic issues (limited transaction rates, insane volatility). It's not clear whether any of these will change, so I wonder what people are investing in? I believe what the parent poster was referring to is that much of the investment seems to be purely driven by speculation on the value, rather than its promise as a platform.
MichaelApproved 9y ago
Bitcoin's purpose isn't for investing. People might choose to invest and speculate on the future value of Bitcoin but, among other things, Bitcoin's purpose is a currency that is decoupled from a central government.
- Bob2019 9y ago
  How do you decouple from governments banning businesses from accepting it?
  - ryanmerket 9y ago
    Sell it for cash to someone via localbitcoins.com? Fly to another country that does accept it, open a checking account there?
  - hndamien 9y ago
    It is only important that people accept it. I think we can call that mission accomplished.
- madlynormal 9y ago
  How feasible is Bitcoin as a currency when transaction fees can exceed $20/USD?
  - MichaelApproved 9y ago
    Not very feasible, right now. There are some technical hurdles that can be overcome with some improvements in the code which will drop the transactions fees to almost nothing. For now, Bitcoin seems to be taking shape as a store of value, like gold. Another, more updated crypto currency, might take over as day-to-day currency while Bitcoin is the larger value store. Hard to say how things will shake out but it's surprisingly still the early days of crypto technology.
sedtrader 9y ago
Wants important is the blockchain technology. As Bitcoin continues to grow it further legitimizes the strength of the blockchain technology which can be applied to many other areas in tech. Bitcoin itself is useless, essentially sending "thin air" back and forth as someone else put it.
- fred_is_fred 9y ago
  And if bitcoin crashes and people who took out mortgages to buy it end up on the street it could take the reputation of blockchain down with it...
  - matwood 9y ago
    Lets tone it a down a bit. I'm sure there are idiots who took out a HELOC to buy BTC, just like idiots who did it with gold, or to bet the horses, or buy lottery tickets. A few idiots can't really change the reputation of something. The internet somehow survived through a crash that led the economy into a recession. When/If BTC crashes, it will be a small blip in the economy.
- craigc 9y ago
  I think dismissing Bitcoin and promoting blockchain technology kind of misses the point. Sure, a lot of companies will invest in blockchain tech and maybe roll out their own blockchains, but that doesn’t make a lot of sense to me. A blockchain without a peer to peer/decentralized network and a crypto currency/incentive system is nothing more than an over-architected centralized database. The trust provided by using a blockchain is based mostly on the incentive for people to secure the network. Sure you can use hashing and encryption to verify transactions without it, but if it is a private chain, then one person with access can perform a 51% attack and alter all of the transactions. That is the exact thing something like Bitcoin is trying to prevent. I agree that Bitcoin itself may not end up being the final coin that survives in 5 or 10 or 20 years, but it has the first mover advantage and strong brand recognition, and I don’t see that changing anytime soon.
honestshitpost 9y ago
You admit you're not a Bitcoin expert but claim it's a pyramid scheme? Do you even know what a pyramid scheme is? I'm by no means a crypto fanatic, but you really have no idea what you're talking about...
rexpop 9y ago
Go ahead and say "speculate on", and throw away your scare quotes.
empath75 9y ago
Prior to the current bubble, the value of bitcoin was largely based on it's use cases for selling illicit goods over the internet, collecting money for ransom ware, evading currency controls and taxes, and general money laundering. An investment in bitcoin was a bet that it would continue to be used for criminal activity. The current bubble is based on exactly what you say, though. Price manipulation by a few shady, unregulated exchanges leading to insane price increases, followed by a speculative mania.
- ghostbrainalpha 9y ago
  > The current bubble is based on exactly what you say, though. Price manipulation by a few shady, unregulated exchanges leading to insane price increases, followed by a speculative mania. The current bubble is mostly based on what you say, but it is still great for all the things you mentioned earlier, "selling illicit goods over the internet, collecting money for ransom ware, evading currency controls and taxes, and general money laundering"
cup-of-tea 9y ago
What's the point of investing in anything? If you work for a salary, as opposed to working for food, ie. hunting, gathering, or farming, then you do investment. Do you expect the "price" of that salary to increase?
Kurtz79 9y ago
Except that pyramid schemes are usually designed from the start as such. Bitcoin wasn't: it was designed in good faith as a cryptocurrency. That people ended up using it as a speculative device says more about these people than the actual technology. Also pyramid schemes are usually run by few people that cash out when it is no longer sustainable. Once it is so, it's over, as it usually the scheme gets exposed and owners lose all credibility. Bitcoin on the other hand went already through several "crises", and came out even stronger. Also, in the case of Bitcoins, as more people buy them, and original owners cash out, the amount of actual owners dilute, so that the possibility of a few people dictating huge movements in price lessens over time. Calling it a pyramid scheme it is an oversimplification, although on the surface it shares many traits with them: I don't think many people can predict how it will turn out.
