11 ms·

Reposting my comment (which is leaf'd off a dead one): Crypto is "cult by design" in much the way all greater-fool scams are. Namely, since coins are incredibl

Reposting my comment (which is leaf'd off a dead one): Crypto is "cult by design" in much the way all greater-fool scams are. Namely, since coins are incredibly deflationary, wealth accumulates to a small number of early-stakers whilst the long-tail people buying-in provide their liquidity (/cash) so they can exit at an extreme multiple of buy-in. Everyone is relying on "more fools" to create a longer-tail from their stating position so they can exit higher. Meaning, whatever position you enter at, you have to evangelise like crazy. I dont think anyone has ever yet explained how this is meant to function as a currency. Indeed, crypto people are dead-set on explaining everything except how this works as a currency. Long-and-short of it: extremely deflationary assets are terrible currencies. One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth. This is just feudalism where land=coin. So crypto people, sitting on a lot of coins, who urge adoption arent trying to "free" the economy, they're trying to own it. It is just a bigger-fool scam, so it wont work -- at some point the tail won't be long enough, and it'll collapse (but this could take decades, as some scams do keep finding enough people to sustain them). So I dont think there's much danger in it -- but, lets be clear: any corporation which accepts bitcoins is thereby recognising an essentially feudal type of economic power. Most holders of coin-wealth didn't earn it, they are taking it from the fools currently buying-in. Accepting crypto as currency, means giving early-stakes a way of exiting the scam at incredible multiples.

