14 ms·

Why Bitcoin is worse than a Madoff-style Ponzi scheme

76 points by okareaman 5y ago

okareaman 5y ago
https://archive.md/sQhtq https://archive.md/sQhtq
- rbho94 5y ago
foxes 5y ago
Fresh in-pouring of victims to sustain the whole thing, while some bigger players benefit. Im sorry, I don't want to argue anymore with crypto advocates. There is no more rational discussion to possibly be had about any of the current contenders in this space. The whole thing needs to be pulled apart. Just because some people earn money from it, doesn't make it moral, a good idea , useful, or bettering human society. Oil companies also make a lot of money and we can see where that has ended up.
- arbuge 5y ago
  The comparison to oil isn't quite fair to oil. Oil has a lot of negative side effects, to be clear, but the benefits to society from the use of oil include pretty much all the things we depend on for modern civilization. That is why replacing oil with renewables is going to be such a challenge. When it comes to crypto, on the other hand, I think the challenge would be listing any real benefits to begin with.
  - LatteLazy 5y ago
    I'm not sure whether crypto is a good or bad thing overall but there are plenty of good uses for it: * In countries with unstable currencies they are useful stores of value (Venezuela, Turkey and Zimbabwe right now). I was in Zim back in 2010 and visited someone's house. It was filled with petrol because he had been paid and had to spend the money before it lost its value so he bought what was available. Bitcoin would have been a lot safer and less likely to cause shortages of goods (and more inflation). * They offer a much cheaper and simpler way to move money between countries both for ordinary people and small businesses. * By making online retail anonymous they've allowed the circumvention of all sorts of prohibitions. Sometimes that might be a bad thing, but I think it's a part of the reason we've seen weed legalised in so many US states. And remember: we don't ban things because you or I don't see the point. If someone else thinks they see a point, and they're not hurting anyone, they have every right to pursue what interests them
    - jdub 5y ago
      Climate-destroying techno-libertarian accelerationists will hurt everyone.
    - jmull 5y ago
      > we don't ban things because you or I don't see the point We do see the point, though: to scam people out of money.
      - DarkWiiPlayer 5y ago
        Then let's ban gift cards first, because those get used for scamming as well and I don't really see the point in them in the first place, other than making money.
        jmull 5y ago
        Gift cards have mainly legitimate uses. Here it's different: The main point is to scam people out of money.
    - yosito 5y ago
      > In countries with unstable currencies they are useful stores of value (Venezuela, Turkey and Zimbabwe right now) Also, Cuba and Argentina. While Bitcoin may be more accessible to people in these countries, they could also store value in USD, or other stable assets. > By making online retail anonymous I really don't understand the persistent myth that blockchains are anonymous.
      - LatteLazy 5y ago
        Blockchain is anonymous if you use it correctly I believe (don't reuse wallets, launder you coins etc) but you're right that the vast majority of people don't do that as far as I'm aware. Full disclosure: I've never actually done it either and I'm no expert...
        tonfreed 5y ago
  - captainmuon 5y ago
    You have to distinguish between absolute benefits, and benefits in our current society. I also think absolute or real benefits are very slim, but there are certain motivations for it today: In our current society, one "benefit" is that you can use it to buy drugs anonymously. I would argue for some soft drugs like cannabis, that is a good thing. But even better to just legalize it - then you can get the benefits of regulation (harder for people to slide into heavier drugs, you have a bit more control over consumption, you can tax it...). Another benefit is that you could take your money that you earn in your day job and funnel it into activism. In many countries, there are a lot of scary political developments, combined with a growing surveillance state. Crypto can help that you are not cut off critical resources if you are a dissident. Finally, I wouldn't dismiss the aspect that it promises you to "get rich quickly". We have a very stratified society, where most people are individual laborers, and only a few are successful entrepreneurs and employers. Yes, in silicon valley you can earn a lot even as an IC, and there are many stories of successful founders. But to be honest, the way to the financial elite, the "ruling class", is barred for 99% of people, even for the most talented. A lot of people in tech probably find this unjust, and I can really relate to this feeling. But most would never question the system as a whole. Instead of trying to completely change society, we look for a literal hack or cheat, and crypto is this hack. It is the nerds' revenge, and we phantasize it will allow us to get what is our due.
- elvatoloco123 5y ago
  Crypto=/= Bitcoin Bitcoin offers a decentralized, supply capped alternative to central banking. If this seems useful to you, use it, if it doesn't, don't use it. Simple as that. Currently people find the ability to have unconfiscatable money attractive.
  - meragrin_ 5y ago
    How is Bitcoin unconfiscatable? Just confiscate all wallets. If they are encrypted in some way, they would still be inaccessible to the person. If they can be recreated, the person can be monitored to determine how to recreate the wallet and then be drained.
    - CryptoPunk 5y ago
      A person can hide the fact that they have a wallet. Confiscating information, that can be stored as a secret passphrase in your brain, is extremely difficult.
      - meragrin_ 5y ago
        > Confiscating information, that can be stored as a secret passphrase in your brain, is extremely difficult. >> If they can be recreated, the person can be monitored to determine how to recreate the wallet and then be drained. Being unable to use the Bitcoin is the same as confiscating it.