lucozade 9y ago
It's true the price is fueled by speculation, not Bitcoin's underlying usefulness, but there's no reason to believe it's a pyramid or ponzi scheme. It's entirely possible that, at least some of, the price is being boosted by mechanisms that would be illegal in other, regulated, markets. But it's not clear, at least to me, how much of an issue that is either legally or practically.
clarkmoody 9y ago
> At some point, the price of Bitcoin will level off, investors will exit, and then the price will fall, quickly and steeply. As someone who has been in the space for a while, this is exactly what happens. There have been multiple 80%+ declines from peak to trough over the years. > elaborate pyramid scheme Having been in the industry since 2011, I have heard this sentiment since day one. Also tulips. >I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin... As a self-admitted non-expert, these initial observations might make sense. Become an expert and you will see differently. (It took me about two years to understand Bitcoin)
- drukenemo 9y ago
  Could you share what took you so long to understand and what have you learned? Not being sarcastic, but it took me a month to have a good grip on the subject, so I cannot imagine what took you two years to learn. Can you please share?
  - clarkmoody 9y ago
    The things that clicked last for me were the nitty-gritty of the transaction structure and scripting system. It also took some time to understand the cypherpunk roots of Bitcoin.
craigc 9y ago
I read someone else who wrote about this before. One question I have is why you think that specifically about Bitcoin and not about other things like gold or stocks? People who purchase stocks early do so expecting the price to rise when more people buy in later for higher prices. Same thing with gold. People say stocks have value because they provide dividends, but when was the last time anyone made significant income due to dividends? I think most companies do not even pay dividends. If Bitcoin was actually a pyramid scheme then the early investors would be eager to cash out at the expense of everyone else, but many people involved in Bitcoin truly believe in the technology and the idea of a global currency that exists outside of government/bank control. Those people are not eager to part with their Bitcoins, and I don’t know why that would change all of a sudden.
- rhino369 9y ago
  >One question I have is why you think that specifically about Bitcoin and not about other things like gold or stocks? Gold has similar issues. But there is significant non-speculative value in gold. How much, I'm not sure, but it's useful for electronics and for decoration, etc. Also, gold's value is the supposed stability. Bitcoin's value is it's supposed growth, which leads to nasty feedback loops. I wouldn't invest in gold. I think it's still in a bit of bubble caused by the 08 financial crisis. Stocks are a different story altogether. You are buying equity in a company that has value. The stock market might be under or overvalued at any given time, but it is still tied to the value of the companies.
  - Zarath 9y ago
    Every company goes bankrupt eventually. The idea is to make money, no matter how you want to look at it.
    - rhino369 9y ago
      Sure eventually, but most pay out dividends over their lifetime that are greater than their current value or get bought out. Growth companies don't, but that's because they think they'd do a better job reinvesting.
dragonwriter 9y ago
> I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin as anything other than an elaborate pyramid scheme. A pyramid scheme requires unsustainable exponential growth in number of new participants. Bitcoin can survive without that, so it's not a pyramid scheme. > Said another way, why would anyone "invest" in Bitcoin unless there is an expectation that the price of Bitcoin will increase? Investment being motivated by expectation of future price increases is not enough to make something a pyramid scheme. I mean, that's what motivated most investment in anything.
- marcosdumay 9y ago
  > Bitcoin can survive without that, so it's not a pyramid scheme. Can Bitcoin really survive without an ever-increasing price? If it can't, it's a pyramid, because it does not generate wealth like most investment avenues.
  - dragonwriter 9y ago
    > Can Bitcoin really survive without an ever-increasing price? Requiring ever-increasing price as measured in some other currency is not what defined a pyramid. Requiring unsustainable growth rate which must eventually consume all of the available number of something limited is; most strictly, a pyramid scheme requires exponentially increasing number of participants at a rate that exceeds population growth (usually on the scale of requiring the entire population to participate in a very short period of time.) To not be a shrinking role in the economy, Bitcoin may needs a long-term growth rate (once coin mining is exhausted) equal to the growth rate of the economy (which may or may not be always positive over the long-term, and if it is may only be logistic), but that's not a pyramid.
PunchTornado 9y ago
you can buy drugs and other stuff online with bitcoin.
PunchTornado 9y ago
uber paid hackers in 50mil in bitcoin to delete data.
lawn 9y ago
Do you see a value with a trustless peer-to-peer digital currency? Bitcoin is probably in a large bubble, but there is real value behind it.

