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> Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a

> Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a new thing. Across so many people, and at BTC's market cap though? I think that's unprecedented. Penny stocks or pyramid schemes, sure, but they never affect this many people or hit 12-digit valuations. (By the way, fiat money doesn't count as an example because it is backed by a variety of government support structures (which are very much not hocus-pocus) and it does not appreciate in value indefinitely relative to the cost of goods.)

lazyasciiart 8y ago
Almost everything that happens today is unprecedented in 'affecting this many people'. It's probably more informative to ask whether it is affecting a larger percentage of people exposed to it than previous examples- and I don't know the answer to that, but I suspect it isn't.
copenja 8y ago
That's an interesting question. Bernie Madoff’s Ponzi scheme is estimated to have lost clients $65 billion. The Bitcoin market cap is nearly double at $107 billion. But Bernie Madoff's $65 billion is all real dollars paid into the scheme. Bitcoin market cap doesn't track the amount of the money that has been paid into the current Bitcoin market. It simply estimates the current market price, then multiplies that number by the total of number of Bitcoins. So the amount currently paid into the current Bitcoin market is going to be much, much lower. Experts estimate that nearly 30% of current bitcoins are 'lost' forever in non-recoverable wallets. Also, the gal who bought 1000 bitcoin at 5 dollars hasn't re-paid another $6 million into the system. But, if Bitcoin crashed to zero today, would you also need to account for dollars lost by investors who built mining stations and gear? I guess we will never know. But, I think it is fair to say that the Madoff scheme is in the same ballpark of Bitcoin.
- bduerst 8y ago
  The apples:apples comparison would be a total of amount of currency converted into Bitcoin.
- nostrademons 8y ago
  24h trading volume for BTC/USD (excluding BTC/USDT and all non-USD fiat currencies) is over $500M [1], and has been at that rate or higher since last December. That's over $90B in real money that has exchanged hands for Bitcoin. It's not quite the same as the Madoff Ponzi scheme, because in that, all the money went into Madoff's firm, and relatively little came out as redemptions. In a trading market, every dollar that comes in from a buyer goes out to a seller (minus exchange fees, which reportedly have netted Coinbase close to $1B this year, again supporting a >$100B trade volume). They can then be used to purchase more crypto later, and show up in the volume statistics again. But this alone indicates that Bitcoin may be a bit more resilient than Madoff's ponzi scheme; when multiple people get rich off it, there's much less of a single point of failure for the scheme to collapse. [1] https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets
  - headsoup 8y ago
    That would assume that it is 'different' money changing hands would it not? I.e. that %500M and $90B is unique dollars being transacted and not just promises being passed back and forth.
    - nostrademons 8y ago
      It does, and that's an assumption that probably doesn't hold. Most things in the economy work that way though - the total supply of hard currency in the economy is only $3.6T, so when you speak of the $18T US GDP or the $20T US national debt or the $524T value of the derivatives market, it necessarily accounts for the same dollar changing hands multiple times. That's what makes it a currency, that it can circulate and change hands while holding its value.
      - sserrot 8y ago
        Saying the 'value' of the derivatives market is $524T is disingenuous. The notional value - sure, but that's like saying the value of the lottery 'market' is the jackpot times all the outstanding tickets - http://www.newsweek.com/600-trillion-derivatives-market-92275 http://www.newsweek.com/600-trillion-derivatives-market-9227...
- latchkey 8y ago
  Thank you. More people need to realize that market cap is meaningless in the context of crypto. It is just a multiplier of two numbers which makes it sound like a big number and thus interesting (which it is not). You explained it perfectly.
