Bitcoin pyramid scheme bubble scales new heights

Marvel at the madness of crowds:

All time highs. I’ve been wonder lately at what point BTC becomes too-big-to-fail. But I don’t think such a thing is possible unless it infects the traditional banking system. The question is more when does it become too big to succeed? Via The Guardian:

Kenneth Rogoff, a professor of economics and public policy at Harvard University and a former IMF chief economist, has predicted that the technology behind cryptocurrencies will thrive, but the price of bitcoin will collapse.

“It is folly to think that bitcoin will ever be allowed to supplant central bank-issued money,” he wrote in the Guardian this week.

“It is one thing for governments to allow small anonymous transactions with virtual currencies; indeed, this would be desirable. But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely difficult to collect taxes or counter criminal activity.”

It’s both a pyramid scheme and a bubble!

Comments

  1. Wellie…. if you can get women to believe smoking advances their freedoms and liberty thingy… whats so hard about making people think crypto can’t do the same….

    Disheveled…. oldest trick in the book, make people fearful, confidently proclamation something [stuff] is the antidote to their fears…. profit++++++++

    P.S. relink – https://www.goodreads.com/book/show/3730.The_Hidden_Persuaders

    Originally published in 1957 and now back in print to celebrate its fiftieth anniversary, The Hidden Persuaders is Vance Packard’s pioneering and prescient work revealing how advertisers use psychological methods to tap into our unconscious desires in order to “persuade” us to buy the products they are selling.

    1957 – FFS

      • R2M….

        Were pretty much on the same page [were] until the druid thingy, too the point that those that think AGW is just a climate issue is so far from the multidisciplinary back drop, needed to realize the size and scope of it makes the simplistic and moronic mental gymnastics about the climate aspect – mental.

        Don’t know where you sit on the monetary side of things or social organization, it not well fleshed out.

        I also agree with a lot George Monbiot has to say, not because he says it, but because its a position I arrived at long ago via my own studies and experience. I would also add Adam Curtis to this point.

    • The is actually hyper-inflation – it is just in asset prices.

      This is because:
      1. of the way the money is fed into the system via loans to the rich
      2. the Chinese productivity boom and yuan rate fixing keeping prices of goods down
      3. the way central banks exclude assets from their inflation measures.

      • drsmithy…

        Don’t forget that 34T-ish in tax havens, the lack of capital formation for social good or lack of VoM, not to mention its non productive….

        disheveled…. and some bang on about lack of demand on one hand and then upper bound inflation in some asset classes….

  2. With literally every asset class seemingly in bubble territory, why single out cryptos? They seem to be a reflection of the state of the world today with our central bank’s idiotic policies in full swing.

      • That is not the issue. The problem is BC was based on an issue limit. Alas there is no limit on how many you can start so it is no different to fiat except the latter has an army behind and the banks in cahoots. I see this evolving as a “points” system in airlines, fast food restaurants, etc. The mathematical underpinnings are solid but the social and economic applications are limited unless governments opt for their own, leaving BC, Et and the others on the side of hedging collectibles.

      • You can’t even burn it or melt it.

        +1

        Its intrinsic value is actually negative – the energy and resources needed to create and power the calculations that produced it.

        At least gold looks pretty and has some industrial applications.

      • migtronixMEMBER

        Lol! Meanwhile if you want to do a transaction right now across the world in under 5 minutes, you’re going to use what?

      • Meanwhile if you want to do a transaction right now across the world in under 5 minutes, you’re going to use what?

        A credit card. Like I have been for the last twenty years or so.

        Maybe Paypal if the seller won’t take CC payments directly.

  3. scottb1978MEMBER

    You run the risk of alienating younger people who embrace the opportunities that crypto brings. Bubble, no bubble who cares. People would rather be talking about how to make money from crypto and if that conversation isn’t happening here then they’ll go elsewhere to have it.

    • migtronixMEMBER

      As far as I can tell bubbles don’t regularly drop 30-50% only to fully recover in days. If it’s a bubble where’s the credit creation driving it? Uh huh – the central banks hyperprinters

      • The Traveling Wilbur

        How is a Bitcoin any different from say a Top Trumps card or a Dragonball Z trading card? (you can assume a card in each set of cards has the same value as all other cards in its set if you literally want to answer that).

        I don’t argue that Bitcoin is a buy, just the why of that (people is stupid).

      • migtronixMEMBER

        Can you setup an escrow with those cards? With bitcoin it’s a no brainer I’ve done it tens of times.

    • With over 100 hedge funds trading in btc now bring institutional capital,and billions can flow in and out in a few trades, and that is evident now. In a no yield world they love it and earn very nice fees. Even JPM trades btc though Jamie seems not to know about it. Two of the high fliers in JPM now run crypto companies, and other JPM’ers in Guardtime which is digitising Estonia and will provide a cc. The utility crypto’s that have a sound business model like XRP using blockchain will do well, but most of the altcoins will disappear like they did around 2013. There is a coin called Tether and sovereigns could use that to model a crypto currency which is probably what Guardtime is doing for Estonia.

      I assume everyone knows the JPM applied for 150 odd blockchain patents and was rejected, yet GS has some. Maybe why Jamie is forgetting things.

      • You risk breaking the wilful ignorance trance. MB 375 articles on BTC since Nov 2013 (BTC $353USD…$5500 today), 200+ predictions of its demise. 8x 30%+ and recoveries corrections since.

