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Thank you for the disinterested take! It's refreshing to see this as a top comment when so often I see "Crypto makes me sick" which offers zero information and

Thank you for the disinterested take! It's refreshing to see this as a top comment when so often I see "Crypto makes me sick" which offers zero information and doesn't belong on HN. A few points to the repetitive comments I keep seeing: 1. Bitcoin is not a Ponzi scheme. Various cryptocurrencies operate in such a manner, but Bitcoin and Ethereum have value propositions: settlement and programmable money respectively. Crucially, these projects are still in a growth phase. More projects are being built on Bitcoin (e.g. Avanti Bank) and Ethereum (e.g. Uniswap) and more institutions like Tesla, MassMutual, and Square have a position in it. Banking institutions are working on supporting Bitcoin. 2. Bitcoin pricing is on a log scale. Dropping to $36k from $50k is not a concern on this scale. If it drops below $10k, there might be some nervousness but Bitcoin's fluctuations have almost never deviated significantly in its 11 year history. 3. Bitcoin is not a currency. How do we know? You can't price the components of a Big Mac in Bitcoin. Again, it is in a growth phase which is what people like Taleb don't understand. When you can price a Big Mac in Bitcoin then maybe it is in some form a currency (not directly, but perhaps indirectly using Lightning or another L2). 4. A lot of smart people are invested in crypto: a16z, USV, Paradigm. These aren't greedy VCs -- it's their job to make returns for institutional investors who are often pension funds or charitable endowments, so if it a "Ponzi" then they are fools. I do not understand how every time cryptocurrency comes up armchair HN users come along and comment when they, very apparently, have almost no understanding of the topic. It's like coming in and starting to discuss how L1 cache works when you aren't a computer engineer or don't have an active day-to-day interest in the matter. Why waste people's time with your vacuous comments? It's like some kind of therapy. "Crypto sucks!" Reinforcing feel-good Circle-upvote is all it is.

