Wow, imagine living in a country where the legal financial assets you own can be turned criminal where accessing them is punished with hard labor. Sounds like a dystopian nightmare.
These things actually have huge meaningful state security risks. Not too long ago the entire country of Albania got swept up in Ponzi schemes. It go so bad, they imprisoned their finance minister for trying to stop it. Then they had a civil war about it. The IMF had to airdrop in bags of money to bail them out. [1]
1997 Albania is what the maxis are working towards.
In this case the PRC not only has the moral high ground, but also is acting out of a real, rational fear of economic collapse.
If America had any sense, it would put the ban hammer down on this before it gets any worse.
[1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...
And what exact path do you see a 'dollar collapse'?
If there were a serious problem with the USD, first, because of it's seigneurage position in the world, it would imply a 'giant crisis'. It would be bad.
People would switch to other currencies like Euros, Pounds, Canadian / Australian Dollars and Swiss Franks, RMB and Yen because they are fungible and transactable.
Gold and other commodities would increase in value, but only as stores of value, they're not good for transactions.
But you'd park your capital in places that are safe havens and convert out as late as possible to the (increasingly worthless) dollars. Arguably we're already at a place where keeping any non-emergency funds in USD is a terrible idea.
My point is exactly what you said: that you'd see a flight of capital to hard assets like gold and bitcoin to shield it from inflationary forces and their contagion. In that scenario, bitcoin is no more a "ponzi" than gold.
Real-estate is valuable on some level, so are most other assets - even 'currencies', however poorly managed, are valuable because people need them to do stuff.
The worst place to go is crypto, it's the bottom of the 'store of value' equation in almost every way - the fact that the government would wipe them out immediately being just one of many risks.
Cypto, at least the way they exist today, have no rational place in anything other than for entertainment and intellectual speculation.
Do you have a seminar I can register for?
...
But seriously, people will speculate on things and bubbles will happen in all assets, some are more resilient than others.
While the future is never easy to know, your predictions can be dismissed out of hand because we definitely have some 'hard parameters' we have to deal with.
BTC is definitely an outlet for illegal activity and tax evasion, and to the extent that it becomes material in that way, it will just be banned. And when it's banned in China, EU, USA, UK, Aussie, Canada, Japan, Korea etc. - well it probably won't be of much use to anyone.
No regime will allow their tax base to be challenged in that way. And neither will the population, so the banning will be a popular measure.
So by nature if it's own design, it can only be an annoying parlour game.
You can dismiss my predictions all you want, they're still predictions. Maybe instead of just dismissing them, state your own.
Consider the inanity of BTC trading at $1M, something so utterly volatile couldn't feasibly be used as a currency, for much the same reason we cannot use it now, it's deflationary: nobody wants to spend it, they want to hold it and believe in magic. That's the last thing you want in a currency, it means circulation dries up.
BTC has already killed itself as a currency for reasons obvious before it's inception.
Chiming in on boards with 'to the moon' / 'don't lose out' / 'you too could be a millionaire' rhetoric is not helping.
I said simply that either you’ll be proven right in a crash, have some point where you’d be willing to reverse your position, or just never change your mind. These three scenarios are obviously the only outcomes. So I was wondering if you could write down a point in terms of time + price where you’d change your mind. If not, and there is no other scenario where you would, then you’re holding an unfalsifiable position.
Even if it does, Bitcoin may very well collapse before the dollar.
It doesn't meet the traditional definition, no, which is why I referred to it as a "distributed Ponzi scheme" - it's closer to an MLM in classical parlance.
[edit] Here's the SEC definition:
> A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.
> With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.
And here are the red flags that the SEC warns folks to watch for:
> High returns with little or no risk.
> Unregistered investments.
> Unlicensed sellers.
> Secretive, complex strategies.
[edit2] So with that in mind, it meets many (but not all) of the classic definition elements.
1. All returns are generated by bringing new money into the system. The only way someone can make money on Bitcoin is if a new person invests. That money is then distributed to the earlier participant, net of miner fees.
2. There is no actual business underlying.
3. The constant flow of new money is required to keep the price from collapsing because miners extract something like $50M in welfare from the system per day.
4. The entire space is unregistered investments hawked by unlicensed sellers.
Edit: parent comment was edited, originally said:
> It actually matches the SEC definition of a Ponzi scheme haha, which happens to be a little bit less restrictive than a traditional definition.
