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Nassim Taleb: Bitcoin failed as a currency and became a speculative ponzi scheme
- iab 5y agoWithout (any) skin in this game, isn’t this proclamation a bit mature? The nature of Bitcoin right now seems speculative, but will that be true also when the mining phase is over?
- thefoodboylover 5y agowhen is the mining phase over?
- deleted 5y ago[deleted]
- tartoran 5y agoAs I understand will get more difficult to mine as it aproaches its 21 million cap. https://www.investopedia.com/tech/what-happens-bitcoin-after-21-million-mined/ https://www.investopedia.com/tech/what-happens-bitcoin-after...
- sebmellen 5y agoNot more difficult per se, just that the rewards will be less.
- tromp 5y agoBitcoin security depends on an everlasting backlog of high-fee paying transactions to fund miners and keep the cost of rewriting history exorbitant. So never.
- wk_end 5y agoIs the mining phase going to end before the oceans boil?
- pcthrowaway 5y agoNot if people keep mining!
- iab 5y agoThink of all that perfectly steamed seafood
- bhouston 5y agoTrue. But so what? The market can stay irrational for a long time and there is money to be made by taking advantage of this ponzi. Arguing about this is not useful.
- xupybd 5y agoI suspect this is the thinking that got bitcoin to where it is. Personally I'm glad to stay away from it as it's a high risk. I like articles like this as the educate people on the risks.
- vwcx 5y agoSimilar to many of the newer $GME investors. Everyone is happy to keep investing in the hype bubble as long as they can enact the exit they imagine faster than the other guys. No one acknowledges how hard it is to catch a falling knife, and everyone over-indexes their ability to harvest the profit at the speed necessary to beat others in the bubble.
- analog31 5y agoThis year may be the year that cryptocurrency acquires a purpose.
- thefoodboylover 5y agowhat kind of purpose
- brighton36 5y agoA kind of number go up
- ChainOfFools 5y agomust be nice to play liquidity etch a sketch with the tape for those Bitcoin 1% that have held back piles of coins acquired for fractions of a cent. real small world in that "decentralized" inner circle; has been for at least 10 years. and miners running on stolen or handshake-subsidized power don't need to sell their coins to come out even, never have. the secret ingredient isnt math, it's corruption.
- f430 5y agoholy thats good. nicely written
- f430 5y agoSee also these mentioned years 2008 2012 2015 2017 2020 2021
- deleted 5y ago[deleted]
- pmurt7 5y agoAslo these years people were saying BTC is a ponzi scheme and would crash and burn.
- 5y ago
- benatkin 5y agoIt's a store of value, which is not too far from a currency. It is also an inefficient currency that is related to some that aren't so inefficient.
- christiansakai 5y agoDogecoin has an actual use case though, it is called wealth transfer, and it is doing a damn good job at it. Just make sure you aren't at the bottom of the barrel but someone else is. Life is hard, we need to eat other people to survive. Deal with it. Long live Dogecoin!
- ideamotor 5y agoSo all ponzi schemes are OK because uh -> "wealth transfer?"
- christiansakai 5y agoOf course! How else we gonna get rich?
- arcticbull 5y agoWell you could build a business. That's a postive-sum investment. I hear there's even a seed stage startup accelerator that can help fund you. Something about combinators, I don't know.
- another_sock 5y agoIt's not positive-sum, you are taking away capital from a competitor or exploiting somebody down the line.
- ideamotor 5y agoStop saying this utter nonsense. It’s far easier to flood everyone’s devices with MLM material, cough sorry, Crypto bullshit, sorry information. As an aside I think part of the problem is FAAMG platform monopolies sucking the life out of real company innovation. I’ve had so many ideas where the ultimately decision was to not do it because it makes more sense for them to do it.
- christiansakai 5y agoOkay, I mean "how do we get rich by non honest means"
- jvik 5y agoAs many have argued before me. Bitcoin will probably not be useful as a every day currency, but more useful as a store of value and long term investment. There are other cryptocurrencies that are faster, have lower transaction fees, provide anonymity and are just as easy to use.
- kaliali 5y agoLike cardano, polkadot, litecoin, etc...
- throw0101a 5y ago> Bitcoin will probably not be useful as a every day currency, but more useful as a store of value and long term investment. March 2020: "Bitcoin loses half of its value in two-day plunge" * https://www.cnbc.com/2020/03/13/bitcoin-loses-half-of-its-value-in-two-day-plunge.html https://www.cnbc.com/2020/03/13/bitcoin-loses-half-of-its-va... March 2021: "Bitcoin surpasses $60,000 in record high as rally accelerates" * https://www.cnbc.com/2021/03/13/bitcoin-surpasses-60000-in-record-high-as-rally-accelerates-.html https://www.cnbc.com/2021/03/13/bitcoin-surpasses-60000-in-r... Do you want the adjective "stable" in there perhaps? Store of value: > A store of value is essentially an asset, commodity, or currency that can be saved, retrieved, and exchanged in the future without deteriorating in value. In other words, to enter this category, the item acquired should, over time, either be worth the same or more. * https://www.investopedia.com/terms/s/storeofvalue.asp https://www.investopedia.com/terms/s/storeofvalue.asp Well, at least it hasn't gone down (yet?).
- zetazzed 5y agoWe want something that is stable, has real value, and has backing beyond any one state's borders! Clearly, International Postal Reply Coupons are the better solution here.
- CPLX 5y agoThis is a wildly under appreciated comment.
