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Most people on HN are rational people who look at the world in a rational way. Bitcoin and friends are not operating in a rational market, therefore we don't un
by llimos 5y ago
Most people on HN are rational people who look at the world in a rational way. Bitcoin and friends are not operating in a rational market, therefore we don't understand them, and most of us would probably be pretty lousy investors since we would try to make decisions rationally instead of memeing and YOLOing.
But, and this is a key point, that doesn't make us right and them wrong. It's just a different kind of market, one that I am not very good at, but it is for sure possible to make money in it. You just need to be a different kind of person. We can say our way is "better", but who are we to decide that?
- PantaloonFlames 5y agoThe issue is not whether a person can make money in a Ponzi scheme. We know it is possible. The issue is, is it a good idea?
- koonsolo 5y agoBuying low and selling high is not a ponzi scheme.
- mypalmike 5y agoThe losers in a Ponzi scheme buy high and sell low. What did the winners do?
- koonsolo 5y agoSo real-estate, stocks and gold are all ponzi schemes?
- Jensson 5y agoAll of those have value even if you wouldn't be allowed to sell them. Stocks pay dividends, people use gold as jewellery, and you can live in real estate. Speculating on assets with real world value is different from speculating on assets nobody would care about unless they could sell it. The whole point of these scams is to convince people to buy assets that nobody wants, but you convince them that some other guy really wants it a lot and will pay more for it in the future. And of course if he could convince some new guy of the same thing he can even sell it at a profit, but since there ultimately is nobody who wants this asset the chain has to break sooner or later.
- koonsolo 5y agoSo please tell me when that chain is going to break. Next year? Next decade? In 50 years? Is it still going to break within our lifetimes?
- deleted 5y ago[deleted]
- mypalmike 5y agoYour infer a lot from a little.
- koonsolo 5y agoSeems to be your definition of a ponzi scheme. At least on wikipedia they don't agree with that definition.
- worik 5y agoGo look up the definition and history of Ponzi schemes. Very interesting, and real estate and stocks, whilst subject to bubbles, are not Ponzi schemes.
- deleted 5y ago[deleted]
- bradwood 5y agoAnd how is fiat not a Ponzi scheme?
- lubonay 5y agoAnd how IS fiat a Ponzi scheme? You don't buy into the US dollar expecting your "share" of dollars to go up. You just use it to pay for stuff.
- SuoDuanDao 5y agoIn most modern economies fiat is backed by the 'full faith and credit' of the issuing government, which requires more young people paying into the pension system than retirees drawing from it. That's as clear an example of a Ponzi scheme as can be imagined, albeit moving on a slower timeframe than we usually think of such things working.
- compiler-guy 5y agoFiat is backed by the insistence of the issuing government that you pay your taxes in that denomination. It has very little to do with pension systems, except to the extent that the government runs those also denominated in dollars. But the US could end social security tomorrow and as long as it still required taxes and tariffs in the form of dollars, the dollar would still have value.
- bradwood 5y agoZimbabwe required taxes and tariffs in the form of Zimbabwean dollars... You need a little more than just taxes and tariffs for a fiat currency to have value... You need a hard money that is not going to be devalued also. This is where all fiat falls short and has done since the demise of the gold standard.
- ivalm 5y agoOk, but Zimbabwean dollar is not a Ponzi scheme either… the claim is about Ponzi scheme, not other things.
- verdverm 5y agoIt's really more of MLM than Ponzi at this point.
- chishaku 5y agoThe market aside from crypto is not rational. The market we have today would be completely unimaginable to "traditional" market participants 12 years ago, 24 years ago and so on. The myth of a rational market is a powerful one. https://en.wikipedia.org/wiki/Irrational_exuberance https://en.wikipedia.org/wiki/Irrational_exuberance https://en.wikipedia.org/wiki/Greenspan_put https://en.wikipedia.org/wiki/Greenspan_put https://www.ft.com/content/9f7f32af-a71a-4892-b331-324aa14ff5b7 https://www.ft.com/content/9f7f32af-a71a-4892-b331-324aa14ff...
- pphysch 5y agoRational/irrational is a vacuous distinction. Everyone has their own perspective on time and value. This doesn't address any of the OP's arguments, however.