tromp 5y ago
> Namely, since coins are incredibly deflationary Not all. Some have more reasonable emissions like one per second forever, the simplest possible disinflationary emission, that minimizes wealth concentration.
- woodruffw 5y ago
  How does a fixed minting rate prevent inflation? Production is elastic and typically grows over time, which is why the Fed is constantly adjusting the dials on money creation (both directly and indirectly.)
  - swalsh 5y ago
    There are many different systems. I'd agree with you that once per second is also a bad system. Just as an alternative example. I had this idea for a community seed box, take a penny leave a penny type thing. The issue with these things is usually it's just a few people who give, and it's usually the same things. I had an idea for how to make this more fair using crypto. Few concepts to understand before I can explain the idea: ERC-20 - this is a fungible token, contracts can specify minting and burning independently. AMM - Automatic Market Maker, this is a concept from defi which allows you to exchange quantities of fungible tokens for any other token. It tries to maintain a ratio, and dynamically prices things as supplies change. It's one of the fundumental concepts that makes defi work, and it works pretty well actually. Subnet - An Avalanche (alternative ETH like blockchain) specific concept, which allows you to create a custom blockchain with a custom or standard VM (such as the EVM) and define it's own gas token (this allows you to have "free" transactions). My Idea, was to basically turn my community take a seed leave a seed into a series of AMM's. It would work like this, you come up to the box, scan a QR code to give your wallet address, then drop some seeds into the machine. The machine would mint two ERC-20 tokens equivlent to the seeds you provided. 1 for the specific type of seed you dropped at that specific location. Another that is the "native" token for the chain. Using subnets you can make this transaction free. With the second token, you can spend it to get the seeds of your choice. As supply changes, the "price" of each seed would dynmically change. When the seeds are dispensed, the 2 tokens would be "burned" to keep the system in balance. To take it one step further, since each "dispencer" is part of a network, there's no reason you couldn't donate your seeds in one machine, and then go to another machine on the network to get some seeds. As a network, different machines would be priced differently for the same item. This is a feature, demand is not constant geographically, this models that. If you wanted, you could abritrage the system. That too is a feature. It's not perfect, as an automated system in the real world it could easily be exploited, but it's not meant to be a business... just a system for the commnity to FAIRLY help each other in a scaled way.
vegai_ 5y ago
>Most holders of coin-wealth didn't earn it, they are taking it from the fools currently buying-in. How does that differ from the more obviously valid versions of rewarding early birds?
- mjburgess 5y ago
  Why should a currency reward anyone? A currency is a way of "liquifying productivity" -- what we have with crypto is a few people turning up early, claiming a stake, and waiting ~10yr until they can exit with a fleet of tesla, houses, etc. because theyve convinced people to accept their tokens as cash. That's about as anti-productivity as you can possibly imagine. It's a transfer of production (eg., cars) to the unproductive. Holding bitcoin in order to spend it is asking the productive economy to subsidise you. (1) It is a scam; and (2) as a currency, it's madness.
  - ianai 5y ago
    I’m reminded of the Better Call Saul where a guy tries to hire him to help declare sovereignty from the US and wants to pay lawyer fees in the currency of the future country.
    - Pxtl 5y ago
      Or in Raul Julia's magnificent performance as Bison in the Street Fighter movie. https://youtu.be/Shxiy7l5b_4 https://youtu.be/Shxiy7l5b_4
  - vegai_ 5y ago
    >Why should a currency reward anyone? Are you calling a revolutionary technology merely a currency?
  - zhynn 5y ago
    Line goes up.
- Mordisquitos 5y ago
  An early bird's stake in a "valid" investment carries with it properties that have changed over time from the moment of their initial investment other than the market value itself. While the early bird cashing out a ~1500% profit of Amazon stock that they bought 10 years ago also depends on someone else buying-in, there is something intrinsically different between what an Amazon share in 2012 and an Amazon share in 2022 actually mean. The same is the case if they had bought IBM stock instead, and were now cashing out at a loss of ~35%. Their values now reflect the businesses as they stand today, as well as future expectations of what Amazon, IBM, and their respective markets will be like in the future. The decision whether to invest or divest in each of them today can be argued with hypothetical if-then thoughts. If you are more convinced than the average shareholder that Amazon will be hurt by the epidemic of fake products and reviews, unionisation of its warehouse workers, and stiffer cloud competition, then you will think it is overvalued and may sell. If you believe IBM's research in quantum computing will be a game-changer, then you may believe it is undervalued and buy. And so on. Compare that to the difference between 1 BTC in 2012 and 1 BTC in 2022. Other than the impressive increase in how much somebody is willing to pay for them, what has changed between 1 BTC in 2012 and 1 BTC in 2022? What if-then arguments regarding the future might be reasoned to believe that the value will increase or decrease, other than "someone will be willing to buy it from me at a greater/smaller price than I paid"?
qsort 5y ago
> I dont think anyone has ever yet explained how this is meant to function as a currency. Because it can't. Even assuming everyone is on board with blockchains, removing the ability of the central bank to increase the monetary supply during recessions makes every downturn 10x worse. (as unpopular as it may be with inflation this high right now)
- mjburgess 5y ago
  There's one revealing way a bitcoin-economy could release money, right? Ask all the major holders of coins. Hmm... wait a minute, a small few holders of coins... can behave like a CENTRAL BANK ... ?! I wonder what those few major holders think about crypto... ah yes, that it will free us all...
  - unmole 5y ago
    > Hmm... wait a minute, a small few holders of coins... can behave like a CENTRAL BANK ... ?! Before the constitution of the Federal Reserve, J.P. Morgan acted like a central bank by being the lender of last resort.
    - mjburgess 5y ago
      Sure, and how would that work with early-stakers? They'd form a guild, much like a large bank, and control large parts of the currency. Now, taking crypto people at their word, they dont want the gov to regulate that. So what does this mean? We have a tiny feudal guild with control over the economy. A central bank, with an inflationary currency, heavily regulated by the gov is nothing like this group of wannabe feudal lords. By comparison, modern central banking is vastly more democratic, and ran for the benefit of soceity.
      - unmole 5y ago
        > Now, taking crypto people at their word That is unlikely to end well.
  - 5y ago
rvz 5y ago
Yes. Bitcoin is the cult that has already unveiled itself as the scam and it has failed and everyone knows that is a scam that obviously cannot be used as a currency, P2P payments or using it to send money in a short space of time. (and nope the Lightning Network is not Bitcoin). I would not go far to dismiss all of them.
- luciusdomitius 5y ago
  "Lightning Network is not Bitcoin" What is it then? On which other blockchain does it run and is massively used?
  - rvz 5y ago
    > "Lightning Network is not Bitcoin" What is it then? A centralized by design layer 2 off-chain system which transactions are done outside of the blockchain.
- Quindecillion 5y ago
  > (and nope the Lightning Network is not Bitcoin) What is it then? > I would not go far to dismiss all of them. I would. Every single crypto is an affinity scam of Bitcoin. They're just unregistered securities of companies. Bitcoin is just an open and neutral protocol that's not owned by any company.
  - once_inc 5y ago
    I feel like the person you are replying to is going to take this discussion into the direction of bitcoin cash being the real bitcoin. If so, please let it be noted that all other cryptos, including forks of Bitcoin, aren't bitcoin, and are affinity scams.
    - rvz 5y ago
      > I feel like the person you are replying to is going to take this discussion into the direction of bitcoin cash being the real bitcoin. I could not care less about attempting to 'use' a cryptocurrency that is slower than VISA and as extremely volatile for merchants to use to accept payments with and is useless as 'digital gold'. Just ask El Salvador.
Quindecillion 5y ago
You're thinking about it all wrong. Lots of "Bitcoiners" don't really see it as an "investment". It's a savings. There's no greater fool to sell to as exit liquidity because we're not looking to sell. We're holding for as long as possible i.e. retirement or inheritance, at which point we won't need to sell, we'll SPEND it. Notice the difference? We know there are still decades of price discovery to occur, so the incentive is to spend as little as possible for as long as possible, but in a couple of decades most of the price discovery will have occurred and it will have integrated more with the economy and financial system, at which point it will be easy to use as a currency to buy things. And yes, it acts as a currency just fine as proven in El Zonte/El Salvador and other places... including every major retailer in America [1] [1] https://bitcoinmagazine.com/industry-events/jack-mallers-adding-bitcoin-to-major-pos-networks https://bitcoinmagazine.com/industry-events/jack-mallers-add...
- AlexandrB 5y ago
  This... doesn't make sense. Spending is selling. You're just selling for something other than currency. And saying "it's not an investment, it's a savings" is nonsense. If Bitcoin didn't appreciate in value no one would use it as "savings" because it would lose value relative to inflation. People usually "HODL" Bitcoin or Ether, not USDT or USDC.
  - Quindecillion 5y ago
    > This... doesn't make sense. Spending is selling. You're just selling for something other than currency. When you go to the shop and you buy something with money, do you consider that as "SELLING your money"? This is the nuance I was getting at. When I can use Bitcoin to buy stuff it will be widely accepted and valued as money. By the time that's possible, how much do you expect its purchasing power will have appreciated? > And saying "it's not an investment, it's a savings" is nonsense. If Bitcoin didn't appreciate in value no one would use it as "savings" because it would lose value relative to inflation. Of course, but it IS appreciating in value against fiat. Why do you think that is? Could it be that fiat is literally designed to be inflationary and Bitcoin is designed to be disinflationary for over a hundred years?
samatman 5y ago
> since coins are incredibly deflationary What a strange take. Would you describe any other currency which was actively being minted, such that the total quantity was increasing, as "deflationary"? That sounds like inflation to me. What you mean, perhaps, is that the market is buying these assets higher over time, even though the total supply is increasing? Shame that undermines your shallow and incorrect analysis of the dynamics at work.
- shkkmo 5y ago
  Inflation is a market wide increase in prices and has no direct relationship to monetary supply.
javert 5y ago
