Bitcoin: Ponzi gone global

I haven’t written on bitcoin for a while despite it going nuts:

The reason is very straight forward. This is a global ponzi scheme and that’s the end of it. As a super-national currency, the only appropriate comparison with bitcoin is gold or other hard assets that hold their value when sovereign paper money does not. Is that going to happen with bitcoin if we reach some at which sovereign currency loses all value? Nope. It’s going to be worthless as well.

As well as that, the regulatory risk is enormous. Folks are putting this latest bubble down to a flood of Chinese dough after its recent tightening hit stocks and bonds:

You don’t have to be Einstein to see that a super-national currency like this fundamentally undermines the power of authoritarian states like China, not to mention liberal democracies as well. If you can tell me where that risk leads then you are Albert Einstein.

Play it, own it, do what you like with it, but always remember that it is nothing more that an intrinsically worthless global pyramid scheme that could collapse at any moment.

Comments

  1. Pyramid schemes bubble and collapse to zero once they’re found out. They dont undergo bubble, bust, then recover to new ATH six times in a row.

    Bitcoin is approaching or in a bubble phase. It’ll crash at some point. But calling this tech a pyramid scheme means you’ve done little to no research. When it does crash you wont be smart enough to buy and miss out again.

      • HadronCollision

        How is this an ad hominem? I am not trying to be smart, I just want to be aware of comment guidelines (which don’t appear to be published anywhere)

      • Stewie GriffinMEMBER

        I think you are wrong here H&H – this is simply part of the the inflation phase as this technology moves along the S-curve that occurs with increased acceptance (corrections will also occur throughout this process). The number of users of it are growing exponentially as are the number of businesses accepting it, it’s value rests in this growing network, which is were the intrinsic value of most of our communication companies lie (i.e. Metcalf’s law).

        There is also the question of what to do when you’re parents generation have debased and destroyed their currency, as a means of preserving their wealth at the expense of generations to follow, and with credit to PFH007 I’ll quote Steven King from the BOE in his book “the End of Alchemy: Money, Banking and the Future of the Global Economy”:

        “The blunt truth, however, is that the implicit intergenerational cooperation that represents the best outcome is supported by trust, not money. IF THE YOUNGER GENERATIONS DECIDES NOT TO SUPPORT THE ELDER, THE EXISTENCE OF TOKENS (money) WILL MAKE NO DIFFERENCE. And if the older generation has invested in, say, housing, they too could renege on the implicit intergenerational transfer by ‘consuming’ the value of their housing capital by selling it to foreigners or a minority of the wealthy, leaving the young unable to afford to buy the housing stock. That is exactly the intergenerational bargin on which, David Willetts argues, the post-war baby-boomer generation has reneged. TRUST OBVIATES THE NEED FOR MONEY, AND MONEY WITHOUT TRUST HAS NO VALUE. Perhaps it is trust that makes the world go round.”

        This is where we are today – what to do when the previous generation have broken the social contract by debasing their currency and betrayed the next generation with regards to housing?

        Answer: You break the social contract back, by inventing a new currency, rendering their paper wealth denoted in the time tokens they have accumulated in a previous era, worthless…. welcome to the post Baby Boomer world of crypto-currency.

        (Apologies for the caps – I can’t work out how to highlight or bold the text)

      • BrentonMEMBER

        @Hadron
        FYI, the below is a classic ad hominem ploy.

        “But calling this tech a pyramid scheme means you’ve done little to no research. When it does crash you wont be smart enough to buy and miss out again.”

        Seeks to demean and undermine HnH, thus strengthening his position, without regard to the actual topic…it’s a weak form of debate; comes off as snarky and petty.

        I might add, HnH did the exact same thing to me the other day lol

      • simpeltonMEMBER

        You’ve got this one wrong. Your repeating the views of the banks and regulators and correctly point out that it’s not legal tender and or used to collect taxes which is what gives many exchange methods a valued currency. But what you miss is that it doesn’t matter that it’s not regulated. Like P2P sharing of media has not been stopped because it can’t without shutting down the internet, this currency can’t be destroyed unless every mined coin and computer is destroyed and it’s algos. That’s clearly not going to happen or could if the government’s globally go out on a very expensive witch hunt and even then they won’t get it all. This even with the currency not being used for tax collection which would relegate a currency you or I tried to make up based on existing endogenous monetary systems, useless. Bitcoins value will remain and continue to be dictated by those that utilise it for exchange and as a value store. Enough people do it, it will always retain value. Worth looking into and understanding it’s structure. As for comparison with gold, gold is not divisible, storable or exchangeable like bit coin so again a poor comparison. Yes you can hold promisary notes on gold but hold on, that’s how we go to our endogenous money system today. Look into a bit more mate. Will bit coin replace legal tender. Nope, as long as taxes have to be paid and have to be paid in legal tender, the regulators and bankshisters will continue to loot the common man.

      • BrentonMEMBER

        It is based on sentiment and perception, neither of which have been tested in a trial by fire.

        When panic hits in a significant crash, I very much doubt it will be the go to haven of choice. At least, I won’t be buying into the stuff…

      • I don’t think you fully understand bitcoin, I also believe it’s over valued and inflated due to Chinese trying to leech money out of China, it’s also worth significantly less in a “real hard” crash compared to gold or silver, but in a mild crash, it is of value.
        I’m not sure if you actually know this, but Bitcoin is not able to be ‘printed’ there’s a finite amount of bitcoin much like there is gold and silver.

        I’m not a bitcoin guy, I think it’s BOUND to go down, hard, soonish but it won’t go to 0, extremely unlikely, not unless there’s a multi-government level intervention in the exchange traffic.

      • send in the nerds!

        its a ponzi no matter which way you look @ it… I’m still glad I got out @$800 usd. It WILL collapse after the Chinese rout. WHY haven’t other cryto currencies performing the same? no ponzi rushes and bubbles… get a clue ppl… it’s a ponzi supported by the tyranny of the CCP. How can you feel GOOD about it?

      • BrentonMEMBER

        At the end of the day, it is a digital currency that has nothing backing it up other than sentiment. If you disagree, tell me what actually guarantees bitcoins other than pure ‘belief’?

        Hypothetical: there’s a severe downturn, are you going to hold onto your bitcoins, and if you do, who will accept it and at what value?
        The above scenario is how much bitcoins are really worth.

      • H&H

        Long time fan and avid supporter… BUT MATE PLEASE ????

        Shame on you for not doing your homework ….

        There in only one thing that is more dangerous than someone with no knowledge – that is someone with little knowledge !!

        LOL- If you have a sense of humor and just puling our chain with this classic click bait

    • Inclined to agree with Paul that it’s not a Ponzi. It’s a bit more accurate to think of bitcoin as comparable to a collectible, given the firm cap on total volume.

      However, the main recent price driver has been the flow of money into certain other assets which are only possible to purchase with Bitcoin, with the majority of money flow from US and Korea.

      • If you’d rather, collectible like a Dutch tulip. It may have no fair value, but my point is that to call it a pyramid scheme is just not an accurate description given how the system works.

