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I think we shouldn't overlook that Bitcoin has some interesting aspects to it that make this a very different and peculiar kind of car crash.

tptacek 15y ago
I don't think we should overlook that bitcoin has a built-in feedback mechanism that acts to keep bitcoin stories on the front page.
- hugh3 15y ago
  As a compromise I'd be willing to accept a moratorium on all bitcoin-related articles up to "Bitcoin Post Mortem", whenever that may be. I have to admit, however, I can't resist commenting on the bitcoin articles when they show up. It's the classic "Someone is wrong on the internet!" reaction. Maybe those of us who aren't zany bitcoin-boosters need to make a pact to stop commenting on these articles and hopefully once robbed of controversy they'll go away.
jellicle 15y ago
Not really. It's the same as any Ponzi scheme. A promise to early adopters that they'll get rich; initial returns seem to prove out the promise; a giant wave of hype drives a steady stream of suckers into the deal; the existence of the hype is sufficient justification for further hyping stories, providing secondary waves of publicity; the creators quietly cash out their positions and retire to small Caribbean islands; eventually others start trying to cash out; this creates a reverse hype wave ("sell your bitcoins now before they are worthless!"); and wooosh, in a week bitcoins will indeed be worthless. If it were a real currency the creator might face jail time but in this case the creator may well get away with it. The creator can plausibly (notice I did not say truthfully) disclaim any knowledge of how the scheme would unfold. It is interesting from a technical perspective but from a societal/historical point of view, not at all. This same cycle has played out infinite times in human history and will play out infinite times in the future. People always manage to convince themselves that "this time it's different".
- narrator 15y ago
  The limited inflation and eventual deflation aspects make it more interesting then tradictional alternate currencies. The world is not going to get flooded with an unlimited supply of bitcoins just because there's more demand. How is gold not a ponzi scheme BTW? Ponzi schemes don't run for 3000 years.
- swaits 15y ago
  I don't think you exactly understand the definition of a Ponzi scheme. It might well be a bubble. But Ponzi? No.
  - hugh3 15y ago
    Not quite ponzi. Somewhere between a Ponzi and a bubble -- economically it's a bubble, practically it's a Ponzi. Most bubbles start by accident -- this one was carefully engineered. How do you engineer a bubble? First you invent an asset. But if it's an asset that only you own then nobody will want to believe it's valuable. So you make it possible for the first round of early adopters to get it for free, by "mining. The first adopters talk the second adopters into trying it too (they can still get significant amounts by mining) and... well, you know the story. You also wrap it in some political anti-fiat-currency anti-bank anti-Fed anti-government anti-whatever pro-cryptography political wrapping to make it appealing to a certain constituency. But the key thing is to give out the "asset" for free at first, and to a lesser extent as time goes on, to incentivise early adopters without requiring 'em to actually put their hands in their own pockets. It's quite brilliant, the best memetically-engineered scam since Scientology. And now I'm really getting tired of discussing bitcoin. I think I'll write a big long blog post in the form of a FAQ, submit it, and never mention bitcoin ever again.
    - kiba 15y ago
      The amount of people who said Bitcoin is a bubble is so great and so constant that I commissioned a comic about Bitcoin Bubble just so I can gain traffic by linking to that comic when somebody made that sort of statement. http://bitcoinweekly.com/articles/comic-reaction-after-dramatic-rise-of-bitcoin-s-value http://bitcoinweekly.com/articles/comic-reaction-after-drama... The ROI is fantastic.

tptacek 15y ago

I don't think we should overlook that bitcoin has a built-in feedback mechanism that acts to keep bitcoin stories on the front page.

hugh3 15y ago
As a compromise I'd be willing to accept a moratorium on all bitcoin-related articles up to "Bitcoin Post Mortem", whenever that may be. I have to admit, however, I can't resist commenting on the bitcoin articles when they show up. It's the classic "Someone is wrong on the internet!" reaction. Maybe those of us who aren't zany bitcoin-boosters need to make a pact to stop commenting on these articles and hopefully once robbed of controversy they'll go away.

jellicle 15y ago

Not really. It's the same as any Ponzi scheme. A promise to early adopters that they'll get rich; initial returns seem to prove out the promise; a giant wave of hype drives a steady stream of suckers into the deal; the existence of the hype is sufficient justification for further hyping stories, providing secondary waves of publicity; the creators quietly cash out their positions and retire to small Caribbean islands; eventually others start trying to cash out; this creates a reverse hype wave ("sell your bitcoins now before they are worthless!"); and wooosh, in a week bitcoins will indeed be worthless. If it were a real currency the creator might face jail time but in this case the creator may well get away with it. The creator can plausibly (notice I did not say truthfully) disclaim any knowledge of how the scheme would unfold. It is interesting from a technical perspective but from a societal/historical point of view, not at all. This same cycle has played out infinite times in human history and will play out infinite times in the future. People always manage to convince themselves that "this time it's different".

narrator 15y ago
The limited inflation and eventual deflation aspects make it more interesting then tradictional alternate currencies. The world is not going to get flooded with an unlimited supply of bitcoins just because there's more demand. How is gold not a ponzi scheme BTW? Ponzi schemes don't run for 3000 years.
swaits 15y ago
I don't think you exactly understand the definition of a Ponzi scheme. It might well be a bubble. But Ponzi? No.
- hugh3 15y ago
  Not quite ponzi. Somewhere between a Ponzi and a bubble -- economically it's a bubble, practically it's a Ponzi. Most bubbles start by accident -- this one was carefully engineered. How do you engineer a bubble? First you invent an asset. But if it's an asset that only you own then nobody will want to believe it's valuable. So you make it possible for the first round of early adopters to get it for free, by "mining. The first adopters talk the second adopters into trying it too (they can still get significant amounts by mining) and... well, you know the story. You also wrap it in some political anti-fiat-currency anti-bank anti-Fed anti-government anti-whatever pro-cryptography political wrapping to make it appealing to a certain constituency. But the key thing is to give out the "asset" for free at first, and to a lesser extent as time goes on, to incentivise early adopters without requiring 'em to actually put their hands in their own pockets. It's quite brilliant, the best memetically-engineered scam since Scientology. And now I'm really getting tired of discussing bitcoin. I think I'll write a big long blog post in the form of a FAQ, submit it, and never mention bitcoin ever again.
  - kiba 15y ago
    The amount of people who said Bitcoin is a bubble is so great and so constant that I commissioned a comic about Bitcoin Bubble just so I can gain traffic by linking to that comic when somebody made that sort of statement. http://bitcoinweekly.com/articles/comic-reaction-after-dramatic-rise-of-bitcoin-s-value http://bitcoinweekly.com/articles/comic-reaction-after-drama... The ROI is fantastic.