> Crypto is "cult by design" in much the way all greater-fool scams are. If you study the history of bitcoin (or were around and paying attention), it wasn't at all designed as a cult or a scam. So this is factually wrong. However I think it's true of a lot of the later coins. > I dont think anyone has ever yet explained how this is meant to function as a currency. People have, like a zillion times, including on this forum. If it matters to you (it shouldn't), even professional economists fall into different camps on the nature of money. If you can't see that there is a real and genuine argument on both sides, you aren't trying. > One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth This is a worst-case view of the situation, but many would say that even this worse case is better than giving "democratic" institutions unlimited power to print money. So again, there is a genuine argument on both sides. > So crypto people, sitting on a lot of coins, who urge adoption arent trying to "free" the economy, they're trying to own it. And there are also crypto people who are true believers, even if they do have a lot of coin. In fact, the people who got into bitcoin early but weren't true believers couldn't believe how much money they made when they sold out at $30. The distribution of true believers vs. get-rich-quick people in bitcoin is grossly different from what you imagine and portray. > any corporation which accepts bitcoins is thereby recognising an essentially feudal type of economic power. You're really conflating economics and government. For example, in the US, Bill Gates doesn't have the same kind of power as the two political parties, who control armies of soldiers and domestic enforcers. When I say "kind," I mean that literally; it's not that Bill Gates has less power; it's that he has a different kind of power. Bitcoin transforms some of the kind of power wielded by government actors into the kind of power wielded by Bill Gates.
- AlexandrB 5y ago
  > If you study the history of bitcoin (or were around and paying attention), it wasn't at all designed as a cult or a scam. So this is factually wrong. However I think it's true of a lot of the later coins. I think you're missing the point. I think what OP is saying is that the nature of a deflationary, speculative asset means that a cult-like environment will organically form around it. Early adopters have a strong incentive to hype it up and get others to buy in to increase their own wealth. And Bitcoin was designed to be a deflationary, speculative asset.
aNoob7000 5y ago
I couldn't agree more. I'm so tired of the hype around cryptocurrencies and NFTs. Everywhere I go to get some news, there's a story about someone like Elon pushing the benefits of crypto coins. If all these rich guys and crypto-evangelists really want cryptocurrencies to succeed, they need to make it easy to acquire and pay with a cryptocurrency. Unfortunately, this will never happen.
- misiti3780 5y ago
  eh. i agree that it probably wont replace USD, but i can see a world where a lot of lawyers do not need to exist because transactions go on chain. if you buy a place in NYC, the transfer of the title costs thousands of dollars. there is absolutely no reason that should be the case, it should be done on chain for a fraction of the price.
  - Ekaros 5y ago
    Why shouldn't the government provide these services for the taxes people pay? If they spend a few hours checking everything is order on both sides for a few hundred I think that is reasonable. After that the court system again paid by taxes should resolve thing according to these. I don't see any reason why a chain would help here too much, fixing the government should be much more effective in long run.
    - long_time_gone 5y ago
      > Why shouldn't the government provide these services for the taxes people pay? It is very common for government's to tax exchanges of money/property/goods. We see this in the sales tax, estate tax, transfer tax, cash app transfers, monetary gifts above $15k, income taxes, etc.
  - FabHK 5y ago
    Maybe a permissioned blockchain, but that has nothing to do with BTC and its preposterous environmental pollution, and will most definitely not get rid of lawyers. Do you think that it is a technical challenge at the moment, unsolved save for Bitcoin, to keep reliable records??
salawat 5y ago
I wonder honestly how this (the pattern of greater fools) is any different than a startup. Build it, horde equity, IPO, or merger exit... The management group exits with massive gains, employees might, investors left holding the bag.
- mjburgess 5y ago
  There's often a "bigger-fool" element to many types of assets (not, incidentally, to modern currencies). But there's a sliding scale. Would your asset, under conditions of perfect information (, public pricing, market equilibrium, etc. etc.) fetch some price in the long run? In the case of startups, yes... I think many of the early-stage dynamics are the same... but there's incredible competitive pressure towards "long-run real productive value"... in most cases, outside of scams, founders have strong incentives to turn fools into investors. Whether someone is just a "bigger fool" or an "investor" comes just from where the future value of their stake will come from -- is it other fools, or is it a genuine long-run demand? In the case of start-ups, if they fail to deliver that productive value, there's a sense in which it was, retrospectively, a foolish enterprise. But I think we should just call that the relevant downside-risk on honest investment. As far as I can tell, everyone involved in crypto pretty explicitly think's their future value is coming from bigger fools (ie., that it will "go to the moon"). No one involved seems to have any plan for making a coin have a future value of its present cost, in the long run... ie., when the plates stop spinning
RandomLensman 5y ago
Feels to me, the mechanics as described hold for all non-cashflow assets with limited supply (e.g., art, collectibles etc.). And yes, markets there can collapse if new generations of buyers don't turn up (I think that is happening/has happened a bit with postage stamps, for example). Sometimes, other people will do the evangelizing, though, like museums "pushing" artists and thereby aiding valuations.
- mjburgess 5y ago
  Sure the art market (c. $70bn world wide, ie., tiny) is also controlled by a tiny number of players, and the high-end is ran largely as a tax (or, and) money-laundering scam. It seems no co-incidence that crypto people running their Ponzi scheme tried to hijack the art market. However art pieces themselves have an "open, efficient, equilibrium" market price, in that, people actually want to own art to enjoy it. If the art market were broken up, and all the tax incentives ended, and all buyers forced to use public pricing -- then we'd see prices plummet... but not all the way, some pieces would still fetch millions. I think crypto is a pure scam, more radical than art and more radical than MLM cosmetics -- you're not holding anything of value absent fools. There are no people who "want to enjoy their coins", there are only fools. Ie., people who want to pass-the-items-on after rent-seeking (ie., holding it until the fools pile up).
  - simulate-me 5y ago
    I don’t think the enjoyment of art is the driving factor at the high end. High end art serves as a store of value and a status symbol. Surprising similar to bitcoin!
  - RandomLensman 5y ago
    With a lot of art just stored tax efficiently, not sure how relevant "enjoyment" currently really is at the upper end of the market (maybe enjoyment of possession?). Also, people could enjoy holding coins, wouldn't rule that out. Arguably, being part of the crypto community does seem to bring some people joy.
    - 5y ago
etherael 5y ago
> I dont think anyone has ever yet explained how this is meant to function as a currency. It's called money, people use it to buy goods and services. If you can't say this with no qualifications about a crypto, then it's not legit. And yes, that is nearly all of them, especially the ones that get the most hype.
gwbas1c 5y ago
The fact that you're the highest-ranked comment on this page shows that, at least for Hacker News, people are getting some sense knocked into them. 5-6 year ago I'd get continually downvoted on Hacker News for comments like that.
- f38zf5vdt 5y ago
  My only problem with this description is that it also describes markets at large. Because markets are always intended to be exponentially growing in real value over time, any individual entering them and holding assets will accrue assets at a great amount than people who can not afford to. Over time this results in greater and greater accumulation of wealth into the hands of those who originally simply possessed more. This is a fact that has been evidenced by ever increasing amounts of wealth concentration in the hands of fewer and fewer individuals over the past 50 years. [1] Unfortunately, it seems cryptocurrency is a just an extension of the many of the systems we already have that are described in fiat amounts. https://www.newyorker.com/news/john-cassidy/pikettys-inequality-story-in-six-charts https://www.newyorker.com/news/john-cassidy/pikettys-inequal...
  - throwaway82652 5y ago
    >Unfortunately, it seems cryptocurrency is a just an extension of the many of the systems we already have that are described in fiat amounts. Because cryptocurrency is also a fiat system where the money holds no real value and is manipulated by various entities, only the fiat is declared by a private group of computer nerds instead of the government.
  - mjburgess 5y ago
    Err.... not quite. What you're describing is preferential attachment... ie., those with a large stake can multiply that stake producing ever larger amounts. This isn't a scam. If I give everyone in the comments $100k, by "next year" some will have $1m and some $0 -- and, in general, we'll all be a little better off. Its the nature of any advantage that it compounds, and compounding advantages of any kind produce dramatic inequalities (of sex, money, creative achievement, etc.). Bitcoin isnt a scam because it produces an unequal outcome -- any system which works to increase the general welfare will necessarily operate on and compound inequalities. It's a scam because as time passes the general welfare *does not increase*, indeed, it plummets! People holding coins arent opening factories, building houses, teaching people, etc. Nothing is happening. They're litterally just twiddling their thumbs. What's actually happening is that poorer fools are joining late in the game, whose money comes from actual labour... and supply the initial parasitical early-stakes with exit-cash. Ie., they wait for 10yr do nothing; you work for 1mo and do lots. Your productive labour becomes their exit. It's welfare for the rich. Inequality isnt the issue here. It's the particular type of "theft" taking place. It is, in a very real sense, an actual scam.
krzyk 5y ago
You miss out on one thing: "early stakers" don't stake, you get bitcoin, and you sell bitcoin when a price is right. There are very few that keep it for years. It is just like stock market. There might be "early stakers" that bought Apple stock in 1980 and kept it till today, but vast majority just traded it.
- mmcnl 5y ago
  It is not like the stock market. Shares are a share of a company, that (hopefully) produces something of actual value. You can calculate earning per share. Companies pay dividend. It means you actually own something. What does it mean to own a bitcoin? What is the "EPS" for a bitcoin? It doesn't exist. You might as well put a number on Monopoly paper money and call it a new currency.
  - krzyk 5y ago
    There are fundamental investors and technical analysis ones. The first care about company and dividends. The later care about the stock behavior. (there are also casino players). Bitcoin doesn't have the first but has the rest.
theknocker 5y ago
nathias 5y ago
By now nocoiners are closer to flat earthers than healthy skepticism, this post being a great example. You can't just willy nilly make up what words mean.
wyager 5y ago
> Indeed, crypto people are dead-set on explaining everything except how this works as a currency. You've clearly not put in much effort to find this information. Bitcoin's currency-related properties have been analyzed to exhaustion. If by "crypto" you mean "besides bitcoin" then I agree for the most part. > One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth. You're conflating wealth and currency. The entire basis for this line of reasoning is nonsense. Every system of property ownership has this "problem" - nothing unique to bitcoin/shitcoins. > at some point the tail won't be long enough, and it'll collapse Why hasn't this happened with gold? Every money to ever exist (including specie) has been a "greater fool scam". You are mistaken in thinking that such systems are inherently unstable.
- rufusroflpunch 5y ago
  The logical conclusion of the OP's argument is that, since all value is subjective, any asset that accrues more value over time is a "greater fool" scam doomed to collapse. Not a very sound argument. Eventually the Bitcoin network will accrue so much value that merchants will starting demanding payment in Bitcoin, and people will use whatever payment rails are available to make it work. This is how it becomes a medium of exchange. It's really that simple. Most or all of the rest of the cryptos will collapse into Bitcoin.
agumonkey 5y ago
