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> Nevertheless, investing in gold at the current price seems unwise, since its price is many times its "natural" price as commodity and so it is more likely to

> Nevertheless, investing in gold at the current price seems unwise, since its price is many times its "natural" price as commodity and so it is more likely to go down than up. This is a misconception and a fundamental misunderstanding of gold's primary utility for thousands of years. While it is true that gold's price reflects a significant premium beyond the "natural" market price, this has been the case for millennia. Since ancient times, most demand for gold has not been for industrial uses or jewelry, but rather as a store of a value. This results in gold having a "monetary premium". It's also worth mentioning that it is no coincidence that humans happened to chose gold as money. Among all chemical elements, gold has a favorable combination of chemical properties and rarity in the earth's crust that make it a suitable choice for storing value over long periods of time. In fact, nearly all gold mined in human history is still around today. We've been hoarding it since the time of the pharaohs. I'm sympathetic to crypto skepticism, but I'm afraid many people are missing the forest for the trees. I'm curious for those that still truly believe Bitcoin is a ponzi scheme or a bubble - at what price point and time would you start to consider that you may be tragically wrong?

jspaetzel 5y ago
Take away the Bitcoin miners and speculators and see how much a Bitcoin is worth.
- scottyp21 5y ago
  You are correct that bitcoin is heavily dependent on miners. That said, I don't think you can simply "take away the Bitcoin miners". An excellent example of this is China's recent ban on bitcoin mining, which quickly dropped the network hash rate by >50%. Today, only a few months later, the hash rate has returned[1], and those miners are back online on the other side of the world. Don't underestimate the power of incentives. [1] https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate
frozenport 5y ago
I also think investing in gold compared to let's say stocks is a sort of ponzi scheme in the sense of OPs article. So no price point. Until bitcoin intrinsically generates value I'm not putting money in it.
- donatj 5y ago
  Cash doesn’t intrinsically generate value. It’s value comes from your belief in it.
  - lodovic 5y ago
    Yes, but Bitcoin is missing the liquidity of cash. Especially if an average transaction costs between $5 and $20
    - simondotau 5y ago
      And literal cash doesn't rely upon internet connectivity to a massive global network of millions of computers in order to transfer a store of value to the dude standing next to me. As methods of payments go, it's possibly the greatest Rube Goldberg machine ever conceived.
- scottyp21 5y ago
  I understand your concern over the lack of "intrinsic value" in the sense that it is not a productive asset generating economic value (like a business). That said, I'd really encourage you to consider that monetary value is real. I don't necessarily recommend investing in it, but there's a reason humans have valued gold for so long.
- deleted 5y ago
  [deleted]
glenvdb 5y ago
Some people will never change their minds. They've made their choice and changing their mind would be more painful than not. Bitcoin could be the world reserve currency and the same people would still say it's a scam. Ultimately, who cares? The world is changing with or without them.
- scottyp21 5y ago
  Probably true. On another note, I see Impervious.ai in your post history. I've never been able to wrap my head around what they're building. If you're willing, I'd love if you could point me to any good learning resources.
- kayamon 5y ago
  On the contrary, we actually need them. The people who refuse to believe Bitcoin is real are the ones whose continued drive for fiat currency will fund the UBI for everyone else. It's win-win.
joe_the_user 5y ago
I'm curious for those that still truly believe Bitcoin is a ponzi scheme or a bubble - at what price point and time would you start to consider that you may be tragically wrong? What price would tulips have had to have attained for them to be proved "not a mania"? [1] "At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled artisan." Which is to say a high price by itself is not a proof of bitcoin not being bubble. I do have a criteria - bitcoin will not be a ponzi scheme if it genuinely winds up being used as currency. Of course, this wouldn't solve its other noxious problems. [1] https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania
- scottyp21 5y ago
  Curious, what other noxious problems?
  - joe_the_user 5y ago
    Massive energy use, manipulated by shadowy actors, facilitates crime and capital flight, etc.
- pixelgeek 5y ago
  Its useful to read the Social Mania & Legacy section [1] as a more modern look at 'Tulip Mania' tends to see the "historical" record of it as a post-event reaction. A recent book actually suggest that the entire thing might be BS [2] [1] https://en.wikipedia.org/wiki/Tulip_mania#Social_mania_and_legacy https://en.wikipedia.org/wiki/Tulip_mania#Social_mania_and_l... [2] https://www.goodreads.com/book/show/431666.Tulipmania https://www.goodreads.com/book/show/431666.Tulipmania
graeme 5y ago
> at what price point and time would you start to consider that you may be tragically wrong? In theory Bitcoin can keep growing as long as people believe in it. It has a strictly negative EV though. * it returns no revenue * At current mining levels, it burns about 1.8% of its market cap annually. By burns I mean literally burns energy and ASICs. (About $18 billion at current market prices) * That’s just for mining costs. There are other costs associated with bitcoin such as costs associated with running exchanges, etc. won’t venture to guess here but it’s all in the billions. Coinbase alone had costs of about $1.1 billion in Q1 No market price changes this fundamental math. People could bid up the price to $1 million per coin and burn $360 billion per year on mining and the dynamics would be the same. Now, what would change my mind would be some kind of use case. Currently we have money laundering, avoiding governments, etc. thin gruel There is some interesting stuff happening with Ethereum. I don’t know if it will take off, but I at least see ways in which it could (Chainlink etc) If bitcoin develops some kind of use case, then I’d change my view. Right now bitcoin in economic is more akin to tourism or a church or something. It takes a bunch of economic resources to run it, but it also makes people happy, and that’s the benefit. But don’t be mistaken: money goes in to bitcoin to be burnt (like tourism). It doesn’t generate money. That there is a number going up doesn’t change any of the dynamics laid out above. That’s just shuffling around between participants, not revenue or a use case.
- scottyp21 5y ago
  Many of these same arguments apply to gold. Do you think gold is (mostly) useless today? If yes, when did it stop becoming useful? Do you think it was always useless?
  - iforgotpassword 5y ago
    Gold is bitcoin minus all the bullshit. If you'd offer me some amount of money today and would pay me in either gold or bc I'd choose gold every time. Downside is, you need to physically store it somewhere safe and accessible, but that somehow applies to your bc wallet too. Exchanges with people's money getting hacked or disappearing, people forgetting their passwords, hard drive failure, the failure modes of bc are endless. And in that scenario of the apocalypse where the government collapses and a civil war breaks loose i wanna see that idiot with his mining rig trying to power it with a solar cell, or the idiot trying to get on some form of network (let alone the internet as we know it today) to start a transaction. Bitcoin has and only ever will have a practical use for criminals.