Nursie 5y ago
> I do not understand how every time cryptocurrency comes up armchair HN users come along and comment when they, very apparently, have almost no understanding of the topic This in itself is a meme - "All criticism is ignorance!" Bitcoin is not a ponzi or a pyramid scheme, that's true, but it has aspects of both, with its declining emission and stacked rewards for early adopters. And Bitcoin is for settlement now is it? That's interesting, and a massive deviation from its original intent (see the white paper) as well as all the other purposes it's been ascribed over the years. The truth is that bitcoin is an instrument of speculation. Little else.
- deleted 5y ago
  [deleted]
- ZephyrBlu 5y ago
  > The truth is that bitcoin is an instrument of speculation. Little else Right now it is because it's experiencing tremendous growth. When it becomes less volatile it may yet become more currency-like.
- krrrh 5y ago
  > The Nakamoto Scheme is an automated hybrid of a Ponzi scheme and a pyramid scheme which has, from the perspective of operating a criminal enterprise, the strengths of both and (currently) the weaknesses of neither. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/
  - okareaman 5y ago
    Good article, but it could also be seen as a global poker game, with holders "bluffing" people to buy while they hold, looking for a top to sell at.
    - meowface 5y ago
      I think poker or another form of gambling is a good analogy. In my opinion, the article tries to construct a pretty strained analogy by listing all the myriad ways Bitcoin isn't like a Ponzi scheme or a pyramid scheme - which is what makes it so ingenious as a Ponzi-pyramid-scheme!, apparently. It clearly does share aspects of Ponzis and pyramids, but, unfortunately, so do plenty of other things, like many companies' stocks. That doesn't necessarily make those companies fraud-schemers, though. That's just what speculation is. You can try to frame all speculation as a pyramid scheme, but I think it's a stretch. I personally dislike gambling and speculation (and finance in general), but there's still a distinction between speculation and scamming. That said, of course in addition to this, lots of other cryptocurrencies/tokens are full-on fraud schemes. If you count all tokens (which anyone can make and sell in like an hour - many are being created daily), then > 99% of it probably is. In my opinion, all these scam tokens are very similar to malware. (And often are also literal malware, because many scam tokens are implemented as malicious/backdoored smart contracts.) There are absurd amounts of malware variants created daily. It's easy for a single person to create dozens of malware variants or dozens of scam tokens in a day. If you're going by number of distinct software hashes, it could very well be that > 99% of all software is malware. I certainly get why people are a tiny bit wary of an ecosystem that's > 99% fraudulent in terms of percentage of distinct assets. > 99% of activity on Tor is also likely illegal or malicious in some way. (There are some studies indicating this.) That doesn't mean I want a government to ban cryptocurrencies or ban Tor, and have police "raid Bitcoin meetups", as this author suggests in the article. Tor, Bitcoin, and especially some other cryptocurrencies have interesting technology to offer. I'd rather there be an attempt to address the externalities in a less crude way than just a blanket ban that makes the technology illegal.
NovemberWhiskey 5y ago
>Bitcoin pricing is on a log scale. Dropping to $36k from $50k is not a concern on this scale. What is that even supposed to mean?
- quickthrowman 5y ago
  The poster you replied to is confused, I think they’re saying they chart Bitcoin with a logarithmic scale, which as we both know has nothing to do with how Bitcoin is priced, only how the price action is displayed on a chart.
- __jem 5y ago
  This has to be one of the funniest financial things I've heard. "Uhhh, you know when your account dropped 50%? Actually that is only like 10% if you pretend it's a log scale." Unfortunately for them, USD is not on a log scale and they'll be disappointed to discover that when they try to cash out.
  - pilingual 5y ago
    I'm not discussing trading here, in which case you would be absolutely right. Trading using a log chart would be absurd. I'm talking about long term positions. Cost averaging over time means you are immune to such a massive swing.
    - ideamotor 5y ago
      You’re talking out of your ass.
    - anyfoo 5y ago
      You just decided that "Bitcoin pricing is on a log scale"? Because it sounds cool to talk about logarithms? What does cost averaging have to do with it?
- imtringued 5y ago
  It means people don't care if it is a store of value because they don't care if their savings are locked up until the next bubble, they can afford to wait because they have savings somewhere else.
kingaillas 5y ago
>2. Bitcoin pricing is on a log scale. Time to report bitcoin pricing with decibels? I suppose another logarithmic scale would work here as well: Richter scale; scaled so these "corrections" are in the middle of the scale. Then we could about a "magnitude 5 on the bitcoin Richter scale" correction, etc.
deleted 5y ago
[deleted]
Ologn 5y ago
> A lot of smart people are invested in crypto: a16z, USV, Paradigm. These aren't greedy VCs -- it's their job to make returns for institutional investors who are often pension funds or charitable endowments, so if it a "Ponzi" then they are fools. (I wanted to say back in 1999) - a lot of smart people are invested in dot-com startups: Kleiner Perkins, Sequoia, Hummer Winblad. These aren't greedy VCs -- it's their job to make returns for institutional investors who are often pension funds or charitable endowments, so if it a "Ponzi" then they are fools. I'm sure Hummer Winblad's investment in Pets.com will work out great.
- okareaman 5y ago
  The vibe is the same: I worked at dotcom pre-crash and the owner used to give noob internet investors (like the "Small Plane Pilots Association" or some such) a tour of the company and say something like "Look at all those people creating value on the internet! The internet is changing the world"
sashimi-houdini 5y ago
1.The term you're looking for is "naturally occurring Ponzi scheme" https://openknowledge.worldbank.org/handle/10986/19358 https://openknowledge.worldbank.org/handle/10986/19358 2. I literally don't know what this means. If it drops below 10, and you bought at 50k, you have an 80% loss. This might indeed induce "some nervousness". 3. Bitcoin is, per the title of the whitepaper, "A Peer-to-Peer Electronic Cash System". You don't have to read very far into the whitepaper to understand that being a currency is 100% the stated objective. As you pointed out: it has failed miserably at that. 4. No... if this is a "Ponzi", then _on average_ there are more fools than smart people. Smart (or lucky) people are in fact a requirement of a successful Ponzi scheme... where else would the money go?
- bavdjdohrbd 5y ago
  U jel?
splithalf 5y ago
“Why waste people's time with your vacuous comments?” Because my opinions are not vacuous to me.

Nursie 5y ago

> I do not understand how every time cryptocurrency comes up armchair HN users come along and comment when they, very apparently, have almost no understanding of the topic This in itself is a meme - "All criticism is ignorance!" Bitcoin is not a ponzi or a pyramid scheme, that's true, but it has aspects of both, with its declining emission and stacked rewards for early adopters. And Bitcoin is for settlement now is it? That's interesting, and a massive deviation from its original intent (see the white paper) as well as all the other purposes it's been ascribed over the years. The truth is that bitcoin is an instrument of speculation. Little else.