        Buy the MB fund, it may return 10-15% PA on ‘safe’ haven investments.

      • Shawn, i’m a software eng, and i’ve had some btc since 2012. It’s just part of my asset allocation. I’ve had ASX blow out on me so my view of risk is a balanced one. There are some companies in the cc space that are real businesses with real utility, and i invest in some of them as well. Most of my wealth is in my super (so ASX) and that might evaporate just like anything else.

      • During an emergency, often times power is out. If bitcoin won’t work when the power is out, then during an emergency when the power is out, bitcoin won’t work. Aristotle’s 4 rules for money include that all money must have intrinsic value. Even when there is electrical power. Especially during an economic crisis. Paraphrasing Voltaire: All cryptos will achieve their intrinsic value of zero.

      • People are bartering, using cash etc. Nobody has made a BTC transaction on Puerto Rico for a long time now. Toast

      • ” What are going to exchange all your gold for?”

        Historically, people have exchanged it for both goods and services.

      • You’re going to give me a digital whodat or whatsis, and I must trust you without being able to verify?

      • About half of Puerto Rico’s bank branches and cash machines are up and running. People are waiting for hours outside banks and A.T.M.s in hopes of withdrawing as much money as possible.

        BTC dead in water…

      • migtronixMEMBER

        Well they can power banks they can setup powerbanks where people can charge their phone. If you can’t even use your phone then you have much bigger problems than not accessing your bitcoin wallet. Problems that cash won’t easily solve, because otherwise you’d use the cash to charge your phone!

    • In the desert I have no heavy coin, but I carry water. You with coin but no water offer me what?
      You are starving and I carry food, but you carry metal. You offer me what?
      We are in the middle of a food market, with a public water fountain off to the side. I still only carry food and water, you carry your coin. You offer me what?

      Plenty of societies have gone through hard times. They can all tell you the same stuff- when the shit hits the fan, you wants goods, not money. Any belief that you can use your gold or your cash misses the point that the exchange rate for each will be really distorted. A hungry man will pay $100 for a loaf of bread if all he has is $100 and all he needs is food. Gold would have an even worse exchange rate, because you have to convince the recipients that you haven’t tampered with the gold alloy, and they have to have enough of their own goods that they can stand to hold the gold until its exchange rate improves.

      Gold is only good for holding value from one stable period to the next. During periods of instability, the act of liquidating it will cause extreme losses. It also attracts thieves. Convenience is a 2 edged sword.

  4. you fail to mention Rogoff published a somewhat quickly discredited book with regards to models used
    he’s also the “genius” behind getting rid of physical cash….

    perhaps a bit biased imo

  5. Crypto is the wild-west of trading instruments. It’s completely decentralised and not able to be regulated. Market reactions are always extreme as it’s a completely emotion driven market, that’s what makes it fun to trade, and that’s why it will be widely adopted. Also can you really call it speculating when the average buyer doesn’t leverage their BC position?

  6. You MB blokes are a laugh. I do enjoy the core content as I swing to the contrarian side, but the sheer volume of opportunity cost calling tops, in the housing market and BTC alone, is staggering.

    Agreed on one topic, the housing market in Australia is a joke, but is being right and way f-ing early really any better than being wrong? No.

    Same applies to BTC, it is frothy for sure but calling it a pyramid scheme is a laugh. Fading your top calls on housing and BTC over the last 5+ years makes a rich man. You guys are talking your book as much as Jamie Dimon. Give it a rest.

    • Or perhaps you could have made your points back at the time MB were recognising the arising issues. Though thanks for pointing this out now in hindsight.

      • Missed the point – the opportunity cost by calling tops constantly, not retroactive advice for you. But sure see ya in 2012.

      • migtronixMEMBER

        This is fun, like last time in a couple of years you’ll come back swearing up and down you never hated on BTC.

        You’re always wrong…

      • migtronixMEMBER

        BTW how many people on your list did Paddock take out? You used to teach at Nevada U LV right?

      • Come on mig… anything with a fear or unfettered greed bias, has all the hallmarks of fashion, lots of volatility, is an end users preference for exchange w/o a broad or intrinsic social base line, high energy input w/o being and actual good that assist in creating value, is just an object d’art that fetch a high price – not that the auction houses don’t use physiological exploits and game the price discovery.

        The PR disaster is a prime example of what happens to golds assumed value in an economic or social collapse as endless studies show. Its only those talking their book or collapsniks that hold the faith.

        disheveled…. its just based on belief as informed by heaps of antiquarian musings….. ffs its just an off take on gold bug QTM rubbish… epic fail on that account imo….

      • Just to dog pile on wtf is notional price until its taken, especially considering feed back loops, sorta like the demand pull for shitty loans from RE to CC creating a toxic credit pool that almost brought down the entire payment system e.g. trade stops and value seeks zero….

        Then how many trillions in key strokes did it take to calm the heard and stuff the short sellers to achieve some resemblance to a floor under the whole thing. Not that C-corps invested in anything socially productive after having their collective asses pull back from the cliff they created. More junk bonds to do stock buy backs, take a breath and pay back debt so they could rinse and repeat, those with an multiplier advantage reap the unearned wealth of FIRE sector paper, complete and utter failure of the so called economic libertarian free market, but yeah, crypto will save the day…. sigh….

        Sorry mig, but you only seem interested in getting rich for yourself by hook or crook, completely ambivalent to everyone or thing else.

        disheveled… so much for your little house with a library….

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