"Comparing Bitcoin to Ponzi Schemes is unfair...

[tecate]

At least if they had a well diversified portfolio that only included some stonks they'd be fairly insulated. I know a fair few 20 somethings who's only exposure is to this bag of hot air. I would wager that there is far more concentration risk associated with Bitcoin hodlers than pretty much any other class of investor.

I'd almost agree with you if you hadn't run with the 'bag of hot air' commentary. On that we won't agree.
On the rest - sure. I don't think there's equity in terms of criticism re. volatility of growth stocks vs. crypto. And I'd add that the latter, seeing as its the wild west in the process of being tamed, has more right to be the way it is (for right now) than growth stocks.

 

[Duke of Marmalade]

Professor Stolfi gives an excellent argument for why bitcoin is a negative sum Ponzi. The professor is the top academic in this sphere in Brazil.

Features 1 and 2 make the scheme a fraud, rather than simply a bad investment (or bad "musical chairs" gambling game). As a minimum, the operators should warn investors of the negative-sum character and negative expected profit. In the case of bitcoin (and all other cryptos), not only that does not happen, but there are thousands of promoters and "investment experts" who predict impressive price increases and/or claim that bitcoin will have massive uses in the future that would somehow make it valuable. Apart from the mendacity of those claims, those promoters never point out that such massive uses would not translate into revenue for the investors.

 

[Duke of Marmalade]

Crypto promoters also make dozens of claims about the virtues of the currency and/or the payment system, such as that it will "one day" replace credit cards, replace national currencies, protect people's savings from inflation or confiscation by government, make banks obsolete, starve governments to death by depriving them of taxes or "money printing", enable support of dissidents in oppressive regimes, "bank the unbanked", allow free internet trade of drugs and other illegal items, end corruption, poverty, and inequality, etc. etc. etc. Ripple Inc., for instance, has boasted for many years that their XRP currency will be used by banks for international transfers. Ethereum promoters claimed that its "smart contracts" will remove the need for lawyers and courts in business deals. Creators of several cryptocurrencies, such as IOTA and Tron (TRX), falsely claimed to have partnerships with entities such as Microsoft [PYM1] and the Liverpool Football Club [TRW]. Bitcoin (BTC) promoters falsely claim that the Lightning Network will "soon" turn their crippled payment system into a "Visa killer". And so on. When one tries to debunk any of these claims, the promoters simply switch to another one.

Even if these rosy claims were to materialize, none of them would result in a source of revenue for people holding bitcoins. The value of those payment services would go partly to the users who use coins for payments, and partly to the miners in the form of transaction fees. But most crypto investors do not understand this point. They, almost "by definition", do not understand what a good investment is -- e. g. why gold, stocks, and real estate have value, and why investing in a game that is guaranteed to be negative-sum is a bad idea. And bitcoin promoters make no attempt to educate them on those points -- quite the opposite.

 

[tecate]

My what wonderful academic friends you have, Duke. I can give you the names of a couple more if you need them. I see the great Stolfi's main claim to fame is his opposition to bitcoin and crypto. I'd suggest that he keeps on with that as I'm sure it will get him a few more speaking gigs on the conference circuit.

Other than that, he claims this - "Bitcoin (BTC) promoters falsely claim that the Lightning Network will "soon" turn their crippled payment system into a "Visa killer"
I'm sure its a difficulty for him to accept but LN payments are real - and are being carried out in the wild - despite his protests.

 

[Duke of Marmalade]

@tecate let's stick to the Ponzi aspect of OP. Just as Stolfi remarks you chose to strike out in another direction in an ad hominem attack on the professor's credentials and motivation - you are becoming tiresome.

When one tries to debunk any of these claims, the promoters simply switch to another one.

A good definition of a Ponzi scheme is where the only possible source of a return to investors is from other investors. In this definition we do not necessarily have crooks and manipulators though crypto space certainly has its share of these.