> It's a negative sum wealth redistribution scheme the takes money from new entrants and gives it to miners and to old entrants. The miner portion is what makes it negative-sum.
You can’t build a building on top of nothing so if land has a building on it you can apportion some of the productivity of the building to the land itself.
Agreed land without improvements is zero sum.
"Ponzi scheme is an investment fraud that"
"investment fraud" - "induces investors to make purchase or sale decisions on the basis of false information"
Major cryptocurrencies do not present "false information", therefore they are not "investment fraud", therefore they are not Ponzi schemes.
This statement is obviously false, as there are people born daily.
> information .. buried in code .. some consider that fraud
It doesn't matter that people consider it fraud. It is not fraud neither by definition, nor it is fraud "in spirit of law" (burying it in code does not have the necessary intention to deceive).
You can twist the definition of fraud as much as you want in your mind, but if you do that - you are just a part of ignorant mob with pitchforks.
Speak against the government--you're no longer allowed to transact in society.
Retroactive tax...boom, negative balance.
We agree on the problem, but not the solution. Technology does not solve challenges at the people/politics OSI layer.
[1] https://www.visualcapitalist.com/700-year-decline-of-interes...
China has the most restrictive capital controls in the world. It is not surprising at all that they have banned a legitimate threat to their control over the country's money.
"When the ships come into harbour, nail them to the dock" - not realizing that eventually, when the tide goes out - the ship will go down several feet relative to the dock and be damaged by the fixed boarding blanks.
You have to use ropes to fix ships, because the water moves.
Dumping the Central Bank and even using hard currency would lead to economic collapse the very first time there is an existential shock - and the only 'saviour' would be a different form of monetary intervention i.e. fiscal policy (i.e. government budget).
Also, in a completely unregulated scenario, powerful financial interests would leverage ownership of the crypto scheme and power would even be further centralized.
Bitcoin is disproportionately owned by a small number of players who have absolutely zero civic perspective, they're looking to make a Trillion dollars out of nothing.
If you don't like that money is managed by a large swath of banks working together with government and regulatory oversight and frankly relative transparency ... then you really won't like it when your monetary system is managed by the insane tyrant offspring of the Winkelvi and Satoshi dynasties who own 30% of the economy.
Crypto mining that is energy intensive should be banned immediately on that basis alone.
Aside from that, anyone declaring monetary value on a crypto asset should have to declare it, and if they don't, they go to actual prison for tax evasion. I'm looking forward to those people replacing weed smokers in prison - that would be effective public policy.
You're both pro legalization of weed and pro government? The war drugs is one the many fronts of the war on personal freedom.
Ironically the thing you're railing against -- being an anonymous uncensured transaction platform -- is one of the few ways weed dealers and consumers can continue to transact.
> Crypto mining that is energy intensive should be banned immediately on that basis alone.
Which is only neccessary to prevent
> Also, in a completely unregulated scenario, powerful financial interests would leverage ownership of the crypto scheme and power would even be further centralized.
PoS _is_ succeptible to this as ownership means a voting stake. PoW prevents entrenched interests from controlling it.
The kind of straw manning that reveals itself here due to the complete lack of civic thinking in some circles is really disturbing.
There is no necessity for mass energy usage for crypto, there are any number of ways to distribute new units of currency. Again the use of the term 'necessary' here is a hint at the false understanding of currency through the lens of a particular form of crypto.
Crytpo, at least today, is a dystopia. Go and live for a few weeks in a country with weak civic institutions and see for yourself. This joke is less and less funny as time goes on, the experiment, in it's current form, has run it's course, it's long since over.
I used to love the idea of the government fixing societies' woes. Unfortunately in my lifetime I've seen several business cycles wherein the rich get bailouts and the rest of us lose our shirts. My country has entered wars I didn't then, and don't now support. I've seen 3 letter agencies topple foreign governments, and I'm watching China leverage its social credit system and implementing CBDCs. I've seen the infrastructure in my country become dilapidated and homelessness skyrocket. I voted for 'change' and got none.
I am civic minded, and to me the government is starting to look like the problem. As such, I support any peaceful alternative. There is no such thing as consent of the governed, and I plan continue believing what I see with my lying eyes.
Tax the damn land and do negative interest rates on cash and use the negative interest to pay for the deposit insurance.
