Bitcoin update.

[lardy]

I wouldn't exactly call it a Ponzi scheme, but it does seem to be entirely based on froth, which you have to question if it can sustain its value on that alone without having some underlying utility.

with a Ponzi scheme I guess it will be sustained for as long as they have new investors available

That's the similarity with a Ponzi. When you buy, you need more people to want to buy it. Just as in a Ponzi you need investors underneath you in the pyramid.

Traditional stocks move on company profits, etc, external factors affect it. With crypto, it's only how many people want to buy it. So as soon as you've bought a coin, you need to encourage others to buy.

I'm not trying to be down on crypto, but its value is solely in how many potential buyers there are. At the moment anyway.

[Eric Cartman]

That's the similarity with a Ponzi. When you buy, you need more people to want to buy it. Just as in a Ponzi you need investors underneath you in the pyramid.

Traditional stocks move on company profits, etc, external factors affect it. With crypto, it's only how many people want to buy it. So as soon as you've bought a coin, you need to encourage others to buy.

I'm not trying to be down on crypto, but its value is solely in how many potential buyers there are. At the moment anyway.

I think that is a pretty blinkered look at the current situation. Any asset moves up because more people want to buy it than want to sell it and vice versa. Where does Tesla fit into the idea that stocks move up or down based on the balance sheet? Industries on the cutting edge will always appear extremely volatile.

LTO springs to mind as a crypto which already pays holders a yield entirely funded by businesses using the network i.e. profits

I don't think crypto is for everyone, as the past few weeks have proved you need to be willing to see it as a long term investment into something that might fail. If it does succeed, the potential upside is massive compared to traditional assets.

[lardy]

I think that is a pretty blinkered look at the current situation. Any asset moves up because more people want to buy it than want to sell it and vice versa. Where does Tesla fit into the idea that stocks move up or down based on the balance sheet? Industries on the cutting edge will always appear extremely volatile.

LTO springs to mind as a crypto which already pays holders a yield entirely funded by businesses using the network i.e. profits

I don't think crypto is for everyone, as the past few weeks have proved you need to be willing to see it as a long term investment into something that might fail. If it does succeed, the potential upside is massive compared to traditional assets.

Yes, Tesla is volatile and rose far too quickly based on a lot more than just profit or loss. But as long as Tesla is in business and selling cars, then its stock will always have some value. It'll never be worthless, it'll never trade at 0.001c. But any crypto could.

I'm not shitting on crypto, I agree that it has massive potential. But at the moment, the current situation, the only value that it has, the only reason that 99% of buyers want it, is that they want it to go up in value. When they realise it is mainly dropping in price (and BTC is right now) many will sell as its not doing what they want, and the price will drop further. This is squeaky bum time for those who hold it.

[Llandaff Blue]

That's the similarity with a Ponzi. When you buy, you need more people to want to buy it. Just as in a Ponzi you need investors underneath you in the pyramid.

Traditional stocks move on company profits, etc, external factors affect it. With crypto, it's only how many people want to buy it. So as soon as you've bought a coin, you need to encourage others to buy.

I'm not trying to be down on crypto, but its value is solely in how many potential buyers there are. At the moment anyway.

Your reasoning for Crypto being a ponzi scheme could be applied to literally anything

[lardy]

Your reasoning for Crypto being a ponzi scheme could be applied to literally anything

I gave an example, the stock market, which is not a Ponzi scheme.

In the future, crypto probably won't be so much like a Ponzi as there will be other uses for it.

[Rock_Flock_of_Five]

I gave an example, the stock market, which is not a Ponzi scheme.

In the future, crypto probably won't be so much like a Ponzi as there will be other uses for it.

You use the word 'crypto' as if in the singular. There are many cryptocurrencies and a lot of them already have a practical use, other than as a store of value.

[Rjk]

You use the word 'crypto' as if in the singular. There are many cryptocurrencies and a lot of them already have a practical use, other than as a store of value.

such as?

[lardy]

You use the word 'crypto' as if in the singular. There are many cryptocurrencies and a lot of them already have a practical use, other than as a store of value.

I was replying to someone who also used crypto that way - I guess it's the same as when someone says footballers earn too much money. They don't mean literally every single pro player.

You know more about this than me, and there's thousands of coins, so yes I'm sure it doesn't apply to all.

[OurManFlint II]

That's the similarity with a Ponzi. When you buy, you need more people to want to buy it. Just as in a Ponzi you need investors underneath you in the pyramid.

Traditional stocks move on company profits, etc, external factors affect it. With crypto, it's only how many people want to buy it. So as soon as you've bought a coin, you need to encourage others to buy.

I'm not trying to be down on crypto, but its value is solely in how many potential buyers there are. At the moment anyway.

In Bitcoin, who is Ponzi?

[lardy]

In Bitcoin, who is Ponzi?