        If you are going to disparage something, I prefer you would take the effort to research it first.

        Also, I sold all my bitcoin a while ago because the system is hitting capacity limits that it can’t resolve due to internal political issues. I think the price is due to fall as a result, perhaps to zero. But that doesn’t mean that there was not utility in what the bitcoin developers were trying to achieve, that isn’t met by the current banking system.

      • I was (and am) asking for technical correctness. Perhaps I’m nitpicking, but a Ponzi is different to a pump and dump, which is different to other types of scams.

        Not calling it correctly means people who are emotionally invested dismiss your argument as uninformed.

      • Mr. Husserl in da house. Phenomenology was one of my favourite subjects at uni. The gaze. The other. The cigarettes. The women. To be young again and ponder the imponderables.
        Q: What’s the difference between a philosopher and an engineer.
        A: About $80,000 a year.

      • nexus789MEMBER

        Given the definition of a ponzi scheme it is not one. It could be another bubble through as people look for a store of value. More likely to follow the classic bubble cycle of first in and best out and then it collapses as the mugs pile in.

    • Not wrong. The technical side of this site isn’t their forte. People come here for the evidence backing their position of which this article clearly lacks.

      • exactly.
        1. bitcoin is NOT debt based.
        2. it cant be fked around with like fiat or ‘gold’ which is price fixed by a London metals group based on price of fantasy paper which is not gold backed and is manipulated.(various legal cases)
        3. various govts are recognising it.
        4.Evades the banks evades usury, transferrable quickly at no cost worldwide.
        5. possibility for use on the silk road and off planet.
        6. could be this is the replacement global reserve currency
        Article only points out the possibly of pyramid scheme. That it could collapse All fiat has this characteristic..hence currency traders of the swings between currencies. Sure fiat goes hyper inflated, some alt coins have collapsed to zero.

        When banks have lobbied (APRA) to have bail-in legislation, are jockeying with govts to ban cash, central banks “FIX” interest rates”, QE feeds banks etc, gold and silver are fiddled with, THERE IS NO OTHER CHOICE.

  2. It’s just catching back up to fair value after a period of sideways trading.

      • There’s no doubt the entire cryptocurrency market has gone absolutely bananas, many are waiting for another round of suicide hotlines stickied on forums, but you are terribly wrong thinking bitcoin will go away.

        A quick glance at Venezuela and the Fed’s balance sheet would add weight to that. For large international transfers the costs are hundredths of what any bank would charge, just that simple fact alone will keep the price high.

        And then Ethereum is going to come along and smash up a bunch of industries with smart contracts.

        There’s a reason all these investment banks are paying thousands to watch a 22 year old kid speak.

      • Hi Houses, you’ve certainly produced a lot of comment on this one.
        However it’s driven, the exponential and accelerating price line never ends well – gold 1980, South Sea 1720, Nasdaq pre 2000 … it’s looks like yet another mania. Another instalment for “Devil Take the Hindmost”.
        Which means the bitcoin kids need to do a bit of thinking.
        Would they regret cashing out their bitcoin into regular currency and seeing the price double in a few weeks? Or keeping the bitcoin and seeing the price half in a few weeks?
        At this stage of previous manias it could go either way and very quickly. And it also did for bitcoin a couple of years ago.
        Whichever regret is the worst for them is the one to avoid, and informs them to either keep their bitcoin & let it ride or take some off the table.
        Losing money is unfortunate, but if you’ve made an active decision then it’s easier to live with. Regrets poison you from the inside, and that’s much worse.
        As to your topic … “ad hominiem” … thank you for expanding my vocabulary. I would have said “playing the man and not the ball”, but the Latin is more classy.
        Pyramid … usually that one involves fraud, e.g. Bernie Madoff. Not sure bitcoin fits that frame yet.
        But bitcoin and regulatory risk … yeah maybe. Government can cut off bitcoin exchanges from our banking system. They can make it an offence for a citizen to own bitcoin, as the US did with gold from 1933-74. If bitcoin usage was viewed as shady and significant, I would not bet against governments choosing to act here and overseas. And all of that does not require a single line of bitcoin code to change. Or a single geek to be jailed/shot. Those are bonus point items for extra credit.

  3. Ronin8317MEMBER

    People buying bitcoin to pay for Wannacrypt type ransomware is also contributing. Apart from China : if the Western government says ISIS is using bitcoin to raise funds, it will be shut down overnight.

    • Interesting thought. It would be funny if wannacry is ACTUALLY a BTC front-running play!

      • Because Bitcoin style technologies are the only way to get a ransom payout. This extortion is only made possible by the fact that it exists.

        Plus the market size is too big to be affected by an event that small.

    • Edmund Husserl

      How ?

      You’d need to shut down the internet.

      Which part of this is escaping people – its like listening to politicians in Australia and the UK talking about technology. Blocking “pirate” websites. There is simply a deep lack of understanding of what is going on.

      “Lets shut down the use of ASCII and UTF8 encoded files – because thought bubble.”

      • Ronin8317MEMBER

        You don’t have to shut down the internet : you only have to shutdown the bitcoin exchange, all of which have to advertise their existence.

      • For the record, I find ASCII-porn vile. Ban it for that reason alone.

        Also, mandate 1337 sp34k as the only allowed form of communication over the NBN. Innovation revolution!

      • fishbulbMEMBER

        Ronin8317, I’m pretty sure P2P exchanges do exist and can’t be shutdown. Also see things like Openbazzar a P2P marketplace that can’t be shutdown.

      • Ronin8317MEMBER

        re : fishbulb. If they advertise, they can be shut down. Bitcoin won’t go out of existence, however buying and selling will take place privately without exchange. This makes trading a lot harder since there is no legal resource when the other side take the money and run.

      • 1. Setup a Bitcoin exchange in a country that doesn’t mind.
        2. End of your fantasy.

      • @Ronin – if I accept bitcoins for cows, am I an exchange? Ok, cows are tangible goods, so lets try this: I accept bitcoins for World of Warcraft characters. Ok, Im now dealing entirely in worthless digital goods. Its merely 2 collectors swapping worthless bits. I now go to eBay and sell the World of Warcraft account.

        Who is the exchange here? eBay? me?

        I dont own, nor will I own, any bitcoin. I was there when bitcoin first started making some noise. They were each worth less than a dollar at the time. I decided to setup [email protected] (and later the folding project) instead of a bitcoin miner because I thought the first 2 were good ideas, and bitcoin was just a solution in search of a problem.

        I was wrong. Cryptocurrency is the ‘barter card’ that has always existed and always been desired by those who want a transactional system that isn’t so convoluted or filled with ticket clippers. Anyone who has ever tried transferring real money to an overseas bank account would know how useful crypto is. The drugs and other markets may have put a floor under crypto’s value, but every tax collecting government on the planet gives it great value. Then add in currency manipulation that goes on to protect national interests etc..I think people would like a lightweight method of carrying value that isnt subject to politicians’ games.