        CryptoPunk 5y ago
        Being unable to use it, when you have access to encrypted communication, not to mention other countries where it is legal?
      - yesbut 5y ago
        the CIA figured out how to extract passphrases from people's brains decades ago.
- lai-yin 5y ago
  Oil and natural gas have lifted billions of people out of generational poverty. It wouldn't be possible for you to type that comment on your computer or laptop and post it to Hacker News without their existence. When I got into Bitcoin I wasn't a "victim" and I'm still not one. Maybe you're the victim of your own preconceived notions.
  - 400thecat 5y ago
    Agree completely with the first paragraph. As for the second part, eventually when bitcoin crashes, there will be lots of victims.
- sixQuarks 5y ago
  you have let Your emotions take over And are blind to everything. Please explain Why is gold not a Ponzi scheme?
- anovikov 5y ago
  Well, if crypto is meant to be used as a method of investment, then sorry, nothing which does not generate rent can be a viable method of investment (can sometimes be a method of preserving wealth e.g. gold but even that barely). In this sense, i agree with you. But crypto is also very useful for undermining governments - making them unnecessary. Which is a beneficial thing for all humankind. Whenever government realises it is not necessary and can be circumvented with no way to fight back - it becomes more flexible (example: legalisation of weed). Crypto makes the world more free. Freedom is a universal value.
  - brightstep 5y ago
    Governments could destroy crypto if they wanted. See China as the most obvious example. A novel technology doesn't stand much of a chance against men with guns.
    - ashwagary 5y ago
      They can't destroy it, a lot of miners in China continue mining using vpns and proxies.
      - anovikov 5y ago
        Well, you can't mine using VPN or proxy because you can't conceal multi-megawatt power consumption that it takes. Prohibition of mining is simply about consumption of electricity which suddenly became in short supply. Crypto is not banned in China and it is not bannable. Mining of course, is.
        ashwagary 5y ago
        You can absolutely conceal energy usage, especially in places where large scale manufacturing takes place.
    - thereyet 5y ago
- fsflover 5y ago
  Crypto helps people in semi-totalitarian regimes to not depend on inflation and be independent on the governments with transactions.
  - 400thecat 5y ago
    nobody uses bitcoin for transaction anymore It has become pure speculation vehicle
    - thereyet 5y ago
- helloworld11 5y ago
  Since you categorically state that "the whole thing needs to be pulled apart" and attribute all sorts of evils to what is essentially just an open cryptographic protocol that anyone can freely use or not use as they please, I'd say it's you who is more closely edging towards being unable to rationally discuss bitcoin. Many things can be arbitrarily defined as bad ideas without having to be banned and something doesn't need to "better human society" (according to your definition of how that's decided no less) in order to have legitimate reasons for existing.
  - tarboreus 5y ago
    Agreed. Let's get rid of ice cream next. I find I don't like the flavor, it uses a lot of CO2 to create, and it has some negative side effects. I also hate how people are big ice cream boosters, how annoying. Also people are making money from selling ice cream. I'm not making money that way, and don't think other people should, either.
- sabellito 5y ago
  I don't care about crypto. You comment seems to amount to "I won't argue because you're not rational. The thing you believe in is awful and should cease to exist". Please reconsider.
  - Devasta 5y ago
    "I won't argue because you're not rational. The thing you believe in is awful and should cease to exist" is a perfectly fine stance to have about bitcoin and crypto in general. Its causing massive amounts of pollution, global spikes in price of computer parts, exacerbates shortages in silicon and facilitates all sorts of illegal activity from money laundering to ponzi schemes to trading of illegal goods. And for what? The shittiest database you could imagine.
    - sabellito 5y ago
      My criticism on the original comment is not about his take on crypto, it is about taking that stance about quite literally anything. If one refuses to argue because they believe the other side is irrational, then abstain for conversation instead of just name-calling/shitting on the thing on a public forum. This is somewhat equivalent to posting some egregious opinion and then saying "don't @ me".
      - Devasta 5y ago
        You're assuming a level of good faith in crypto bros that frankly doesn't exist. They aren't interested in any criticism of bitcoin and the like, they personally stand to make money from it and you are just their next potential victim.
        sabellito 5y ago
        I take the dismissive stance you're talking about when dealing with anti-vax, flatearthers, and qanon types. I'm not above that. Having said that, my original point is the same: then don't engage at all. I don't go posting on flatearther forums how "i won't argue and that their opinion is stupid". I either fully engage and endure what I perceive to be unbelievable stupidity, or don't engage at all.
boxmonster 5y ago
The counter argument is that Bitcoin provides more than 45 million dollars a day in utility. edit: Does the lightning network need Bitcoin to work or is it just Venmo?
- danlugo92 5y ago
  > Does the lightning network need Bitcoin to work or is it just Venmo? It is built atop of bitcoin and provides as much safety as bitcoin itself, with one single exception: you cannot be offline for more than a week. It's a fair tradeoff you have to take in order to instantly transfer trillions of dollars for cents worldwide.
  - defaultprimate 5y ago