Nobody is, as far as I know. I said it was similar to a Ponzi.

[lardy]

Nobody is, as far as I know. I said it was similar to a Ponzi.

Or to be more precise with what I said in #69, as I think people are going to jump on this, the current reliance on getting new investors is the similarity with a Ponzi.

[OurManFlint II]

Or to be more precise with what I said in #69, as I think people are going to jump on this, the current reliance on getting new investors is the similarity with a Ponzi.

But its nothing like a ponzi.

Miners mine the bitcoin. Existential arguments aside for now, we assume IT is a thing, it is on the bitcoin ledger and thus now existing. The miner now has a thing, the miner goes to the market and sells it, and then that thing is bought, sold and traded and exists (again putting aside the question exist). A Ponzi is robbing peter to pay paul, where nothing exists i fail to see the similarity.

[lardy]

But its nothing like a ponzi.

Miners mine the bitcoin. Existential arguments aside for now, we assume IT is a thing, it is on the bitcoin ledger and thus now existing. The miner now has a thing, the miner goes to the market and sells it, and then that thing is bought, sold and traded and exists (again putting aside the question exist). A Ponzi is robbing peter to pay paul, where nothing exists i fail to see the similarity.

But why are people buying, selling and trading?

Imagine if you bought one bitcoin for £1,000 and you knew that it would still cost £1,000 in five years (hypothetical, ignoring inflation, etc). How much interest would there be in buying it today?

Probably very little. Most people only want it because they think it'll go up in value, and the only way that happens is if more new buyers increase demand.

That's the similarity with the Ponzi. When new buyers 'run out' the value drops as there's nothing to sustain it, which I think we're seeing now.

Like I said, I'm not shitting on it. Bitcoin will have an upward trend again.

[Optimistic Nick]

But why are people buying, selling and trading?

Imagine if you bought one bitcoin for £1,000 and you knew that it would still cost £1,000 in five years (hypothetical, ignoring inflation, etc). How much interest would there be in buying it today?

Probably very little. Most people only want it because they think it'll go up in value, and the only way that happens is if more new buyers increase demand.

That's the similarity with the Ponzi. When new buyers 'run out' the value drops as there's nothing to sustain it, which I think we're seeing now.

Like I said, I'm not shitting on it. Bitcoin will have an upward trend again.

But bitcoin has a purpose beyond speculation. In fact its entire purpose exists beyond speculation. If the project succeeds it will eliminate money laundering and fraud. It will do away with banks. Credit card fees will be a thing of the past, as will credit cards. It is not a ponzi scheme. It might be a bubble, but that is not the same as a Ponzi scheme.

But the underlying concept is excellent. The purpose was not to create an asset that people could speculate on, it was to fix a systemic problem. And blockchain can really do that. Crypto is using the blockchain to transfer value, but blockchain is increasingly being used to transfer assets directly as well through NFTs. Getting your head around swapping fiat currency for crypto takes quite a big step; getting your head around swapping crypto for the "ownership" of (for example) an image through an NFT takes a massive leap. And honestly, I've not made it yet. I had a small part to play in the creation of some NFTs recently but it does feel like something of a lottery as to what will blow up and what will whimper. For example would someone on here be willing to pay money to "own" this board's Bale sell-on clause post? Hockey, basketball etc cards go for MILLIONS of dollars and on the face of it they are just valueless pieces of card that have no utility - is it any more ridiculous that ownership of digital versions of these things could go for huge sums too? So you could have a blockchain-based panini album in future. It rather lacks the social benefits of trading physical cards in the playground, but this time the big kid can't nick them because you can prove they are yours. A trivial example maybe, but you can quite easily see how something like this could revolutionise the music industry (again).

I'm really struggling to get my head around the many and various use cases for blockchain, and in particular the taxation of cryptos and NFTs which is where I have a professional interest. But fundamentally - the concept of blockchain is absolutely brilliant and I really hope we do manage to make use of it as a society.

[Rjk]

But its nothing like a ponzi.

Miners mine the bitcoin. Existential arguments aside for now, we assume IT is a thing, it is on the bitcoin ledger and thus now existing. The miner now has a thing, the miner goes to the market and sells it, and then that thing is bought, sold and traded and exists (again putting aside the question exist). A Ponzi is robbing peter to pay paul, where nothing exists i fail to see the similarity.

but the question remains over the value of "the thing"
If you mine up a load of gold, the price will go up or down, but you'd expect there to be a floor below which it won't go, because the gold itself has some use.

At the moment many people want bitcoin, but only because they think the price will go up. If everyone thinks the price will go down then it will go down, everyone will sell and it will become completely worthless. There is no floor.

It is relying on enough people believing they can make money out of having it to retain any value. like tinkerbell coming back to life in peter pan.
If enough people lose faith in that then its dead.