        There are now legitimate businesses that will sell you goods for bitcoins. We live in a digital age, so digital goods (music, video, software etc) are prime for being traded in digital currencies. HnH is probably right about bitcoins VALUE (which comes from a ponzi scheme) but he is wrong about the whole here today, gone to tomorrow thing. Whether its bitcoin or another crypto, its here to stay. A crypto wallet could hold a billion dollars, and be carried on a device smaller than a 5c coin. Short of a global catastrophe, it will therefore always have value.

  4. proofreadersMEMBER

    “Folks are putting this latest bubble down to a flood of Chinese dough …”

    Nah, bitcoin is just a sideshow to Chinese money laundering in Strayan residential property?

  5. Edmund Husserl

    The reason is very straight forward. This is a global ponzi scheme and that’s the end of it. As a super-national currency, the only appropriate comparison with bitcoin is gold or other hard assets that hold their value when sovereign paper money does not. Is that going to happen with bitcoin if we reach some at which sovereign currency loses all value? Nope. It’s going to be worthless as well.

    Honestly how well do you understand bitcoin ? I saw the same kind of articles defending the NBN on this website despite rabid criticism and it took literally months for the reality to sink in regarding the MTM.

    Bitcoin is absolutely massive. I seriously do not think you understand how big it is.

    Bitcoin is considered the currency of the internet. Its not a currency of nations, or buying a coffee on the street – its the internet. Its never going away and its absolutely massive.

    How well do you even understand the block chain ? Its use in modern major global banks ? Mining ? Bitcoins use for storing and transferring data (its not just a currency).

    The blockchain is the what matters (also what means it is not a ponzi).

    The reason it is going gangbusters is because it is getting harder and harder to mine. I honestly don’t think you even realise what mining bitcoins takes and why its rarity is increasing its value.

    Finally the Chinese government and Bitcoin you say ? Well – the Chinese government has not real problem with bitcoin.

    https://www.youtube.com/watch?v=K8kua5B5K3I

    Here is one in iceland – which may help to put things in perspective – also the relationship between scarcity / mining and price is better explained.

    https://www.youtube.com/watch?v=SJgWqbZBn6I

    .

    • Curious how Spinoza and Bentham and now Husserl are all readers or perhaps the same identity. If it was really Husserl he’d know the phenomenological difference between blockchain and the BTC value.

      • Edmund Husserl

        How is Iceland a comrade ?

        This post references how China is against Bitcoin – and there is video showing quite clearly the government tolerates it. Its got nothing to do with “comrades”. The question is will China cut itself off from International Trade because it doesn’t like Bitcoin ? I find that absurd.

        Or is macrobusiness just “reaching” for any rationale it can find for why a technology it simply does not understand will fail.

    • The tech side is irrelevant. Bitcoin is worthless because it’s PV is zero. And unlike real money it doesn’t have any liquidity premium.
      Real money has value because people are prepared to give up interest paid in the same money to hold it.
      It’s a dead giveaway that there is no large, long duration debt market in bitcoin.

  6. fishbulbMEMBER

    H&H, to fully understand bitcoin and other cryptos a lot of research is required, I’m talking weeks here, I don’t think you have done that. I can’t understand how anyone can say its simply a ponzi after researching it in detail. Yes, current value may be high, and yes it may come down, as it has done roughly 6 times in the past. But, this technology is not going away. Government regulations can have an impact, but, once you look into crypto technology you realise that the whole thing has been designed so governments can not destroy it. Also, think of the illegal drug market, governments hate that, yet it flourishes.

    China has not been a price driver this time round, very little volume has been coming out of China since they regulated their exchanges, for the better I might add. Most of this increase is probably due to the Japanese, where volume has exploded recently, due to pro crypto policies from the government.

    • Nothing you have said addresses any of my arguments nor contradicts that it is anything other than a pyramid scheme. Getting lost in the tech is a bad excuse to make a bad investment.

      Note that I do not say it is going to be wiped out (unless we had some very large monetary fail) . I only note it is exposed to enormous regulatory risk.

      Your defensiveness is a dead giveaway.

      • fishbulbMEMBER

        I’m not trying to address your arguments. I’m just saying please look into it more. The technology and it’s future possibilities are interesting. If you do a lot more research you might be pleasantly surprised. A technology like this, whether you will oppose it or not, requires a decent understanding of it’s mechanics and therefore it’s pros and cons.

        I don’t care if the price goes down, the technology is here to stay and will potentially make a difference to how finance is done. That is the important thing. Only speculators worry about the price. I want the technology flourish, as I think it reduces the power of governments.

      • fishbulbMEMBER

        I did not call you anything, don’t put words in my mouth. I suspected that you may not fully understand the technology, maybe I was wrong and you do fully understand, but, I don’t think you do from what you have written today and in the past. I agree that it may be overvalued at the moment and investing at this stage is definitely risky, but, I disagree that it is a ponzi. It is actual technology and potentially very disruptive to the finance industry, as well as government. I try to encourage people to look into it, not accuse people of ignorance.

        Ignore the price for a moment, are you critical of the technology? what do you see as its failings (apart from its speculative side)?

        I suggest to people who have not looked into bitcoin, to imagine that the price was always tethered to the USD at 1:1 ratio for ever (this helps ignore the speculative aspect). then look into the technology and then decided if this is a better system then the current financial system. Example, hold your money out of the banking sector, no middle man required for transfers, no inflation, etc

      • You did call me ignorant (that is, lacking in research). I have no idea how bitcoin tech works. None. Doesn’t change a thing about my arguments. You are mistaking politics for investment.

      • fishbulbMEMBER

        Well in that case, I suggest you ignore the speculative aspects and look into it. I’m pretty sure you will enjoy it as it is interesting from a technology point of view. It could also be very relevant for the economy one day.

        I like to think of it as a way to keep the banks and governments honest. If there is a better alternative to what they are offering, it means they can’t fuck people over as much, like they do these days with inflation in asset prices and consumer needs.

      • Holy moly! So why would you create an article on something you know nothing about? Why not preface that you know nothing of it! You can’t accuse others of fakenews and then do this.

      • Edmund Husserl

        Either you don’t know what a Ponzi scheme is – or – you don’t understand Bitcoin. These two things are not the same. I am guessing, along with everyone else, the latter.

        Ponzi scheme
        ˈpɒnzi/Submit
        noun
        a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

        Bitcoin

        The system is peer-to-peer, and transactions take place between users directly, without an intermediary.[13]:4 These transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain. Since the system works without a central repository or single administrator, bitcoin is called the first decentralized digital currency

      • Sorry H&H, disagree with you on this one. It’s ludicrous to me that someone can have a position on something without understanding it. It’s like having the view of the ASX or whatever else and not knowing how it works.

    • I struggle to see a long term value prospect for Bitcoin. I expect it will be superseded by Ethereum sooner or later.

      • fishbulbMEMBER

        Yeah probably, but crypto in general is what is the exciting part and a game changer.

      • Ronin8317MEMBER

        Technically speaking, Ethereum have some intrinsic value as a programming platform, however it still suffers the same problem with Bitcoin in regard to needing an exchange.