That's it. Bonus: Get rid of other regressive taxes. Lower income tax, corporate income tax, capital gains tax, sales tax, VAT and so on. Rather than redistributing incomes redistribute jobs.
In a world where economic rents are eliminated, income = spending is true on an individual and country level and jobs are fairly allocated there is no need for charity and welfare. It would be one small step closer to utopia yet it will not happen because nobody will recognize it as a "free market" that is supposedly the be and end all of economics even though it would be free-er than anything the capitalists will come up with.
Yes, here is the homework: If the solution is so simple how come there are so many people wanting to keep the system unfair and rigged?
Here is my answer: It's because the rich need to trick people into believing that the source of inequality is fair and morally justifiable. After all, if inequality has no place in a moral framework then any source of inequality would be tackled immediately.
So your "solution" is a regression to something that was tried and didn't actually work well? https://en.wikipedia.org/wiki/History_of_central_banking_in_...
The solution to real productivity declines is real productivity increases, and the incentive to reallocate your resources into the most productive activities is lacking when the cost of capital is effectively nil and the central bank bails out any misallocation.
I don't know why but when the central bank intends lower interest rates to overheat the market people somehow stop believing that the market even exists. It's really strange. I mean it. People talk about how the market works and will fix everything on its own but as soon as there is any government action even action that supports the market suddenly people think it will completely break down, as if the market didn't exist or function the way they say.
Bankruptcy and unemployment are the means with which we "prioritize and allocate resources". They are, by definition, when you stop doing what you were doing and start doing something else. So no, I would disagree that "governments are begging for this to happen" - I can't think of a government that's encouraged bankruptcy and unemployment since the 1980s.
I view various forms of capital as a way to get over local maxima in economic efficiency. You borrow money or raise funds now so that you can build up tooling and innovations that will let you work more efficiently in the future, and then if you're right, you make lots of profits and can pay back your loans & dividends. If you're wrong, you go bankrupt, your investors take a haircut, and that capital goes back to other more productive activities.
Constantly growing debt balances and inflation, however, I view as a way of lying to ourselves. They're basically saying "Well, in the future, things will get better", but when the future arrives and you still don't have profits, shrink the yardstick so things look better. That's exactly what "government action that supports the market" is - it's a way to avoid the failure of enterprises and loss of jobs that the market, on its own, doesn't demand enough to make profitable. Do this over 90 years and you can get some pretty extensive misallocation of capital.
Inflation is the economy’s rate of debt forgiveness. Bad when high but good when low but above zero. Without it economies get clogged by debt. A slow rate of debt forgiveness is more economically efficient than bankruptcies or debt jails. Inflation also combats sticky prices by forcing contracts to be regularly renegotiated to supply demand prices. For example wages are hard to adjust down and having inflation do that automatically few % per year is more economically efficient than having to fire workers and replace them.
Societies that realize this implement debt forgiveness policies such as https://en.m.wikipedia.org/wiki/Jubilee_(biblical) and modern bankruptcy and inflation. Societies that fail to do this stagnate, with many in them trapped by debt slavery.
Slow growing stagnant societies lose competitions for resources to societies that implement debt forgiveness. Sometimes stagnant societies implode in civil wars and revolutions as happened in France, Russia, China. This also results in wealth gaps shrinking but at far greater cost.
A lot of the things that are happening now are not new. Sure, actors have changed, events have new facade and technology adds an interesting spin to it, but at its core, none of it is new to people who are aware of human history.
Separately, I will add that there are developments where 40 years is genuinely not long. As an example allow me to trot out the change of being gay being classified as a mental disorder in 80s to today's predominant understanding as a fully functioning member of society. That is a stunning evolution of societal mores in a short amount of time.
I suppose I understand that people would like to see instant change, but at certain scales, 45 years is 'not so long ago'. From societal memory point of view, it isn't. Only fool forgets that government can take their property. I will illustrate that further with a geological example. By those timescales, humans just showed up yesterday.
https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
But maybe someone from China can chime in and explain how serious the enforcement of these bans will be. I have seen countries with all kinds of laws, none ever enforced.
You mean something like old Reserve Act of 1934 in the US?
Your worldview is ridiculous.
This is effectively not that different than a company dumping chemical in the local river rather than disposing of them properly. They are encroaching on my rights to a livable planet for their own personal financial gain.
