Bitcoin is a digital currency that has no intrinsic value and its price is determined solely by supply and demand. It is not backed by any government, which means that it can be used to finance terrorism or other illegal activities.
As the price of Bitcoin increases, more people are attracted to it, which then drives its price even higher - creating a self-reinforcing upward spiral that is unsustainable and will eventually collapse.
If you think it's a scam and going to collapse then don't hold any of it.
"It is not backed by any government, which means that it can be used to finance terrorism or other illegal activities."
Besides that fact that this statement is simply untrue because the government of El Salvador has backed Bitcoin, it is not logical. The endorsement or support or lack of endorsement/support of any currency or money doesn't determine or even influence whether or not it can be used to finance terrorism or other illegal activities. Government backed money funds such things all the time, and will continue to do so regardless of what happens with Bitcoin.
I suspect that because you don't like Bitcoin you associate it with bad things, rather than the other way around, though I could be wrong... it is a popular opinion that governments should have direct control over the money of every individual, and Bitcoin is designed to make that difficult. I suspect this is also true of most who oppose Bitcoin because of environmental concerns. No doubt there are those who really are concerned about the energy use, but most are just dismayed that they were wrong and these reasons are just coping mechanisms to avoid having to admit it.
Cryptocurrency proponents love parroting that idea. It’s like they are dismayed at the harm caused by cryptocurrencies but don’t want to give them up, so they fabricate scenarios where other people are petty as coping mechanisms to avoid having to admit it.
When people say that they mean, you know -- large, stable, democratic governments. Which El Salvador (and the CAR et al) are essentially the opposite of.
This is a part where I can't agree. A scam assumes someone is profiting on purpose. Bitcoin supply is largely diluted now though some early adopters made big, this was mostly by chance. That is, unless you think Nakamoto is still hiding for the big pay-off.
> Bitcoin is a digital currency that has no intrinsic value
There is no such thing as "intrinsic value". The value gets assigned by people and market participants.
> and its price is determined solely by supply and demand
Everything is.
> It is not backed by any government
Hardly anything is backed by governments. Also, outside of the Western bubble, many governments defaults on stuff they back...
> which means that it can be used to finance terrorism or other illegal activities
Most terrorism is financed by governments (big surprise!) and most illegal activities will prefer cash/banks/real estate because of the easier on-off ramps to the real economy. You can't launder money with Bitcoin.
> As the price of Bitcoin increases, more people are attracted to it, which then drives its price even higher - creating a self-reinforcing upward spiral that is unsustainable and will eventually collapse.
Okay. Not sure what the issue here is. Bitcoin doesn't have a regulatory body for "market stability". It's anything but stable.
I don't "believe" in Bitcoin. Bitcoin is there whether you believe in it or not. It has shown itself to be quite resilient to governments and censorship (if you follow the China bans) and unlikely to go away any time soon.
> There is no such thing as "intrinsic value". The value gets assigned by people and market participants.
I'll leave out the discussion of the value of a company and fundamental analysis as off-topic here. Let's focus on currencies instead. The value of a currency is not its exchange rate. Just because Bitcoin is worth 38910.69 USD, does not mean it's more valuable as a currency than a dollar. 1 GBP being worth 1.25 USD doesn't push people to use GBP in place of USD. The value of a currency stems from two factors: liquidity and stability. The reason for the dominance of USD in international trade is the stability people around the world expect from it, compared to other currencies, as well as its liquidity (almost everyone accepts dollars, sometimes even more eagerly than their local currency). Bitcoin fails on both fronts. There are still loads of things I can't buy with Bitcoin (admittedly this aspect is changing). Stability^W volatility of Bitcoin is a meme since its inception. A currency whose value changes so dynamically is a shitty currency. It is more similar to a gambling game than to a currency (and has similar psychological effects on the players). Notice that noone ever "invests in a currency" (other than as a shorthand for investing in something that's sold in that currency), that would be nonsensical, given that the whole point of a currency is so that its value changes as little as possible. So... I guess saying that "Bitcoin is a digital currency that has no intrinsic value" is wrong mainly due to the first part of this sentence. Instead I'd say: Bitcoin is not a currency, but a speculative financial asset.
With a pure linear emission, Bitcoin would now, after 13 years, still have a yearly supply inflation of 7.7%, and remain more suitable as a means of exchange than a store of value. Its price would be way lower, and its environmental impact much less.
But then people will also waste energy and throw real money into NFTs, hats, cosmetics, virtual spaceships... Bitcoin is just more of the same. An exploitation of some primitive human brain fart for percieved status in a rigged game.
Bitcoin's killer feature is speculation for the stupidity of people. What small cryptographic utility it might ever have is eclipsed by the illusion of currency and investment. It is a marketable enigma.
Advanced cryptocurrencies such as Ethereum and Algorand are more suitable for commerce.
The basic concept of cryptocurrency, which sadly is generally missed because many people have turned it into a get-rich-scheme like everything else, is to *use math and computer science to reduce or eliminate cheating in databases that record monetary balances*. The techniques are far superior to the legacy (secret) databases used by banks.
Gold and paper money solves it in the physical world. Gold because it’s dense and easy to check for forgeries (although gold is not used everyday now, is it). Paper money obviously has counterfeiting and serial numbers. But neither of these can be exchanged online.
If we agree that blockchain currencies are a way to exchange value online, then the question is: are they better than credit cards and banks?
