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> Long story short: some people will make a mint. A lot of people will lose their shirts. Zero. Sum. Game.

sillysaurus3 9y ago
Is it? That doesn't sound correct. Bitcoin didn't exist a decade ago. The amount of wealth it added can be measured directly. But perhaps I'm not thinking of it in the right way.
- umanwizard 9y ago
  Assuming Bitcoin is totally worthless in the long run (which I strongly believe it is), the right way to think of it is that people who own it have lost however much they paid for it. When you think of it that way, all the sums add up to zero.
  - sillysaurus3 9y ago
    Suppose Bitcoin ends up worth a dollar. Since there will be 22 million BTC, it seems true to say that it added at least as much wealth to the world as a failed (acqui-hired) startup. Therefore it wasn't zero sum, correct? It's not like we're doing anything else with our time, so we may as well have a thought experiment.
    - wolco 9y ago
      the fiat currency required to fullfill the 22 million coins being cashed out would be removed from other areas of society
      - sillysaurus3 9y ago
        Why is that different from a startup being acquired for $22M? In both cases, people now have $22M to spend that they otherwise wouldn't have had.
        rspeer 9y ago
        Startups are bought because the buying company plans to use them in a profitable enterprise. What would you do with post-crash Bitcoins that you paid a dollar for?
- abakker 9y ago
  I suppose if you wanted to be really economic about it, you might say that the wealth created is equal to the sums of the wealth foregone in everyone else’s opportunity costs. But, really, that is stilly. Nobody does that kind of accounting. I think what the OP meant was that when the whole fiction comes crashing down (editorializing here) that the people who get rich will be those that get out first. Those who can’t get out will be owed because there simply doesn’t seem to be enough real dollars backing up the exchanges. For real wealth to be gained you want liquidity and you want to have healthy demand for the underlying product. What people want here is not actual bitcoins (or other cryptos). They want appreciation in value. However, while the prices are inflating a lot, it seems that enough people are trying exit positions to USD that the exchanges are having trouble getting enough cash to facilitate transactions. If that all ends, the fixed sum of dollars in the exchanges will be the zero sum. Those that get out first will get it, and those that don’t will be SOL.
- root_axis 9y ago
  Nothing is created when someone exchanges blockchain tokens for money or the reverse.
dingo_bat 9y ago
I don't think that it is a zero sum game is relevant. The problem is that people are getting scammed out of their life savings. These are illegal scams, and nobody is regulating them before it's too late.
allthenews 9y ago
I'm not so sure about that. The bitcoin system is not closed. People have been using it to transact real world goods and services, which means that there is value flowing into and out of bitcoin, such that a profit off of a sale in bitcoin does not necessarily imply an identical loss for someone else.
- fnord77 9y ago
  real world currency expands and contracts, either naturally or via regulation. As more value is created in the world (say by turning sand into iphones), more money is created. bitcoin etc. can't. It is a major flaw.
  - allthenews 9y ago
    That is exactly what I am describing when I say that value flows into and out of bitcoin. There is nothing stopping bitcoin from "expanding and contracting" [I think you mean inflating and deflating]. At the very least something like money laundering has such an effect on bitcoin - because pre-laundered money does not have a 1:1 value ratio with clean money. Of course I'm sure there are more legitimate examples, although I wonder what percentage of BTC volume is laundering...
  - r00fus 9y ago
    Bitcoin acts like an asset not a currency. The term cryptocurrency is a bit ridiculous. It should be called digital-gold, because it behaves like that.
colanderman 9y ago
Actually, negative sum, since the exchanges pocket some cash.
- dingo_bat 9y ago
  Just include that in the sum. Back to zero.

Is it? That doesn't sound correct. Bitcoin didn't exist a decade ago. The amount of wealth it added can be measured directly. But perhaps I'm not thinking of it in the right way.

umanwizard 9y ago
Assuming Bitcoin is totally worthless in the long run (which I strongly believe it is), the right way to think of it is that people who own it have lost however much they paid for it. When you think of it that way, all the sums add up to zero.
- sillysaurus3 9y ago
  Suppose Bitcoin ends up worth a dollar. Since there will be 22 million BTC, it seems true to say that it added at least as much wealth to the world as a failed (acqui-hired) startup. Therefore it wasn't zero sum, correct? It's not like we're doing anything else with our time, so we may as well have a thought experiment.
  - wolco 9y ago
    the fiat currency required to fullfill the 22 million coins being cashed out would be removed from other areas of society
    - sillysaurus3 9y ago
      Why is that different from a startup being acquired for $22M? In both cases, people now have $22M to spend that they otherwise wouldn't have had.
      - rspeer 9y ago
        Startups are bought because the buying company plans to use them in a profitable enterprise. What would you do with post-crash Bitcoins that you paid a dollar for?
abakker 9y ago
I suppose if you wanted to be really economic about it, you might say that the wealth created is equal to the sums of the wealth foregone in everyone else’s opportunity costs. But, really, that is stilly. Nobody does that kind of accounting. I think what the OP meant was that when the whole fiction comes crashing down (editorializing here) that the people who get rich will be those that get out first. Those who can’t get out will be owed because there simply doesn’t seem to be enough real dollars backing up the exchanges. For real wealth to be gained you want liquidity and you want to have healthy demand for the underlying product. What people want here is not actual bitcoins (or other cryptos). They want appreciation in value. However, while the prices are inflating a lot, it seems that enough people are trying exit positions to USD that the exchanges are having trouble getting enough cash to facilitate transactions. If that all ends, the fixed sum of dollars in the exchanges will be the zero sum. Those that get out first will get it, and those that don’t will be SOL.
root_axis 9y ago
Nothing is created when someone exchanges blockchain tokens for money or the reverse.

dingo_bat 9y ago

I don't think that it is a zero sum game is relevant. The problem is that people are getting scammed out of their life savings. These are illegal scams, and nobody is regulating them before it's too late.

allthenews 9y ago

I'm not so sure about that. The bitcoin system is not closed. People have been using it to transact real world goods and services, which means that there is value flowing into and out of bitcoin, such that a profit off of a sale in bitcoin does not necessarily imply an identical loss for someone else.

fnord77 9y ago
real world currency expands and contracts, either naturally or via regulation. As more value is created in the world (say by turning sand into iphones), more money is created. bitcoin etc. can't. It is a major flaw.
- allthenews 9y ago
  That is exactly what I am describing when I say that value flows into and out of bitcoin. There is nothing stopping bitcoin from "expanding and contracting" [I think you mean inflating and deflating]. At the very least something like money laundering has such an effect on bitcoin - because pre-laundered money does not have a 1:1 value ratio with clean money. Of course I'm sure there are more legitimate examples, although I wonder what percentage of BTC volume is laundering...
- r00fus 9y ago
  Bitcoin acts like an asset not a currency. The term cryptocurrency is a bit ridiculous. It should be called digital-gold, because it behaves like that.

colanderman 9y ago

Actually, negative sum, since the exchanges pocket some cash.

dingo_bat 9y ago
Just include that in the sum. Back to zero.