There are many reasons to dislike crypto in general, but "it destroys the environment" only applies to PoW-based systems and not crypto in general.
Also, you should read the guidelines: "Please don't comment about the voting on comments. It never does any good, and it makes boring reading."[1]
I rephrased that first sentence to remove the reference to HN voting. I was simply remarking how the tone will cause people to object to it quicker regardless of the merit of the underlying thought.
So quite a bit actually. We are talking hundreds of billions in market cap at least.
https://en.m.wikipedia.org/wiki/Energy_usage_of_the_United_S...
https://www.nasdaq.com/articles/bitcoin-emits-less-than-2-of...
Exactly, step my step, please explain how adoption of bitcoin would reduce military energy consumption.
"Base demand for dollars is created due to taxation" [1]
Which of course completely contradicts: "The (mostly paid for by tax) army has nothing to do with the value of a dollar." [also 1]
[1] comment by 'arcticbull' on 'Hacker News'
The maintenance of the army doesn't create demand for taxes? Are you aware this is one of the most significant historical reasons for the collection of taxes?
Could you remind me again of when the Army was abolished in Japan and why, and whether the US military (which drives part of our demand for taxes) had any role in that?
Japan pays for the Army. The US army [1].
[1] https://www.aljazeera.com/news/2021/2/17/japan-us-extend-agr...
Clearly the one arguing in good faith is the person leading off calling all crypto a ponzi scheme because of several myths you misunderstand. Or given your financial literacy, probably intentional disingenuous portrayal.
I understand perfectly well which is why I’ve made the points. Your retorts are argumentative for the sake of argument, and you’re not actually making any sort of case that would address my overarching narrative.
Even if I conceded all of your points, which I don’t, my position would remain totally in tact.
When I buy crypto, I EXPECT to lose at the very least the exchange fee(~0.25%). Why on earth would I expect any gains on a currency, or expect there to be little or no risk on something so new and relatively untested versus something like gold?
>> High returns with little or no risk.
This is not a requirement of cryptocurrency. And there is no guarantee they will have a high return. There is certainly no guarantee in anything like the bitcoin whitepaper that you will have no risk to fluctuations in exchange rate with fiat. [1]
>> Unregistered investments.
Currencies are not synonymous with investments. Cryptocurrencies do not have to be peddle as investments, and only a moron would use them that way. [1, look anywhere for the word investment, interest, or appreciation -- you will not find it].
>> Unlicensed sellers.
Whether the government approves of something has no bearing on whether it is a ponzi scheme or not.
>> Secretive, complex strategies.
The implementation of a number of cryptos are both open implementation and open white paper [1]. Hardly secretive. I do agree the closed source ones could certainly be ponzi schemes, and perhaps you could also make an open source ponzi scheme.
>[edit2] So with that in mind, it meets many (but not all) of the classic definition elements.
>1. All returns are generated by bringing new money into the system. The only way someone can make money on Bitcoin is if a new person invests. That money is then distributed to the earlier participant, net of miner fees.
Currencies aren't meant to provide a return. Some people even consider currencies more useful if they're slightly inflationary. But lets examine your statement anyway. All other bitcoin holders appreciate their asset when someone loses their keys (deflation). An individual can make a return at the expense of the others by mining (inflationary creation). Or I could make fiat money on bitcoin by arbitrage and work, like selling coffee for bitcoin in a circumstance where people want it and few others are offering it except in fiat.
>2. There is no actual business underlying.
Just as there is no actual business underlying commodity money? This doesn't make commodity money a ponzi scheme either.
>3. The constant flow of new money is required to keep the price from collapsing because miners extract something like $50M in welfare from the system per day.
Not at all. A constant confidence in the crypto we examine is required to keep the price from collapsing. If no transactions are happening, then we are simply slowly inflating. Some currencies have infinite tail emission (infinite slow inflation) like monero. For bitcoin most coins have already been mined, so the amount of remaining inflation is finite. Even under the fiction that 50 million per day were extracted, it would take about 54 years for the price to collapse (care to imagine how much you would lose on USD if you stuck it in a mattress for 54 years?)
>4. The entire space is unregistered investments hawked by unlicensed sellers.
Crypto-currencies are not generically investments. Yes I know some scam artists promise returns, but this is not a necessary feature of cryptocurrency. For instance, bitcoin and litecoin do not promise any sort of returns, and thus cannot be considered investment vehicle by anyone but speculators (speculators can call anything an investment, including USD).