solotronics 9y ago

why would anyone invest in anything unless there is an expectation that the price will increase? investing isnt charity

danielbarla 9y ago
We could say that many had an educated guess that Bitcoin would be the way of the future. It's initial promise was brilliant, however at the time of writing it seems to have lost much of its use (e.g. cheap micro-transactions between peers), due to technical and economic issues (limited transaction rates, insane volatility). It's not clear whether any of these will change, so I wonder what people are investing in? I believe what the parent poster was referring to is that much of the investment seems to be purely driven by speculation on the value, rather than its promise as a platform.

MichaelApproved 9y ago

Bitcoin's purpose isn't for investing. People might choose to invest and speculate on the future value of Bitcoin but, among other things, Bitcoin's purpose is a currency that is decoupled from a central government.

Bob2019 9y ago
How do you decouple from governments banning businesses from accepting it?
- ryanmerket 9y ago
  Sell it for cash to someone via localbitcoins.com? Fly to another country that does accept it, open a checking account there?
- hndamien 9y ago
  It is only important that people accept it. I think we can call that mission accomplished.
madlynormal 9y ago
How feasible is Bitcoin as a currency when transaction fees can exceed $20/USD?
- MichaelApproved 9y ago
  Not very feasible, right now. There are some technical hurdles that can be overcome with some improvements in the code which will drop the transactions fees to almost nothing. For now, Bitcoin seems to be taking shape as a store of value, like gold. Another, more updated crypto currency, might take over as day-to-day currency while Bitcoin is the larger value store. Hard to say how things will shake out but it's surprisingly still the early days of crypto technology.

sedtrader 9y ago

Wants important is the blockchain technology. As Bitcoin continues to grow it further legitimizes the strength of the blockchain technology which can be applied to many other areas in tech. Bitcoin itself is useless, essentially sending "thin air" back and forth as someone else put it.

fred_is_fred 9y ago
And if bitcoin crashes and people who took out mortgages to buy it end up on the street it could take the reputation of blockchain down with it...
- matwood 9y ago
  Lets tone it a down a bit. I'm sure there are idiots who took out a HELOC to buy BTC, just like idiots who did it with gold, or to bet the horses, or buy lottery tickets. A few idiots can't really change the reputation of something. The internet somehow survived through a crash that led the economy into a recession. When/If BTC crashes, it will be a small blip in the economy.
craigc 9y ago
I think dismissing Bitcoin and promoting blockchain technology kind of misses the point. Sure, a lot of companies will invest in blockchain tech and maybe roll out their own blockchains, but that doesn’t make a lot of sense to me. A blockchain without a peer to peer/decentralized network and a crypto currency/incentive system is nothing more than an over-architected centralized database. The trust provided by using a blockchain is based mostly on the incentive for people to secure the network. Sure you can use hashing and encryption to verify transactions without it, but if it is a private chain, then one person with access can perform a 51% attack and alter all of the transactions. That is the exact thing something like Bitcoin is trying to prevent. I agree that Bitcoin itself may not end up being the final coin that survives in 5 or 10 or 20 years, but it has the first mover advantage and strong brand recognition, and I don’t see that changing anytime soon.

honestshitpost 9y ago

You admit you're not a Bitcoin expert but claim it's a pyramid scheme? Do you even know what a pyramid scheme is? I'm by no means a crypto fanatic, but you really have no idea what you're talking about...

rexpop 9y ago

Go ahead and say "speculate on", and throw away your scare quotes.

empath75 9y ago

Prior to the current bubble, the value of bitcoin was largely based on it's use cases for selling illicit goods over the internet, collecting money for ransom ware, evading currency controls and taxes, and general money laundering. An investment in bitcoin was a bet that it would continue to be used for criminal activity. The current bubble is based on exactly what you say, though. Price manipulation by a few shady, unregulated exchanges leading to insane price increases, followed by a speculative mania.

ghostbrainalpha 9y ago
> The current bubble is based on exactly what you say, though. Price manipulation by a few shady, unregulated exchanges leading to insane price increases, followed by a speculative mania. The current bubble is mostly based on what you say, but it is still great for all the things you mentioned earlier, "selling illicit goods over the internet, collecting money for ransom ware, evading currency controls and taxes, and general money laundering"

cup-of-tea 9y ago

What's the point of investing in anything? If you work for a salary, as opposed to working for food, ie. hunting, gathering, or farming, then you do investment. Do you expect the "price" of that salary to increase?