The early on profiting from late fools is partially what a few very old trading techniques describe (so called smart money vs dumb money). Not a crypto exclusive. Now of course crypto operating on the web, more newbs can be influenced faster. The cult aspect of crypt to me is more about the YouTube crypto millionnaires who are near idols to most. Every one has a chapel (patterns, mean reversal, or whatever pseudomagical formula one manages to sell to his audience). It's impressive to witness and even more so to succomb to (i felt like a fanboy few years ago) yet it seems to tap into primal neural réflexes (silver bullet, path to your dreams, having faith, it always worked until it didn't but it's ok no one can predict the future)
swalsh 5y ago
"crypto people are dead-set on explaining everything except how this works as a currency." I consider myself a "crypo-person". In that I see a vision of the future where crypto is a major part of it. But I don't personally see it as a currency. Not in the origional vision that bitcoin seemed to envision. Personally I view the bitcoin vision as obsolete. Bitcoin always has, and always will measure it's value in dollars. It's just a place to sink dollars. It's not even a good vehicle to transfer to other "modern" crypto's. At least ETH enables you to easily bridge. Still bridges are wonky regardless. In my vision of the future, crypto is a seperate purely digital economy. Where as bitcoin imagined a future where it is a currency for the meat world economy, i see it as something seperate. I'm a regular user of Avalanche (AVAX). When I perform transactions I measure my gains/losses in AVAX. To me dollars are foreign exchange. I monitor the forex market, because it can change demand and market conditions, but it's not important to me beyond that. I almost never convert my AVAX back to dollars. Crypto is exceptionally good at transferring digital value. Better than any singular alternative in my opinion. I view it as the future platform for the AI-to-AI economy. People will probably continue to participate in it, but they will be foreign citizens.
rufusroflpunch 5y ago
I'm going to address Bitcoin because I think most cryptos are scams at the worst, or unsustainable systems with poorly designed incentives at best. Speaking as a Bitcoiner, we all envision it as a medium of exchange. This is the goal, 100%. Some finance bros see if differently, but Bitcoin is money. And if you spend any time on research, or reading any of the top Bitcoin books (there are many), you would know the Lightning network is the answer we advocate. Bitcoin isn't deflationary, but it is disinflationary. The money supply grows at a predictable rate until it will eventually stop growing. The idea that you need inflation to be a viable currency is a sort of fever dream delusion that economists tell each other to justify their own terrible inflationary policies. The argument is that you need your money to slowly lose value to encourage people to consume and to keep the velocity of money up. But that is a ridiculous argument on its face because if the argument is "consumers won't consume today if they think the price will go down in the future" then the opposite argument must also be true: "producers won't produce today if they think the price will go up tomorrow." It's an entirely self defeating argument, but that gets ignored in macroeconomics classes, and most people don't think critically enough to question it. The reasons that Bitcoin isn't a great medium of exchange yet is because: 1) There's not enough liquidity yet because it's a relatively small market still. 2) The payment layer isn't fully developed. Both are changing, however, and changing quickly. The monetary policy of Bitcoin has already ossified, and no one could change consensus rules if they wanted to. This makes it the soundest, hardest money we have. It is already a long term store of value. Network effects have taken over, and are probably on a runaway track at this point. In order to break this process, you will need to break the network, which you likely can't do. People will continue to use the network and acquire Bitcoin. Value will accrue to the network. Eventually, it will become so valuable that merchants will start preferring Bitcoin payments. This is when it will become the medium of exchange. You say this is a "greater fool" scam, but actually, we are just seeing something we haven't seen before in recent human history: the bootstrapping of an entirely new money from nothing. This is how it happens. It starts as a store of value, then transitions to medium of exchange, then becomes a unit of account. That is the order. We are nearing the transition point from step 1 to step 2.
rvin 5y ago
I agree that accepting it as a currency means early stakers get more money which is less than ideal. Same can be said about startups, the ones that are earliest in the building of company get most of the money. Most of the time, the founders and VC's are the ones that get most of the money with the other employees getting next to nothing. This perspective is hyper focused on the US. There are countries (Venezuela, Lebanon) who's currencies have hyper inflated to the point where citizens have lost the wealth they've accumulated over their lifetimes. Cryptocurrencies allow them to sell their services/labour to a global market and to retain some of that wealth instead of having their local monthly wages be worth a fraction of the value that they earned.
- gregjor 5y ago
  The Venezuela/Lebanon/Afghanistan fantasy stories are mostly canards. For the majority of people, and especially those in developing countries with unstable economies, there’s no “global market” for their services or labor. How exactly does someone cooking in a restaurant or sewing t-shirts in a sweatshop sell their labor on the “global market?” They can’t. They are stuck getting their “local monthly wages” in whatever currency their employer pays them with. For the relatively tiny portion of people who have significant assets to protect, or who can sell their services globally, hard currencies such as dollars and Euros already protect them from hyperinflation and mismanagement of their local currency. Do you suppose the very wealthy in Venezuela have bank accounts in the US or Switzerland, or do they buy crypto? Dollars and other hard currencies are already used in exactly the role you describe for crypto. Hard currency trading is often underground, black market, because of currency and exchange controls imposed by the dysfunctional government. A government that can ban legal trading in dollars can just as easily ban crypto (in fact that has happened in China already). That won’t stop the trade, it just drives it underground. Anyone who has traveled in a poor country knows that it’s very easy to use dollars or Euros. For people in Venezuela et al. crypto is not offering some new magical lifeline to protect people from hyperinflation. It’s used to circumvent currency controls, and it will work in that respect until the oppressive government figures out how to stop it, driving it underground just like trading in dollars or Euros or gold. If the anti-crypto perspective is “hyper focused on the US,” the pro-crypto perspective is even more hyper-focused on a small clique of (relatively) wealthy people in developed economies, free of hyperinflation and draconian currency controls and regulation, who have skills they can sell globally online — even if those “skills” amount to shilling crypto on YouTube to an audience of rubes who want to get rich quick and don’t understand risk or how blockchains work.
RestlessMind 5y ago
> Crypto is "cult by design" in much the way all greater-fool scams are. Only if you think Gold is also a "cult by design" > I dont think anyone has ever yet explained how this is meant to function as a currency. I don't think anyone has ever yet explained to me how a fish can fly :-p. To be more serious, I don't think Bitcoin is a currency. I see it as an equivalent of digital gold - a store of value. > extremely deflationary assets are terrible currencies. Agreed. But they are great as a store of value. > at some point the tail won't be long enough I don't see it as a pyramid. For someone in Venezuela, Russia or Zimbabwe where currency may go in a free fall, Bitcoin offers a way to both store their savings and to take those savings with them easily as they flee the regimes. See this[1] story about Afghani girls who use bitcoins. That is a real world example. > It is just a bigger-fool scam, so it won't work Hacker news is famous for bookmarking and surfacing comments after a decade. Want to bet? Let's just agree on a definition of "won't work". here is what I propose: today, Bitcoin market cap is ~777B USD[2] and per BTC price is ~41K USD. On Apr 11th 2032, per BTC price will be greater than or equal to 41K USD[3]. Are you up for this bet? [1] https://www.reuters.com/article/crypto-currency-afghanistan/feature-salaries-to-remittances-afghans-embrace-crypto-amid-financial-chaos-idUSL8N2QU39A https://www.reuters.com/article/crypto-currency-afghanistan/... [2] https://coinmarketcap.com/ https://coinmarketcap.com/ [3] I know that some USD bears will call out decline in value for USD itself, but I still trust the stability of USD as well and I see BTC's use case mainly for despotic regimes without any easy stores of value.
- mmcnl 5y ago
  Digital gold is about how far as it gets. I can understand that. But I don't see Matt Damon hyping up gold during the Super Bowl. The price is not based on the assumption that it is digital gold.
mmcnl 5y ago
You are so right. Also, almost literally everyone involved in crypto has a financial stake in one or more coins. How can they be a trusted advisor? It dawned me on a while ago, and every cryptocurrency is simply a big scam. The only way for bitcoin to rise in value is by convincing people to get rich by buying bitcoin, without actually explaining why it will make them rich. That's a huuuuge red flag to me.
ck2 5y ago
Just to play devil's advocate for a moment, aren't "early adopters" rewarded in any investment that takes off, doesn't have to be a scam? A decade ago there used to be "bitcoin faucets" on the internet that would "drip" free fractional bitcoins to promote interest. Was pennies then but those drips are worth thousands of dollars now.
FerociousTimes 5y ago
While I almost agree with you totally, I have an issue with your characterization of Bitcoin in deflationary/inflationary terms because as you said yourself, it is not a currency to begin with. Bitcoin or crypto in general is just an alternative* asset class, nothing more nothing less. Calling it a currency adds to the confusion and strengthens the narrative of the crypto enthusiasts in misleading the general public. *: speculative
JSavageOne 5y ago
I guess you've never heard of stablecoins.
kobasa 5y ago
>I dont think anyone has ever yet explained how this is meant to function as a currency. It's a store of value. Worked fucking great for people who were fleeing shitty places on earth but most people on this board wouldn't know a god damn thing about that. >Most holders of coin-wealth didn't earn it.. You're an idiot. You don't know how investments work and how it has nothing to do with "earning it".
datadata 5y ago
> Crypto is "cult by design" in much the way all greater-fool scams are. Namely, since coins are incredibly deflationary I think you have it backwards. Bitcoin is not deflationary by design, but rather it becomes deflationary when demand increases. This is a property of any scarce asset where there are constraints on supply. Conversely, as demand decreases it becomes quite violently inflationary! For assets that are not scarce, such as fiat currency, deflation is avoided by creating more units as demand grows. There is also an allocation fairness problem in this case, at it is just as bad if adoption is growing as fast as it is for bitcoin. Who has the right to produce new supply, and how do you stop them from becoming incredibly rich when you give them this privilege? Ironically, those sorts of systems also tend to result in feudal like structures as well. What I don't understand is most people think bitcoin must either go to zero or take over the entire world. It is entirely possible that some subset of people decide to adopt bitcoin, other people decide they want nothing to do with it, and that its value stays relatively steady once everyone has decided. This would still offer great utility as a protection against inflation of fiat (the expectation is not necessarily huge returns), in the same way that other scarce collectables are used. Most people don't view other markets with such extreme views.