        The ideal crypto-currency is one backed by computing power : instead of “mining” prime numbers, it is backed up by available storage, CPU and bandwidth as part of a computer cloud platform. The connection speed is not there yet, but will reach that point eventually. (well, except for Australia with our NBN..)

  7. When it comes to private forms of money let a hundred flowers bloom. If people find them useful for any of the usual things money is used that is fine.

    The only reason there is any heat in the debate at all is because specific types of private money, the IOUs of private banks, are given special privileges and the protection of the state. It is quite understandable that as the corruption and dysfunction baked into this public / private fusion has reached epidemic proportions people feel they are faced with a terrible choice.

    Switch to purely private monetary systems like bitcoin or gold or frequent flyer points or take their chances with the corrupted public/private fusion system which they can see is being deployed by the rich to extract and concentrate resource in a few hands.

    It is pretty ugly to see people facing this choice being mocked especially by those who stand by and applaud, endorse, obsfucate and defend the thoroughly corrupted monetary system currently on offer.

    The solution is simple.

    Separate public money from private money – no more special protection for specific mobs and their apologists – e.g. Licensed banks.

    Let people choose which systems they wish to use as their needs require. Most people are likely to want to save in public money but chances are they will see merit in a portfolio approach so that not all eggs will be in one asset class.

    The state can decide what it will accept as payment of taxes and it is likely they will require the money they issue. But as there will be exchange rates between the various private moneies – just as there are between national currencies today – and also between private and public money, the state might be quite happy to accept some private money for some specific purposes. It may find having some useful for public purposes.

    Naturally this suggestion will appall all the usual suspects – those corporatists, binary types and authoritarians who like to extinguish as much choice as possible but as I said at the top let one hundred flowers bloom.

    • Hill Billy 55MEMBER

      Thank you, the level of journalism on this site has fallen by the wayside of recent times. Often there are comments which are more thoughtfully put together than the original article. Cheers

    • SoMPLSBoyMEMBER

      Nicely put!

      “…take their chances with the corrupted public/private fusion system which they can see is being deployed by the rich to extract and concentrate resource in a few hands.”

      It’s the awareness that a ‘choice’ exists and by pursuing this choice is a way to throw spanners into the gears of the monstrously bad current system.

      Bitcoin may not supersede the global monetary system anytime soon, but the days of the current banking system’s centuries old ability to operate with legislated impunity are clearly numbered- a Darwinian species destined for extinction.

    • In other words; Lets go back to Austrian free-banking.. Why don’t you just say that.
      I’m guessing you support bitcoin?

      • Sweeper,

        LOL – whatever Sweeps. Separate public and private…..let 100 flowers bloom……miss that did you?

        Don’t worry we all know you love the current public-private monetary system even though you keep trying to deny it even exists with your meaningless distinctions between ADI private bank IOUs and those issued by the state.

        Anyway here is a present for you. It is the first MMT candidate for president. Enjoy.

        https://www.youtube.com/embed/xKYIVidbpeU

      • Haha too funny. I actually support most of his policies. Except kept thinking.. wait there’s something missing.. oh yeah, a tax policy.
        Not surprised to hear he backed Trump. Some people want to believe lies… especially when they’ve built a reputation repeating them .. on blogs..
        But back to MMT; I actually hope he gets elected so we can see a controlled experiment and end this debate once and for all.

      • Plus there’s a little problem of legal reality. Since 1981 the Fed can’t allow the Treasury account to go into overdraft.

  8. Your article shows your clear misunderstanding of bitcoin, which can be forgiven, as it probably does appear to be some form of ponzi/pyramid to an outsider.
    If, however, you fully immersed yourself within the community you would see how foolish your comments. If you spent hours in forums, on blogs, reading every bit of literature possible. You would see that most bitcoiners would agree with you, yet still love bitcoin.

    Yes, it could come crashing down to zero tomorrow, that is why you will never find anyone recommending to invest any more than you’re prepared to lose.
    Yes it could be regulated to death, hence why you should not invest anymore than you’re willing to lose. This is not seeming to be the case though. The first couple of years it was being outlawed world around. Nowadays regulations are being relaxed world around. China, while regulating the exchanges, have put out many positive comments on it, Russia have just announced they are to decriminalise it, Japan have just decriminalised it, which brings me to your next wrong assumption. Recent buying coming from China. Incorrect, recent buying is coming from Japan, since they decriminalised it. They have been responsible for 40% of recent volumes.
    “The only appropriate comparison with bitcoin is gold or other hard assets that hold their value when sovereign paper money does not. Is that going to happen with bitcoin if we reach some at which sovereign currency loses all value? Nope. It’s going to be worthless as well”.

    Why will it go to zero?

    All enthusiastic bitcoiners are generally a little anarchic, hoping that this will be the final outcome. Bar the value disappearing. Yes it is a very long shot. Tiny chance of central banks messing up and causing hyper inflation and bitcoin being the best safe haven. A tiny chance, but a chance none the less that is worth waging no more than you can afford to lose on. As I did with s few K 3 years ago and am currently sitting on a tidy 2500% profit, that I am more than willing to watch either crash and burn, or make people such as you kick yourself.

    P.s usually love every word that comes from your mouth h’n’h. Just don’t dis the bitcoin man haha

    • Dude, you just agreed with me and don’t even know it. This is just weird.

      YOU LOT ARE SO BLOODY DEFENSIVE IT’S A DEAD GIVEAWAY. ALL I’VE SAID IS BITCOIN IS A POOR STORE OF VALUE AND SUBJECT TO PYRAMID DYNAMICS. CLASSIC PONZI STUFF.

      Deal with it!

      • All the crypto fiends coming out of the woodwork on mb.
        Not even that surprised.

      • H&H if you look hard enough every transaction is a pair trade (including investing in government money) and everything is a ponzi scheme solely because “value” is a human concept and humans tend to act in herds. It is about the desirability (demand) vs scarcity of the asset (supply). If everyone wants “cash” its value rises compared to other goods; doesn’t mean it has any value at all other than what other people are willing to trade for it – I would argue cash’s value is volatile doesn’t mean its worthless. The only thing BitCoin needs to flourish is a critical mass of people who “desire” it. It’s utility is that it is “scarce” and “trustworthy” which makes it a good money candidate especially since its untraceable. It’s no different than bank tokens (bank accounts) and the like except I think its anonymity combined with its growing acceptance for transactions means it will always have some value compared to a state money system. What that value is remains to be seen and rightly other money will compete with it including newer better forms of money in the future.

    • Jamie – replace every “bitcoin” reference with “Australian property” reference (mutatis mutandis) and you have a standard property-perma-bull manifesto

  9. Reckon it could go either way, and certain ‘black swan’ events will end up dictating if it is mass adopted or not. Governments trying to close it down will actually probably make it more popular. The only way they can get rid of it is to make money worthwhile again – CBs raise teh rates! But that won’t happen.