jspaetzel 5y ago

Take away the Bitcoin miners and speculators and see how much a Bitcoin is worth.

scottyp21 5y ago
You are correct that bitcoin is heavily dependent on miners. That said, I don't think you can simply "take away the Bitcoin miners". An excellent example of this is China's recent ban on bitcoin mining, which quickly dropped the network hash rate by >50%. Today, only a few months later, the hash rate has returned[1], and those miners are back online on the other side of the world. Don't underestimate the power of incentives. [1] https://www.blockchain.com/charts/hash-rate https://www.blockchain.com/charts/hash-rate

frozenport 5y ago

I also think investing in gold compared to let's say stocks is a sort of ponzi scheme in the sense of OPs article. So no price point. Until bitcoin intrinsically generates value I'm not putting money in it.

donatj 5y ago
Cash doesn’t intrinsically generate value. It’s value comes from your belief in it.
- lodovic 5y ago
  Yes, but Bitcoin is missing the liquidity of cash. Especially if an average transaction costs between $5 and $20
  - simondotau 5y ago
    And literal cash doesn't rely upon internet connectivity to a massive global network of millions of computers in order to transfer a store of value to the dude standing next to me. As methods of payments go, it's possibly the greatest Rube Goldberg machine ever conceived.
scottyp21 5y ago
I understand your concern over the lack of "intrinsic value" in the sense that it is not a productive asset generating economic value (like a business). That said, I'd really encourage you to consider that monetary value is real. I don't necessarily recommend investing in it, but there's a reason humans have valued gold for so long.
deleted 5y ago
[deleted]

glenvdb 5y ago

Some people will never change their minds. They've made their choice and changing their mind would be more painful than not. Bitcoin could be the world reserve currency and the same people would still say it's a scam. Ultimately, who cares? The world is changing with or without them.