It is not to deny that many folk buy shares mostly with a view to selling to other investors at a profit but in the end of the day shares are underpinned by real revenue.
Similarly many people buy gold with a view to its future resale, but without buyers who actually want it for its intrinsic value gold would also be a Ponzi.
He also points out that fiat is not Ponzi, although I believe you have described as such. Reason being people do not acquire fiat to make a profit - they have been assured by the custodians of fiat that their intention is the exact opposite - that it will lose value.
Stolfi does identify a class of buyer who buy not with a view to store of value or resale at a profit but for "ideological" reasons. He puts that constituency at 0.1%.
Stolfi also makes an interesting comparison between Ponzi/Madoff and bitcoin. Ponzi/Madoff were based on a lie and when the lie was exposed the game was up. Bitcoin on the other hand is based on delusion. Even if it falls to $1 the delusion will still survive to some extent. So I am going to shock you - I do not think bitcoin will go to zero (unless there is some regulatory intervention) for there is really no more information to be made available, unlike Ponzi/Madoff where the exposure was clear cut and final.

 

[tecate]

@tecate let's stick to the Ponzi aspect of OP. Just as Stolfi remarks you chose to strike out in another direction in an ad hominem attack on the professor's credentials and motivation - you are becoming tiresome.

You provided a direct quote from your academic friend - with no other commentary. I commented on what you posted - inclusive of a wayward claim re. LN. If you don't want me to comment on something, then don't post it.

On the ponzi claims, what new info does he bring to the table? Run a search on 'Stolfi' and you'll see that you've brought the guys views up multiple times. I don't particularly want to post the same response a 577th time to the very same claims that you're regurgitating. That to me is 'tiresome'.
On motivations, I would say motivations are relevant. Furthermore, we've had motivations questioned from both sides of the house on a continuous basis. Why should Stolfi get a free pass? All his wiki profile says is that he's a professor, he's highly cited and he's a bitcoin skeptic. You can claim ad hominem all day long and yet I'll still point out to you that the point I made (that he is otherwise of little import and his anti-bitcoin stance has elevated his profile) very much stands.

 

[letitroll]

My view is simple.........the last wave of crypto, this last mass adoption spike, pulled in the last remaining suckers into the mania.......to put it another way in previous crytpo bull runs & pull backs it was still a niche, lets call it hobby, there were lots of people still left to indoctrinate......this last wave has exhausted almost everyone susceptible to the siren song of BTC.......pyramid schemes collapse when you run out of suckers, manias collapse when all the chips have been pushed into the centre of the table & the next fellow who comes along is just a little less optimistic about the future than the last .......and super bowl in the United States was like peak crypto with all the ads at half-time......it looked to me exactly like the crest of a wave that was about to break.

Nobody is left to 'suck in', the last cycle mopped up the last group of people and nobody, moving forward, will be interested in 'getting involved" in a trading sardine that has fallen 90% peak to trough.....and where 95% of the population of holders are underwater. See the great scheme with BTC was it turned its 'owners' into unbeknownst to the individuals, unpaid sales people like @tecate ....exactly like a multi-level marketing scam. Problem now is the total addressable population for 'the hustle' has been burned up and the evidence of BTC losses are dispersed wide enough for people to be wary enough to say no thanks.

 

[CuriousGeorge11]

My view is simple.........the last wave of crypto, this last mass adoption spike, pulled in the last remaining suckers into the mania.......to put it another way in previous crytpo bull runs & pull backs it was still a niche, lets call it hobby, there were lots of people still left to indoctrinate......this last wave has exhausted almost everyone susceptible to the siren song of BTC.......pyramid schemes collapse when you run out of suckers, manias collapse when all the chips have been pushed into the centre of the table & the next fellow who comes along is just a little less optimistic about the future than the last .......and super bowl in the United States was like peak crypto with all the ads at half-time......it looked to me exactly like the crest of a wave that was about to break.

Nobody is left to 'suck in', the last cycle mopped up the last group of people and nobody, moving forward, will be interested in 'getting involved" in a trading sardine that has fallen 90% peak to trough.....and where 95% of the population of holders are underwater. See the great scheme with BTC was it turned its 'owners' into unbeknownst to the individuals, unpaid sales people like @tecate ....exactly like a multi-level marketing scam. Problem now is the total addressable population for 'the hustle' has been burned up and the evidence of BTC losses are dispersed wide enough for people to be wary enough to say no thanks.