    If the mass public thinks it’s worth something, can actually continue to buy/sell goods with it, and knows there is no attached debt default risk, then it might not be able to be contained. With the ability to transact, you could argue it may serve as a better hedge against artificial govt devaluation of all currencies than gold? And with millennials sharing the recent article about $100 7 years ago now worth 75mil, ppl will probably think it’s also a good ‘investment’ now, leading to more mainstream take-up.

  10. This train can’t be stopped, and can’t be regulated.

    Your argument is comparable to saying “there is enormous regulatory risk with movie piracy”.

    (took a screen-shot to show my future grandkids that even financially literate people still didn’t understand, even as late as 2017)

    ————————-

    Is Bitcoin a Ponzi scheme?

    A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money, or the money paid by subsequent investors, instead of from profit earned by the individuals running the business. Ponzi schemes are designed to collapse at the expense of the last investors when there is not enough new participants.

    Bitcoin is a free software project with no central authority. Consequently, no one is in a position to make fraudulent representations about investment returns. Like other major currencies such as gold, United States dollar, euro, yen, etc. there is no guaranteed purchasing power and the exchange rate floats freely. This leads to volatility where owners of bitcoins can unpredictably make or lose money. Beyond speculation, Bitcoin is also a payment system with useful and competitive attributes that are being used by thousands of users and businesses.

    • Maybe, maybe not. As I say, if you think you know then outcome then you think you;re Albert Einstein.

      Ponzi is a broader definition for me. More the Minkian brand.

    • and now your comment about BB being banned is deleted too. This is becoming pathetic …

      • You ask non members to pay up; pay up for what exactly ? Browsing a blog on the Internet? Pay up to add a random comment every now and then? I read tens of other blogs and news outlets each day and they all have subscriber sections but no one asks their users to pay up for just browsing.

        Obviously the ones who do pay up value your advice and that is fair enough. I don’t see the value hence why i don’t pay up.

    • drsmithyMEMBER

      The difference is you eventually need to turn your bitcoin into real money. You do not eventually need to turn your pirated movie downloads into legitimate copies.

  11. Bitcoin is used for dark web drug purchases large and small… Easily transferable between countries for drug syndicates virtually untraceable… I disagree with your assessment that it’s a useless currency

  12. i see h&h’s point. bitcoin might well be a good investment, but its definitely very risky for the reasons aforementioned. why bother exposing yourself to this kind of risk when there are so many other, better, bets to make?

  13. While BTC and other cryptocurrency allow cross-border near-anonymous trade in drugs, weapons, assassinations, ransom and all the best parts of the black markets, it will have value.

    It is the proletariat’s Swiss bank account coupled with the blind Jersey Trust.

  14. I have to disagree with this. Nothing has value unless a person puts their value on something. Gold is a useless rock in its natural state, but we have decided it has value and can be used for things. All currency, digital or otherwise is the same.

    As long as people chose to do trade in bitcoin, it has value. As long as someone assigns value – it has value.

    The reason the Chinese have taken so well to it, is that its a great way to launder money out of the country and get around capital controls.

    • Ronin8317MEMBER

      Government can’t make gold disappear, but governments can make Bitcoin exchange disappear. That is the ‘regulatory risk’.

      • fishbulbMEMBER

        As I said before P2P exchanges are around. However, there are many ways to get bitcoin (and others) than an exchange. You could mine it, get paid in it, you could open a business that accepts it as a payment, you could get rid of it by buying from businesses that accept it, and so on.

        An exchange helps, and no doubt the reason why the price can be pushed so high so quickly. But, it is not essential.

      • RevengeOfThePork

        I’d argue not. It would be whacker mole. As the piracy example was given above, how effective has the Gov been in stopping piracy?

      • Not really. They closed Silk Road, but from its ashes came many many others (I’m not in the scene, so AlphaBay is the only one I can name off the top of my head).

        I think you underestimate the difficulty in shutting down a darknet market. The only reason Silk Road fell was due to some opsec mistakes Ulbrecht made on the public internet, not because the NSA cracked TOR.

      • Virtually all those industrial applications were discovered many hundreds, if not thousands, of years after gold became valuable.
        Gold is used in industry despite its cost, gold is not valuable because of its usefulness.

      • drsmithyMEMBER

        Gold is used in industry despite its cost, gold is not valuable because of its usefulness.

        True, but it would retain some industrial use value even were it to lose pet rock status.

        What value remains in your bitcoin stash if it falls out of favour ? You can’t even recover some of the vast amounts of energy embedded in its ultimately pointless creation.

      • WhatIsThePorktrix?

        “Gold is a useless rock in its natural state”
        BTC has many uses too……….
        Value exists, where value is placed.

  15. Nope, I’d say it’s more the case of the author getting worked over by internet gremlins. Given the position that MB takes, that is not surprising. Furthermore, the word “Ponzi” as it applies to human behavior in search for capital value is well within the context of use to describe what is happening with Bitcoin.

  16. Unfortunately a ponzi scheme requires the scheme operators to fraudulently take invested money later and pay it out to earlier investors. There is no fraud here, which is why calling it a ponzi scheme is just wrong.

    Rard mentioned piracy above and I will elaborate on the metaphor. Bitcoin is like BitTorrent. The regulators can make is difficult to access for the common man (e.g. banning the website piratebay) but loopholes and workarounds will come about (VPNs, proxy sites etc.). The government can’t stop it completely without becoming totalitarian. In China it’s possible, but Australia heavily regulating it? Unlikely.

    The higher the price of Bitcoin, the more secure it becomes because it attracts more miners (hashing power) to the network. This will make it even more difficult to stop.

    Important to note, other cryptocurrencies like Ethereum have real world business uses in addition to their money component. Will the government crack down on this, given the real world economic benefits of smart contracts and decentralised fund raising?

      • You should probably use the term “ponzi financing/borrowing”, as Minksy did, and not “ponzi scheme”. But even the Minsky definition doesn’t apply because he said ponzi financing is when economic units borrows just to rollover debts. I still can’t how using the term ponzi is relevant on any level.

        Even pyramid scheme is a long bow. By your definition gold and other commodity like assets are a ponzi/pyramid scheme?

      • Gold sure is. But it has history and physicality on it side. Having said that, gold would still not be ponzi if it was not stored away given it has industrial value. Industrial commodities aren’t.

  17. Assuming you want discussion on here, perhaps less deleting of comments and banning of users who disagree with you may help. If you want a one-sided bubble or don’t want to be (so easily) offended, then please carry on with your censorship and ban-hammering.

    • If you want discussion on here why don’t you pay. I deleted one comment from a guy that has baited me for years. You can join him if you like.

      You reek of entitlement. STINK of it!

      • Here’s a deal: I’ll pay when the “journalists” know the basics of the subject they’re writing about, each and every time. That’s not too much to expect, is it?

        No entitlement from me, ban if you like, censor if you like, your website, your choice.

  18. Of course HnH is wrong, but not for the reasons posted by others above. He’s wrong because, as we all know, you can’t spot a bubble before it pops.