- mlcrypto 5y agoBitcoin is smart engineered gold. It's perfectly rational compared to the endless printing in fiat. Most engineers just accept keynesian economics because that's what they were taught. They have a narrow world view beyond their tech expertise. I saw somebody criticize BTC because they couldn't imagine using so much energy "just to secure money". I was like what you just took for granted is perhaps society's most important need and unsolved problem.
- pphysch 5y ago"Smart engineered gold" is an oxymoron. Gold is a terrible platform for economic activity, because it is expensive to create and difficult to move/transact with. Just because it was the best financial technology hundreds of years ago does not make gold, artificial or not, the best financial technology for today. "Faster horses"...
- mlcrypto 5y agoIt's all the good of gold with none of the bad
- compiler-guy 5y agoCrypto adds it’s own bad parts.
- pphysch 5y agoBitcoins are both "expensive to create" and "difficult to transact with". It's all of the good with all of the bad, and then some.
- 5y ago
- louwrentius 5y agoWe are perfectly capable to decide what is better because it isn't magic. For every gain, somebody literally has to lose. All crypto money is just other people's money. The people who win are vocal. The people who lose, stay silent, often in shame And even if you disagree, those gains are not worth the destruction of our planet.
- twelve40 5y agoTo play devil's advocate, the fact that it's someone's money and people are losing it doesn't automatically mean better or worse. For example, Netflix bankrupted Blockbuster and people lost money but it is clearly "better". I guess we're just still waiting for a popular use case, outside of crime, speculation and money transfers to places with no infrastructure.
- secondaryacct 5y agoYou cant compare two companies providing service to millions of people worldwide with a completely dead transaction !! Yes there are winner and losers in useful business, but when someone times the btc market better than someone else, what has the universe naturally selected ? A better degenerate gambler ?
- louwrentius 5y agoCome on, be better than this. This isn't about companies being made obsolete, this is about regular people losing a lot of money because they didn't understand the risks. They trusted some acquaintance or some family member and now they are ffed.
- koonsolo 5y agoHave you seen the price of bitcoin evolve? We recently had 2 all time highs again. You must be really stupid to lose money on that.
- louwrentius 5y agohindsight is 20/20
- jgalt212 5y ago> most of us would probably be pretty lousy investors since we would try to make decisions rationally instead of memeing and YOLOing I think those are the makings of an effective bond investor. But as far as stocks, or stonks, go you're pretty correct here.
- rawtxapp 5y agoAre you implying that no rational person should ever buy Bitcoin? That seems a bit far-fetched, no? At this point, considering that it's stronger than ever and it's pretty clear it's not going away, I would expect a rational person to allocate even a small percentage to it for diversification, in case they happen to be wrong on their conclusions or understanding of Bitcoin.
- outside1234 5y agoThere are rational reasons for buying Bitcoin - most of them revolve around money laundering, drug trades, and ransomware. This is the reason we should enforce "know your customer" laws on Bitcoin such that we have government ID for everyone for every transaction that hits the chain.
- rawtxapp 5y ago> most of them revolve around money laundering, drug trades, and ransomware. You need a citation for that, because according to experts “In 2020, the illicit share of all cryptocurrency activity fell to just 0.34%,” reported Chainalysis [1]. For many, it's a hedge against inflation, for others it's the next potential global reserve currency, for some it's just a savings mechanism. There are more rational reasons than just crime that you're ignoring. 1: https://www.thomsonreuters.com/en-us/posts/investigation-fraud-and-risk/crypto-crime-caveats/ https://www.thomsonreuters.com/en-us/posts/investigation-fra...
- Jensson 5y ago> In 2020, the illicit share of all cryptocurrency activity fell to just 0.34%, Is the takeaway that the crypto bubble stands for 99.76% of the activity?
- cdiddy2 5y agoTell that to the people in Turkey who had there currency fall 10% against the dollar just this week. Tell that to Argentinians, or Nigerians, or Afghanistan. You might be surprised by the places where crypto has the most penetration. https://bitcoinist.com/cryptocurrency-adoption-highest-5-countries/ https://bitcoinist.com/cryptocurrency-adoption-highest-5-cou...
- ineptech 5y agoThe anti-crypto case is not that it's "worse" than some other speculative investment asset (gold, comic books, etc), it's that crypto is a speculative asset, as opposed to the things it's sometimes claimed to be (e.g. currency, a new way to do finance, etc).