Kurtz79 9y ago

Except that pyramid schemes are usually designed from the start as such. Bitcoin wasn't: it was designed in good faith as a cryptocurrency. That people ended up using it as a speculative device says more about these people than the actual technology. Also pyramid schemes are usually run by few people that cash out when it is no longer sustainable. Once it is so, it's over, as it usually the scheme gets exposed and owners lose all credibility. Bitcoin on the other hand went already through several "crises", and came out even stronger. Also, in the case of Bitcoins, as more people buy them, and original owners cash out, the amount of actual owners dilute, so that the possibility of a few people dictating huge movements in price lessens over time. Calling it a pyramid scheme it is an oversimplification, although on the surface it shares many traits with them: I don't think many people can predict how it will turn out.

lucozade 9y ago

It's true the price is fueled by speculation, not Bitcoin's underlying usefulness, but there's no reason to believe it's a pyramid or ponzi scheme. It's entirely possible that, at least some of, the price is being boosted by mechanisms that would be illegal in other, regulated, markets. But it's not clear, at least to me, how much of an issue that is either legally or practically.

clarkmoody 9y ago

> At some point, the price of Bitcoin will level off, investors will exit, and then the price will fall, quickly and steeply. As someone who has been in the space for a while, this is exactly what happens. There have been multiple 80%+ declines from peak to trough over the years. > elaborate pyramid scheme Having been in the industry since 2011, I have heard this sentiment since day one. Also tulips. >I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin... As a self-admitted non-expert, these initial observations might make sense. Become an expert and you will see differently. (It took me about two years to understand Bitcoin)

drukenemo 9y ago
Could you share what took you so long to understand and what have you learned? Not being sarcastic, but it took me a month to have a good grip on the subject, so I cannot imagine what took you two years to learn. Can you please share?
- clarkmoody 9y ago
  The things that clicked last for me were the nitty-gritty of the transaction structure and scripting system. It also took some time to understand the cypherpunk roots of Bitcoin.

craigc 9y ago

I read someone else who wrote about this before. One question I have is why you think that specifically about Bitcoin and not about other things like gold or stocks? People who purchase stocks early do so expecting the price to rise when more people buy in later for higher prices. Same thing with gold. People say stocks have value because they provide dividends, but when was the last time anyone made significant income due to dividends? I think most companies do not even pay dividends. If Bitcoin was actually a pyramid scheme then the early investors would be eager to cash out at the expense of everyone else, but many people involved in Bitcoin truly believe in the technology and the idea of a global currency that exists outside of government/bank control. Those people are not eager to part with their Bitcoins, and I don’t know why that would change all of a sudden.

rhino369 9y ago
>One question I have is why you think that specifically about Bitcoin and not about other things like gold or stocks? Gold has similar issues. But there is significant non-speculative value in gold. How much, I'm not sure, but it's useful for electronics and for decoration, etc. Also, gold's value is the supposed stability. Bitcoin's value is it's supposed growth, which leads to nasty feedback loops. I wouldn't invest in gold. I think it's still in a bit of bubble caused by the 08 financial crisis. Stocks are a different story altogether. You are buying equity in a company that has value. The stock market might be under or overvalued at any given time, but it is still tied to the value of the companies.
- Zarath 9y ago
  Every company goes bankrupt eventually. The idea is to make money, no matter how you want to look at it.
  - rhino369 9y ago
    Sure eventually, but most pay out dividends over their lifetime that are greater than their current value or get bought out. Growth companies don't, but that's because they think they'd do a better job reinvesting.

dragonwriter 9y ago

> I'm not a Bitcoin expert, but I don't see how anyone can view Bitcoin as anything other than an elaborate pyramid scheme. A pyramid scheme requires unsustainable exponential growth in number of new participants. Bitcoin can survive without that, so it's not a pyramid scheme. > Said another way, why would anyone "invest" in Bitcoin unless there is an expectation that the price of Bitcoin will increase? Investment being motivated by expectation of future price increases is not enough to make something a pyramid scheme. I mean, that's what motivated most investment in anything.

marcosdumay 9y ago
> Bitcoin can survive without that, so it's not a pyramid scheme. Can Bitcoin really survive without an ever-increasing price? If it can't, it's a pyramid, because it does not generate wealth like most investment avenues.
- dragonwriter 9y ago
  > Can Bitcoin really survive without an ever-increasing price? Requiring ever-increasing price as measured in some other currency is not what defined a pyramid. Requiring unsustainable growth rate which must eventually consume all of the available number of something limited is; most strictly, a pyramid scheme requires exponentially increasing number of participants at a rate that exceeds population growth (usually on the scale of requiring the entire population to participate in a very short period of time.) To not be a shrinking role in the economy, Bitcoin may needs a long-term growth rate (once coin mining is exhausted) equal to the growth rate of the economy (which may or may not be always positive over the long-term, and if it is may only be logistic), but that's not a pyramid.

PunchTornado 9y ago

you can buy drugs and other stuff online with bitcoin.

PunchTornado 9y ago

uber paid hackers in 50mil in bitcoin to delete data.

lawn 9y ago

Do you see a value with a trustless peer-to-peer digital currency? Bitcoin is probably in a large bubble, but there is real value behind it.