    • MB have a history of calling the top of a bubble long before it actually eventuates. I tend to agree with the underlying themes that inform their opinion, but thinking back to the 2012 call that Australian property was likely to crash soon, and the 2015 call that the AUD would continue down to 0.50 USD I’m inclined to say that there’s money to be made trading against their advice for a year or two, before selling and taking the profit.

      With crypto, I have a fair knowledge of the space, so for me the most interesting part of their analysis is that it doesn’t mention ethereum, ripple, or NEM. That tells me more than the uninformed wall of text about how magic internet money is a global ponzi scheme.

      The problem is, using the terminology of “a ponzi scheme” means informed readers dismiss the author out of hand, as there are multiple reasons why bitcoin doesn’t follow the model Ponzi pioneered. It is much harder to argue that the current behaviour isn’t similar to tulip mania in the Netherlands in the 17th century.

      There are actually plenty of arguments to be made that bitcoin (as distinct from blockchain currencies) is ridiculously overpriced. I’m disappointed that they didn’t do enough research to be able to make them.

    • They have a way cooler name. Plus, if you are laundering money you don’t need to bury them in the back yard.

    • drsmithyMEMBER

      They’re easier to get over borders without detection and more likely to be accepted by your local drug dealer ?

  19. I am glad to see this being debated here. Also surprised reading through all the comments that there has been little mention of Ethereum and only one mention of smart contracts. That is a bigger story than bitcoin I believe. As has been mentioned, you need to buy bitcoin to buy Ethereum and other ERC20 tokens. There was a big announcement this week at Consensys 2017 conference of new companies joining the EEA (Enterprise Ethereum Alliance). It was the expectation of the announcement of a long list of companies joining up that drove the price of Ether up 50% and took bitcoin with it.

    HnH I think the comment that a lot of us here would disagree with is: ” it is nothing more that an intrinsically worthless global pyramid scheme”.

    Anyone who is working or researching this field has come across this type of argument over and over. Yes there are pyramid schemes in the crypto space. Mostly these are in among the many ICO’s (Initial Coin Offering) coming down the line. Many are scams but some will be game changing and exceptionally highly valuable. The trick as an investor is to work out which are which. It definitely is very much like the year 1999 in the dot com boom. But there will be genuine game changing business models, systems and networks that arise from the ashes when the ICO boom pops. Much like Amazon which apparently has had 5 collapses in price of 70% or more, there will be big winners but they will have ups and downs.

    So yes there is Ponzi behaviour going on. But I do not think that bitcoin is “intrinsically worthless”. Token backed smart contracts are not intrinsically worthless – albeit that they are a feature of the Ethereum network and not bitcoin. But many people who have not a deep understanding of cryptocurrencies tend to lump them all together as “bitcoin”. Smart contracts are the new commodity of trust where absolute certainty can be built into business transactions. Whenever pre agreed conditions are true, no human can prevent the contractual outcome – it is automatic. Bitcoin is a “dumber” technology but it has been battle tested and is now trusted simply as a store of wealth or as digital gold.

    As has been pointed out, it has been through several serious collapses. Its death has been predicted a hundred times and it has been banned 4 times by China. It is decentralised so nobody can destroy it other than by killing the Internet and if that happens, we all have much bigger problems to worry about than what happened to the value of any form or our money.

    I myself was badly burnt in 2014 by the collapse of MtGox. I lost a lot of money because I foolishly left all my bitcoin on that exchange where it was stolen. It was dreadfully embarrassing at the time as I had argued to my wife that one of the benefits of bitcoin as a store of wealth was that it eliminated counter party risk. I allowed myself to be subject to the bankruptcy of a counter party when I should have stored my bitcoin in my own wallet. If I still had that bitcoin and had traded it for Ether this year I would have had enough money to buy a farm.

    However, it did not stop me. I lived and learnt. I have teamed up with others to form a virtual research group and together we evaluate ICO’s and decide which ones to back. Now in spite of a severe Goxxing I am still well ahead overall in my crypto investments. I have experienced the risks but still back this asset class in general. It will be a roller coaster ride for sure but I believe it has a long long way to go and you aint seen nothing yet.

    I do agree that you should not invest more than a small proportion of your wealth in this space and only that which you can afford to lose. Yes it has Ponzi scheme elements going on but no it is not intrinsically worthless.

      • Edmund Husserl

        John does not support you. At all. He is pointing out the exact opposite.

        He is merely saying that Ethereum (a more dynamic form of Bitcoin allowing for a wider range of applications amongst other features) will take over – in other words – its no ponzi.

        As pointed out as well – you require bitcoin to buy ethereum thus ensuring bitcoin is not a ponzi.

        Honestly Houses and Holes – once you properly understand Bitcoin it literally makes no sense at all, in fact it appears quite crazy, to be just writing it off and calling it a ponzi. The outrage on this thread is entirely justified – it really is. Perhaps instead of being so outraged you take on board what is being said.

        .

    • Unfortunately, to be able to see what ethereum offers, you have to understand how bitcoin works. I think that’s why there isn’t much discussion of smart contracts – because people aren’t going to understand what they are.

    • Thanks for your comments John. Sorry you had to go through that with Mt Gox.
      From what I understand, you can even print out your wallet to store it safely.
      I’m very keen to see where Ethereum goes. They have fixed many of the issues BTC has – and many people are moving across it seems.

    • “But I do not think that bitcoin is “intrinsically worthless””.

      It is intrinsically worthless. The PV of a bitcoin is zero. And unlike real money it has no liquidity premium.

  20. drsmithyMEMBER

    There is a great deal of conflation between “bitcoin” and “blockchain” going on above.

    • Edmund Husserl

      No there isn’t. The only people who are saying that are the ones who do not understand it. The block chain holds the value of the each bitcoin – thats what the blockchain does.

      Its like saying people are confusing currency with dollars. They are intrinsically linked. We all understand that the blockchain can be used to store all manner of information like stock transactions etc – but where it is being used as a Bitcoin the relationship becomes intrinsic.

      .

      • drsmithyMEMBER

        No there isn’t.

        Yes there is.

        Most all of the hysterics above takes the form of ‘don’t dis bitcoin, blockchain and crypto 4eva!’.

        Its like saying people are confusing currency with dollars.

        No, it’s like saying people are confusing currency with wallets.

  21. Duke_WellingtonMEMBER

    All you have to do is browse the bitcoin forums, or listen to the guys fronting new coin schemes and trying to frontload buyers, to know what is driving this. It is interesting to read the hysterical defenses of it – much like property investors around a BBQ. HnH is speaking from an investment point of view and a risk point of view – which is why I come here, If I want to read a bunch of investors defending their tulips, I’ll pop onto the various crypto forums.

    • Agree. The defenders aren’t approaching it from a valuation / investment point of view. They think it has value due to the tech stuff.

  22. I have to say, I feel the same applies to gold. It has limited industrial use, yet for historical reasons it is considered valuable.