    >provides as much safety Not even close https://www.investopedia.com/tech/bitcoin-lightning-network-problems/ https://www.investopedia.com/tech/bitcoin-lightning-network-... https://cryptowhale.medium.com/why-the-bitcoin-lightning-network-is-satoshi-nakamotos-worst-nightmare-8402be4a4e73 https://cryptowhale.medium.com/why-the-bitcoin-lightning-net... https://www.forbes.com/sites/billybambrough/2020/07/09/bitcoins-lightning-network-is-struggling-to-overcome-fundamental-issues/?sh=5602918a5f77 https://www.forbes.com/sites/billybambrough/2020/07/09/bitco...
trabant00 5y ago
My prediction: it will take years for this to pop in the absence of a general economic crysis. The crypto coins gave just struck the most anti tech circle of my friends. They are watching youtube videos of how to mine on mobile phones besides buying the most obscure coins they can find. So it looks to me like there's plenty of potential "investors" out there who can sustain this thing for years to come.
- ddorian43 5y ago
  I think the same. Especially when you see in investing forums that many people are tilting 5% to crypto.
  - skohan 5y ago
    I think crypto "investing" might be here to stay, for quite a while at least. Not that I think it should: it's a non-productive asset valued almost totally based on the greater fool theory, and there seem to be very credible indications that there may be large-scale price manipulation going on. But it appears to have managed to become entrenched in culture to the point that my non-tech-savvy colleagues talk about it like a normal thing, and financial media personalities comment on the price movements alongside securities and other asset classes. But to be fair, in some ways securities are quite disjoint from "true value" as well. If I buy a share in AAPL from another investor, the minuscule dividend and voting rights I acquire do very little to justify the price of the stock. I am really buying it in hopes that the market value will increase in time to make my retirement a bit more comfortable.
    - ddorian43 5y ago
      > But to be fair, in some ways securities are quite disjoint from "true value" as well. If I buy a share in AAPL from another investor, the minuscule dividend and voting rights I acquire do very little to justify the price of the stock. I am really buying it in hopes that the market value will increase in time to make my retirement a bit more comfortable. Feel free to buy dividend stocks then. It's just that the growth types are expected to have a greater "total growth" over time.
Waterluvian 5y ago
The Bitcoin situation reminds me of one wing of current U.S. politics. It's a complete fraud that's been obvious to a lot of people for quite a while now. But countless people have become so married to it and have allowed it to become a core part of their identity that they're no-longer capable of seeing reality clearly. It comes with all the same kinds of personalities too: - The angry commenter who just wants you to know that _you're_ the idiot, not them - The "just show me the facts then" perpetually recursive denier - The few who manage to benefit from it and are amplified as a signal that _everyone_ will benefit - The few at the top actually making all the money, funding the further manipulation of the weaker minds at the bottom Yeah, it's all a Ponzi scheme. A cult. All that.
janandonly 5y ago
I always UPvote negative Bitcoin comments... the longer time I have to buy it cheap, the better...
- ur-whale 5y ago
  > the longer time I have to buy it cheap, the better. LOL, I do the exact same thing :)
jonathan-adly 5y ago
I am glad the ft audience think BTC is a bad idea. They are mostly well-off elite in developed countries. Bitcoin is meant to erode their power.
- jacknews 5y ago
  LOL, you mean shift power to a different (for now) elite. Bitcoin ownership is even more concentrated than the real financial system.
  - jonathan-adly 5y ago
    1. With exchanges, non-self custody solutions, and smart early adopters splitting their ownership in many wallets, no one knows the concentration of Bitcoin. 2. I much prefer the crypto dons of Lebanon[0] as the new elite than the old white guys currently running the shows. Bernie Madoff was literally the chairman of NASDAQ. 3. No one says Bitcoin will eliminate the elites, nope. Just erode the power of the current elites, where they made it via financial engineering, wars, and oil. [0]https://restofworld.org/2021/the-cryptocurrency-dons-of-beirut/ https://restofworld.org/2021/the-cryptocurrency-dons-of-beir...
  - ur-whale 5y ago
    > Bitcoin ownership is even more concentrated than the real financial system. The concentration of Bitcoin ownership and the service that Bitcoin provides to humanity (please do everyone a favor and don't re-post one of the 100 lame arguments present in the thread as to why there isn't any) are completely orthogonal, especially given the fact that a Bitcoin can be divided into 10^8 pieces.
    - jacknews 5y ago
      Your argument makes no sense. I'm not saying crypto is useless, for mainstream activity, though I personally incline toward that conclusion, awaiting proof otherwise. But I am saying it concentrates wealth, even more than the existing financial system. How does the very small tradable unit have any bearing on concentration of ownership? How does 'service to humanity' justify a concentration of wealth, which itself is a dis-service to humanity?
icu 5y ago