tromp 5y ago

> Namely, since coins are incredibly deflationary Not all. Some have more reasonable emissions like one per second forever, the simplest possible disinflationary emission, that minimizes wealth concentration.

woodruffw 5y ago
How does a fixed minting rate prevent inflation? Production is elastic and typically grows over time, which is why the Fed is constantly adjusting the dials on money creation (both directly and indirectly.)
- swalsh 5y ago
  There are many different systems. I'd agree with you that once per second is also a bad system. Just as an alternative example. I had this idea for a community seed box, take a penny leave a penny type thing. The issue with these things is usually it's just a few people who give, and it's usually the same things. I had an idea for how to make this more fair using crypto. Few concepts to understand before I can explain the idea: ERC-20 - this is a fungible token, contracts can specify minting and burning independently. AMM - Automatic Market Maker, this is a concept from defi which allows you to exchange quantities of fungible tokens for any other token. It tries to maintain a ratio, and dynamically prices things as supplies change. It's one of the fundumental concepts that makes defi work, and it works pretty well actually. Subnet - An Avalanche (alternative ETH like blockchain) specific concept, which allows you to create a custom blockchain with a custom or standard VM (such as the EVM) and define it's own gas token (this allows you to have "free" transactions). My Idea, was to basically turn my community take a seed leave a seed into a series of AMM's. It would work like this, you come up to the box, scan a QR code to give your wallet address, then drop some seeds into the machine. The machine would mint two ERC-20 tokens equivlent to the seeds you provided. 1 for the specific type of seed you dropped at that specific location. Another that is the "native" token for the chain. Using subnets you can make this transaction free. With the second token, you can spend it to get the seeds of your choice. As supply changes, the "price" of each seed would dynmically change. When the seeds are dispensed, the 2 tokens would be "burned" to keep the system in balance. To take it one step further, since each "dispencer" is part of a network, there's no reason you couldn't donate your seeds in one machine, and then go to another machine on the network to get some seeds. As a network, different machines would be priced differently for the same item. This is a feature, demand is not constant geographically, this models that. If you wanted, you could abritrage the system. That too is a feature. It's not perfect, as an automated system in the real world it could easily be exploited, but it's not meant to be a business... just a system for the commnity to FAIRLY help each other in a scaled way.

vegai_ 5y ago

>Most holders of coin-wealth didn't earn it, they are taking it from the fools currently buying-in. How does that differ from the more obviously valid versions of rewarding early birds?

mjburgess 5y ago
Why should a currency reward anyone? A currency is a way of "liquifying productivity" -- what we have with crypto is a few people turning up early, claiming a stake, and waiting ~10yr until they can exit with a fleet of tesla, houses, etc. because theyve convinced people to accept their tokens as cash. That's about as anti-productivity as you can possibly imagine. It's a transfer of production (eg., cars) to the unproductive. Holding bitcoin in order to spend it is asking the productive economy to subsidise you. (1) It is a scam; and (2) as a currency, it's madness.
- ianai 5y ago
  I’m reminded of the Better Call Saul where a guy tries to hire him to help declare sovereignty from the US and wants to pay lawyer fees in the currency of the future country.
  - Pxtl 5y ago
    Or in Raul Julia's magnificent performance as Bison in the Street Fighter movie. https://youtu.be/Shxiy7l5b_4 https://youtu.be/Shxiy7l5b_4
- vegai_ 5y ago
  >Why should a currency reward anyone? Are you calling a revolutionary technology merely a currency?
- zhynn 5y ago
  Line goes up.
Mordisquitos 5y ago
An early bird's stake in a "valid" investment carries with it properties that have changed over time from the moment of their initial investment other than the market value itself. While the early bird cashing out a ~1500% profit of Amazon stock that they bought 10 years ago also depends on someone else buying-in, there is something intrinsically different between what an Amazon share in 2012 and an Amazon share in 2022 actually mean. The same is the case if they had bought IBM stock instead, and were now cashing out at a loss of ~35%. Their values now reflect the businesses as they stand today, as well as future expectations of what Amazon, IBM, and their respective markets will be like in the future. The decision whether to invest or divest in each of them today can be argued with hypothetical if-then thoughts. If you are more convinced than the average shareholder that Amazon will be hurt by the epidemic of fake products and reviews, unionisation of its warehouse workers, and stiffer cloud competition, then you will think it is overvalued and may sell. If you believe IBM's research in quantum computing will be a game-changer, then you may believe it is undervalued and buy. And so on. Compare that to the difference between 1 BTC in 2012 and 1 BTC in 2022. Other than the impressive increase in how much somebody is willing to pay for them, what has changed between 1 BTC in 2012 and 1 BTC in 2022? What if-then arguments regarding the future might be reasoned to believe that the value will increase or decrease, other than "someone will be willing to buy it from me at a greater/smaller price than I paid"?

qsort 5y ago

> I dont think anyone has ever yet explained how this is meant to function as a currency. Because it can't. Even assuming everyone is on board with blockchains, removing the ability of the central bank to increase the monetary supply during recessions makes every downturn 10x worse. (as unpopular as it may be with inflation this high right now)

mjburgess 5y ago
There's one revealing way a bitcoin-economy could release money, right? Ask all the major holders of coins. Hmm... wait a minute, a small few holders of coins... can behave like a CENTRAL BANK ... ?! I wonder what those few major holders think about crypto... ah yes, that it will free us all...
- unmole 5y ago
  > Hmm... wait a minute, a small few holders of coins... can behave like a CENTRAL BANK ... ?! Before the constitution of the Federal Reserve, J.P. Morgan acted like a central bank by being the lender of last resort.
  - mjburgess 5y ago
    Sure, and how would that work with early-stakers? They'd form a guild, much like a large bank, and control large parts of the currency. Now, taking crypto people at their word, they dont want the gov to regulate that. So what does this mean? We have a tiny feudal guild with control over the economy. A central bank, with an inflationary currency, heavily regulated by the gov is nothing like this group of wannabe feudal lords. By comparison, modern central banking is vastly more democratic, and ran for the benefit of soceity.
    - unmole 5y ago
      > Now, taking crypto people at their word That is unlikely to end well.
- 5y ago

rvz 5y ago

Yes. Bitcoin is the cult that has already unveiled itself as the scam and it has failed and everyone knows that is a scam that obviously cannot be used as a currency, P2P payments or using it to send money in a short space of time. (and nope the Lightning Network is not Bitcoin). I would not go far to dismiss all of them.

luciusdomitius 5y ago
"Lightning Network is not Bitcoin" What is it then? On which other blockchain does it run and is massively used?
- rvz 5y ago
  > "Lightning Network is not Bitcoin" What is it then? A centralized by design layer 2 off-chain system which transactions are done outside of the blockchain.
Quindecillion 5y ago
> (and nope the Lightning Network is not Bitcoin) What is it then? > I would not go far to dismiss all of them. I would. Every single crypto is an affinity scam of Bitcoin. They're just unregistered securities of companies. Bitcoin is just an open and neutral protocol that's not owned by any company.
- once_inc 5y ago
  I feel like the person you are replying to is going to take this discussion into the direction of bitcoin cash being the real bitcoin. If so, please let it be noted that all other cryptos, including forks of Bitcoin, aren't bitcoin, and are affinity scams.
  - rvz 5y ago
    > I feel like the person you are replying to is going to take this discussion into the direction of bitcoin cash being the real bitcoin. I could not care less about attempting to 'use' a cryptocurrency that is slower than VISA and as extremely volatile for merchants to use to accept payments with and is useless as 'digital gold'. Just ask El Salvador.

