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And the dollar isn’t? One is backed by aircraft carriers and the force of law, the other is backed by math and an egregious amount of energy usage. Don’t see

And the dollar isn’t? One is backed by aircraft carriers and the force of law, the other is backed by math and an egregious amount of energy usage. Don’t see how it precludes the ‘having value’ part of things.

lottin 5y ago
No, the dollar isn't a pyramid scheme. People don't invest in dollars expecting to get a positive return.
- sb057 5y ago
  No, but people invest in dollar-denominated assets that, should the USD become worth less, would cause a corresponding decrease in the value of said assets.
- JohnJamesRambo 5y ago
  What? Yes they do. Why do you think people from other countries try anyway possible to get in USD and USD investments?
  - goldcd 5y ago
    Indeed. And you get a massive return for investing in dollars, if your own currency has say hyper-inflation. "I exchange my local currency for a USD and in a year when I want to buy something I can exchange it back for twice as much local of currency" Not massively different to investing in BTC today, in the hope that you can convert it back for more of your local currency when you want to spend it.
    - notahacker 5y ago
      You get a massive return in local currency from holding onto virtually any asset other than local currency or local currency denominated debt if your own currency has hyperinflation. People overseas want dollars because dollars are extremely easy to transact with and many companies [especially outside their country] accept only dollars, not because a price graph and a tweet from Elon Musk have convinced them that dollars will be even more popular next year. The actual mechanism that ensures many of these companies will continue to accept dollars next year is financial obligation, not hype.
    - jonfw 5y ago
      Why USD when you can hold an asset? Maybe if you live in a place where liquid assets are hard to come by I could see using USD instead
  - jonfw 5y ago
    > in USD and USD investments What's a USD investment? People want USD because of it's transactional value (i.e. they want to trade with it), not to use it as a store of value
  - lottin 5y ago
    First, a USD-denominated investment is not the same thing as an investment in USD. Second, I am from "other countries" and no one around here is investing in USD. Can you point me to a specific example of people from other countries who are investing in USD? Thank you!
- eCa 5y ago
  Some most certainly do, at least in the more-positive-than-the-alternative sense. Of course not to the same extent as in crypto currencies, but still.
astrea 5y ago
This comment could be a picture in the dictionary next to "reductionist".
sgt101 5y ago
And the future tax receipts of the USA.
robertlagrant 5y ago
No the first is backed by stability. The dollar is still a currency. It's not turned into an investment opportunity.
gameswithgo 5y ago
The dollar is backed by semi rational opinions of the GDP of the nation(s) printing the dollars. The relative values of currencies shift, normally slowly, because normally economies don't tank overnight. Bitcoin is not backed by anything. Thus it has wild swings.
- JohnJamesRambo 5y ago
  > backed by semi rational opinions of the GDP of the nation(s) printing the dollars. About that... https://www.currentmarketvaluation.com/models/buffett-indicator.php https://www.currentmarketvaluation.com/models/buffett-indica... https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- traloid 5y ago
  It is backed by cost of electrical consumption. Its just that 90% of its value is speculation. But it absolutely does have "real value" and is backed by material reality.
AlexandrB 5y ago
In a way, bitcoin is like super-fiat. It doesn't even have the power of the state to back it. Where fiat was backed by nothing but the guarantees of an armed government, bitcoin is backed by literally nothing. It's funny then when some imply that bitcoin is somehow a return to pre-fiat money.
Maken 5y ago
I would say the aircraft carrier seems a better inversion than a bunch of burning overclocked GPUs.
rspeele 5y ago
People buy Bitcoin expecting that holding onto it for a few years will vastly increase their purchasing power. "lambo", "to the moon", etc. People are starry eyed over the 1000x return they could have made if they bought years earlier, and are hoping there's still some of that juice left to squeeze. Maybe not 1000x but 100x or 50x or 10x. Just search "bitcoin price target" and browse the dreams and napkin calculations of "assuming Bitcoin's market cap grows to match all gold" or "all M2" or "the euro" or whatever your favorite goal is, "...then 1 BTC == 1 zillion dollars and I can retire". For investors to get that growth they desire, they need exponentially more new money to come into the system. If I buy 1 BTC at $40k, to double my money I need to sell it at $80k. Maybe I sell it to one rich guy, maybe to two people on my level each buying 0.5 BTC at $40k, or maybe to 1000 poor people each buying .001 BTC at $80. But somehow $80k needs to come into Bitcoin. Eventually you run out of people in the world with more money to buy in. And since the Bitcoins themselves aren't useful, the person who bought the top is SOL. The whole utility was "get more money out than you put in" and there's no bigger buyer left to make that possible, so now what is it good for? That's why people compare it to a pyramid scheme because pyramid schemes have an identical problem, with everybody making money until there simply aren't any more rubes left to buy in. The dollar, even though it's still just scraps of paper and shared make-believe, doesn't have this scaling problem. People aren't holding onto their dollars expecting them to double in value. It's a currency, i.e. a handy abstraction layer over bartering, not an investment. I use the dollar because it beats trading my software development labor for chicken eggs from my boss's side-gig farm and then trading those for apples and gasoline and mortgage payments and electricity. I don't expect to get more out than I put in. Stable currencies make sense and work. Double-your-money schemes run out of steam. It's that simple. -- edit -- I will give Bitcoin credit though for being the first decentralized pyramid. It doesn't die, so if you miss the peak in one cycle, you can always hope that a few years later it'll come back in style and reel in a bigger crowd before collapsing again.