Indeed my first assessment way back when it was <$1 was that it was a Ponzi scheme. However, the market has been saying something I ignored for years... so I took another look at things and this time really took the time to study it. By study it I mean: 1) Read the Whitepaper 2) Read the Bitcoin Standard Book (and subsequently the Fiat Standard book) 3) Listened to The Saylor Series on YouTube, and 4) Did the MIT Blockchain and Money course. I then re-considered criticism from: 1) Various Warren Buffet and Charlie Munger interviews 2) The Blackpaper by Nassim Taleb, and 3) Various interviews with Peter Schiff. My conclusion is that most arguments raised by the above respectable figures in criticism of Bitcoin are ignorant of evidence contrary to their arguements and display a surprising lack of knowledge or understanding that careful study would have overcome. I say that as I was that ignorant person. There are some valid criticisms, however they are in the same category as any new emerging technology. I then decided to venture into crypto with money I could completely lose and not worry about, and it really helped my understanding further. I'm now convinced this is like the pre-dotcom bust whereupon Amazon, Google, Facebook etc emerged to generate enormous value. There is enormous Alpha here to be made but I'm not arrogant to believe I know what will emerge as the market winners, but I have a stake in it now, and I'm further educating myself. I encourage dedicated study and an open, but critical mind, before making any aspersions on crypto.
- bsima 5y ago
- hiq 5y ago
  It would be more helpful if you could say what changed your mind. From your comment I can't say whether you changed your mind because you learned something in your studies, or because BTC went from <1$ to 10k$+.
  - horsawlarway 5y ago
    > or because BTC went from <1$ to 10k$+ I can give you a very good guess.
    - 5y ago
fc373745 5y ago
There was a period of time where bitcoin was almost exclusively used for illegal substances / activity - predominately for drugs (the only time I ever used bitcoin was to buy adderall on silkroad), but also for things like hiring hitmen, weapons, and child pornography. To see cryptocurrency grow to what it is today, especially given the context of what it originally was used for is a bit demoralizing.
- DarkWiiPlayer 5y ago
  > what it originally was used for This "guilt by association" type thinking makes no sense at all. Why would it matter who the earlier adopters of bitcoin were and what they were using it for? This is like saying TOR is bad because most people associate it with those same things (drugs, hitmen, etc.)
  - frankbreetz 5y ago
    It matters because it is basically funding the worldwide crime system, if some bought slaves for 1000s of bitcoin, that is now worth many millions of dollars and guess what? That money is going to be reinvested into a bigger, better and more sophisticated criminal organization. Crime is a business like anything else, profits get reinvested
bsima 5y ago
I love unfounded FUD articles like this. I hope it dips the price so I can get bitcoin at a discount
- defaultprimate 5y ago
  Please describe which aspects are unfounded and provide evidence to the contrary
jacknews 5y ago
I'm quite surprised that Madoff's investors are being successfully pursued. Presumably they invested in good faith, and so are not at fault.
McTossOut 5y ago
vinni2 5y ago
Am I the only one hitting paywall while accessing this article?
- mwattsun 5y ago
  A non-paywalled link was provided in comments above https://archive.md/sQhtq https://archive.md/sQhtq
Geee 5y ago
It's obvious that there is global demand for money which is separated from state control. You can see this demand in Bitcoin price. Bitcoin is the opposite of a Ponzi scheme, because there's no central operator which can arbitrarily print more money for its own benefit. It's completely transparent and traded on open markets.
- defaultprimate 5y ago
  The only thing you see in bitcoin's price is how many unbacked stable coins have been printed
jonathan-adly 5y ago
If you think Bitcoin is worse than a Madoff-style Ponzi scheme, wait until you hear about Lebanon's central bank[0]. [0]https://www.nytimes.com/2021/07/17/business/lebanon-riad-salameh.html https://www.nytimes.com/2021/07/17/business/lebanon-riad-sal...
js8 5y ago
The biggest irony of Bitcoin and similar schemes is that they actually commoditized money-printing and caused massive inflation, despite the libertarian claims that come along with it about how deflationary they are, and how we need to prevent government to do so. It is pretty counter-intuitive to understand that you can have two transactions between three parties, where everything is properly accounted for with double-entry check, and yet, more money is created in the system as a whole. So people, of course, in this gold rush, run the money printers 24/7. Of course, if Bitcoin replaced normal currency, it could be conceivably deflationary (probably for worse). But it doesn't, it just adds to it. I don't think humanity is fully aware of the amount of inflation that various crypto-schemes caused around the world.
ucha 5y ago
This argument is so basic yet it keeps being repeated over and over on HN... It boils down to you can't expect a return on bitcoin hence it's shouldn't be worth anything. If that argument was true, then gold is a ponzi that shouldn't be worth anything and the same would apply to art. A slightly more advanced rebuttal would be to say, yes but gold has some industrial use and you pay for art because you can enjoy consuming it. But the price of gold and rare artistic pieces is many times their "useful value" if defined as such. All these arguments show a deep misunderstanding of what constitute money, the history of money [1] and the concept of "hard money". Bitcoin is the only way to transfer an arbitrary amount of money in a way that is fast, verifiable, permissionless and to an arbitrary location. This particular use, that no other tool makes possible, means it has some value to some people and consequently should be worth something. The question of what its fair value is harder to answer but just because gold is worth more than its industrial value doesn't make it a ponzi scheme. [1] https://econwpa.ub.uni-muenchen.de/econ-wp/eh/papers/0211/0211005.html https://econwpa.ub.uni-muenchen.de/econ-wp/eh/papers/0211/02...
- danuker 5y ago
  Indeed, the actual Ponzi scheme is the fiat monetary system, where the issuers of money gain at the expense of savers. Bitcoin merely intends to offer a way out: long-term, if demand stabilizes, it should merely match inflation. But for the next few years or so, I'd expect it to keep growing, which means a lot of volatility.
authed 5y ago
Sure... please make it drop so I can get more.