Quindecillion 5y ago

You're thinking about it all wrong. Lots of "Bitcoiners" don't really see it as an "investment". It's a savings. There's no greater fool to sell to as exit liquidity because we're not looking to sell. We're holding for as long as possible i.e. retirement or inheritance, at which point we won't need to sell, we'll SPEND it. Notice the difference? We know there are still decades of price discovery to occur, so the incentive is to spend as little as possible for as long as possible, but in a couple of decades most of the price discovery will have occurred and it will have integrated more with the economy and financial system, at which point it will be easy to use as a currency to buy things. And yes, it acts as a currency just fine as proven in El Zonte/El Salvador and other places... including every major retailer in America [1] [1] https://bitcoinmagazine.com/industry-events/jack-mallers-adding-bitcoin-to-major-pos-networks https://bitcoinmagazine.com/industry-events/jack-mallers-add...

AlexandrB 5y ago
This... doesn't make sense. Spending is selling. You're just selling for something other than currency. And saying "it's not an investment, it's a savings" is nonsense. If Bitcoin didn't appreciate in value no one would use it as "savings" because it would lose value relative to inflation. People usually "HODL" Bitcoin or Ether, not USDT or USDC.
- Quindecillion 5y ago
  > This... doesn't make sense. Spending is selling. You're just selling for something other than currency. When you go to the shop and you buy something with money, do you consider that as "SELLING your money"? This is the nuance I was getting at. When I can use Bitcoin to buy stuff it will be widely accepted and valued as money. By the time that's possible, how much do you expect its purchasing power will have appreciated? > And saying "it's not an investment, it's a savings" is nonsense. If Bitcoin didn't appreciate in value no one would use it as "savings" because it would lose value relative to inflation. Of course, but it IS appreciating in value against fiat. Why do you think that is? Could it be that fiat is literally designed to be inflationary and Bitcoin is designed to be disinflationary for over a hundred years?

samatman 5y ago

> since coins are incredibly deflationary What a strange take. Would you describe any other currency which was actively being minted, such that the total quantity was increasing, as "deflationary"? That sounds like inflation to me. What you mean, perhaps, is that the market is buying these assets higher over time, even though the total supply is increasing? Shame that undermines your shallow and incorrect analysis of the dynamics at work.

shkkmo 5y ago
Inflation is a market wide increase in prices and has no direct relationship to monetary supply.

javert 5y ago

> Crypto is "cult by design" in much the way all greater-fool scams are. If you study the history of bitcoin (or were around and paying attention), it wasn't at all designed as a cult or a scam. So this is factually wrong. However I think it's true of a lot of the later coins. > I dont think anyone has ever yet explained how this is meant to function as a currency. People have, like a zillion times, including on this forum. If it matters to you (it shouldn't), even professional economists fall into different camps on the nature of money. If you can't see that there is a real and genuine argument on both sides, you aren't trying. > One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth This is a worst-case view of the situation, but many would say that even this worse case is better than giving "democratic" institutions unlimited power to print money. So again, there is a genuine argument on both sides. > So crypto people, sitting on a lot of coins, who urge adoption arent trying to "free" the economy, they're trying to own it. And there are also crypto people who are true believers, even if they do have a lot of coin. In fact, the people who got into bitcoin early but weren't true believers couldn't believe how much money they made when they sold out at $30. The distribution of true believers vs. get-rich-quick people in bitcoin is grossly different from what you imagine and portray. > any corporation which accepts bitcoins is thereby recognising an essentially feudal type of economic power. You're really conflating economics and government. For example, in the US, Bill Gates doesn't have the same kind of power as the two political parties, who control armies of soldiers and domestic enforcers. When I say "kind," I mean that literally; it's not that Bill Gates has less power; it's that he has a different kind of power. Bitcoin transforms some of the kind of power wielded by government actors into the kind of power wielded by Bill Gates.

AlexandrB 5y ago
> If you study the history of bitcoin (or were around and paying attention), it wasn't at all designed as a cult or a scam. So this is factually wrong. However I think it's true of a lot of the later coins. I think you're missing the point. I think what OP is saying is that the nature of a deflationary, speculative asset means that a cult-like environment will organically form around it. Early adopters have a strong incentive to hype it up and get others to buy in to increase their own wealth. And Bitcoin was designed to be a deflationary, speculative asset.

aNoob7000 5y ago

I couldn't agree more. I'm so tired of the hype around cryptocurrencies and NFTs. Everywhere I go to get some news, there's a story about someone like Elon pushing the benefits of crypto coins. If all these rich guys and crypto-evangelists really want cryptocurrencies to succeed, they need to make it easy to acquire and pay with a cryptocurrency. Unfortunately, this will never happen.

misiti3780 5y ago
eh. i agree that it probably wont replace USD, but i can see a world where a lot of lawyers do not need to exist because transactions go on chain. if you buy a place in NYC, the transfer of the title costs thousands of dollars. there is absolutely no reason that should be the case, it should be done on chain for a fraction of the price.
- Ekaros 5y ago
  Why shouldn't the government provide these services for the taxes people pay? If they spend a few hours checking everything is order on both sides for a few hundred I think that is reasonable. After that the court system again paid by taxes should resolve thing according to these. I don't see any reason why a chain would help here too much, fixing the government should be much more effective in long run.
  - long_time_gone 5y ago
    > Why shouldn't the government provide these services for the taxes people pay? It is very common for government's to tax exchanges of money/property/goods. We see this in the sales tax, estate tax, transfer tax, cash app transfers, monetary gifts above $15k, income taxes, etc.
- FabHK 5y ago
  Maybe a permissioned blockchain, but that has nothing to do with BTC and its preposterous environmental pollution, and will most definitely not get rid of lawyers. Do you think that it is a technical challenge at the moment, unsolved save for Bitcoin, to keep reliable records??

salawat 5y ago

I wonder honestly how this (the pattern of greater fools) is any different than a startup. Build it, horde equity, IPO, or merger exit... The management group exits with massive gains, employees might, investors left holding the bag.

mjburgess 5y ago
There's often a "bigger-fool" element to many types of assets (not, incidentally, to modern currencies). But there's a sliding scale. Would your asset, under conditions of perfect information (, public pricing, market equilibrium, etc. etc.) fetch some price in the long run? In the case of startups, yes... I think many of the early-stage dynamics are the same... but there's incredible competitive pressure towards "long-run real productive value"... in most cases, outside of scams, founders have strong incentives to turn fools into investors. Whether someone is just a "bigger fool" or an "investor" comes just from where the future value of their stake will come from -- is it other fools, or is it a genuine long-run demand? In the case of start-ups, if they fail to deliver that productive value, there's a sense in which it was, retrospectively, a foolish enterprise. But I think we should just call that the relevant downside-risk on honest investment. As far as I can tell, everyone involved in crypto pretty explicitly think's their future value is coming from bigger fools (ie., that it will "go to the moon"). No one involved seems to have any plan for making a coin have a future value of its present cost, in the long run... ie., when the plates stop spinning

RandomLensman 5y ago

Feels to me, the mechanics as described hold for all non-cashflow assets with limited supply (e.g., art, collectibles etc.). And yes, markets there can collapse if new generations of buyers don't turn up (I think that is happening/has happened a bit with postage stamps, for example). Sometimes, other people will do the evangelizing, though, like museums "pushing" artists and thereby aiding valuations.

