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Bitcoins are absolutely worthless. If there is any sign of a tech bubble, it is these worthless hashes that people pay hundreds of dollars for. One of the gen

by Ologn 12y ago

Bitcoins are absolutely worthless. If there is any sign of a tech bubble, it is these worthless hashes that people pay hundreds of dollars for. One of the genius aspects of the Bitcoin scam is the limited output and increasing difficulty as it goes on. This keeps the scam going longer. If it were like tulip bulbs, or subprime real estate, or pets.com type stocks, the bubble would eventually burst. With the types of bubbles we've seen, and the big names in tech willing to associate their names with this scam, keeping a <$15 billion market cap going is feasible for a little while. Also keep in mind that the float is not all that high. Many bitcoins have never been traded, especially early ones. That 30k of Bitcoins are going on the market can tank the price so much shows how weak demand is for this worthless "currency". One aspect of the pied pipers of this scam is that their theories of its value are not falsifiable. My theory is falsifiable - Bitcoins are going to go from a current market cap of over $7 billion to well below $1 billion. There theory is not falsifiable "it's valuable because it's valuable". So if it goes up they're right, if it goes down they're right. Why are Bitcoins valuable? Anyone thinking of buying an ASIC or a Bitcoin should read from the Bitcoin boosters the answer to this question. There is no answer. Which is why Bitcoin is bound to crash. It's possible a real online currency might happen. The Bitcoin scam is certainly postponing that day. When Bitcoin crashes, possibly with much legal involvement afterward, VCs will be very hesitant to fund an online currency for years to come. To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that. I would short Bitcoins if I could find a reliable party to do it with, and it were easier to do. That doing that is so difficult is another sign how it's not a real currency. That this post and any post not buying into the Bitcoin hype is bound to be downvoted is yet another sign of the scam. I rarely have posts downvoted on HN, but any time I am slightly skeptical of Bitcoin's value, the Bitcoin hucksters pile on and downvote anyone questioning the scam into oblivion. It reminds me of how MLM people act on the Internet.