76 points by okareaman 5y ago

okareaman 5y ago

https://archive.md/sQhtq https://archive.md/sQhtq

rbho94 5y ago

foxes 5y ago

Fresh in-pouring of victims to sustain the whole thing, while some bigger players benefit. Im sorry, I don't want to argue anymore with crypto advocates. There is no more rational discussion to possibly be had about any of the current contenders in this space. The whole thing needs to be pulled apart. Just because some people earn money from it, doesn't make it moral, a good idea , useful, or bettering human society. Oil companies also make a lot of money and we can see where that has ended up.

arbuge 5y ago
The comparison to oil isn't quite fair to oil. Oil has a lot of negative side effects, to be clear, but the benefits to society from the use of oil include pretty much all the things we depend on for modern civilization. That is why replacing oil with renewables is going to be such a challenge. When it comes to crypto, on the other hand, I think the challenge would be listing any real benefits to begin with.
- LatteLazy 5y ago
  I'm not sure whether crypto is a good or bad thing overall but there are plenty of good uses for it: * In countries with unstable currencies they are useful stores of value (Venezuela, Turkey and Zimbabwe right now). I was in Zim back in 2010 and visited someone's house. It was filled with petrol because he had been paid and had to spend the money before it lost its value so he bought what was available. Bitcoin would have been a lot safer and less likely to cause shortages of goods (and more inflation). * They offer a much cheaper and simpler way to move money between countries both for ordinary people and small businesses. * By making online retail anonymous they've allowed the circumvention of all sorts of prohibitions. Sometimes that might be a bad thing, but I think it's a part of the reason we've seen weed legalised in so many US states. And remember: we don't ban things because you or I don't see the point. If someone else thinks they see a point, and they're not hurting anyone, they have every right to pursue what interests them
  - jdub 5y ago
    Climate-destroying techno-libertarian accelerationists will hurt everyone.
  - jmull 5y ago
    > we don't ban things because you or I don't see the point We do see the point, though: to scam people out of money.
    - DarkWiiPlayer 5y ago
      Then let's ban gift cards first, because those get used for scamming as well and I don't really see the point in them in the first place, other than making money.
      - jmull 5y ago
        Gift cards have mainly legitimate uses. Here it's different: The main point is to scam people out of money.
  - yosito 5y ago
    > In countries with unstable currencies they are useful stores of value (Venezuela, Turkey and Zimbabwe right now) Also, Cuba and Argentina. While Bitcoin may be more accessible to people in these countries, they could also store value in USD, or other stable assets. > By making online retail anonymous I really don't understand the persistent myth that blockchains are anonymous.
    - LatteLazy 5y ago
      Blockchain is anonymous if you use it correctly I believe (don't reuse wallets, launder you coins etc) but you're right that the vast majority of people don't do that as far as I'm aware. Full disclosure: I've never actually done it either and I'm no expert...
      - tonfreed 5y ago
- captainmuon 5y ago
  You have to distinguish between absolute benefits, and benefits in our current society. I also think absolute or real benefits are very slim, but there are certain motivations for it today: In our current society, one "benefit" is that you can use it to buy drugs anonymously. I would argue for some soft drugs like cannabis, that is a good thing. But even better to just legalize it - then you can get the benefits of regulation (harder for people to slide into heavier drugs, you have a bit more control over consumption, you can tax it...). Another benefit is that you could take your money that you earn in your day job and funnel it into activism. In many countries, there are a lot of scary political developments, combined with a growing surveillance state. Crypto can help that you are not cut off critical resources if you are a dissident. Finally, I wouldn't dismiss the aspect that it promises you to "get rich quickly". We have a very stratified society, where most people are individual laborers, and only a few are successful entrepreneurs and employers. Yes, in silicon valley you can earn a lot even as an IC, and there are many stories of successful founders. But to be honest, the way to the financial elite, the "ruling class", is barred for 99% of people, even for the most talented. A lot of people in tech probably find this unjust, and I can really relate to this feeling. But most would never question the system as a whole. Instead of trying to completely change society, we look for a literal hack or cheat, and crypto is this hack. It is the nerds' revenge, and we phantasize it will allow us to get what is our due.
elvatoloco123 5y ago
Crypto=/= Bitcoin Bitcoin offers a decentralized, supply capped alternative to central banking. If this seems useful to you, use it, if it doesn't, don't use it. Simple as that. Currently people find the ability to have unconfiscatable money attractive.
- meragrin_ 5y ago
  How is Bitcoin unconfiscatable? Just confiscate all wallets. If they are encrypted in some way, they would still be inaccessible to the person. If they can be recreated, the person can be monitored to determine how to recreate the wallet and then be drained.
  - CryptoPunk 5y ago
