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Bitcoin itself is a scam, so it's no surprise that all the key organizations around it are founds to be scams - the Bitcoin Foundation, Mt. Gox - even hardware

by Ologn 12y ago

Bitcoin itself is a scam, so it's no surprise that all the key organizations around it are founds to be scams - the Bitcoin Foundation, Mt. Gox - even hardware manufacturers like Butterfly Labs. The scam actually ended in December 2013, when the original scammers unloaded hundreds of millions of dollars worth of their worthless hyped hashes for $1100 each. Everything has been gravy since then - they made over $100 million in the last year as well. The bitcoin is worth under $260, and headed to zero. Warren Buffett and Charlie Munger have been around long enough to know a fraud when they see one, and Munger correctly termed Bitcoins "rat poison". It's not a digital currency - it's a Ponzi scheme that will kill any chance of an actual digital currency from being developed in the subsequent years after its inevitable demise. I was saying so here when it was worth over $460. If the bagholders had listened instead of downvoted, they would have saved a lot of money. You still have time to get out before it plunges to zero. The idea these worthless hashes can retain a $3 billion market cap is risible. I know why a commodity like gold has value, or why oil has value. Gold has been used as a currency, or to back currencies for thousands of years. Gold backed the US dollar until 1971. In fact, the 10,000 tons of gold the US still holds in Fort Knox and elsewhere still backs the dollar, albeit indirectly (for what other reason are they paying the expenses to store it?) Why does Bitcoin have value? It doesn't, nor did Pets.com, subprime real estate, Dutch tulip bulbs, or other bubbles supported by hype. HN has new rules against gratuituous negativity. I warned some people here from this scam over a year ago when it was over $460 (now <$260). I don't know if people can be warned off hype here in the future, but if so, you can always listen to old hands who have seen it all before like Munger and Buffett, who see this "rat poison" for what it is - valueless hashes, destined to be priced at their true worth - $0. Of course, as Keynes said, markets can remain irrational longer than I can remain solvent.

njloof 12y ago
Why does a commodity like gold have the value it does? Its price outshines its industrial uses. The remaining values are that it doesn't corrode and it's shiny.
- Ologn 12y ago
  I don't believe that the price of gold outpaces its value over the long run. Of course prices can swing in the shorter term. Silver was worth $10 an ounce in 1979 and $10 an ounce in 1981, but for a few days in 1980 it went over $40 for various reasons. The price of gold and silver shot up after the 2008 sub-prime crisis, but have come down from their highs. There are still some economic fears, like with the EU, with Greece and Spain, so the prices are still somewhat high. The reason gold's price doesn't outstrip its value over the long term is because it is just a commodity, despite being durable as you say (and divisible, and uniform, and portable). If its price outstripped its value for too long, people would move to better priced commodities like the other precious metals, or oil, or other commodities.
- rhino369 12y ago
  Gold's value was always decorative.
  - oafitupa 12y ago
    False. It's a store of value, that even central banks use.
jmount 12y ago
My (non-expert) OPINION is: Bitcoin is a scam. I do support the idea of digital currencies (possibly even decentralized), but I don't think Bitcoin is the appropriate flag bearer. I understand the term "scam" may seem rude or offensive, but it is what I mean. For example: I don't mean "I think Bitcoin is a bad investment." I think it is something else entirely. I understand this seems to be a minority opinion on hacker news. I know I don't have the exact parameters of the scam. But insisting on such degenerates into some weird imitation of constructivist logic that seems to claim: if you can't point out exactly when you are going to be ripped off then you can't prove you are going to be ripped off, and therefore you don't know you are being ripped off. Or: no, I don't know how to make money shorting Bitcoin. But I also don't know how to make money shorting 419 scams. That doesn't mean these things have positive value. Assuming information always has tradable value (i.e. you can go long or go short) is attempting to apply an idea that may or may not be true for investments to a completely different category (scams). What I think confuses people is we are in the time interval where Bitcoin is a successful scam. So it superficially appears different than any past failed scam you compare it to. But Bitcoin is almost entirely about paying earlier investors purely with proceeds from later investors. A lot of abstract markets and currencies do appear to be similar to this, but tend to have other mitigating features that I just don't see in Bitcoin. (The mitigating factor for traditional currencies is the large state institutions that would lose reputation in a hyperinflation scenario, hasn't always stopped hyperinflation- but it is at least a weak counter-force; for stocks it is the fiction of company control/ownership/dividends/voting-rights; gold the liquidity of the resale market and demand for jewelry; I am not saying these are good institutions, just that you certainly don't want to be even worse.) I would say to the pro-Bitcoin crowd: if you don't think Bitcoin is a scam, is there any description of a system that you would consider a scam (with our without the Bitcoin name attached)? I say this in seriousness as I really suspect there is some sort of "by definition informed investors can't be scammed, they can only make good or bad investments" element to some of the debates.
- pjzedalis 12y ago
  I think it feels scammy because it makes no consideration for past wealth. Anyone who got in early enough and picked up dozens of early coin are now reaping some benefits. Old money now has to buy it at new rates or ignore it. Some old money decided to buy early and now have considerable impact on its future so thats something. Everyone in between is trying to figure out how having "Disney dollars" helps them. See https://www.youtube.com/watch?v=8Jp22_M8wNQ&spfreload=10 https://www.youtube.com/watch?v=8Jp22_M8wNQ&spfreload=10