- sebmellen 5y agoWhat's more concerning to me is the cryptocurrency market as a whole. Perhaps there is an argument to Bitcoin being a kind of "digital gold" even if it is all but useless as a currency. But events like Dogecoin hitting a $50B market cap are very unsettling to me. I used to take part in "Dogecoin Socks for the Homeless" events. It was wonderful, everyone was trying to make something good out of what we all knew to be a meme. I am shocked now to look back on those wallet addresses which once held ~$1,500 and see they'd be worth $285,000 (had I held). Of course, it might be that I'm just angry I wasn't the one to become rich, but the mania right now is really, seriously, insane. Many people who are FOMO-ing in thinking this will make them millions with a few hundred dollars invested will be hurt when the "number go up, number go down" cycle turns to "number go down."
- GoldenMonkey 5y agoThis is more a mania with dogecoin. Of course set off by robinhood traders and elon musk tweets.
- dole 5y agoAlso a Conagra Foods Slim Jim cross promotion announcement.
- baq 5y agoblame musk all you want, he knows doge is a joke and treated it as such. same for doge creator. there's simply so much money looking to be put to work that people throw it around to see what sticks. i don't believe that anyone trading doge isn't aware this is a ponzi. the only question may be if it's by design or by accident. or maybe memes have value after all...
- read_if_gay_ 5y agoMemes are influencing presidential elections.
- throw0101a 5y ago> Perhaps there is an argument to Bitcoin being a kind of "digital gold" even if it is all but useless as a currency. Gold is less useful than most people think: > In a 2012 paper entitled "The Golden Dilemma",[1] Claude Erb and Campbell Harvey examined some common assumptions about gold. First they looked at gold as an inflation hedge, analyzing gold returns from 1975 (the year the U.S. came off of the gold standard), through March 2012. They found that, due to its real-price volatility, gold had not been a good inflation hedge over the short- or long-term. * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ It's only of note because of historical accident and it's use in certain cultures (along with silver as well). The Incas had piles of gold, but only used it for jewelry and such, and not as a currency. * https://www.tourinperu.com/blog/inca-gold-culture-invasion-role https://www.tourinperu.com/blog/inca-gold-culture-invasion-r... If we didn't have the culture references of the Gold Standard, I don't think most people would accept a shiny rock as anything special. Or at least gold (Au) specifically, and not any other Period 6 element: * https://en.wikipedia.org/wiki/Period_6_element https://en.wikipedia.org/wiki/Period_6_element Is there perhaps something special about Group 11 element (Cu, Ag, Au) that they should be treated as "currency"? * https://en.wikipedia.org/wiki/Group_11_element https://en.wikipedia.org/wiki/Group_11_element They are certainly useful from a tooling perspective in some ways, but beyond that?
- pavlov 5y agoAlso, Ethereum failed at everything that smart contracts originally promised and became a Ponzi Construction Kit.
- aqsheehy 5y agoHave you used uniswap? What do you think of it?
- Crye 5y agotried to use it recently but saw the fees in the $25-$30 range and thought, ok we're definitely not there yet. Beyond that tho I was super impressed.
- dylkil 5y agotry it on matic or optimism l2
- anonymoushn 5y agoAfter I pay $300 to send myself some MATIC and the asset I actually want to trade?
- deepvibrations 5y agoYou obviously haven't checked in on the Ethereum ecosystem recently and looked at all the innovation there...
- atweiden 5y agoWe’ve been constantly hearing about the importance of “innovation” in the cryptocurrency space. Meanwhile, Dogecoin hits $50B after having been all but dead for a solid decade. Makes you wonder just how important Defi’s so called “innovation” is to its valuation, and how much of it is just a narrative.
- jude- 5y agoWait, isn't this the guy with the whole shpeel about having skin in the game? And, didn't he also sell most of his BTC in February? If so, then I guess he would want us to just ignore him.
- foobiter 5y agohow is he wrong?
- deleted 5y ago[deleted]
- klyrs 5y agoIs this like saying that only current drug users can advocate for cessation, and not those who have quit?
- jude- 5y agoWhat's the financial-investor-equivalent of a drug user? Someone who can't help but eat their assets?
- arcticbull 5y agoSomeone constantly chasing the next pump and dump - a crypto investor, or a penny stock gambler?
- deleted 5y ago[deleted]
- offby37years 5y agoYou’re missing the point of SITG. It would be hypocritical of him to be vocally bearish BTC while holding. Given he has (apparently) relieved himself of his BTC, Taleb is consistent. Don’t give me investment advice, show me your portfolio.
- mohanmcgeek 5y agoClearly you don't understand what SITG is. He's not _deciding_ for you. He's merely expressing his opinion on something. For this to be a SITG question, he'll have to take a decision on your behalf but one that he's insulated from.
- SturgeonsLaw 5y agoThat "article" doesn't add anything beyond the fact that "this guy wrote a tweet and here's what it said". Why is such low quality filler getting traction on HN? Is it because anti-crypto posts push people's buttons? Every day there is something like this posted, and like clockwork the comments are full of the same arguments both on the pro and anti crypto sides. Am I an idiot for expecting better from HN?
- xiphias2 5y agoHN got very popular in the last few years, so I guess it became much harder to moderate. I wish the rules got stricter over time (stay strictly within the hacker/startup/tech mindset), but also as software is now a multi-trillion dollar market, politics has to be involved.
- krapp 5y ago>I wish the rules got stricter over time (stay strictly within the hacker/startup/tech mindset) That was never a rule to begin with.
- xiphias2 5y agoThere's a rule about not making jokes, which already distinguishes HN from almost all other forums in the world. Also there are some topic based bans, which is really hard to do well, as there are new things happening in Bitcoin (i.e. a new soft fork, or ETF being approved or not approved) that should be able to go through the filter.
- krapp 5y ago>There's a rule about not making jokes, which already distinguishes HN from almost all other forums in the world. There isn't actually a rule against making jokes, humor tends to get downvoted because few people are as funny as they think they are, and HN has a thin skin. And as far as other forums go, you can find plenty of niche subreddits which moderate humor and off-topic conversation far more strictly than HN does, such as /r/askhistorians.