    A person can hide the fact that they have a wallet. Confiscating information, that can be stored as a secret passphrase in your brain, is extremely difficult.
    - meragrin_ 5y ago
      > Confiscating information, that can be stored as a secret passphrase in your brain, is extremely difficult. >> If they can be recreated, the person can be monitored to determine how to recreate the wallet and then be drained. Being unable to use the Bitcoin is the same as confiscating it.
      - CryptoPunk 5y ago
        Being unable to use it, when you have access to encrypted communication, not to mention other countries where it is legal?
    - yesbut 5y ago
      the CIA figured out how to extract passphrases from people's brains decades ago.
lai-yin 5y ago
Oil and natural gas have lifted billions of people out of generational poverty. It wouldn't be possible for you to type that comment on your computer or laptop and post it to Hacker News without their existence. When I got into Bitcoin I wasn't a "victim" and I'm still not one. Maybe you're the victim of your own preconceived notions.
- 400thecat 5y ago
  Agree completely with the first paragraph. As for the second part, eventually when bitcoin crashes, there will be lots of victims.
sixQuarks 5y ago
you have let Your emotions take over And are blind to everything. Please explain Why is gold not a Ponzi scheme?
anovikov 5y ago
Well, if crypto is meant to be used as a method of investment, then sorry, nothing which does not generate rent can be a viable method of investment (can sometimes be a method of preserving wealth e.g. gold but even that barely). In this sense, i agree with you. But crypto is also very useful for undermining governments - making them unnecessary. Which is a beneficial thing for all humankind. Whenever government realises it is not necessary and can be circumvented with no way to fight back - it becomes more flexible (example: legalisation of weed). Crypto makes the world more free. Freedom is a universal value.
- brightstep 5y ago
  Governments could destroy crypto if they wanted. See China as the most obvious example. A novel technology doesn't stand much of a chance against men with guns.
  - ashwagary 5y ago
    They can't destroy it, a lot of miners in China continue mining using vpns and proxies.
    - anovikov 5y ago
      Well, you can't mine using VPN or proxy because you can't conceal multi-megawatt power consumption that it takes. Prohibition of mining is simply about consumption of electricity which suddenly became in short supply. Crypto is not banned in China and it is not bannable. Mining of course, is.
      - ashwagary 5y ago
        You can absolutely conceal energy usage, especially in places where large scale manufacturing takes place.
  - thereyet 5y ago
fsflover 5y ago
Crypto helps people in semi-totalitarian regimes to not depend on inflation and be independent on the governments with transactions.
- 400thecat 5y ago
  nobody uses bitcoin for transaction anymore It has become pure speculation vehicle
  - thereyet 5y ago
helloworld11 5y ago
Since you categorically state that "the whole thing needs to be pulled apart" and attribute all sorts of evils to what is essentially just an open cryptographic protocol that anyone can freely use or not use as they please, I'd say it's you who is more closely edging towards being unable to rationally discuss bitcoin. Many things can be arbitrarily defined as bad ideas without having to be banned and something doesn't need to "better human society" (according to your definition of how that's decided no less) in order to have legitimate reasons for existing.
- tarboreus 5y ago
  Agreed. Let's get rid of ice cream next. I find I don't like the flavor, it uses a lot of CO2 to create, and it has some negative side effects. I also hate how people are big ice cream boosters, how annoying. Also people are making money from selling ice cream. I'm not making money that way, and don't think other people should, either.
sabellito 5y ago
I don't care about crypto. You comment seems to amount to "I won't argue because you're not rational. The thing you believe in is awful and should cease to exist". Please reconsider.
- Devasta 5y ago
  "I won't argue because you're not rational. The thing you believe in is awful and should cease to exist" is a perfectly fine stance to have about bitcoin and crypto in general. Its causing massive amounts of pollution, global spikes in price of computer parts, exacerbates shortages in silicon and facilitates all sorts of illegal activity from money laundering to ponzi schemes to trading of illegal goods. And for what? The shittiest database you could imagine.
  - sabellito 5y ago
    My criticism on the original comment is not about his take on crypto, it is about taking that stance about quite literally anything. If one refuses to argue because they believe the other side is irrational, then abstain for conversation instead of just name-calling/shitting on the thing on a public forum. This is somewhat equivalent to posting some egregious opinion and then saying "don't @ me".
    - Devasta 5y ago
      You're assuming a level of good faith in crypto bros that frankly doesn't exist. They aren't interested in any criticism of bitcoin and the like, they personally stand to make money from it and you are just their next potential victim.
      - sabellito 5y ago
        I take the dismissive stance you're talking about when dealing with anti-vax, flatearthers, and qanon types. I'm not above that. Having said that, my original point is the same: then don't engage at all. I don't go posting on flatearther forums how "i won't argue and that their opinion is stupid". I either fully engage and endure what I perceive to be unbelievable stupidity, or don't engage at all.