by Ologn 12y ago

njloof 12y ago

Why does a commodity like gold have the value it does? Its price outshines its industrial uses. The remaining values are that it doesn't corrode and it's shiny.

Ologn 12y ago
I don't believe that the price of gold outpaces its value over the long run. Of course prices can swing in the shorter term. Silver was worth $10 an ounce in 1979 and $10 an ounce in 1981, but for a few days in 1980 it went over $40 for various reasons. The price of gold and silver shot up after the 2008 sub-prime crisis, but have come down from their highs. There are still some economic fears, like with the EU, with Greece and Spain, so the prices are still somewhat high. The reason gold's price doesn't outstrip its value over the long term is because it is just a commodity, despite being durable as you say (and divisible, and uniform, and portable). If its price outstripped its value for too long, people would move to better priced commodities like the other precious metals, or oil, or other commodities.
rhino369 12y ago
Gold's value was always decorative.
- oafitupa 12y ago
  False. It's a store of value, that even central banks use.

jmount 12y ago

My (non-expert) OPINION is: Bitcoin is a scam. I do support the idea of digital currencies (possibly even decentralized), but I don't think Bitcoin is the appropriate flag bearer. I understand the term "scam" may seem rude or offensive, but it is what I mean. For example: I don't mean "I think Bitcoin is a bad investment." I think it is something else entirely. I understand this seems to be a minority opinion on hacker news. I know I don't have the exact parameters of the scam. But insisting on such degenerates into some weird imitation of constructivist logic that seems to claim: if you can't point out exactly when you are going to be ripped off then you can't prove you are going to be ripped off, and therefore you don't know you are being ripped off. Or: no, I don't know how to make money shorting Bitcoin. But I also don't know how to make money shorting 419 scams. That doesn't mean these things have positive value. Assuming information always has tradable value (i.e. you can go long or go short) is attempting to apply an idea that may or may not be true for investments to a completely different category (scams). What I think confuses people is we are in the time interval where Bitcoin is a successful scam. So it superficially appears different than any past failed scam you compare it to. But Bitcoin is almost entirely about paying earlier investors purely with proceeds from later investors. A lot of abstract markets and currencies do appear to be similar to this, but tend to have other mitigating features that I just don't see in Bitcoin. (The mitigating factor for traditional currencies is the large state institutions that would lose reputation in a hyperinflation scenario, hasn't always stopped hyperinflation- but it is at least a weak counter-force; for stocks it is the fiction of company control/ownership/dividends/voting-rights; gold the liquidity of the resale market and demand for jewelry; I am not saying these are good institutions, just that you certainly don't want to be even worse.) I would say to the pro-Bitcoin crowd: if you don't think Bitcoin is a scam, is there any description of a system that you would consider a scam (with our without the Bitcoin name attached)? I say this in seriousness as I really suspect there is some sort of "by definition informed investors can't be scammed, they can only make good or bad investments" element to some of the debates.

pjzedalis 12y ago
I think it feels scammy because it makes no consideration for past wealth. Anyone who got in early enough and picked up dozens of early coin are now reaping some benefits. Old money now has to buy it at new rates or ignore it. Some old money decided to buy early and now have considerable impact on its future so thats something. Everyone in between is trying to figure out how having "Disney dollars" helps them. See https://www.youtube.com/watch?v=8Jp22_M8wNQ&spfreload=10 https://www.youtube.com/watch?v=8Jp22_M8wNQ&spfreload=10