- narrator 5y agoStocks: * You buy them because they increase earnings and eventually produce dividends at a very high yield to your initial investment. * The company can issue shares suppressing the price. * The company can do stock buybacks, increasing the price. * Brokers can naked short, suppressing the price. Fiat currency * You need it to pay taxes and debts. * Endless Printing. Gold * Bought because of limited supply. * Supply can be increased by settling futures in fiat, or more gold mining or naked shorting. * Very few have custody. Bitcoin * You buy it not for dividends. * No naked shorting. No stock buybacks because there is no company. Limited new issuance because code=law. Bitcoin's use case is a reliable means of calculating reciprocation for value provided that can't be interfered with by 3rd parties to the transaction via dilution unless they expend meaningful effort by mining.
- klyrs 5y agoYou missed the part about fiat where you can carry it in your pocket and exchange it for goods nearly instantaneously, which isn't true of the other three.
- anonytrary 5y agoYou can only transfer what's in your pocket instantaneously when the recipient is right next to you. The real value of cash is that it is able to be nearly anonymous. Venmo and other services break this anonymity. The only thing cash has on crypto is stronger anonymity.
- klyrs 5y agoNo, bitcoin has transparency and every transaction is publicly visible. Privacy is a myth.
- anonytrary 5y agoYou clearly read my comment wrong. I said that cash is better than crypto when it comes to privacy and anonymity, which you are agreeing with, so I am not sure why you prefixed your comment with "No".
- GoldenMonkey 5y agoI’ve read most of Taleb’s books. And follow his contrarian investment advice. Being anti-fragile makes a lot of sense. Looking beyond his typical ad-hominem attacks. i.e. ‘Questioned by the user ‘Ultra_Mega_BTC’, who said that “the market is saying the opposite”, Nassim Taleb called him an “imbecile”.’ I wonder, if there’s something more to this. As in, what is he selling? He’s got the spotlight... more books? Or a drop in bitcoin... buying bitcoin on a down cycle. These supposed problems, are not what bitcoin is supposed to solve. His trading advice is 90% of your money in riskless assets (T-bills). The rest in the riskiest investments one can find. He must’ve not bought into bitcoin ;)
- ravieira 5y agoI believe Taleb's investment advices are neither contrarian nor innovative, which I don't mean as a disqualification (I liked his books). I also believe his rant is more likely just a rant. And he may or may not have long or short positions in Bitcoin. I also like to believe he is too sophisticated (well, to be fair, as a quant/professional trader he is very sophisticated) to think that he's influencing the market in his favor with his tweets (he knows he's not Elon Musk).
- noname123 5y agoAn honest question, understanding crypto and its true viability as a non-fiat currency or an anti-inflationary digital gold is simply above my pay-grade. I'm wondering if there are any smart plays out there to take advantage of the volatility and/or the inefficiencies in the blockchain that has zero directional delta exposure to the underlying crypto-market. I'm talking about the exploiting the inefficiency of some crypto-proxies like GBTC or MSTR that had 40-150% premium over their stated market value of their BTC holding at one point. Or similarly, doing some kind of long black swan tail trade (on both 500K and 5K BTC scenario) that minimizes the theta burn as much as possible to 0. Or even sympathy trades involving other physical commodities/precious metals. These are my current vague ideas. Would love to hear more from much smarter folks than me!
- Marciplan 5y agoI wish I understood half of your words :)
- ornornor 5y agoGPT-2 authored this comment. Or at least that’s how it feels to me.
- arcticbull 5y agoI'd love to find one. It's really difficult because crypto is a fundamentally inefficient market. It's practically impossible to meaningfully short-sell (except via futures) and the ratio of shorts to longs is about 1:19. If you have a ton of collateral, one option would be to buy 5BTC and short sell a corresponding futures contract. The contango is massive, we're talking 2% per month. This requires of course a decent bankroll, 310K to spend at Coinbase and then about 3M in margin to short a BTC future on IBKR. On the other hand it's a "risk free" 20% per annum, 0 delta play.
- noname123 5y agoI've thought about and looked into this. I heard some brokers actually allow you to custody your bitcoins with them, so basically you're 100% hedged and have 0 margin hit when you execute this pair trade. Additionally, if you can borrow 7:1 on Portfolio Margin for this 5BTC trade for both the long and short side… it becomes a reasonable trade. The question is, can you find a broker that allows you PM on crypto and could custody (or know you have the coins and allow you to HODL the short side in the face of a face-ripper rally of the underlying??). I've also thought about doing some kind of vol arb - if I can sell calls on some optionable over-priced crypto proxies like MSTR; and then buy calls on presumably more efficient BTC options on futures on CME to neutralize the delta and gamma. Greyscale also has an offering program for accredited investors that allows you to fund and buy their GBTC shares at NAV and be able to redeem back the shares after 6 months - and capture what used to be 20-40% premium over NAV (https://adventuresincapitalism.com/2020/11/24/why-this-reflexive-ponzi-scheme-will-continue/ https://adventuresincapitalism.com/2020/11/24/why-this-refle...). But I believe that premium returned back to a discount recently. So no edge is not there anymore. But you're 100% correct, there are so many issues exploiting inefficiencies in crypto despite that it is an emerging market. Exchange risk, risk of self-custody, lack of liquidity in derivatives. Best of luck!
- rektide 5y agoI want to agree, but I have to confess, I don't think currency necessarily has to be cheap nor fast to use. For example, there are Rai Stones[1] or Yapese stone money , which can require more than one person to move in some cases. They're not really currency per se, so it only sort of counts. But I feel like I have to allow currency with different behaviors & characteristics than the cash we all know. I do think there is a very weird thing going on with cryptocurrencies & ever rising valuations, and it feels fake and absurd & built on madness & insanity. Social belief attributing value where there is none. But I also feel similarly about the stock market on many days, and it's non stop rise. It feels like anything we convince ourselves is worthy to be an investment target will continue to accrue worth, that there are scant balancing forces for any markets. [1] https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones
- prepend 5y agoThose currencies sucked. Pointing out other terrible currencies once existed in dead civilizations doesn’t quite help with the argument that currently doesn’t need to be easy to use.