boxmonster 5y ago

The counter argument is that Bitcoin provides more than 45 million dollars a day in utility. edit: Does the lightning network need Bitcoin to work or is it just Venmo?

danlugo92 5y ago
> Does the lightning network need Bitcoin to work or is it just Venmo? It is built atop of bitcoin and provides as much safety as bitcoin itself, with one single exception: you cannot be offline for more than a week. It's a fair tradeoff you have to take in order to instantly transfer trillions of dollars for cents worldwide.
- defaultprimate 5y ago
  >provides as much safety Not even close https://www.investopedia.com/tech/bitcoin-lightning-network-problems/ https://www.investopedia.com/tech/bitcoin-lightning-network-... https://cryptowhale.medium.com/why-the-bitcoin-lightning-network-is-satoshi-nakamotos-worst-nightmare-8402be4a4e73 https://cryptowhale.medium.com/why-the-bitcoin-lightning-net... https://www.forbes.com/sites/billybambrough/2020/07/09/bitcoins-lightning-network-is-struggling-to-overcome-fundamental-issues/?sh=5602918a5f77 https://www.forbes.com/sites/billybambrough/2020/07/09/bitco...

trabant00 5y ago

My prediction: it will take years for this to pop in the absence of a general economic crysis. The crypto coins gave just struck the most anti tech circle of my friends. They are watching youtube videos of how to mine on mobile phones besides buying the most obscure coins they can find. So it looks to me like there's plenty of potential "investors" out there who can sustain this thing for years to come.

ddorian43 5y ago
I think the same. Especially when you see in investing forums that many people are tilting 5% to crypto.
- skohan 5y ago
  I think crypto "investing" might be here to stay, for quite a while at least. Not that I think it should: it's a non-productive asset valued almost totally based on the greater fool theory, and there seem to be very credible indications that there may be large-scale price manipulation going on. But it appears to have managed to become entrenched in culture to the point that my non-tech-savvy colleagues talk about it like a normal thing, and financial media personalities comment on the price movements alongside securities and other asset classes. But to be fair, in some ways securities are quite disjoint from "true value" as well. If I buy a share in AAPL from another investor, the minuscule dividend and voting rights I acquire do very little to justify the price of the stock. I am really buying it in hopes that the market value will increase in time to make my retirement a bit more comfortable.
  - ddorian43 5y ago
    > But to be fair, in some ways securities are quite disjoint from "true value" as well. If I buy a share in AAPL from another investor, the minuscule dividend and voting rights I acquire do very little to justify the price of the stock. I am really buying it in hopes that the market value will increase in time to make my retirement a bit more comfortable. Feel free to buy dividend stocks then. It's just that the growth types are expected to have a greater "total growth" over time.

Waterluvian 5y ago

The Bitcoin situation reminds me of one wing of current U.S. politics. It's a complete fraud that's been obvious to a lot of people for quite a while now. But countless people have become so married to it and have allowed it to become a core part of their identity that they're no-longer capable of seeing reality clearly. It comes with all the same kinds of personalities too: - The angry commenter who just wants you to know that _you're_ the idiot, not them - The "just show me the facts then" perpetually recursive denier - The few who manage to benefit from it and are amplified as a signal that _everyone_ will benefit - The few at the top actually making all the money, funding the further manipulation of the weaker minds at the bottom Yeah, it's all a Ponzi scheme. A cult. All that.

janandonly 5y ago

I always UPvote negative Bitcoin comments... the longer time I have to buy it cheap, the better...

ur-whale 5y ago
> the longer time I have to buy it cheap, the better. LOL, I do the exact same thing :)

jonathan-adly 5y ago

I am glad the ft audience think BTC is a bad idea. They are mostly well-off elite in developed countries. Bitcoin is meant to erode their power.

jacknews 5y ago
LOL, you mean shift power to a different (for now) elite. Bitcoin ownership is even more concentrated than the real financial system.
- jonathan-adly 5y ago
  1. With exchanges, non-self custody solutions, and smart early adopters splitting their ownership in many wallets, no one knows the concentration of Bitcoin. 2. I much prefer the crypto dons of Lebanon[0] as the new elite than the old white guys currently running the shows. Bernie Madoff was literally the chairman of NASDAQ. 3. No one says Bitcoin will eliminate the elites, nope. Just erode the power of the current elites, where they made it via financial engineering, wars, and oil. [0]https://restofworld.org/2021/the-cryptocurrency-dons-of-beirut/ https://restofworld.org/2021/the-cryptocurrency-dons-of-beir...
- ur-whale 5y ago
  > Bitcoin ownership is even more concentrated than the real financial system. The concentration of Bitcoin ownership and the service that Bitcoin provides to humanity (please do everyone a favor and don't re-post one of the 100 lame arguments present in the thread as to why there isn't any) are completely orthogonal, especially given the fact that a Bitcoin can be divided into 10^8 pieces.
  - jacknews 5y ago
    Your argument makes no sense. I'm not saying crypto is useless, for mainstream activity, though I personally incline toward that conclusion, awaiting proof otherwise. But I am saying it concentrates wealth, even more than the existing financial system. How does the very small tradable unit have any bearing on concentration of ownership? How does 'service to humanity' justify a concentration of wealth, which itself is a dis-service to humanity?

icu 5y ago

Indeed my first assessment way back when it was <$1 was that it was a Ponzi scheme. However, the market has been saying something I ignored for years... so I took another look at things and this time really took the time to study it. By study it I mean: 1) Read the Whitepaper 2) Read the Bitcoin Standard Book (and subsequently the Fiat Standard book) 3) Listened to The Saylor Series on YouTube, and 4) Did the MIT Blockchain and Money course. I then re-considered criticism from: 1) Various Warren Buffet and Charlie Munger interviews 2) The Blackpaper by Nassim Taleb, and 3) Various interviews with Peter Schiff. My conclusion is that most arguments raised by the above respectable figures in criticism of Bitcoin are ignorant of evidence contrary to their arguements and display a surprising lack of knowledge or understanding that careful study would have overcome. I say that as I was that ignorant person. There are some valid criticisms, however they are in the same category as any new emerging technology. I then decided to venture into crypto with money I could completely lose and not worry about, and it really helped my understanding further. I'm now convinced this is like the pre-dotcom bust whereupon Amazon, Google, Facebook etc emerged to generate enormous value. There is enormous Alpha here to be made but I'm not arrogant to believe I know what will emerge as the market winners, but I have a stake in it now, and I'm further educating myself. I encourage dedicated study and an open, but critical mind, before making any aspersions on crypto.