    The greater fool theory definitely applies to both gold and bitcoin. In the event of a collapse of capitalism, neither are going to have any use or value. Yet both are worth something because of a lack of confidence in our monetary system. The risk that people will decide that bitcoin is worth nothing tomorrow is greater, but it is essentially the same calculation.

    • Good comment.

      I suspect a chunk of the recent run up in price for bitcoin is purely speculative: people buying it because they expect it to go up further. In that sense it is a bubble and one that could collapse quickly once any small downwards move kicks off.

      The “underlying value” – its usefulness for buying illegal things – seems more stable but it strikes me that could also disappear quite quickly if the vendors of said illegal things decide it’s too volatile to rely on.

    • But, but, gold was considered valuable long before capitalism existed. So I don’t think gold will lose value in the event of a collapse of capitalism. And this historically proven durability of gold in the event of a collapse of a civilization makes gold superior.

  23. I agree with H&H bitcoin is a ponzi collectible.
    It will be akin to collecting pointy sticks as compared to collecting guns and lead.
    The tech behind bitcoin however will and is revolutionalising the world, namely blockchain tech.
    Ethereum gives insights as to what is possible in the future, but Ethereum is destined to fail through its many inherent flaws.
    However the concept of smart contracts supporting the notion of trust will change business as we know it.
    Disruptive tech will disrupt the corrupt and inefficient systems that rule, including a disruptive tech that comes to rule being easily cloned whereby every man and his dog will be able to author their own ‘smart’ bcoin as easy as cut and paste. Corporations will have multiple blockchains each, not just support for things like Flybuys, Corporate scrip, whatever. (There is alot of idle computing power in the world 😉 AI is going to change that.

    Shutdown the belief of anonymity of bitcoin and it is worthless, crack cryptography and it is worthless – hello qantam computer.
    What remains is the reproducible tech of blockchain that will reach the point of commoness, like 3D printing everything you want is the end of productive economies as we know it.

    Like a fighter jet is obsolete before it takes off (in design), bitcoin is obsolete and soon to be relic of a pioneering age.

    • Do you have a rationale for your “ethereum is destined to fail” claim? I know it carries a lot of risk, but why is failure guaranteed?

      • I have concerns with blockchain bloat on ethereum, it’s already got a bigger blockchain than bitcoin.

    • Computer scientists aren’t generally great mathematicians let alone logicians. Combine all three, crack decidability and you can say goodbye to google, facebook etc even microsoft as software itself will be engineered so as not to break and also become self amending, thereby an opportunity to become an overnight trillionaire. Maybe I am being semantic, but Kurt Godel will help. Etherium is a poorly designed shortcut facing a dead end. People will make lots of money along the way from a belief that they will make lots of money along the way – which is a ponzi.

    • HadronCollision

      I read up on Ethereum on block geeks.

      One thing stood out as frightening.

      You could write code to do something really, really bad (it seems) and then it is unstoppable. Can’t be turned off.

      Is this correct?

      • Short answer: No.

        Long answer: Only if you commit unlimited funds to the transaction. Computational cycles on the EVM have a cost, so the program will keep running until the funds assigned to that transaction run out. The funds assigned to a transaction are defined every time a contract is run, so you would have to write a faulty program, and then fat finger multiple extra zeros on to the execution cost (called the “gas” cost).

  24. The crux of your argument H&H seems to be that it’s exposed to massive regulatory risk. But while there is some truth to this, I don’t think it’s a realistic risk.

    There are far far too many P2P exchanges starting up, far too many decentralised exchanges starting up, and ones that run with full escrow built in. Incredibly low fees, instant transfers, and all very very easy to use.

    Pretty much impossible to shut down.

    Even if one country was to somehow shut it down, it would be a drop in the bucket.

    Look at an up and coming exchanges – Lykke – this is one that’s essentially billing itself as a blockchain based FOREX service + securities exchange + coin exchange.

    • drsmithyMEMBER

      They don’t need to shut it down, they just need to make it illegal to process bitcoin transactions.

      When few businesses or individuals will take bitcoin as payment because there is no legitimate way to transform it into real money, what value does it have for the average punter ?

      • Foreign purchases. Can’t buy in Australia? No big deal, we all buy from foreign countries constantly.

      • drsmithyMEMBER

        Can’t buy food overseas. Can’t buy booze overseas. Can’t buy petrol overseas. Can’t buy cars overseas. Can’t pay the doctor or the school or the rent[0] overseas.

        You need to consider where you spend the majority of your money. I mean, even most high-income and wealthy people who consume lots of “stuff” (vs essentials) probably couldn’t easily (or willingly) substitute foreign suppliers for that “stuff”.

        Not to mention, where are your bitcoins going to come from for those foreign transactions ?

        Finally, can you not envisage a scenario where a large group of similar nations act together to ban bitcoin transactions ? Say, Australia, Canada, the USA and the UK ? Maybe even the EU ? Really ?

        The point is that you don’t need to shutdown the exchanges or the system, you just need to make it impractical/impossible to use in the most common cases.

        [0] In nearly all cases.

      • fishbulbMEMBER

        Has making recreational drugs illegal wiped them out? Dark markets thrive on crypto, the products they sell are illegal, why do they still exist? Why hasn’t creating laws stopped all the unlawful activities?

      • drsmithyMEMBER

        Has making recreational drugs illegal wiped them out? Dark markets thrive on crypto, the products they sell are illegal, why do they still exist? Why hasn’t creating laws stopped all the unlawful activities?

        I suggest you reread my post a few times until you understand my point, because quite clearly you don’t at the moment.

    • HadronCollision

      Didn’t Nixon basically rob everyone on the gold standard – regulatory risk writ large, eh?

      Super interesting seeing the defence of this article vs those who seem to actually understand the tech (which drives the value).

      • drsmithyMEMBER

        The tech does not drive the value of bitcoin, demand for them does (which is probably 49% money laundering, 49% tax/legal evasion and 2% other).

        If it does, why isn’t every other cryptocurrency based on the same tech skyrocketing as well ?

        I believe this is the fundamental point being made by the article.

      • Ronin8317MEMBER

        Nixon debased the US dollar against gold. It’s the inverse of what you’re stating, as the price of gold went up by 3 times to the US dollar.

      • Other crypto is sky-rocketing, much more so than bitcoin. It just isn’t being reported.

      • fishbulbMEMBER

        Seriously dr, have you seen the alt coin market lately it is exploding, far more than bitcoin. Also the previous 8 years of demand is being driven by the tech (at the moment, probably FOMO/gambling), people are genuinely excited by it. If it was just money laundering, they would cash it out once laundered, creating sell pressure.

      • HadronCollision

        drsmithy because it was the first one to crack the widespread use curve?
        and is now easily accepted as online payment (i,e. shopify stores)

      • HadronCollision

        ronin he mandated everyone by law had to hand their gold in at a fixed rate 25:1 if I recall correctly and I cannot be bovvered altavista-ing it on the line

        he then revalued it up effectively robbing everyone blind

      • fishbulbMEMBER

        Altavista! Damn. Haven’t used that since the 90s, I didn’t know it was still around.