- rektide 5y agoI think it's ok to consider that different currencies can fill different roles & have different advantages than one another. Not all currencies need to compete on the same terms.
- prepend 5y agoIt’s also ok to consider positive and negative characteristics of currencies and to assess, including all the different roles and advantages, whether they sucked within their original context and whether they would suck being used in other contexts, including present day.
- GhostVII 5y agoWhat I want is an inflationary cryptocurrency, not a deflationary one. Make an actual currency, not something to speculate on.
- Kranar 5y agoIf you want something inflationary, why not a basket of currencies via the traditional finance system? One reason I like Bitcoin is because it's a deflationary asset which makes it unique among most other assets. This site is overwhelmingly negative towards Bitcoin, but I feel like the negativity would only make sense if you had to make a binary decision to put most of your wealth in Bitcoin or none of it. Having just some Bitcoin say 5%, is a reasonable way to preserve your wealth against what I find to be a very opaque system of finance where a lot of trust is being placed in a handful of people to keep things running smoothly. If the U.S. government, the Federal Reserve, some crazy trade-conflict or other global unforeseen event takes place that results in unusual currency fluctuations, it's nice to have some of my wealth contained in a digitally secure global financial system.
- sebmellen 5y agoIMO what’s neat about cryptocurrencies is that they are programmable money. This means you could build inflationary cash which inflates at a fixed, fair rate, in an open and transparent manner (Dogecoin did this, for example). Bitcoin has obviously failed at being what the whitepaper said it would be: “A Peer-to-Peer Electronic Cash System.” A fair and open inflationary currency might stand a better chance.
- lasagnaphil 5y agoThough I think it’s too late for other coins to fix this and present themselves to be an alternative; Bitcoin has already grown too big (too much trust & resources spent on it globally), and the failure of Bitcoin will probably mean the failure of crypto as a whole. So Bitcoin itself needs to actively fix this deflationary problem for crypto to be used as actual currency. The problem is most believers of Bitcoin want it to stay it as deflationary (as most are just speculators), and only a minority are really seeing the problem here...
- timoth3y 5y agoI know it's a losing battle, but I can't help but tilt at this particular pedantic windmill. Not all financial scams are Ponzi schemes. Most are not. Ponzi schemes involve shady bookkeeping by the operator that conceals the source of fake profits. If Bitcoin were an actual scam (and I don't think it is) it would be a pump-and-dump. Most ICOs were clearly pump-and-dumps. There is a huge variety of financial scams, and it would be a fiscally safer world if more people knew about them.
- ChainOfFools 5y agoShiller may have coined the phrase "Naturally occurring Ponzi" but I believe the World Bank was the first to describe Bitcoin as one: https://openknowledge.worldbank.org/bitstream/handle/10986/19358/WPS6967.txt?sequence=2&isAllowed=y https://openknowledge.worldbank.org/bitstream/handle/10986/1...
- prepend 5y agoThe key characteristic of Ponzi schemes, I think, is that there is no real value and returns are paid based solely on new cash coming in. There’s shady bookkeeping only as an artifact to hide the cash-in/cash-out structure. I think this applies to Bitcoin because it’s payouts are solely based on speculation and new cash coming in.
- Sammi 5y agoBitcoin has two well understood and valuable use cases: 1) Bitcoin can do trustable and reliable transactions with unlimited amounts of assets across the world in 10 minutes. What else can do that? It's the perfect settlement layer for large actors. 2) It doesn't inflate, which makes it a perfect store of value. Even gold inflates.
- Synaesthesia 5y agoThat's correct but there is still a huge issue for me with Bitcoin, which is that the vast majority of BTC is owned by literally a handful of people. It should be well distributed if it's gonna succeed as a currency and it never will be.
- diego_moita 5y ago> Nassim Taleb called him an “imbecile”. This is why I disgust this Taleb guy: he usually has good insights but defends them with the worst arguments. Or no arguments at all. I felt his "Black Swan" book is a very good idea stretched into hundreds of pages of arrogance and condescendence.
- DrOctagon 5y ago100% agree on Black Swan. Taleb sure loves Taleb.
- lindy2021 5y ago“To figure out if someone is an idiot, call him an idiot and check if he gets upset.” It’s intentional: https://mobile.twitter.com/nntaleb/status/1297163095341699072 https://mobile.twitter.com/nntaleb/status/129716309534169907...
- nickkell 5y agoHis reply to his own tweet is hilarious. He's playing chess whilst we're all playing checkers
- ckastner 5y agoI don't recall Taleb calling others idiots much in his book. I do recall Taleb admiring himself, though. A lot.
- sonthonax 5y agoHe’s just a pathological narcissist that functionally aliterate traders think is a philosopher. His books are mostly unoriginal fluff that could be expressed in a few pages.
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- conistonwater 5y ago
- ChainOfFools 5y agoNice of you to join the gang over in r/buttcoin Taleb. they'll rib you for being 6 or 7 years late with this observation, but you'll be welcomed as a fellow comedy gold aficionado nonetheless.
- d6e 5y agoCurrencies can't be deflationary.
- chmike 5y agoCould you please explain more in detail what you mean to say ? Is it impossible ? Currencies shouldn't be deflationary ?