ghshephard 12y ago
Bitcoins have value because they let you buy things.
- wmf 12y ago
  You'd still be able to buy things if the exchange rate was 1 cent. Where's the rest of the value coming from?
  - ryan_j_naughton 12y ago
    They are a unit of exchange that freely floats based on the demand for that unit of exchange. There is an eventual fixed supply of coins (21 million), with currently ~13 million in circulation (http://blockexplorer.com/q/totalbc http://blockexplorer.com/q/totalbc). Given that the 13 million isn't increasing at any meaningful rate as it relates to the money supply, we can almost consider the supply fixed (at least on any short term perspective). With this fixed supply, if more people become interested in using bitcoin as a unit of exchange and buy it in order to use it, then they will increase the demand and thus the price. If they used it to transfer money back home (i.e. remittances), and their family their exited the position back into cash, then the demand would be neutral. In reality, their is some cost of carry where by holding it for a period, you still increase the demand. That would an explanation for the price were it governed by an actual underlying value. In reality, the price is mainly governed by speculators hoping that it will be used by people as a unit of exchange eventually and thus the speculators are buying and holding coins.
  - 13throwaway 12y ago
    Where does the value of USD come from?
    - bodyfour 12y ago
      A couple hundred million people are required to pay taxes using it. That implies that there is some inelastic demand for dollars. That factor alone obviously doesn't prevent every currency collapse, but it is a key difference between "government fiat" and "geek fiat" currencies.
    - pulgrot 12y ago
      The monetary supply is tailored to the needs of the economy to prevent volatility and create value. By being able to buy or sell anything and have the currency worth a predictable amount there are many transactions that can happen that would not be possible with a more volatile currency.
jnbiche 12y ago
I didn't downvote, but I have to wonder what you're threshhold for not being a scam is? What companies will have to accept it, and how long will it have to be around? I'm pretty amazed that people still think it's a scam when huge companies with massive legal departments are accepting it. That's some pretty extreme skepticism. BTW, there are plenty of easy, legitimate ways to short Bitcoin, but given your extraordinarily high threshold for "non-scam", I won't bother mentioning them. PS: Bitcoins are valuable because people are willing to buy them. Despite what most people think, money is not magic, it's just an agreement.
- JohnTHaller 12y ago
  Huge companies with massive legal departments don't accept bitcoin. They contract with smaller VC-funded startups to accept it and assume the risk and pay the large retailer in cash at sale time. The large retailers neither accept nor hold bitcoin directly, nor should they (as a merchant, you don't want to be holding something that loses 10% of its value during your business hours as bitcoin did today). The large retailers merely get to enjoy capitalizing on bitcoin as a purchase method.
  - ThomPete 12y ago
    Yeah and the internet was just a temporary trend. People always overestimate the short term consequences and underestimate the long term consequences of such technologies. Currency is only one way to express the protocol.
  - SilasX 12y ago
    That seems like a non-standard usage of "accept". Does everyone who accepts a payment method while hedging it also not count as another vendor who accepts it? If someone accepts PayPal while insuring against the possibility of not being paid "not accept PayPal"? If a non-US vendor uses forward/option contracts to maintain cash flow in the local currency, do they "not accept" USD?
    - pessimizer 12y ago
13throwaway 12y ago
Do you believe that there are not any people who want an anonymous(Edit: pseudononymous), decentralized currency?
- JohnTHaller 12y ago
  "Bitcoin is not anonymous" - bitcoin.org
- jafaku 12y ago
  For a currency with true decentralized anonymity, check out Monero: http://monero.cc/ http://monero.cc/
ThomPete 12y ago
I didn't downvote you because it's important that people realize why you are wrong. The value of any fiat, piece of gold, diamond etc isn't falsifiable either. You are assuming that other types of currency has inherent value. They don't.
- pbhjpbhj 12y ago
  Gold and diamonds have inherent value - they're both used industrially. Bitcoin perhaps doesn't have less inherent value than a non-backed currency though; but even being decades passed gold standard, and such, currencies that have a "reliable" government as support are still pretty reliable.
  - deleted 12y ago
    [deleted]
  - ThomPete 12y ago
    no value is inherrent and it makes no sense to talk about it from that perspective. You are confusing historical with universal facts.
    - pbhjpbhj 12y ago
      No value is inherent? The universe, say, has no value? I can certainly see possible frameworks in which this is true but they don't really appear to be useful in assessing relative worth. If we agree that things which can be utilised in order to provide gains in efficient production of fulfilment, happiness, [sense of] achievement, etc., then it seems that there are many things with inherent value, no? For example, Gold is more readily worked than other metals and it's relative inertness makes it useful for carrying charge without causing a reaction (such as oxidation), additionally it has low resistance - these innate properties give it an inherent value by virtue of it's suitability for electrical connections. If you're speaking on a the level of "value is a human construct"; well that's as may be but doesn't really aid in the discussion of human economics. I'm more than happy to discuss that but it seems we should stay within the locus of human experience here. Or ...?
baddox 12y ago
For any remotely plausible definition of "worthless," bitcoins are just as worthless as any representative money, which inclues fiat money (like a USD) and commodity-backed money (like a gold certificate). The only reason money can be used in general transactions is that people choose to accept it, and they choose to accept it because they are reasonably confident they will be able to trade it again in the future for something of at least equal value. This is the fundamental answer to "why is any representative money valuable?" If people don't have confidence that they can offer the money in the future, they won't accept the money today. > To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that. As far as I know, that can't happen, at least not in a proof of work system. The work in a proof of work system can't be severable from the specific information it is designed to secure (in Bitcoin, that would be transactions on the block chain). This isn't exactly a scholarly source, but it's from the "Chief Cryptographer for the Ripple protocol": http://bitcoin.stackexchange.com/questions/11649/intrinsically-useful-proof-of-work-using-mersenne-or-fermat-numbers-factorizatio/11651#11651 http://bitcoin.stackexchange.com/questions/11649/intrinsical... I'm not very familiar with other cryptocurrency systems, like proof of stake, but I know there are some attempts at cryptocurrencies that use computation with unrelated useful side effects.
- bumbledraven 12y ago
  For any remotely plausible definition of "worthless," bitcoins are just as worthless as any representative money, which inclues fiat money (like a USD) and commodity-backed money (like a gold certificate). The US government is a powerful entity that levies taxes and accepts tax payments only in dollars. Gold has various uses in industry and fashion and therefore a certificate entitling one to ownership of gold would have some value independent of gold's use as a currency. None of these are true for bitcoin.
  - baddox 12y ago
    > The US government is a powerful entity that levies taxes and accepts tax payments only in dollars. Right. That's just a more detailed explanation for why most people are willing to accept USD in exchange for their goods. There are similarly detailed explanations for why people are willing to accept bitcoins. The reasons are different, but they still (obviously) exist. If no reasons existed, then people would not be willing to accept bitcoins in trade.
mrb 12y ago
People downvote you because if this post is similar to previous ones you wrote (I did not read your history), then it contains no argument whatsoever, no line of thoughts, nothing. You say "it is a scam, it is going to crash" without explaining why. For example you seem unaware that Bitcoin is decentralized and what fundamental advantages this gives it over any other currency. So, of course, if you seem uneducated about Bitcoin, people will see no value in your posts and downvote you. I suggest you read the original white paper http://bitcoin.org/bitcoin.pdf http://bitcoin.org/bitcoin.pdf as a starting point. (No, this is not sarcasm, I am serious.)
wcummings 12y ago
The gold bubble is thousands of years old, I wouldn't hold my breath
argaba 12y ago
> Why are Bitcoins valuable? Anyone thinking of buying an ASIC or a Bitcoin should read from the Bitcoin boosters the answer to this question. There is no answer. Which is why Bitcoin is bound to crash. Simple answer: Supply and demand. There is demand, you just have to research for more than 20 minutes to find the reasons for the demand aside from the artificial one created from people using it as a means for returns in investment. Why do you jump to conclusions on topics in which you are clearly uninformed?