>It's a negative sum wealth redistribution scheme the takes money from new entrants and gives it to miners and to old entrants. The miner portion is what makes it negative-sum.
The same is said of gold, all the way up to gold miners paying for electricity and workers by liquidating some of their gold which makes it negative sum. Yet gold has been a legitimate store of value, and often currency, for thousands of years -- certainly no ponzi scheme.
Base demand for dollars is created due to taxation. As the money supply is managed via fractional reserve lending, each new dollar that enters circulation is backed by the demand for repayment of that loan. When someone borrows money from a bank, the bank enters a negative balance in its ledger and the borrower gets a positive balance in their account. This is how money is created. As the loan is repaid, the money is destroyed.
Dollars are fully backed by demand for dollars. It's really quite elegant.
> Do you understand that the reason it has value is because it’s backed by the US military, which provides peace and stability for industry to consume a vast amount of energy to produce goods that get shipped around using fossil fuel?
This is utterly irrelevant. The US military existed for hundreds of years on hard money. World wars were fought on hard money.
> Have you calculated the total energy expenditure of the entire US financial system, direct and indirect, and then compare it to proof-of-work calculations?
Sure, and as a percentage of transaction count, transaction value, or basically any other metric it utterly pales in comparison. [1]
> Don’t just parrot what the current-day zeitgeist told you to think.
Ditto the crypto echo chamber.
I get that this is working econ theory, but is that even meaningful? Do you honestly think people hold dollars because "someone can use it to.pay taxes"?
And for calling it fundamental, yes BTC requires burning lots of energy to have a transaction. Even if it goes so that day to day most transactions are lightning based you still have to burn that energy continuously to provide the security for new links in the network.
Or living in a country that continuously devalues its currency, forcing exponential consumption, thus stealing from the poor to give to the rich and destroying the environment while at it?
Plebs cannot be allowed to have access to sound money, otherwise financial parasites can’t exists.
There are tons of these out there https://bitcoinerjobs.co/
Basically to people who need dollars to do productive work.
Oversimplification: The promise of work creates dollars and therefore dollars are created through work.
[citation needed]
You seem to have a fairy tale level of knowledge about how dollars are created. One of the Fed's favored way of created more money is simply buying treasury bonds with newly created money. Care to explain what work is done there (other than the work done by individuals at the Federal Reserve)?
There's a lot of disingenuous people out there, that for some reason believe bitcoin or other cryptos are "investments." I guess they missed that they are called crypto-CURRENCIES and not crypto-investments. And then they get upset that they are not, and go on to berate a currency for not being an investment. It's fine to be upset at any swindlers calling a zero-sum or negative-sum game like most crypto an investment, but if you actually read the white papers many cryptos make no such claims.
And there are certainty people telling you that you can get rich off dollars, just look at the FOREX trading peddlers telling you to get rich by trading fiat and leveraging fiat exchanges. I don't attack dollars for that!
And yeah, you can apply your idea to dollars, because one of the biggest way for the government to profit off of dollars is to print more out of thin air, therefore debasing the "investment" of the rest of the dollar holders. You can choose to not apply the idea to dollars, and rather bury your head in the sand if you like, that's your prerogative.
There are certainly influencers as well influencing you to start FOREX trading changing dollars back and forth to get rich, or leveraging dollar exchanges in a zero sum game attempt to strike it big. This blog boasts a man made $6M trading USD and NZD [1].
You use circular logic that bitcoin is an investment because it is a pyramid scheme which is by your definition an investment. Then you say dollars are not an investment because "everybody knows you can't make money off dollars" (which is patently false.)
Some people may view bitcoin as an investment. Some people may view dollars as an investment. There is no requirement it be treated as one. Again the bitcoin whitepaper, and open implementation of it which you can readily acquire the source code to, makes no promises of returns, stability in exchange rate, or appreciation. Any pyramid scheme is the fault of some swindlers who could create a pyramid scheme in any number of currencies -- not "Bitcoin: A Peer-to-Peer Electronic Cash System." You seem bitter at bitcoin because you chose to take the word of swindlers rather than the actual white paper and public implementation which made no such promise of profits.
[1] https://forextradingstrategies4u.com/millionaire-forex-trade...