- throwaway4good 5y agoThe full tweet is actually easier to read: https://twitter.com/nntaleb/status/1382446478539550727 https://twitter.com/nntaleb/status/1382446478539550727 WHAT WE WANT CRYPTO & CURRENCY FOR: 1) Currency w/o a government 2) Stable/reliable for contracts 3) Inflation indexed store of value -- basket of items representative for me. 4) Rapid transactions Can we do it? #BTC failed to be currency, open-Ponzi speculative game. A currency must earn interest: currencies weren't born from govt design but from commercial credit. A deflationary currency blocks borrowing. #BTC is just an open Ponzi scheme: money made by someone is taken from someone else. Stephen Diehl explains it better: Because on top of the zero-sum mechanics, if it siphons wealth off to insiders then the pool to pay out returns shrinks. What @nntaleb said is right, it's economically equivalent to an open Ponzi scheme.
- throwaway4good 5y agoIt is the idea that money is credit / debt. https://en.wikipedia.org/wiki/Credit_theory_of_money https://en.wikipedia.org/wiki/Credit_theory_of_money As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature. People are stuck at home and cannot go to the cinema. Investing in Bitcoin and watching Elon's twitter is an ok replacement for now.
- matkoniecz 5y agoOK I will bite. > As for Bitcoin. Who cares if it is a bubble or a ponzi? People make money and gambling is a part of human nature. People who want to use it as a currency and people preferring to avoid losing their investment in a dumb bubbles. (it is more OK if it is a dumb gambling with what someone is considering as entertainment funds, but nearly noone is doing that)
- McScroogy 5y agoCould you point me to an alternative investment that can not lose its value, please?
- tomcooks 5y agoWhy post this crap article instead of the original tweet mentioned at the beginning of said crap article?
- ummonk 5y agoPretty uncontroversial. It's clearly failed as a currency, and is more of a collectible for speculative investment. It may one day become functional currency, but it certainly isn't today.
- dandanua 5y agoBitcoin won't become a functional currency. I have a blog post about that https://dandanua.github.io/posts/why-i-wouldnt-recommend-using-bitcoin-as-a-lifetime-investment/ https://dandanua.github.io/posts/why-i-wouldnt-recommend-usi...
- johndoe42377 5y agoGood morning, lmao
- zoshi 5y agoNaysayers whine and crypto increases value like clockwork it goes.
- Geee 5y agoThe open ponzi-scheme comment is stupid and he knows it. Bitcoin behaves like any scarce asset, such as real estate. There's a limited amount available and price goes up when there are more buyers. Price goes down when there are less buyers. Trading assets on open markets can not be a ponzi. No one is lying to anyone. No one is promising profits to anyone. Bitcoin is very new and that's why the price goes up so fast. As it grows, it will grow slower and slower, until it stabilizes. It did not fail as a currency. The last year has been huge for bitcoin as a currency, with the opening of Visa and Paypal networks to it, in addition to decentralized solutions. And that's just the beginning. To be really usable as an currency and as an unit of account, the price needs to stabilize first, which takes time. It's open-source software. That's what's important. Everyone can make improvements. When software is not instantly perfect, can you say that it has failed? Software gets better and better as time goes by.
- person_of_color 5y agoWhat I’ve noticed: there are lot of incredibly smart and resourceful nerds who could be doing amazing things in the world but instead are pumping currupto all over the internet.
- DonHopkins 5y agoBitcoin has spectacularly succeeded as a reliable litmus test to identify people and companies who are actually charlatans and get-rich-quick scammers with nothing better to offer than self-serving shilling and crypto-woo-woo, who contribute nothing to the world but hot air, burning coal, and global warming.
- bitcoinmonger 5y agoBitcoin doesn't run on coal.
- DonHopkins 5y agoCitations? https://www.theguardian.com/technology/2021/apr/07/china-bitcoin-mining-climate-targets-nature-study https://www.theguardian.com/technology/2021/apr/07/china-bit... >China’s vast bitcoin mining empire risks derailing its climate targets, says study >China powers nearly 80% of the global cryptocurrencies trade, but the energy required could jeopardise its pledge to peak carbon emissions by 2030 >Bitcoin miner Huang inspects a malfunctioning mining machine during his night shift at the Bitcoin mine in Sichuan Province, China. China’s bitcoin mines will generate 130.5m metric tons of carbon emissions by 2024, the Nature study found. >China’s electricity-hungry bitcoin mines that power nearly 80% of the global trade in cryptocurrencies risk undercutting the country’s climate goals, a study in the journal Nature has said. >Bitcoin and other cryptocurrencies rely on “blockchain” technology, which is a shared database of transactions, with entries that must be confirmed and encrypted. The network is secured by individuals called “miners” who use high-powered computers to verify transactions, with bitcoins offered as a reward. Those computers consume enormous amounts of electricity. >About 40% of China’s bitcoin mines are powered with coal, while the rest use renewables, the study said. However, the coal plants are so large they could end up undermining Beijing’s pledge to peak carbon emissions before 2030 and become carbon neutral by 2060, it warned.
- DonHopkins 5y agoIt does too. Bitcoin is China's way of exporting coal through the atmosphere. Bitcoin shills also produce huge quantities of hot air and CO2 by endlessly repeating false claims like "Bitcoin doesn't run on coal". https://www.coindesk.com/chinese-coal-mines-accidents-affecting-bitcoin-mining https://www.coindesk.com/chinese-coal-mines-accidents-affect... >How Accidents in Chinese Coal Mines Are Affecting Bitcoin Mining >The explosions took nearly a quarter of Bitcoin's hashrate offline, but the network is operating normally and these miners could be back online in as soon as a week. >Disruptions in coal plants in Xinjiang and other parts of China have knocked out bitcoin miners in the region, clipping as much as 35 exahashes from the Bitcoin system’s global hashrate, CoinDesk has learned. >Figures shared with CoinDesk show F2Pool, Antpool, BTC.com and Poolin, the four largest pools in the world, have collectively lost 86% of their share of Bitcoin’s global hashrate over the last 24 hours. Primitive Ventures partner Dovey Wan, who operates mining equipment in one of the regions, told CoinDesk the coal-fired plants are down after “a massive explosion under the plants.” >The coal plant shutdowns follow coal mine accidents in Shanxi, Xinjiang and Guizhou provinces, which collectively have left nearly a dozen dead and, in the case of the mine in Xinjian, 21 people trapped. Coal-abundant Xinjiang and Inner Mongolia are popular spots for Chinese bitcoin miners in the autumn and winter, when the rains that usually supply cheap hydro energy in regions like Sichuan are low.