  - achompas 8y ago
    This horse has been beaten, but it trivializes the amount of money that entered late last year. I don't think it's all late money, but the money in BTC is not all "early" either.
  - tuesdayrain 8y ago
    It's not meaningless. It's still the only way to roughly compare the size of assets with different supplies.
    - latchkey 8y ago
      "Market capitalization is just a fancy name for a straightforward concept: it is the market value of a company's outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding." At least with bitcoin, there is no company. So, all it is is price * shares outstanding (held shares). Given that there is some portion of btc that is 'lost' as well as the fact that we don't know what people paid for what is held, I don't see how anyone can come to a conclusion about the "the size of assets with different supplies." In fact, the definition of market cap says nothing about that conclusion. The description says that it was just a way of grouping companies of various sizes. So, we are back at square zero, bitcoin is not a company. Maybe I'm totally wrong in my feelings about MC, but at the end of the day, this is not an indicator I would use for TA or popularity of a cryptocurrency. For example, Volume is a much more interesting high level number.
- achompas 8y ago
  > But, I think it is fair to say that the Madoff scheme is in the same ballpark of Bitcoin. I was going to comment on this, but I was blocked by my time manager. :( Current market cap of BTC, at $111M, puts Madoff's scheme at about half of BTC. Compared to BTC's peak in 2017, Madoff's $$ is about a quarter. (supply * rough BTC price of $20,000). Additionally, Madoff's scheme affected 4800 clients. [0] The amount of users on Coinbase as of late 2017 is about 2400x that amount [1]. So while amount "paid in" is lower, market cap is much higher. The affected userbase is also many multiples higher than Madoff's clientele. So, my point: the difference in $$ is higher, and the difference in userbase is far higher. More practically, note: we are comparing BTC to the largest grift in history. That's a lot of money. [0] https://en.wikipedia.org/wiki/Bernard_Madoff https://en.wikipedia.org/wiki/Bernard_Madoff [1] https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-has-more-users-than-stock-brokerage-schwab.html https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-ha...
- jayd16 8y ago
  As others have pointed out Madoff might not be a solid example as it was a single firm committing fraud vs the possibility of multiple actors abusing a bubble (and possibly committing fraud as well). It might be closer to the abuse of sub-prime mortgages and mortgage-backed securities. Is feeding a bubble the same as pumping and dumping? Sure can be.
arisAlexis 8y ago
usdt is a usd peg system with no fake money. did you ever read the technical details?
- zik 8y ago
  But it's claimed that it's not really a peg system at all - that Tether were fraudulently created while claiming they were pegged.
  - arisAlexis 8y ago
    yes and because someone wrote about it then it's true right? I can't think of anybody wanting to spread FUD to profit from shorting...for the life of me, really. Who is the manipulator in this case?
    - rrcaptain 8y ago
      Except Tether hasn't actually proved they have the cash they claim. So why should we take their word that they're a peg system when they haven't proved it?
- sfifs 8y ago
  The problem is they have never demonstrated they actually have the money. It's very simple really to ask your bank to provide a certified and digitally signed account statement. This routinely happens in audits. Tether has never showed this. So the accusation is that its operation is basically fraud.
xapata 8y ago
> unprecedented Mortgage crisis? Sure, Bitcoin is different. But it's kinda the same...
anthony_barker 8y ago
I am not a bitcoin maximalist. But Bitcoin is a new kind of money that no one can take from you. Better than gold, cash or anything that came before in certain circumstances. That said other tokens have similar characteristics..
deleted 8y ago
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lazyasciiart 8y ago