lottin 5y ago

No, the dollar isn't a pyramid scheme. People don't invest in dollars expecting to get a positive return.

sb057 5y ago
No, but people invest in dollar-denominated assets that, should the USD become worth less, would cause a corresponding decrease in the value of said assets.
JohnJamesRambo 5y ago
What? Yes they do. Why do you think people from other countries try anyway possible to get in USD and USD investments?
- goldcd 5y ago
  Indeed. And you get a massive return for investing in dollars, if your own currency has say hyper-inflation. "I exchange my local currency for a USD and in a year when I want to buy something I can exchange it back for twice as much local of currency" Not massively different to investing in BTC today, in the hope that you can convert it back for more of your local currency when you want to spend it.
  - notahacker 5y ago
    You get a massive return in local currency from holding onto virtually any asset other than local currency or local currency denominated debt if your own currency has hyperinflation. People overseas want dollars because dollars are extremely easy to transact with and many companies [especially outside their country] accept only dollars, not because a price graph and a tweet from Elon Musk have convinced them that dollars will be even more popular next year. The actual mechanism that ensures many of these companies will continue to accept dollars next year is financial obligation, not hype.
  - jonfw 5y ago
    Why USD when you can hold an asset? Maybe if you live in a place where liquid assets are hard to come by I could see using USD instead
- jonfw 5y ago
  > in USD and USD investments What's a USD investment? People want USD because of it's transactional value (i.e. they want to trade with it), not to use it as a store of value
- lottin 5y ago
  First, a USD-denominated investment is not the same thing as an investment in USD. Second, I am from "other countries" and no one around here is investing in USD. Can you point me to a specific example of people from other countries who are investing in USD? Thank you!
eCa 5y ago
Some most certainly do, at least in the more-positive-than-the-alternative sense. Of course not to the same extent as in crypto currencies, but still.

astrea 5y ago

This comment could be a picture in the dictionary next to "reductionist".

sgt101 5y ago

And the future tax receipts of the USA.

robertlagrant 5y ago

No the first is backed by stability. The dollar is still a currency. It's not turned into an investment opportunity.

gameswithgo 5y ago

The dollar is backed by semi rational opinions of the GDP of the nation(s) printing the dollars. The relative values of currencies shift, normally slowly, because normally economies don't tank overnight. Bitcoin is not backed by anything. Thus it has wild swings.

JohnJamesRambo 5y ago
> backed by semi rational opinions of the GDP of the nation(s) printing the dollars. About that... https://www.currentmarketvaluation.com/models/buffett-indicator.php https://www.currentmarketvaluation.com/models/buffett-indica... https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
traloid 5y ago
It is backed by cost of electrical consumption. Its just that 90% of its value is speculation. But it absolutely does have "real value" and is backed by material reality.

AlexandrB 5y ago

In a way, bitcoin is like super-fiat. It doesn't even have the power of the state to back it. Where fiat was backed by nothing but the guarantees of an armed government, bitcoin is backed by literally nothing. It's funny then when some imply that bitcoin is somehow a return to pre-fiat money.

Maken 5y ago

I would say the aircraft carrier seems a better inversion than a bunch of burning overclocked GPUs.

rspeele 5y ago

People buy Bitcoin expecting that holding onto it for a few years will vastly increase their purchasing power. "lambo", "to the moon", etc. People are starry eyed over the 1000x return they could have made if they bought years earlier, and are hoping there's still some of that juice left to squeeze. Maybe not 1000x but 100x or 50x or 10x. Just search "bitcoin price target" and browse the dreams and napkin calculations of "assuming Bitcoin's market cap grows to match all gold" or "all M2" or "the euro" or whatever your favorite goal is, "...then 1 BTC == 1 zillion dollars and I can retire". For investors to get that growth they desire, they need exponentially more new money to come into the system. If I buy 1 BTC at $40k, to double my money I need to sell it at $80k. Maybe I sell it to one rich guy, maybe to two people on my level each buying 0.5 BTC at $40k, or maybe to 1000 poor people each buying .001 BTC at $80. But somehow $80k needs to come into Bitcoin. Eventually you run out of people in the world with more money to buy in. And since the Bitcoins themselves aren't useful, the person who bought the top is SOL. The whole utility was "get more money out than you put in" and there's no bigger buyer left to make that possible, so now what is it good for? That's why people compare it to a pyramid scheme because pyramid schemes have an identical problem, with everybody making money until there simply aren't any more rubes left to buy in. The dollar, even though it's still just scraps of paper and shared make-believe, doesn't have this scaling problem. People aren't holding onto their dollars expecting them to double in value. It's a currency, i.e. a handy abstraction layer over bartering, not an investment. I use the dollar because it beats trading my software development labor for chicken eggs from my boss's side-gig farm and then trading those for apples and gasoline and mortgage payments and electricity. I don't expect to get more out than I put in. Stable currencies make sense and work. Double-your-money schemes run out of steam. It's that simple. -- edit -- I will give Bitcoin credit though for being the first decentralized pyramid. It doesn't die, so if you miss the peak in one cycle, you can always hope that a few years later it'll come back in style and reel in a bigger crowd before collapsing again.