- geraldbauer 5y agoFYI: I collect a Best of the Yes, Bitcoin is a ponzi - Learn how to investment fraud works at Open Blockchains. See https://github.com/openblockchains/bitcoin-ponzi https://github.com/openblockchains/bitcoin-ponzi
- chmike 5y agoNassim Taleb is a bit short in his arguments
- varispeed 5y agoI can read between the lines in many of those type of articles, that simply put, authors feel salty that they didn't buy in early.
- Gys 5y agoHe was very early and ‘In 2021, specifically on February 12, Nassim Nicholas Taleb decided to tell the public that he was selling some of his bitcoin. Moreover, Taleb criticized a number of people within the crypto community toward the latter end of his tweet.’
- randomsearch 5y agoThis logic smacks of delusion and you hear it all the time. It’s exactly the thinking that drives bubbles. “He is just gutted he missed out on the easy money, what a sucker” Do you really believe that the very large number of people saying that Bitcoin is a terrible idea are all saying it because they’re jealous? Even those who are already rich? If you believe Bitcoin is going to be so fantastically valued in the future, then why wouldn’t they just buy now and be boosting it? If bitcoin’s gains have already been fully realised, why haven’t you sold? There is no scenario where Bitcoin ends well. It’s not only environmentally disastrous, it’s a giant Ponzi scheme that incentivises holders to keep pumping it. The reason HN is bearish on Bitcoin is because those without skin in the game understand the tech, can see the problem, and have no stake in boosting it. The best situation a long term Bitcoin holder can hope for is that they get out before the rest or that the government rescues them before Bitcoin immolates the planet or goes to zero. The former might happen because institutions are insanely buying in. But according to the Bitcoin creed I’m saying this because I didn’t get in early. And the gigantic gains you’re predicting aren’t enticing me in... why? Because I’d rather criticise it after missing out on past gains rather than realising I’m “wrong” and buying now?
- timdaub 5y ago"...returned to attack Bitcoin on Twitter". Ah so he sat on the toilet shitting and wrote some 160 chars into a social media app. Well then.
- sub7 5y agoJust wait until people realize the stable coins are not stable either. There's 1000 or so entities that control 50% of circulating btc. These insiders run the game, they have more information than you and they control the very few exits out there so you cannot really win without being extremely lucky. Everyone thinks they are smart enough to get out before the next idiot, there's no universe where this ends well for anyone outside the exchanges, miners, and market makers.
- tom_mellior 5y agoMany many people have already gotten out, with things ending brilliantly for them. Out of being smarter? No, through pure dumb luck. But this notion that "the average person who holds forever can't win, ergo nobody can win" doesn't make your analysis look particularly insightful.
- sub7 5y agoThis isn't analysis, it's opinion. But thanks for adding to it in a meaningful way. The people who get out in time will be a tiny fraction of those that get fucked. And to date, exponentially more people have gotten fucked than have had brilliant endings.
- tom_mellior 5y ago> And to date, exponentially more people have gotten fucked than have had brilliant endings. If you know of a good source on this, I would be interested. I don't mean this as a challenge, I'm genuinely interested if there are many people who managed to buy at a local maximum and were forced to sell much lower. Even people who bought at $20,000 in late 2017 are now up 3x if they managed to hold. Also, what the actual ownership distribution of Bitcoin is. Is it 90% mom-and-pop investors who gambled their life savings, or is it 90% hedge funds?
- unixhero 5y agoLook I like Taleb, I read his books and they are insightful. But here he is just butthurt he hasn't invested early.
- dean177 5y agoHe did. He sold his Bitcoin recently
- yunohn 5y ago>> he is just butthurt he hasn't invested early Every single time a BTC supporter says this, they further prove that it’s a Ponzi scheme.
- Synaesthesia 5y agoYes, like that's the way Bitcoin works. You invest early, "hodl" then profit. Obviously this cannot work indefinitely.
- 127 5y agoBitcoin is new technology. Internet took 42 years from 1967 to 2009 to get from zero to Bitcoin. How long for Bitcoin to get zero to <?> Arguably, the technology is much more complex and slow moving because it has to store value instead of just random bits.
- isoprophlex 5y ago> Arguably, the technology is much more complex and slow moving because it has to store value instead of just random bits. What does this even mean? Writing ones is faster than writing random integers?
- jacquesm 5y agoSo, now we know Nassim Taleb missed the crypto boat. As did I and many others. Because if he didn't he wouldn't have posted this. And what nonsense. "A currency must earn interest" <- this guy is really full of sh*t sometimes. I really do not understand why he has the reputation that he has. It's perfectly possible to lend your bitcoins to someone and generate a return on it, that's what contracts are for and has nothing to do with the currency itself. Coming soon: one NT's own crypto coin.