by Ologn 12y ago

ghshephard 12y ago

Bitcoins have value because they let you buy things.

wmf 12y ago
You'd still be able to buy things if the exchange rate was 1 cent. Where's the rest of the value coming from?
- ryan_j_naughton 12y ago
  They are a unit of exchange that freely floats based on the demand for that unit of exchange. There is an eventual fixed supply of coins (21 million), with currently ~13 million in circulation (http://blockexplorer.com/q/totalbc http://blockexplorer.com/q/totalbc). Given that the 13 million isn't increasing at any meaningful rate as it relates to the money supply, we can almost consider the supply fixed (at least on any short term perspective). With this fixed supply, if more people become interested in using bitcoin as a unit of exchange and buy it in order to use it, then they will increase the demand and thus the price. If they used it to transfer money back home (i.e. remittances), and their family their exited the position back into cash, then the demand would be neutral. In reality, their is some cost of carry where by holding it for a period, you still increase the demand. That would an explanation for the price were it governed by an actual underlying value. In reality, the price is mainly governed by speculators hoping that it will be used by people as a unit of exchange eventually and thus the speculators are buying and holding coins.
- 13throwaway 12y ago
  Where does the value of USD come from?
  - bodyfour 12y ago
    A couple hundred million people are required to pay taxes using it. That implies that there is some inelastic demand for dollars. That factor alone obviously doesn't prevent every currency collapse, but it is a key difference between "government fiat" and "geek fiat" currencies.
  - pulgrot 12y ago
    The monetary supply is tailored to the needs of the economy to prevent volatility and create value. By being able to buy or sell anything and have the currency worth a predictable amount there are many transactions that can happen that would not be possible with a more volatile currency.

jnbiche 12y ago

I didn't downvote, but I have to wonder what you're threshhold for not being a scam is? What companies will have to accept it, and how long will it have to be around? I'm pretty amazed that people still think it's a scam when huge companies with massive legal departments are accepting it. That's some pretty extreme skepticism. BTW, there are plenty of easy, legitimate ways to short Bitcoin, but given your extraordinarily high threshold for "non-scam", I won't bother mentioning them. PS: Bitcoins are valuable because people are willing to buy them. Despite what most people think, money is not magic, it's just an agreement.

JohnTHaller 12y ago
Huge companies with massive legal departments don't accept bitcoin. They contract with smaller VC-funded startups to accept it and assume the risk and pay the large retailer in cash at sale time. The large retailers neither accept nor hold bitcoin directly, nor should they (as a merchant, you don't want to be holding something that loses 10% of its value during your business hours as bitcoin did today). The large retailers merely get to enjoy capitalizing on bitcoin as a purchase method.
- ThomPete 12y ago
  Yeah and the internet was just a temporary trend. People always overestimate the short term consequences and underestimate the long term consequences of such technologies. Currency is only one way to express the protocol.
- SilasX 12y ago
  That seems like a non-standard usage of "accept". Does everyone who accepts a payment method while hedging it also not count as another vendor who accepts it? If someone accepts PayPal while insuring against the possibility of not being paid "not accept PayPal"? If a non-US vendor uses forward/option contracts to maintain cash flow in the local currency, do they "not accept" USD?
  - pessimizer 12y ago

13throwaway 12y ago

Do you believe that there are not any people who want an anonymous(Edit: pseudononymous), decentralized currency?