scottyp21 5y ago
Probably true. On another note, I see Impervious.ai in your post history. I've never been able to wrap my head around what they're building. If you're willing, I'd love if you could point me to any good learning resources.
kayamon 5y ago
On the contrary, we actually need them. The people who refuse to believe Bitcoin is real are the ones whose continued drive for fiat currency will fund the UBI for everyone else. It's win-win.

joe_the_user 5y ago

I'm curious for those that still truly believe Bitcoin is a ponzi scheme or a bubble - at what price point and time would you start to consider that you may be tragically wrong? What price would tulips have had to have attained for them to be proved "not a mania"? [1] "At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled artisan." Which is to say a high price by itself is not a proof of bitcoin not being bubble. I do have a criteria - bitcoin will not be a ponzi scheme if it genuinely winds up being used as currency. Of course, this wouldn't solve its other noxious problems. [1] https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania

scottyp21 5y ago
Curious, what other noxious problems?
- joe_the_user 5y ago
  Massive energy use, manipulated by shadowy actors, facilitates crime and capital flight, etc.
pixelgeek 5y ago
Its useful to read the Social Mania & Legacy section [1] as a more modern look at 'Tulip Mania' tends to see the "historical" record of it as a post-event reaction. A recent book actually suggest that the entire thing might be BS [2] [1] https://en.wikipedia.org/wiki/Tulip_mania#Social_mania_and_legacy https://en.wikipedia.org/wiki/Tulip_mania#Social_mania_and_l... [2] https://www.goodreads.com/book/show/431666.Tulipmania https://www.goodreads.com/book/show/431666.Tulipmania

graeme 5y ago

> at what price point and time would you start to consider that you may be tragically wrong? In theory Bitcoin can keep growing as long as people believe in it. It has a strictly negative EV though. * it returns no revenue * At current mining levels, it burns about 1.8% of its market cap annually. By burns I mean literally burns energy and ASICs. (About $18 billion at current market prices) * That’s just for mining costs. There are other costs associated with bitcoin such as costs associated with running exchanges, etc. won’t venture to guess here but it’s all in the billions. Coinbase alone had costs of about $1.1 billion in Q1 No market price changes this fundamental math. People could bid up the price to $1 million per coin and burn $360 billion per year on mining and the dynamics would be the same. Now, what would change my mind would be some kind of use case. Currently we have money laundering, avoiding governments, etc. thin gruel There is some interesting stuff happening with Ethereum. I don’t know if it will take off, but I at least see ways in which it could (Chainlink etc) If bitcoin develops some kind of use case, then I’d change my view. Right now bitcoin in economic is more akin to tourism or a church or something. It takes a bunch of economic resources to run it, but it also makes people happy, and that’s the benefit. But don’t be mistaken: money goes in to bitcoin to be burnt (like tourism). It doesn’t generate money. That there is a number going up doesn’t change any of the dynamics laid out above. That’s just shuffling around between participants, not revenue or a use case.

scottyp21 5y ago
Many of these same arguments apply to gold. Do you think gold is (mostly) useless today? If yes, when did it stop becoming useful? Do you think it was always useless?
- iforgotpassword 5y ago
  Gold is bitcoin minus all the bullshit. If you'd offer me some amount of money today and would pay me in either gold or bc I'd choose gold every time. Downside is, you need to physically store it somewhere safe and accessible, but that somehow applies to your bc wallet too. Exchanges with people's money getting hacked or disappearing, people forgetting their passwords, hard drive failure, the failure modes of bc are endless. And in that scenario of the apocalypse where the government collapses and a civil war breaks loose i wanna see that idiot with his mining rig trying to power it with a solar cell, or the idiot trying to get on some form of network (let alone the internet as we know it today) to start a transaction. Bitcoin has and only ever will have a practical use for criminals.