- vmurthy 5y agoUm , Taleb was a supporter of BTC a couple of years ago [0] and has owned BTC and is now selling it [1]. I think what he did falls in the category of "When facts change, I change my mind. What do you do, sir?" [0] https://news.bitcoin.com/black-swan-author-pulls-a-180-nassim-taleb-says-bitcoins-a-failure-at-least-for-now/ https://news.bitcoin.com/black-swan-author-pulls-a-180-nassi... [1]https://twitter.com/nntaleb/status/1360276917992230919 https://twitter.com/nntaleb/status/1360276917992230919
- jacquesm 5y agoYes, let me be more specific: if you really are able to predict the future then you bet the house on something, you'll make out like a bandit. But if you also do something that many others do when the trend is plainly visible that doesn't count. Yes, I mined some bitcoin. But that's not the same as being able to predict a trend. Because when you can you're not just going to mine a couple of bitcoins or put a bit of money into it, you're going to bet the house: you know you can't lose. So as far as I'm concerned he's full of it.
- deleted 5y ago[deleted]
- aaron695 5y ago> if you really are able to predict the future then you bet the house on something, you'll make out like a bandit. Unless you can predict 'time', then no. (And generally we don't include time as 'predicting the future') Will we all be eating meat not grown from animals in the near future, yes. Should I start shorting cattle farms? I'd guess cattle farms will start to devalue within a decade, but I'm not sure that statement has any value to me. > So as far as I'm concerned he's full of it. Yes he is.
- timwaagh 5y agoWell I for one am glad bitcoin remains only as an asset for speculation, not a currency. I don't want 'currency without government'. Bitcoin as an alternative for the Swiss Banking system seems to have failed.
- edem 5y agoThis guy has no idea what a ponzi scheme is and also has no idea what bitcoin is...because it is not a currency and was never intended as one.
- timonoko 5y agoChinacoin is going to be big. I call it Zitcoin, bcause it is going to be like pimple in all governments ass. 1) Works in every phone everywhere 2) Zerocost immediate transfer 3) Immediate exchange to other currency via Alipay 4) Including Bitcoin 5) Negative interest aka inflation, as it is not an investment. At first it will replace all small-scale money transfer in shops and services. Eventually governments have to act, and cheapest way is to pay China -- just to collect their value-added taxes.
- yigitcakar 5y agoI admire the idea of having a public currency with no ties to governments. That might create a better, more equal future. But bitcoin is failing that and it's what Taleb is talking about. I am not a working economist, but I am trained as one, and I would like to drop my two cents here. I like the idea of having a public currency with no ties to governments because that makes our wealth safe from policies that have nothing to do with us, or our country. For example, I am Turkish and my wife is American. We are tied to the US and Turkey. Right now we earn some of our income in Turkish Liras, and some of it in US Dollars. The Turkish Lira(TRY) has been losing its value because of the incompetent financial management of the country. Basically our TRY wealth has lost half of its value in the past two years. Even though we don't feel that loss locally we feel it globally. The disturbing thing is we did nothing wrong to lose half of our wealth. A small group of people at the head of the government, with their horrendous decisions made us lose half of our wealth in just two years. Same situation is going on with the global economy as well. We haven't felt the effects of Biden's new stimulus package yet, but as more money enter the system, all of our wealth will get a hit because of the inflation. America bets that they are going to create enough wealth with the 2b they are going to spend on infrastructure and will handle the effects of inflation. But what about rest of the world? We don't get anything, we will just lose our wealth. When Bitcoin(BTC) was founded, the hope was to create a global currency with no ties with governments so we can preserve our wealth. But the speculative nature of Bitcoin makes it unsuitable for such a task. If BTC was stable enough, it would be preferable to gold to preserve wealth because it is easier to save and transfer. But you can't trust BTC. Anybody who understands finance will tell you it is the biggest bubble economy has ever seen. People with financial backgrounds don't trust BTC because it reminds them the previous economic bubbles that hurt global economy when the economy wasn't global. Since BTC became mainstream and started growing in an unprecedented way, I fear the effects of the burst because I know about the south sea bubble of 1720. In BTC kind of bubbles everything looks wonderful to the public until a lot of wealth disappears in a couple of weeks. It took four weeks for the south sea bubble to burst and to lose 75% of its value. I believe when the bubble bursts and panic sets in BTC will lose most of its value in a shorter time. Moreover, in this burst there will be no government to mend the economic hurt people will suffer. That's what the economists are trying to warn people about. When BTC people talk about BTC they usually talk from individual perspectives. They are earning a lot of money through BTC, so what's the problem with that? They say people who are against BTC doesn't get it, or are jealous because they are not earning money through BTC. Well, when the economists talk about BTC they talk about it from a global economic perspective. People can do what they deem worthy with their money, they can gamble, they can bet on BTC and try to earn more. Economists has no problem with that. Economists care about understanding the effects of the aggregate actions of people and economists don't want people to lose 75% of their wealth in a couple of weeks knowing the implications. They warn against bitcoin because when people who invest huge amounts of their money on BTC lose their wealth there will be no doors to knock to ask for help. The BTC people almost always say that BTC is like gold. Well it's not. First, gold is tangible. You can have your gold and save it somewhere. Moreover, gold is one of the safest investments because over time gold price always increases. If you invest all of your wealth in gold, in the long term you will preserve your wealth. Can you say that with BTC? Of course not. You can't be sure that people will continue valuing BTC after the bust. You can't be sure that you will be able to sell your BTC after the bust. You can end up having some digits on some machines people are running for nostalgia. Moreover, gold is entangled in global economy and governments will interfere if the price of gold drops spectacularly. If the same happens to BTC, governments will shrug and tell that that's why people should use government backed currencies. Another fallacy BTC people has is listening to people who are not financial experts. People might be successful experts in other areas, but economics is a different beast. I am good at marketing and sales, and people consider me as an expert in those areas. Would you accept my advice on programming a Linux kernel? That's happening with regards to BTC though. People who don't know about economics and finance, spends their days giving financial advice to people. Even people who are experts at finance would always tell that what they are telling are not financial advice whenever they talk, because it is just their opinion — and also for legal reasons. But those BTC zealots don't see a problem with suggesting people put their livelihoods and futures risk in an unstable, risky investment option. We have to be reminded that, Newton, arguably one of the smartest human ever, and one of the most brilliant minds of his time with a great understanding of the financial events of his time, lost a huge part of his wealth when the bubble burst. You can read about it here: https://royalsocietypublishing.org/doi/10.1098/rsnr.2018.0018#d3e1449 https://royalsocietypublishing.org/doi/10.1098/rsnr.2018.001... Yet, I don't think BTC is a ponzi scheme. BTC is a risky financial instrument. NFT on the other hand is a beautiful ponzi scheme.