deleted 5y ago
[deleted]
ZephyrBlu 5y ago
> The truth is that bitcoin is an instrument of speculation. Little else Right now it is because it's experiencing tremendous growth. When it becomes less volatile it may yet become more currency-like.
krrrh 5y ago
> The Nakamoto Scheme is an automated hybrid of a Ponzi scheme and a pyramid scheme which has, from the perspective of operating a criminal enterprise, the strengths of both and (currently) the weaknesses of neither. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/
- okareaman 5y ago
  Good article, but it could also be seen as a global poker game, with holders "bluffing" people to buy while they hold, looking for a top to sell at.
  - meowface 5y ago
    I think poker or another form of gambling is a good analogy. In my opinion, the article tries to construct a pretty strained analogy by listing all the myriad ways Bitcoin isn't like a Ponzi scheme or a pyramid scheme - which is what makes it so ingenious as a Ponzi-pyramid-scheme!, apparently. It clearly does share aspects of Ponzis and pyramids, but, unfortunately, so do plenty of other things, like many companies' stocks. That doesn't necessarily make those companies fraud-schemers, though. That's just what speculation is. You can try to frame all speculation as a pyramid scheme, but I think it's a stretch. I personally dislike gambling and speculation (and finance in general), but there's still a distinction between speculation and scamming. That said, of course in addition to this, lots of other cryptocurrencies/tokens are full-on fraud schemes. If you count all tokens (which anyone can make and sell in like an hour - many are being created daily), then > 99% of it probably is. In my opinion, all these scam tokens are very similar to malware. (And often are also literal malware, because many scam tokens are implemented as malicious/backdoored smart contracts.) There are absurd amounts of malware variants created daily. It's easy for a single person to create dozens of malware variants or dozens of scam tokens in a day. If you're going by number of distinct software hashes, it could very well be that > 99% of all software is malware. I certainly get why people are a tiny bit wary of an ecosystem that's > 99% fraudulent in terms of percentage of distinct assets. > 99% of activity on Tor is also likely illegal or malicious in some way. (There are some studies indicating this.) That doesn't mean I want a government to ban cryptocurrencies or ban Tor, and have police "raid Bitcoin meetups", as this author suggests in the article. Tor, Bitcoin, and especially some other cryptocurrencies have interesting technology to offer. I'd rather there be an attempt to address the externalities in a less crude way than just a blanket ban that makes the technology illegal.

NovemberWhiskey 5y ago

>Bitcoin pricing is on a log scale. Dropping to $36k from $50k is not a concern on this scale. What is that even supposed to mean?

quickthrowman 5y ago
The poster you replied to is confused, I think they’re saying they chart Bitcoin with a logarithmic scale, which as we both know has nothing to do with how Bitcoin is priced, only how the price action is displayed on a chart.
__jem 5y ago
This has to be one of the funniest financial things I've heard. "Uhhh, you know when your account dropped 50%? Actually that is only like 10% if you pretend it's a log scale." Unfortunately for them, USD is not on a log scale and they'll be disappointed to discover that when they try to cash out.
- pilingual 5y ago
  I'm not discussing trading here, in which case you would be absolutely right. Trading using a log chart would be absurd. I'm talking about long term positions. Cost averaging over time means you are immune to such a massive swing.
  - ideamotor 5y ago
    You’re talking out of your ass.
  - anyfoo 5y ago
    You just decided that "Bitcoin pricing is on a log scale"? Because it sounds cool to talk about logarithms? What does cost averaging have to do with it?
imtringued 5y ago
It means people don't care if it is a store of value because they don't care if their savings are locked up until the next bubble, they can afford to wait because they have savings somewhere else.

kingaillas 5y ago

>2. Bitcoin pricing is on a log scale. Time to report bitcoin pricing with decibels? I suppose another logarithmic scale would work here as well: Richter scale; scaled so these "corrections" are in the middle of the scale. Then we could about a "magnitude 5 on the bitcoin Richter scale" correction, etc.

deleted 5y ago

[deleted]

Ologn 5y ago

> A lot of smart people are invested in crypto: a16z, USV, Paradigm. These aren't greedy VCs -- it's their job to make returns for institutional investors who are often pension funds or charitable endowments, so if it a "Ponzi" then they are fools. (I wanted to say back in 1999) - a lot of smart people are invested in dot-com startups: Kleiner Perkins, Sequoia, Hummer Winblad. These aren't greedy VCs -- it's their job to make returns for institutional investors who are often pension funds or charitable endowments, so if it a "Ponzi" then they are fools. I'm sure Hummer Winblad's investment in Pets.com will work out great.

okareaman 5y ago
The vibe is the same: I worked at dotcom pre-crash and the owner used to give noob internet investors (like the "Small Plane Pilots Association" or some such) a tour of the company and say something like "Look at all those people creating value on the internet! The internet is changing the world"

sashimi-houdini 5y ago

1.The term you're looking for is "naturally occurring Ponzi scheme" https://openknowledge.worldbank.org/handle/10986/19358 https://openknowledge.worldbank.org/handle/10986/19358 2. I literally don't know what this means. If it drops below 10, and you bought at 50k, you have an 80% loss. This might indeed induce "some nervousness". 3. Bitcoin is, per the title of the whitepaper, "A Peer-to-Peer Electronic Cash System". You don't have to read very far into the whitepaper to understand that being a currency is 100% the stated objective. As you pointed out: it has failed miserably at that. 4. No... if this is a "Ponzi", then _on average_ there are more fools than smart people. Smart (or lucky) people are in fact a requirement of a successful Ponzi scheme... where else would the money go?

bavdjdohrbd 5y ago
U jel?

splithalf 5y ago

“Why waste people's time with your vacuous comments?” Because my opinions are not vacuous to me.