JohnTHaller 12y ago
"Bitcoin is not anonymous" - bitcoin.org
jafaku 12y ago
For a currency with true decentralized anonymity, check out Monero: http://monero.cc/ http://monero.cc/

ThomPete 12y ago

I didn't downvote you because it's important that people realize why you are wrong. The value of any fiat, piece of gold, diamond etc isn't falsifiable either. You are assuming that other types of currency has inherent value. They don't.

pbhjpbhj 12y ago
Gold and diamonds have inherent value - they're both used industrially. Bitcoin perhaps doesn't have less inherent value than a non-backed currency though; but even being decades passed gold standard, and such, currencies that have a "reliable" government as support are still pretty reliable.
- deleted 12y ago
  [deleted]
- ThomPete 12y ago
  no value is inherrent and it makes no sense to talk about it from that perspective. You are confusing historical with universal facts.
  - pbhjpbhj 12y ago
    No value is inherent? The universe, say, has no value? I can certainly see possible frameworks in which this is true but they don't really appear to be useful in assessing relative worth. If we agree that things which can be utilised in order to provide gains in efficient production of fulfilment, happiness, [sense of] achievement, etc., then it seems that there are many things with inherent value, no? For example, Gold is more readily worked than other metals and it's relative inertness makes it useful for carrying charge without causing a reaction (such as oxidation), additionally it has low resistance - these innate properties give it an inherent value by virtue of it's suitability for electrical connections. If you're speaking on a the level of "value is a human construct"; well that's as may be but doesn't really aid in the discussion of human economics. I'm more than happy to discuss that but it seems we should stay within the locus of human experience here. Or ...?

baddox 12y ago

For any remotely plausible definition of "worthless," bitcoins are just as worthless as any representative money, which inclues fiat money (like a USD) and commodity-backed money (like a gold certificate). The only reason money can be used in general transactions is that people choose to accept it, and they choose to accept it because they are reasonably confident they will be able to trade it again in the future for something of at least equal value. This is the fundamental answer to "why is any representative money valuable?" If people don't have confidence that they can offer the money in the future, they won't accept the money today. > To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that. As far as I know, that can't happen, at least not in a proof of work system. The work in a proof of work system can't be severable from the specific information it is designed to secure (in Bitcoin, that would be transactions on the block chain). This isn't exactly a scholarly source, but it's from the "Chief Cryptographer for the Ripple protocol": http://bitcoin.stackexchange.com/questions/11649/intrinsically-useful-proof-of-work-using-mersenne-or-fermat-numbers-factorizatio/11651#11651 http://bitcoin.stackexchange.com/questions/11649/intrinsical... I'm not very familiar with other cryptocurrency systems, like proof of stake, but I know there are some attempts at cryptocurrencies that use computation with unrelated useful side effects.

bumbledraven 12y ago
For any remotely plausible definition of "worthless," bitcoins are just as worthless as any representative money, which inclues fiat money (like a USD) and commodity-backed money (like a gold certificate). The US government is a powerful entity that levies taxes and accepts tax payments only in dollars. Gold has various uses in industry and fashion and therefore a certificate entitling one to ownership of gold would have some value independent of gold's use as a currency. None of these are true for bitcoin.
- baddox 12y ago
  > The US government is a powerful entity that levies taxes and accepts tax payments only in dollars. Right. That's just a more detailed explanation for why most people are willing to accept USD in exchange for their goods. There are similarly detailed explanations for why people are willing to accept bitcoins. The reasons are different, but they still (obviously) exist. If no reasons existed, then people would not be willing to accept bitcoins in trade.

mrb 12y ago

People downvote you because if this post is similar to previous ones you wrote (I did not read your history), then it contains no argument whatsoever, no line of thoughts, nothing. You say "it is a scam, it is going to crash" without explaining why. For example you seem unaware that Bitcoin is decentralized and what fundamental advantages this gives it over any other currency. So, of course, if you seem uneducated about Bitcoin, people will see no value in your posts and downvote you. I suggest you read the original white paper http://bitcoin.org/bitcoin.pdf http://bitcoin.org/bitcoin.pdf as a starting point. (No, this is not sarcasm, I am serious.)

wcummings 12y ago

The gold bubble is thousands of years old, I wouldn't hold my breath

argaba 12y ago

> Why are Bitcoins valuable? Anyone thinking of buying an ASIC or a Bitcoin should read from the Bitcoin boosters the answer to this question. There is no answer. Which is why Bitcoin is bound to crash. Simple answer: Supply and demand. There is demand, you just have to research for more than 20 minutes to find the reasons for the demand aside from the artificial one created from people using it as a means for returns in investment. Why do you jump to conclusions on topics in which you are clearly uninformed?