You'll be delighted to know who is sponsoring the upcoming world cup

 

[tecate]

We've had these discussions before @letitroll . You were adamant it was going down and would never see $60k again. I believed it would go up first - and that as these things are cyclical, we'd see a major retrace.

On the 'no more suckers' aspect, I can see those that may have been burned being slow to come back. However, everyone that comes behind us are digital natives. They're different in that respect than the couple of generations before them. Furthermore, there are different constituencies at play. The gaming market is worth $200 billion and is expected to grow to $340 billion within 5 years. Decentralised digital assets are going to be part of that world - that change has already begun. And there is that digitally native group getting involved with that.

This past year has seen a whole host of new people being drawn in via NFTs. These are people that otherwise had no touch point with crypto. That whole thing is still only being scoped out - it has not drawn in its total addressable market. It hasn't even found all its utility yet because it's very early days. It's distinct from Bitcoin but they're very much related and anyone that can bring themselves to own an NFT is capable of figuring out what Bitcoin brings to the table.

Today saw the launch of a software stack to support decentralised social media on the Polygon sidechain. That implicates digital assets - albeit that it's very early days and it will probably take a decade to produce a mass market ready product and break down the stranglehold of social media incumbents. That will bring everyone in touch with digital assets.

I'm on record as saying that I expected a major slump and reset. What's changed since then is the macro economic picture looks much worse. If governments don't keep printing, then we all will have more to worry about than Bitcoin! Bitcoin by virtue of it being an immature asset will suffer most - but so will equities, property, gold, etc. Tech stocks already have suffered - in many cases nearly as much as Bitcoin - yet that special place in hell is only reserved for Bitcoin it seems.

You think this thing goes down never to recover. I think this thing can very easily go down - but ultimately, it will rise again. It's not impossible that we could have a multi-year crypto-winter. What there is no chance of us agreeing on is that where you see vapourware, I see utility. So you've promised you'll be here every step of the way as/when the price plummets. Great - athough can you provide an undertaking that you'll stick around upon recovery and not do a dishonourable runner as you did last time?

I joined these discussions as crypto winter set in in early 2018 - and stuck around the whole time. I can assure you that there are all manner of twists and turns in this whole story just yet.

 

[letitroll]

that comes behind us are digital natives. They're different in that respect than the couple of generations before them.

Losing money on particular versions of a 'get rich quick schemes' and its pain has inter-generational memory transfer built in.....losing money on crytpo will transfer to those 'coming behind us'...........after the 1929 mania.....the audience for the ownership of equites in the United States went from basically everybody to nobody for nearly 35 years......the pain & memory of loss in public securities was inter-generational & these were minority ownership shares in business with INTRINSIC value, not trading sardines.

As I've said the generation coming behind will fall for a get rich quick scehem with different clothes.......maybe it will be a property bubble again, beanie babies who knows.......but it wont be BTC. I can assure you of that.

This past year has seen a whole host of new people being drawn in via NFTs. These are people that otherwise had no touch point with crypto. That whole thing is still only being scoped out - it has not drawn in its total addressable market.

I'm afraid this cycle gobbled up almost everybody susceptible to the message - there are no more suckers left.....and not enough to ever get it back to $69,000 again.

I'm on record as saying that I expected a major slump and reset.

You know my view..........reset and never to return to anything approaching $69k ever again

You think this thing goes down never to recover. I think this thing can very easily go down - but ultimately, it will rise again. It's not impossible that we could have a multi-year crypto-winter. Great - athough can you provide an undertaking that you'll stick around upon recovery and not do a dishonourable runner as you did last time?

When would you be willing to wave the white flag @tecate ? Five years, ten years when BTC is no where near $69k? Interested to know vaguely remember you hating to get specific with timelines and price levels. Lets set a date I dont have time to be on forums the whole time...........if by 2030 BTC isnt back to its ATH's of $69k would that be a failure for it to function as a store of wealth???? Surely we can at least agree that? or would you prefer 2130 Come on if by 2030 (8 years) this 'thing' reporting to be a 'store of value', a digital gold, isn't back to its previous high then come on @tecate you gotta give up by then.