mjburgess 5y ago
Sure the art market (c. $70bn world wide, ie., tiny) is also controlled by a tiny number of players, and the high-end is ran largely as a tax (or, and) money-laundering scam. It seems no co-incidence that crypto people running their Ponzi scheme tried to hijack the art market. However art pieces themselves have an "open, efficient, equilibrium" market price, in that, people actually want to own art to enjoy it. If the art market were broken up, and all the tax incentives ended, and all buyers forced to use public pricing -- then we'd see prices plummet... but not all the way, some pieces would still fetch millions. I think crypto is a pure scam, more radical than art and more radical than MLM cosmetics -- you're not holding anything of value absent fools. There are no people who "want to enjoy their coins", there are only fools. Ie., people who want to pass-the-items-on after rent-seeking (ie., holding it until the fools pile up).
- simulate-me 5y ago
  I don’t think the enjoyment of art is the driving factor at the high end. High end art serves as a store of value and a status symbol. Surprising similar to bitcoin!
- RandomLensman 5y ago
  With a lot of art just stored tax efficiently, not sure how relevant "enjoyment" currently really is at the upper end of the market (maybe enjoyment of possession?). Also, people could enjoy holding coins, wouldn't rule that out. Arguably, being part of the crypto community does seem to bring some people joy.
  - 5y ago

etherael 5y ago

> I dont think anyone has ever yet explained how this is meant to function as a currency. It's called money, people use it to buy goods and services. If you can't say this with no qualifications about a crypto, then it's not legit. And yes, that is nearly all of them, especially the ones that get the most hype.

gwbas1c 5y ago

The fact that you're the highest-ranked comment on this page shows that, at least for Hacker News, people are getting some sense knocked into them. 5-6 year ago I'd get continually downvoted on Hacker News for comments like that.

f38zf5vdt 5y ago
My only problem with this description is that it also describes markets at large. Because markets are always intended to be exponentially growing in real value over time, any individual entering them and holding assets will accrue assets at a great amount than people who can not afford to. Over time this results in greater and greater accumulation of wealth into the hands of those who originally simply possessed more. This is a fact that has been evidenced by ever increasing amounts of wealth concentration in the hands of fewer and fewer individuals over the past 50 years. [1] Unfortunately, it seems cryptocurrency is a just an extension of the many of the systems we already have that are described in fiat amounts. https://www.newyorker.com/news/john-cassidy/pikettys-inequality-story-in-six-charts https://www.newyorker.com/news/john-cassidy/pikettys-inequal...
- throwaway82652 5y ago
  >Unfortunately, it seems cryptocurrency is a just an extension of the many of the systems we already have that are described in fiat amounts. Because cryptocurrency is also a fiat system where the money holds no real value and is manipulated by various entities, only the fiat is declared by a private group of computer nerds instead of the government.
- mjburgess 5y ago
  Err.... not quite. What you're describing is preferential attachment... ie., those with a large stake can multiply that stake producing ever larger amounts. This isn't a scam. If I give everyone in the comments $100k, by "next year" some will have $1m and some $0 -- and, in general, we'll all be a little better off. Its the nature of any advantage that it compounds, and compounding advantages of any kind produce dramatic inequalities (of sex, money, creative achievement, etc.). Bitcoin isnt a scam because it produces an unequal outcome -- any system which works to increase the general welfare will necessarily operate on and compound inequalities. It's a scam because as time passes the general welfare *does not increase*, indeed, it plummets! People holding coins arent opening factories, building houses, teaching people, etc. Nothing is happening. They're litterally just twiddling their thumbs. What's actually happening is that poorer fools are joining late in the game, whose money comes from actual labour... and supply the initial parasitical early-stakes with exit-cash. Ie., they wait for 10yr do nothing; you work for 1mo and do lots. Your productive labour becomes their exit. It's welfare for the rich. Inequality isnt the issue here. It's the particular type of "theft" taking place. It is, in a very real sense, an actual scam.

krzyk 5y ago

You miss out on one thing: "early stakers" don't stake, you get bitcoin, and you sell bitcoin when a price is right. There are very few that keep it for years. It is just like stock market. There might be "early stakers" that bought Apple stock in 1980 and kept it till today, but vast majority just traded it.

mmcnl 5y ago
It is not like the stock market. Shares are a share of a company, that (hopefully) produces something of actual value. You can calculate earning per share. Companies pay dividend. It means you actually own something. What does it mean to own a bitcoin? What is the "EPS" for a bitcoin? It doesn't exist. You might as well put a number on Monopoly paper money and call it a new currency.
- krzyk 5y ago
  There are fundamental investors and technical analysis ones. The first care about company and dividends. The later care about the stock behavior. (there are also casino players). Bitcoin doesn't have the first but has the rest.

theknocker 5y ago

nathias 5y ago

By now nocoiners are closer to flat earthers than healthy skepticism, this post being a great example. You can't just willy nilly make up what words mean.

wyager 5y ago

> Indeed, crypto people are dead-set on explaining everything except how this works as a currency. You've clearly not put in much effort to find this information. Bitcoin's currency-related properties have been analyzed to exhaustion. If by "crypto" you mean "besides bitcoin" then I agree for the most part. > One reason they're terrible is they transfer power over the economic system to early-stakers, as they have all the wealth. You're conflating wealth and currency. The entire basis for this line of reasoning is nonsense. Every system of property ownership has this "problem" - nothing unique to bitcoin/shitcoins. > at some point the tail won't be long enough, and it'll collapse Why hasn't this happened with gold? Every money to ever exist (including specie) has been a "greater fool scam". You are mistaken in thinking that such systems are inherently unstable.

rufusroflpunch 5y ago
The logical conclusion of the OP's argument is that, since all value is subjective, any asset that accrues more value over time is a "greater fool" scam doomed to collapse. Not a very sound argument. Eventually the Bitcoin network will accrue so much value that merchants will starting demanding payment in Bitcoin, and people will use whatever payment rails are available to make it work. This is how it becomes a medium of exchange. It's really that simple. Most or all of the rest of the cryptos will collapse into Bitcoin.

agumonkey 5y ago

The early on profiting from late fools is partially what a few very old trading techniques describe (so called smart money vs dumb money). Not a crypto exclusive. Now of course crypto operating on the web, more newbs can be influenced faster. The cult aspect of crypt to me is more about the YouTube crypto millionnaires who are near idols to most. Every one has a chapel (patterns, mean reversal, or whatever pseudomagical formula one manages to sell to his audience). It's impressive to witness and even more so to succomb to (i felt like a fanboy few years ago) yet it seems to tap into primal neural réflexes (silver bullet, path to your dreams, having faith, it always worked until it didn't but it's ok no one can predict the future)

swalsh 5y ago

"crypto people are dead-set on explaining everything except how this works as a currency." I consider myself a "crypo-person". In that I see a vision of the future where crypto is a major part of it. But I don't personally see it as a currency. Not in the origional vision that bitcoin seemed to envision. Personally I view the bitcoin vision as obsolete. Bitcoin always has, and always will measure it's value in dollars. It's just a place to sink dollars. It's not even a good vehicle to transfer to other "modern" crypto's. At least ETH enables you to easily bridge. Still bridges are wonky regardless. In my vision of the future, crypto is a seperate purely digital economy. Where as bitcoin imagined a future where it is a currency for the meat world economy, i see it as something seperate. I'm a regular user of Avalanche (AVAX). When I perform transactions I measure my gains/losses in AVAX. To me dollars are foreign exchange. I monitor the forex market, because it can change demand and market conditions, but it's not important to me beyond that. I almost never convert my AVAX back to dollars. Crypto is exceptionally good at transferring digital value. Better than any singular alternative in my opinion. I view it as the future platform for the AI-to-AI economy. People will probably continue to participate in it, but they will be foreign citizens.