        Edit: Just looked it up and I see that it isn’t. Brings back some memories though.

  25. Errrr. This reminds be of the hysterical reaction to that abolishing currency article. Look at all the pro-bitcoiners. Another example of the logical void which takes over once you become a libertarian fantasist.
    Bitcoin is a huge bubble and ponzi scheme. Kept alive because of libertarianism’s ability to recruit another greater fool. And because nobody knows the bubbles termination date.
    For those who think otherwise; why is there no long-term debt market in bitcoin. If it’s such a stable store of value why don’t people want to lend it for 30 years? Also please tell me what the intrinsic value of a bitcoin is. Thanks.

    • I don’t think bitcoin has any intrinsic value. Nor is it meant to. Just like gold, silver or platinum.

      • Precious metals all have a value in use (or a yield) which shows up in spot v forward. Bitcoin is literally worthless.

    • Why do you tie bitcoin to libertarianism? Is it because of the crowd that has most enthusiastically adopted it, or is there something underlying the philosophy behind it? I wouldn’t consider myself a libertarian but I can see some benefits to the idea of a medium of exchange like bitcoin, as long as one acknowledges the risks associated with it.
      Note: I do not have any bitcoin and am not thinking about purchasing any at the moment.

      • Both. If you look at all the defenders in this thread I’m willing to bet most come from an IT background and have a techno libertarian outlook.
        The theory behind it is also regressive and libertarian ie. aim is to take another public good away from the state (liquidity provision)

    • Thanks for replying.
      I can see where you are coming from, especially your point of intrinsic value, but I can also see Pfh007’s point as well.
      If one does adopt Pfh’s view, and they don’t have to, then the libertarian underpinning of it disappears. The money of the government remains king and should one choose to do business outside of paying taxes and whatnot using an alternate currency then that is up to them. I can also see a lot of issues with this in that you’d want an alternate currency to be fairly steady in relation to the government tender. You also risk a black market that would make current GST and cash in hand seem trifling.
      As with most of these topics about strange new worlds (UBI, LVT, MMT and so on) I keep thinking that there might be a chance that it could work, but a lot of other reforms would need to be adopted. In Australia it is hard to see them as any more than thought experiments and argument fodder in the comments section of the internet.

  26. Its legal Tender in Japan
    https://www.businessinsider.com.au/bitcoin-price-spikes-as-japan-recognizes-it-as-a-legal-payment-method-2017-4?r=US&IR=T
    Just because you dont understand something doesn’t mean you should mock it! It cant be shut down noe it is as good as legal tender in Japan the worlds 3rd largest Economy.

    You are on the wrong side of history there. Its like recommending to short internet stocks in 1994. Sure you got a Pull back in the tech wreck but that was mainly the bogus companies that went bust. Bitcoin is secured by 30 million trillion calcs a second. It has utility that we cant even dream of. When you get FOMO and buy a mBTC millibit for $10 = BTC $10,000 I still wont sell to you as if reaches 1/4 the market cap of gold it will be $100,000 per BTC.

    • My argument stands whether you are blind to it or not. This is a ponzi currency confronting immense regulatory risk. Invest at your own huge risk.

  27. And for people that say it has illegal uses 99.9% of illicit trade is in USD or Fiat. To me the advent of distributed public ledger technology is one of those simple yet game changing technologies i would say it will have a similar impact to double entry bookkeeping “The historical origin of the use of the words “debit” and “credit” in accounting goes back to the days of single-entry bookkeeping, which had as its chief objective keeping track of amounts owed by customers (debtors) and amounts owed to creditors. Debit in Latin means “he owes” and credit in Latin means “he trusts”.[18]
    The earliest extant evidence of full double-entry bookkeeping appears in the Farolfi ledger of 1299-1300.”

    The difference here is that the technology is decentralized and democratic anyone can use it however i disagree that they can use it for anything as bitcoin is highly traceable through the distributed ledger it leaves behind. Leaving aside that this offers the possibility to be a bank account for the 40% of those in the world without a bank account, There are issues of scaling in bitcoin it has outgrown its network somewhat which has made it expensive to use for small transactions however this will be fixed in a safe and forward thinking manner. As the security that can be offered by a decentralized network running 38 million trillion calculations a second to ensure its security and immutability is something that should be treated as a public good even if it does use the electricity of a small nation.
    In regards to the recent hacking scandal BTC played a tiny part and was the wrong currency to use as it IS traceable.
    These are the three bitcoin addresses used int he Wannacry attack you can google each one and see how much money they raised around 50k USD.
    13AM4VW2dhxYgXeQepoHkHSQuy6NgaEb94
    115p7UMMngoj1pMvkpHijcRdfJNXj6LrLn
    12t9YDPgwueZ9NyMgw519p7AA8isjr6SMw

    The other big picture people aren’t seeing here is the way that bitcoin will fit into modern portfolios even as a tiny sliver. how to you think it will perform in a crisis. It is a safe haven asset that is correlated to very little that will find its way into hedge fund portfolios due to the diversification and natural hedge that it offers it times of turmoil.
    This is a great talk given by one of the leading experts in blockchain on why bitcoin is driving us to take cyber security more seriously as there is no incentive quite like securing value to make people take security seriously? https://youtu.be/RIKzZRA3qO4.
    If any criticism is due it should be directed at the agencies leaving these exploits open and vulnerable to attack?
    Tobias

  28. Who cares if its a Ponzi or not.
    One thing is for certain, it’s going to crash and you if you hold it, then sell it fast.
    The only interesting thing worth discuss is, can it recovery once it does and if so, how well because this is really going to hurt a lot. There is a lot of money poured into this thinking its some sort of safe haven, which its not

  29. For people that like numbers:
    There are 530,196 addresses with more than 1.0 bitcoins, totalling 15,792,119 BTC, 96% of all existing bitcoins.
    There are 353988 addresses with more than 2.0 bitcoins, totalling 15540583 BTC, 95% of all existing bitcoins.
    So 0.000088366% of the world own 1 Bitcoin.
    There are 285,842 addresses with more than 3.0 bitcoins, totalling 15,371,040 BTC, 94% of all existing bitcoins.
    There are 138,898 addresses with more than 10.0 bitcoins, totalling 14,528,843 BTC, 88% of all existing bitcoins.
    So 0.000088366 of the world own 1 Bicoin.
    So if 1/th of 1% of the world buys 1 bitcoin that is an increase in demand by a factor of 10.
    If the top 1% of world wealth buys 1 each that is an increase in demand of 100x and for some reason i think they might be after more than 1?

  30. Prosecuted futures….

    disheveled…. one would think after all the scams and fruad people would get the hint…. naw just like gold bugs… fear makes people stoopid…

  31. g0ddamn u nerdz r stoopid, that’s why th NSA tweaked a backdoor crypto virus on erry1’s ass… it’s a play to make ALL crypto illegal (except da banks of course 😉 – catch up. Read Ars like once a week… profit?

  32. 56k modems are a Ponzi. My Geocities pages load fine on my 33k6.

    Kind Regards
    1994