- pmurt7 5y agoNassim Taled sold his BTC back in February and now he's getting mad BTC is rising more than ever. Look no further than that.
- pmurt7 5y agoBitcoin may be a speculative ponzi scheme and Nassim Taleb may be a fraud too.
- stblack 5y agoBecause the stock market and fiat currency aren’t Ponzi schemes at all.
- gvv 5y agoNassim "Nocoiner" Taleb
- myth_buster 5y agoThis is worth a read. https://threadreaderapp.com/thread/1382408549343580161.html https://threadreaderapp.com/thread/1382408549343580161.html
- m3kw9 5y agoListening to laser eyes talk = full of biases
- csomar 5y agoActually, I have come to believe that Nassim Taleb is the ponzi scheme charlatan. Let's see 1. It's not clear what this guy achievements are; apart from stating the obvious using very good writing (black swan). 2. He doesn't have any real credentials or achievements. He brags about having traded lots of options and making a bunch of money. But he fails to deliver any proof of that. 3. He sells a mini-certificate (whatever that means) for $3.000 -> https://www.realworldrisk.com/details.html https://www.realworldrisk.com/details.html 4. He actually accepts Bitcoin for his program "Note that we accept bitcoins!" 5. Requirements for his mini-certificate are the same, practically, to buy Bitcoin > What are the requirements to enroll? Simply, some experience with risk and, being a typical reader of, say, Antifragile or similar books. 6. You should trust him with his program because the Feedback shows considerable name recognition. > The Mini-certificate is priced at about 40% less than an executive MBA, and requires a tenth of the time and financial commitment, so we believe that the payoff will be quite generous. Feedback shows there is considerable name recognition. tl;dr: Taleb is a snake-oil sales man. His good writing style made you fell for it.
- okareaman 5y ago"All that glitters is not gold" ~~ William Shakespeare ~~
- m3kw9 5y agoThere seems to be a detachment on the tech and the price of the tech. It’s prob not a ponzi but when that promise starts to take too long, people are still waiting, these prices won’t last long. The current price appreciation, the “cycle” as they call t, is based on a world wide FOMO.
- mcnamaratw 5y agoPonzi schemes have a payout.
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- hudon 5y agoJust to counter the knee jerk “but it’s actually digital gold!” reaction of Bitcoin holders: One big reason Bitcoin can’t be “digital gold” is because humans don’t control the natural supply of gold. Humans, however, control the supply of Bitcoin. The “21 million limit” is just a meme that’s currently implemented in the code that the network has consensus on, but that limit can change if the influencers in the space see fit to it and the herd follows along.
- j0ba 5y agoThen it would be a fork of bitcoin (and therefore not bitcoin). Everybody who already owned a bitcoin would also own the equivalent amount in the forked coin. This already happened in 2016 with bitcoin cash.
- hudon 5y agoYou don’t get to choose which cryptobean keeps the name, the market does (see 2016 fork, and 2013 fork).
- aazaa 5y agoHe claims what "we" want is: 1) Currency w/o a government 2) Stable/reliable for contracts 3) Inflation indexed store of value -- basket of items representative for me. 4) Rapid transactions Of these points, only (1) or (2) were ever a goals. And Bitcoin has succeeded spectacularly there. (4) is debatable. Read the white paper and the original discussions on Bitcoin Talk. Retrofitting goals on a project after the fact is just dishonest. And who is this "we" anyway?
- realce 5y agoThis discussion proves Taleb's point very well. Nobody is arguing about the currency utility of BTC, everyone's arguing about the definition of a Ponzi scheme or the attributes of gold.
- medium_burrito 5y agoThe primary use of Bitcoin is moving money out of China. That's what drives a lot of this.
- kfold3 5y agoReality: how Nassim Taleb failed as an investor and became a fourth-rate Twitter troll
- deleted 5y ago[deleted]
- diedyesterday 5y agoBitcoin is INDEED a ponzi/pyramid scheme. The main hallmark of a pyramid scheme is that is produced no significant net wealth but somehow makes a minority richer, much richer! How can this be? Because a pyramid scheme is designed to transfer wealth from the base of the pyramid (new recruits) to the upper layers of the pyramid (earlier entrants) and this is exactly what bitcoin has been doing and is the very main reason for it being promoted.
- laszlo-kiss 5y agoAs long as there are oppressive financial systems (central banks, the world bank, the current financial pyramid) crypto (decentralized) currencies are going to be around and will provide a needed _service_. The harder the folks (running the 'official Ponzi scheme') fight crypto the more valuable crypto currency technology will be, more smart folks will pay attention to it and it will evolve further. Since there is no way on Earth that the financial elite will just give up and go away, demand for crypto transactions will be ever present. They can pass laws to make it illegal, but that means that servicing the demand is going to be even more profitable. Consider that the risk of owning an outlawed crypto currency is nowhere near to carrying around a kilo of white powder... Every time a windbag (insider/rich guy/financial guru), like Taleb or Bill Gates, bad mouths crypto, it should be considered an endorsement of the concept. Which crypto you choose to put your fiat into however, is your business.
- grae_QED 5y agoThis is GPT-3 generated. Some no name 'news' outlet uses a web scraper to get tweets, and the like, then generates 'articles' about them... change my mind.