- wyager 5y agoAll monetized assets like USD or gold are "speculative". I speculate that my dollar probably won't lose more than 10-20% of its value in the next year.
- compiler-guy 5y agoThe value of the dollar has a floor in that the US government requires that you remit your taxes in dollars. Sure, the US could cease to exist, but that is far less likely than any scenario where bitcoin goes to zero.
- wyager 5y agoThe demand introduced by US tax obligations is a vanishingly small fraction of USD demand.
- ineptech 5y agoAnything that hasn't happened yet is "speculative" I guess, but in this context speculative means you bought it because you think you can sell it for more tomorrow, as opposed to buying it for its intrinsic value.
- wyager 5y agoRight, like USD, except replace "for more" with "not too much less".
- ineptech 5y agoAh, I think I see the misunderstanding now. I argued that cryptocurrency is only speculative, and hence unlike a currency which has other uses. I did not argue the inverse (that currency only has other uses, and is not speculative).
- koonsolo 5y agoSorry, but please speak for yourself. Plenty of people here see the potential that cryptocurrencies and blockchains can offer. Let's find out where it takes us, but at this point, we're winning :D.
- secondaryacct 5y agoWinning what ? US dollards?
- koonsolo 5y agoYou can't win with US dollars ;p
- secondaryacct 5y agoTaxpayers, law abiders, hell even environment conscious is who we are to say our way is better.
- sjtindell 5y agoHN’s attitude is very surprising to me. I would think that they could get very excited about flash loans, decentralized exchanges (automated market makers), daos, and other concrete innovations coming out of crypto asset projects. I think it’s mostly jealousy and a feeling that they missed the boat, so they want to see it sink. I think that because I’ve had the feeling many times. They may not realize these are early days. The average person saw the bubbles in tech company stocks and even to this day I find myself having to argue with people who think that tech is in a bubble despite the fact that these companies are now some of the biggest, most profitable, and most powerful in the world. Everyone on HN is asleep and a company offering a product called SushiSwap is a multi billion dollar unicorn. I think 99% of crypto projects are scams, but they are also exploratory. Even if they crash now, these decentralized apps are significantly more solid than pets.com ever was. Does HN really think that just evaporates? I would ask anyone on HN who is doubtful to do this - go read the UniswapV2 contract. If you don’t think that’s a cool innovation, please come back and let me know, I’m interested. The situation on HN really feels to me like one of “live long enough, see yourself become the villain.” They are playing the role of the old men in suits in the 90’s sitting around a table in New York and looking at those internet hippies in California saying “we build real things, not these internet funny money companies”. And what happened? It’s like Zuckerberg said to the suits in the Social Network - “I could buy Mt. Auburn Street, take the Phoenix Club, and turn it into my ping-pong room.”
- beepbooptheory 5y agoI am not asleep, but I'm definitely tired.
- vnchr 5y agoThere’s astroturfing on HN, like every other open social media platform. The tilted dissonance around crypto, whether it’s the counterintuitive market behavior or climate change advocacy, is one of lacking curiosity, a hallmark of innovative cultures.
- TomSwirly 5y agoFunny how crypto people thinking insulting everyone else will change our minds! "It has to be your lack of curiosity" (because there's no otherwise explaining your bad judgement).
- mamma_luvs_rust 5y agoIt's easy to complain and dismiss, but bitcoin literally made me rich
- beervirus 5y agoYes, rationality is better than irrationality.
- wyager 5y ago> Bitcoin and friends are not operating in a rational market Have you considered the possibility that your personal model (which you presumably describe as rational) is just insufficiently complete to accurately model bitcoin? I think bitcoin is perfectly rational. A lot of people confuse things like impredicativity (e.g. in the pricing of monetized goods) with irrationality, but this is just a limitation of their mental model.
- TomSwirly 5y ago> but it is for sure possible to make money in it. If it's a bubble, what that means is that almost everyone is going to lose money on it. > It's just a different kind of market, Would you say that magic is a different kind of science? I'd say that magic is simply false to the fact. I think it can convince people to do things, but it has no objective reality beyond that. And cryptocurrencies have the same relationship to economics that magic has to science.
- yung_steezy 5y agoIt is perfectly possible to be right for the wrong reasons. Unfortunately that can eventually catch up with you.