bsima 5y ago
hiq 5y ago
It would be more helpful if you could say what changed your mind. From your comment I can't say whether you changed your mind because you learned something in your studies, or because BTC went from <1$ to 10k$+.
- horsawlarway 5y ago
  > or because BTC went from <1$ to 10k$+ I can give you a very good guess.
  - 5y ago

fc373745 5y ago

There was a period of time where bitcoin was almost exclusively used for illegal substances / activity - predominately for drugs (the only time I ever used bitcoin was to buy adderall on silkroad), but also for things like hiring hitmen, weapons, and child pornography. To see cryptocurrency grow to what it is today, especially given the context of what it originally was used for is a bit demoralizing.

DarkWiiPlayer 5y ago
> what it originally was used for This "guilt by association" type thinking makes no sense at all. Why would it matter who the earlier adopters of bitcoin were and what they were using it for? This is like saying TOR is bad because most people associate it with those same things (drugs, hitmen, etc.)
- frankbreetz 5y ago
  It matters because it is basically funding the worldwide crime system, if some bought slaves for 1000s of bitcoin, that is now worth many millions of dollars and guess what? That money is going to be reinvested into a bigger, better and more sophisticated criminal organization. Crime is a business like anything else, profits get reinvested

bsima 5y ago

I love unfounded FUD articles like this. I hope it dips the price so I can get bitcoin at a discount

defaultprimate 5y ago
Please describe which aspects are unfounded and provide evidence to the contrary

jacknews 5y ago

I'm quite surprised that Madoff's investors are being successfully pursued. Presumably they invested in good faith, and so are not at fault.

McTossOut 5y ago

vinni2 5y ago

Am I the only one hitting paywall while accessing this article?

mwattsun 5y ago
A non-paywalled link was provided in comments above https://archive.md/sQhtq https://archive.md/sQhtq

Geee 5y ago

It's obvious that there is global demand for money which is separated from state control. You can see this demand in Bitcoin price. Bitcoin is the opposite of a Ponzi scheme, because there's no central operator which can arbitrarily print more money for its own benefit. It's completely transparent and traded on open markets.

defaultprimate 5y ago
The only thing you see in bitcoin's price is how many unbacked stable coins have been printed

jonathan-adly 5y ago

If you think Bitcoin is worse than a Madoff-style Ponzi scheme, wait until you hear about Lebanon's central bank[0]. [0]https://www.nytimes.com/2021/07/17/business/lebanon-riad-salameh.html https://www.nytimes.com/2021/07/17/business/lebanon-riad-sal...

js8 5y ago

The biggest irony of Bitcoin and similar schemes is that they actually commoditized money-printing and caused massive inflation, despite the libertarian claims that come along with it about how deflationary they are, and how we need to prevent government to do so. It is pretty counter-intuitive to understand that you can have two transactions between three parties, where everything is properly accounted for with double-entry check, and yet, more money is created in the system as a whole. So people, of course, in this gold rush, run the money printers 24/7. Of course, if Bitcoin replaced normal currency, it could be conceivably deflationary (probably for worse). But it doesn't, it just adds to it. I don't think humanity is fully aware of the amount of inflation that various crypto-schemes caused around the world.

ucha 5y ago

This argument is so basic yet it keeps being repeated over and over on HN... It boils down to you can't expect a return on bitcoin hence it's shouldn't be worth anything. If that argument was true, then gold is a ponzi that shouldn't be worth anything and the same would apply to art. A slightly more advanced rebuttal would be to say, yes but gold has some industrial use and you pay for art because you can enjoy consuming it. But the price of gold and rare artistic pieces is many times their "useful value" if defined as such. All these arguments show a deep misunderstanding of what constitute money, the history of money [1] and the concept of "hard money". Bitcoin is the only way to transfer an arbitrary amount of money in a way that is fast, verifiable, permissionless and to an arbitrary location. This particular use, that no other tool makes possible, means it has some value to some people and consequently should be worth something. The question of what its fair value is harder to answer but just because gold is worth more than its industrial value doesn't make it a ponzi scheme. [1] https://econwpa.ub.uni-muenchen.de/econ-wp/eh/papers/0211/0211005.html https://econwpa.ub.uni-muenchen.de/econ-wp/eh/papers/0211/02...

danuker 5y ago
Indeed, the actual Ponzi scheme is the fiat monetary system, where the issuers of money gain at the expense of savers. Bitcoin merely intends to offer a way out: long-term, if demand stabilizes, it should merely match inflation. But for the next few years or so, I'd expect it to keep growing, which means a lot of volatility.

authed 5y ago

Sure... please make it drop so I can get more.