Right now, it’s not clear to me that they are, because of the emissions from mining, and the relatively slow transaction rate. Time will tell if the digital currencies will scale better than they are now.
By the way, when comparing emissions of digital currencies with banks, do analysts include the physical bank infrastructure, such as all the bank’s retail branches, and associated employees and other overhead?
Bitcoin is actually pretty unfriendly to terrorist groups because it's a public ledger, making it relatively easy for law enforcement to track. By contrast, being backed by a government doesn't actually make, say, the dollar immune to nefarious uses.
Value is in the eye of the beholder. If Bitcoins sell for $38k then they're worth $38k... right now. As the payment network related to Bitcoin spreads wider, its utility goes up, and the value to holders increases. This is similar to how a fiat currency's value largely comes from the ability / obligation to pay taxes in that currency, but rather than being created by governmental mandate, it is developing organically, bootstrapping.
If the Internet had had a payment system built into it from the beginning, spam may never have become a problem. Advertising would not have been the only effective way to monetize. And so on. Getting to a micropayments world with the Lightning Network or whatever comes after it is a technological revolution that will likely have wide-ranging consequences.
Some of my reasons.
That's quite an ask. HTTPS only arrived half way through its existence.
Later after the market has moved, bitcoin will go out of fashion, it will fall to a hashrate attack attributed to lack of use & disinterest.
I think digital currency is here to stay. Further, I think most people are wrong about it what it will mean. People seem to see it as some utopian freedom. What I see if a cash replacement that has traceability on a scale which was never possible before. And it's all public (at least for most of the coins). If your government said tomorrow that all your cash would be converted to a digital currency like bitcoin but all existing regulation would be in place then they could watch literally every cent you spend. Further, if it stayed public like bitcoin, so could advertisers. They wouldn't need to place like buttons all over the web to watch what you're doing. They could just watch your account. Using any kind of anonymisers would be made among the harshest of crimes so you cannot escape the observation.
I hear a lot of proponents saying digital currency is the way to reduce the power of government and the banks. I think, in the end, this will give both power on a scale never before dreamed.
> it is a scam.
How so?
> Bitcoin is a digital currency that has no intrinsic value
Fiat currency has no intrinsic value either. Aside from precious metal coins.
> not backed by any government, which means that it can be used to finance terrorism or other illegal activities.
Illegal activity is older than bitcoin. It can be and is financed with government fiat currencies.
Unless you just mean the convenience of using banking systems.
> creating a self-reinforcing upward spiral that is unsustainable and will eventually collapse.
I agree here. The value of bitcoin is based entirely on more people wanting to buy-in. But this is not much different than any other commodity/currency hybrid such as gold.
https://news.ycombinator.com/item?id=31262447
I'm open to suggestions on editing the wording/options.
(FYI, HN supports polls: https://news.ycombinator.com/newpoll)
Next, I'm going to find some rubes to read it, and they will give me money to own those nonsensical numbers. Those guys are going out to farm more rubes. We aim to say all sorts of new finance is now possible while enabling nothing but crime and fraud.
Rinse. Repeat.
if it isn't completely obvious, I think the whole thing is unhinged
What is nonsensical about the white paper?
It is the first solution to the double spend problem, thus the first decentralized money system. Cryptographers had tried to create such a system for at least a decade, but no solution had been found before.
And it has been proven beyond a doubt that it works, and it's secure. It's kind of insane that the first solution to something is good enough to handle over 10 years later an almost 1 trillion market cap (thus a massive incentive to hack it / break it).
It has of course some big limitations, which is to be expected for the first solution to a problem. Namely, it's kind of a "brute force" solution, with this I mean the inefficient aspect in terms of energy usage. And it has very low throughput (TPS). It still is however, a breakthrough paper. It takes you from having no solution to a problem, to having a working solution.
The shame is how slowly it has progressed from there. It's been over 10 years and the efficiency part is only now being almost solved with ETH PoS. And the throughput part seems quite far away. Also the UX of most software that allows you to interact with cryptocurrency is still awful.
The bitcoin whitepaper is one of my favorite papers in fact. It is very approachable with minimal cryptography knowledge and only 9 pages long. And very simple, unlike more modern cryptocurrency papers.
The trustless model where the paper insists that irreversible transactions are the only acceptable form of financial settlement is hubris and ignorance.
Am I relying on crypto to retire? Hopefully not, and anyone who does may want to reconsider balancing their portfolio. It can go away as easily as it arrived. I don't think it will, but there's a chance that it's a Palm Pilot in a world if iPads.
The secular parts of the country are completely exposed to such phenomenons, because in reality they aren't really secular, they just substitued one religion for another.
I also want the value to stabilize before I start using it. Bitcoin as an investment is scary I'm not sure where the current price comes from and why it keeps going up. Once it levels off I'd be happy to use it.
Is gold a scam?
Nope.
It's more accurate to understand it as a store of value, like gold or art or baseball cards. All of which only have value because other people will give you fiat currency in exchange for some.
If it makes you feel better, Bitcoin was likely created by the US Government (unless you believe in Satoshi/Santa). There is around $70 billion in bitcoin sitting unused in the original wallet somewhere, something only the US Government could resist burning through. Once you realize the origin myth and its effectiveness as a tool for destabilizing other currencies and extracting wealth out of unfriendly countries by bypassing their currency controls, you realize the US Government backs it, so why shouldn't you?
