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with the same logic you can also consider gold a ponzi scheme because if people starts mass selling it the price crashes
by str3wer 4y ago
with the same logic you can also consider gold a ponzi scheme because if people starts mass selling it the price crashes
- nytesky 4y agoThe Venn diagram of folks skeptical of crypto and calling it a Ponzi who are big gold investors is a dot. Edit: for erroneous autocorrect of Venn
- srvmshr 4y agoMy financial understanding is rudimentary but please correct me if wrong: Isn't gold eventually a tangible wealth (and currencies being linked to it) unlike crypto which is purely a digital construct. Gold is a rarer metal & historically attributed to wealth over centuries. If gold & its reserves become meaningless then we have no basis for monetary exchange. We go back to doing barter trade.
- cinntaile 4y agoThe term digital construct is hiding that the value of gold is, just like bitcoin, a social construct. The digital part about it is to create artificial scarcity.
- nr2x 4y agoYou can also build things with it.
- setr 4y agoAt the end of the day, the use of gold as a store of value and medium of exchange is simply a social agreement that this is the case. There’s nothing inherent to gold, except perhaps some useful properties like rarity, that make it so — and if we all decide to stop believing that gold can be used for further exchange, then its purpose is immediately lost. There’s nothing really stopping us from choosing another subject as that medium. Currency is largely a case of our particular choice isn’t that important, we just need to choose one, and everyone needs to agree on it. You have examples of other choices in prisons, where cigarettes and ramen are used, and the USD when it dropped the gold standard. Crypto is just another choice. Of course, there are certain things you want in a currency, that make some choices better than others, so you can’t just pick anything and say it’s the same as anything else (e.g. gold standard has a problem in that you can’t fully control the supply — if a new mine is found, then you just have to deal with the consequences of it’s existence; but this is less likely than say seashells. It won’t kill its wielder’s either, like say the choice of lead. Etc.), but you’re still left with quite a variety of choices, and certain properties have different impacts at different economic scales. From that perspective, there’s nothing really stopping crypto from being a valid choice. The issue is largely in whether it’s a good currency (it has useful properties versus other choices), and whether it’s better enough that you can convince enough people to make the switch (you need people to believe that they get crypto from you, they can use that crypto to exchange with others). The story however gets muddled because currencies can also be used as a speculative asset, driven by your belief in crypto being convincing enough to get people to make the switch. And you can also believe in other’s believing that it will switch, and bet on that. Which is where most speculation comes from — not the belief in crypto itself, but in that others will believe in it recursively.
- sokoloff 4y agoThe thing that fiat currencies have going for them is they’re the instrument needed to pay taxes in. So, even if you went to a system where toothpicks were the functional currency of your business endeavors, you’d eventually have to go buy some dollars (sell some toothpicks) to pay your property, employment, income, and other taxes. This puts a floor of demand to prop up fiat currencies that doesn’t exist for crypto.
- cirgue 4y agoYes, and gold based investment schemes are where most of the hucksters plied their trade before crypto.