Almost everything that happens today is unprecedented in 'affecting this many people'. It's probably more informative to ask whether it is affecting a larger percentage of people exposed to it than previous examples- and I don't know the answer to that, but I suspect it isn't.

copenja 8y ago

That's an interesting question. Bernie Madoff’s Ponzi scheme is estimated to have lost clients $65 billion. The Bitcoin market cap is nearly double at $107 billion. But Bernie Madoff's $65 billion is all real dollars paid into the scheme. Bitcoin market cap doesn't track the amount of the money that has been paid into the current Bitcoin market. It simply estimates the current market price, then multiplies that number by the total of number of Bitcoins. So the amount currently paid into the current Bitcoin market is going to be much, much lower. Experts estimate that nearly 30% of current bitcoins are 'lost' forever in non-recoverable wallets. Also, the gal who bought 1000 bitcoin at 5 dollars hasn't re-paid another $6 million into the system. But, if Bitcoin crashed to zero today, would you also need to account for dollars lost by investors who built mining stations and gear? I guess we will never know. But, I think it is fair to say that the Madoff scheme is in the same ballpark of Bitcoin.

bduerst 8y ago
The apples:apples comparison would be a total of amount of currency converted into Bitcoin.
nostrademons 8y ago
24h trading volume for BTC/USD (excluding BTC/USDT and all non-USD fiat currencies) is over $500M [1], and has been at that rate or higher since last December. That's over $90B in real money that has exchanged hands for Bitcoin. It's not quite the same as the Madoff Ponzi scheme, because in that, all the money went into Madoff's firm, and relatively little came out as redemptions. In a trading market, every dollar that comes in from a buyer goes out to a seller (minus exchange fees, which reportedly have netted Coinbase close to $1B this year, again supporting a >$100B trade volume). They can then be used to purchase more crypto later, and show up in the volume statistics again. But this alone indicates that Bitcoin may be a bit more resilient than Madoff's ponzi scheme; when multiple people get rich off it, there's much less of a single point of failure for the scheme to collapse. [1] https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets
- headsoup 8y ago
  That would assume that it is 'different' money changing hands would it not? I.e. that %500M and $90B is unique dollars being transacted and not just promises being passed back and forth.
  - nostrademons 8y ago
    It does, and that's an assumption that probably doesn't hold. Most things in the economy work that way though - the total supply of hard currency in the economy is only $3.6T, so when you speak of the $18T US GDP or the $20T US national debt or the $524T value of the derivatives market, it necessarily accounts for the same dollar changing hands multiple times. That's what makes it a currency, that it can circulate and change hands while holding its value.
    - sserrot 8y ago
      Saying the 'value' of the derivatives market is $524T is disingenuous. The notional value - sure, but that's like saying the value of the lottery 'market' is the jackpot times all the outstanding tickets - http://www.newsweek.com/600-trillion-derivatives-market-92275 http://www.newsweek.com/600-trillion-derivatives-market-9227...
latchkey 8y ago
Thank you. More people need to realize that market cap is meaningless in the context of crypto. It is just a multiplier of two numbers which makes it sound like a big number and thus interesting (which it is not). You explained it perfectly.
- achompas 8y ago
  This horse has been beaten, but it trivializes the amount of money that entered late last year. I don't think it's all late money, but the money in BTC is not all "early" either.
- tuesdayrain 8y ago
  It's not meaningless. It's still the only way to roughly compare the size of assets with different supplies.
  - latchkey 8y ago
    "Market capitalization is just a fancy name for a straightforward concept: it is the market value of a company's outstanding shares. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding." At least with bitcoin, there is no company. So, all it is is price * shares outstanding (held shares). Given that there is some portion of btc that is 'lost' as well as the fact that we don't know what people paid for what is held, I don't see how anyone can come to a conclusion about the "the size of assets with different supplies." In fact, the definition of market cap says nothing about that conclusion. The description says that it was just a way of grouping companies of various sizes. So, we are back at square zero, bitcoin is not a company. Maybe I'm totally wrong in my feelings about MC, but at the end of the day, this is not an indicator I would use for TA or popularity of a cryptocurrency. For example, Volume is a much more interesting high level number.
achompas 8y ago
> But, I think it is fair to say that the Madoff scheme is in the same ballpark of Bitcoin. I was going to comment on this, but I was blocked by my time manager. :( Current market cap of BTC, at $111M, puts Madoff's scheme at about half of BTC. Compared to BTC's peak in 2017, Madoff's $$ is about a quarter. (supply * rough BTC price of $20,000). Additionally, Madoff's scheme affected 4800 clients. [0] The amount of users on Coinbase as of late 2017 is about 2400x that amount [1]. So while amount "paid in" is lower, market cap is much higher. The affected userbase is also many multiples higher than Madoff's clientele. So, my point: the difference in $$ is higher, and the difference in userbase is far higher. More practically, note: we are comparing BTC to the largest grift in history. That's a lot of money. [0] https://en.wikipedia.org/wiki/Bernard_Madoff https://en.wikipedia.org/wiki/Bernard_Madoff [1] https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-has-more-users-than-stock-brokerage-schwab.html https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-ha...
jayd16 8y ago
As others have pointed out Madoff might not be a solid example as it was a single firm committing fraud vs the possibility of multiple actors abusing a bubble (and possibly committing fraud as well). It might be closer to the abuse of sub-prime mortgages and mortgage-backed securities. Is feeding a bubble the same as pumping and dumping? Sure can be.

arisAlexis 8y ago

usdt is a usd peg system with no fake money. did you ever read the technical details?

zik 8y ago
But it's claimed that it's not really a peg system at all - that Tether were fraudulently created while claiming they were pegged.
- arisAlexis 8y ago
  yes and because someone wrote about it then it's true right? I can't think of anybody wanting to spread FUD to profit from shorting...for the life of me, really. Who is the manipulator in this case?
  - rrcaptain 8y ago
    Except Tether hasn't actually proved they have the cash they claim. So why should we take their word that they're a peg system when they haven't proved it?
sfifs 8y ago
The problem is they have never demonstrated they actually have the money. It's very simple really to ask your bank to provide a certified and digitally signed account statement. This routinely happens in audits. Tether has never showed this. So the accusation is that its operation is basically fraud.

xapata 8y ago

> unprecedented Mortgage crisis? Sure, Bitcoin is different. But it's kinda the same...

anthony_barker 8y ago

I am not a bitcoin maximalist. But Bitcoin is a new kind of money that no one can take from you. Better than gold, cash or anything that came before in certain circumstances. That said other tokens have similar characteristics..

deleted 8y ago

[deleted]