rufusroflpunch 5y ago

I'm going to address Bitcoin because I think most cryptos are scams at the worst, or unsustainable systems with poorly designed incentives at best. Speaking as a Bitcoiner, we all envision it as a medium of exchange. This is the goal, 100%. Some finance bros see if differently, but Bitcoin is money. And if you spend any time on research, or reading any of the top Bitcoin books (there are many), you would know the Lightning network is the answer we advocate. Bitcoin isn't deflationary, but it is disinflationary. The money supply grows at a predictable rate until it will eventually stop growing. The idea that you need inflation to be a viable currency is a sort of fever dream delusion that economists tell each other to justify their own terrible inflationary policies. The argument is that you need your money to slowly lose value to encourage people to consume and to keep the velocity of money up. But that is a ridiculous argument on its face because if the argument is "consumers won't consume today if they think the price will go down in the future" then the opposite argument must also be true: "producers won't produce today if they think the price will go up tomorrow." It's an entirely self defeating argument, but that gets ignored in macroeconomics classes, and most people don't think critically enough to question it. The reasons that Bitcoin isn't a great medium of exchange yet is because: 1) There's not enough liquidity yet because it's a relatively small market still. 2) The payment layer isn't fully developed. Both are changing, however, and changing quickly. The monetary policy of Bitcoin has already ossified, and no one could change consensus rules if they wanted to. This makes it the soundest, hardest money we have. It is already a long term store of value. Network effects have taken over, and are probably on a runaway track at this point. In order to break this process, you will need to break the network, which you likely can't do. People will continue to use the network and acquire Bitcoin. Value will accrue to the network. Eventually, it will become so valuable that merchants will start preferring Bitcoin payments. This is when it will become the medium of exchange. You say this is a "greater fool" scam, but actually, we are just seeing something we haven't seen before in recent human history: the bootstrapping of an entirely new money from nothing. This is how it happens. It starts as a store of value, then transitions to medium of exchange, then becomes a unit of account. That is the order. We are nearing the transition point from step 1 to step 2.

rvin 5y ago

I agree that accepting it as a currency means early stakers get more money which is less than ideal. Same can be said about startups, the ones that are earliest in the building of company get most of the money. Most of the time, the founders and VC's are the ones that get most of the money with the other employees getting next to nothing. This perspective is hyper focused on the US. There are countries (Venezuela, Lebanon) who's currencies have hyper inflated to the point where citizens have lost the wealth they've accumulated over their lifetimes. Cryptocurrencies allow them to sell their services/labour to a global market and to retain some of that wealth instead of having their local monthly wages be worth a fraction of the value that they earned.

gregjor 5y ago
The Venezuela/Lebanon/Afghanistan fantasy stories are mostly canards. For the majority of people, and especially those in developing countries with unstable economies, there’s no “global market” for their services or labor. How exactly does someone cooking in a restaurant or sewing t-shirts in a sweatshop sell their labor on the “global market?” They can’t. They are stuck getting their “local monthly wages” in whatever currency their employer pays them with. For the relatively tiny portion of people who have significant assets to protect, or who can sell their services globally, hard currencies such as dollars and Euros already protect them from hyperinflation and mismanagement of their local currency. Do you suppose the very wealthy in Venezuela have bank accounts in the US or Switzerland, or do they buy crypto? Dollars and other hard currencies are already used in exactly the role you describe for crypto. Hard currency trading is often underground, black market, because of currency and exchange controls imposed by the dysfunctional government. A government that can ban legal trading in dollars can just as easily ban crypto (in fact that has happened in China already). That won’t stop the trade, it just drives it underground. Anyone who has traveled in a poor country knows that it’s very easy to use dollars or Euros. For people in Venezuela et al. crypto is not offering some new magical lifeline to protect people from hyperinflation. It’s used to circumvent currency controls, and it will work in that respect until the oppressive government figures out how to stop it, driving it underground just like trading in dollars or Euros or gold. If the anti-crypto perspective is “hyper focused on the US,” the pro-crypto perspective is even more hyper-focused on a small clique of (relatively) wealthy people in developed economies, free of hyperinflation and draconian currency controls and regulation, who have skills they can sell globally online — even if those “skills” amount to shilling crypto on YouTube to an audience of rubes who want to get rich quick and don’t understand risk or how blockchains work.

RestlessMind 5y ago

> Crypto is "cult by design" in much the way all greater-fool scams are. Only if you think Gold is also a "cult by design" > I dont think anyone has ever yet explained how this is meant to function as a currency. I don't think anyone has ever yet explained to me how a fish can fly :-p. To be more serious, I don't think Bitcoin is a currency. I see it as an equivalent of digital gold - a store of value. > extremely deflationary assets are terrible currencies. Agreed. But they are great as a store of value. > at some point the tail won't be long enough I don't see it as a pyramid. For someone in Venezuela, Russia or Zimbabwe where currency may go in a free fall, Bitcoin offers a way to both store their savings and to take those savings with them easily as they flee the regimes. See this[1] story about Afghani girls who use bitcoins. That is a real world example. > It is just a bigger-fool scam, so it won't work Hacker news is famous for bookmarking and surfacing comments after a decade. Want to bet? Let's just agree on a definition of "won't work". here is what I propose: today, Bitcoin market cap is ~777B USD[2] and per BTC price is ~41K USD. On Apr 11th 2032, per BTC price will be greater than or equal to 41K USD[3]. Are you up for this bet? [1] https://www.reuters.com/article/crypto-currency-afghanistan/feature-salaries-to-remittances-afghans-embrace-crypto-amid-financial-chaos-idUSL8N2QU39A https://www.reuters.com/article/crypto-currency-afghanistan/... [2] https://coinmarketcap.com/ https://coinmarketcap.com/ [3] I know that some USD bears will call out decline in value for USD itself, but I still trust the stability of USD as well and I see BTC's use case mainly for despotic regimes without any easy stores of value.

mmcnl 5y ago
Digital gold is about how far as it gets. I can understand that. But I don't see Matt Damon hyping up gold during the Super Bowl. The price is not based on the assumption that it is digital gold.

mmcnl 5y ago

You are so right. Also, almost literally everyone involved in crypto has a financial stake in one or more coins. How can they be a trusted advisor? It dawned me on a while ago, and every cryptocurrency is simply a big scam. The only way for bitcoin to rise in value is by convincing people to get rich by buying bitcoin, without actually explaining why it will make them rich. That's a huuuuge red flag to me.

ck2 5y ago

Just to play devil's advocate for a moment, aren't "early adopters" rewarded in any investment that takes off, doesn't have to be a scam? A decade ago there used to be "bitcoin faucets" on the internet that would "drip" free fractional bitcoins to promote interest. Was pennies then but those drips are worth thousands of dollars now.

FerociousTimes 5y ago

While I almost agree with you totally, I have an issue with your characterization of Bitcoin in deflationary/inflationary terms because as you said yourself, it is not a currency to begin with. Bitcoin or crypto in general is just an alternative* asset class, nothing more nothing less. Calling it a currency adds to the confusion and strengthens the narrative of the crypto enthusiasts in misleading the general public. *: speculative

JSavageOne 5y ago

I guess you've never heard of stablecoins.

kobasa 5y ago

>I dont think anyone has ever yet explained how this is meant to function as a currency. It's a store of value. Worked fucking great for people who were fleeing shitty places on earth but most people on this board wouldn't know a god damn thing about that. >Most holders of coin-wealth didn't earn it.. You're an idiot. You don't know how investments work and how it has nothing to do with "earning it".

datadata 5y ago

> Crypto is "cult by design" in much the way all greater-fool scams are. Namely, since coins are incredibly deflationary I think you have it backwards. Bitcoin is not deflationary by design, but rather it becomes deflationary when demand increases. This is a property of any scarce asset where there are constraints on supply. Conversely, as demand decreases it becomes quite violently inflationary! For assets that are not scarce, such as fiat currency, deflation is avoided by creating more units as demand grows. There is also an allocation fairness problem in this case, at it is just as bad if adoption is growing as fast as it is for bitcoin. Who has the right to produce new supply, and how do you stop them from becoming incredibly rich when you give them this privilege? Ironically, those sorts of systems also tend to result in feudal like structures as well. What I don't understand is most people think bitcoin must either go to zero or take over the entire world. It is entirely possible that some subset of people decide to adopt bitcoin, other people decide they want nothing to do with it, and that its value stays relatively steady once everyone has decided. This would still offer great utility as a protection against inflation of fiat (the expectation is not necessarily huge returns), in the same way that other scarce collectables are used. Most people don't view other markets with such extreme views.