I told you government was going to strangle BTC but it looks like BTC is going to strangle itself before government could fully get to it. Given manias lead to so much promotional chicanery and promotion by undesirable people is there any surprise that everybody who is susceptible to this messaging has been now reached by the unbelievable amount of marketing dollars spent to entice them into the scheme. i firmly beleive there is nobody left and the corpuses of those who've been burned will serve as a reminder to the 'generation coming up behind' such that they wont get involved either.

 

[tecate]

@letitroll : I don't believe bitcoin to be a 'get rich quick' scheme albeit I'm sure there may have been some who did or who do. Anyway, 2030 is fine. Coingecko puts market top at $67,617 on 9th Nov.

 

[letitroll]

@letitroll : I don't believe bitcoin to be a 'get rich quick' scheme albeit I'm sure there may have been some who did or who do. Anyway, 2030 is fine. Coingecko puts market top at $67,617 on 9th Nov.

I know you don't think its a scheme and I don't doubt your sincerity/believe in the 'project' of BTC. I've always enjoyed chatting to you even though we have very different views.

No problemo on using Coingecko top tick figure of $67,617 in my world if I'm right, I'm going to be right by ALOT, not a couple K.....you will be first on my visit list Jan 1st, 2030 but were in agreement then that the BTC dream has clearly failed if it can't reach or exceed that high water mark of $67,617 it set in 2021 by the year 2030 right??

 

[tecate]

No problemo on using Coingecko top tick figure of $67,617 in my world if I'm right, I'm going to be right by ALOT, not a couple K.....you will be first on my visit list Jan 1st, 2030 but were in agreement then that the BTC dream has clearly failed if it can't reach or exceed that high water mark of $67,617 it set in 2021 by the year 2030 right??

Yup, that will work.

 

[tecate]

Bitcoin has reached a new all-time-high (ATH) price against a plethora of world currencies in recent days. Only the US dollar ATH remains to be breached. At the time of this post, BTC = $66,777.

https://twitter.com/x/status/1762897108007330097

 

[Flybytheseat]

Bitcoin has reached a new all-time-high (ATH) price against a plethora of world currencies in recent days. Only the USD dollar ATH remains to be breached. At the time of this post, BTC = $66,777.

Looks like it may be time to get out before the Ponzi collapses

 

[tecate]

Looks like it may be time to get out before the Ponzi collapses

Tragically, I failed to act on your previous warning on this back in Feb. 2018 ->

Couldn't agree more with Brendan. Bitcoin is a lightly cloaked ponzi scheme. Just because my nasal hair is of limited supply and can be mined if I'm lucky enough to live until 2040 doesn't mean it has inherent value. Also Bitcoin fails as a currency due to extreme volatility. Who accepts payment in BTC when by the time it hits your account it could have dropped 30% in value?

Bitcoin was $8,200 at the time. Down bad. Lesson learnt.

 

[ArthurMcB]

I think ill lob quid in at the next dip in about a yr. When its 8000 or so. And then flog it when it hits next ATH in about 2 yrs. Rinse and repeat . For fun.

 

[tecate]

I think ill lob quid in at the next dip in about a yr. When its 8000 or so. And then flog it when it hits next ATH in about 2 yrs. Rinse and repeat . For fun.

Who can tell what happens. I do expect much more volatility still. Brighter minds than me suggest that this bull market is still in its very early stages. I'm sure there will be a cycle crash. I'm sure that will be dramatic - but I'd be thinking that $8,000 would be optimistic. I added at $16,500 in Nov. 2022, thinking I'd get another stab at it further down. Further down never happened although I'm grateful to have gotten a buy order over the line at what turned out to be market bottom.

 

[ArthurMcB]

Care to predict what might be the next bottom price? Maybe 24kish?

 

[tecate]

Care to predict what might be the next bottom price? Maybe 24kish?

I wouldn't go anywhere near such a thing right now

Let's look what happens in 2024-25 first. There's a new ATH to be set. There's a halving event in April when we are already facing a demand/supply mismatch. Also, is past performance something that can indicate future performance? I believe that there's a new buyer group that will react differently to the last retail people in, in terms of a longer term outlook.