What are your thoughts on BitCoin?

[Modder_Mode]

This-

Doesn't really square with this:

A ponzi scheme has to have built into it the promise or guarantee of a return and also reward for recruitment of others (the pyramid structure).
Bitcoin doesn't fit this criteria. It may have the appearance of a dodgy ponzi scheme however it's not.

The early adopters were the real winners and not in the deceptive manner of a ponzi scheme, as I said there were quite a few people who had Bitcoin when it was worth peanuts purely as a gimmick with some even forgetting they had it, you hear of people losing a USB stick that had Bitcoin on it in an offline wallet that in today's market is worth a few hundred thousand dollars.

 

[Modder_Mode]

Are the crypto people here worried about google's quantum supremacy? As I understand it, a functioning quantum computer would pretty much break bitcoin, along with all asymmetric encryption schemes.

Google is unstoppable in every sense, they literally run the internet and can do whatever they please, they would love to have more control over cryptocurrency. The banks do not like crypto either as it gives consumers an alternative hence the first block read "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

It will be interesting when Facebook and others offer their own digital asset/crypto currency. It may push the prices of other cryptos up as it seems any wide-scale adoption of crypto always has an affect on the crypto market as a whole.

 

[Samson]

Google is unstoppable in every sense, they literally run the internet and can do whatever they please, they would love to have more control over cryptocurrency. The banks do not like crypto either as it gives consumers an alternative hence the first block read "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

It will be interesting when Facebook and others offer their own digital asset/crypto currency. It may push the prices of other cryptos up as it seems any wide-scale adoption of crypto always has an affect on the crypto market as a whole.

I am not sure you get my point. As I understand it, a functioning quantum computer would be able to factorise very large numbers, so break most encryption including that that secures cryptocurrency transactions. If such a computer is available generally, noone will be able to trust the transactions so the whole thing is likely to fall apart. We are not there yet, but I would have thought such a possibility on the horizon would give people pause for thought if they had significant wealth stored in bitcoin.

 

[MaryKB]

I don't mean Bitcoin is literally a ponzi scheme, I mean it works in a similar way ...

- you "invest" money hoping to get a return
- your reward is completely dependent on more people "investing" in the future
- your "investment" has no real value
- eventually, when no one's investing anymore, whoever invested last will lose everything

 

[Moriarte]

I am not sure you get my point. As I understand it, a functioning quantum computer would be able to factorise very large numbers, so break most encryption including that that secures cryptocurrency transactions. If such a computer is available generally, noone will be able to trust the transactions so the whole thing is likely to fall apart. We are not there yet, but I would have thought such a possibility on the horizon would give people pause for thought if they had significant wealth stored in bitcoin.

Such computer won’t be available generally for a very, very long time. And when it is, you think the first thing they’re going to do with a (currently) hundred mil worth of equipment is break random btc transactions? Regardless, there will be advent of quantum cryptography alongside quantum computing.. because quantum cryptography, among other things, is the requirement for quantum internet.

 

[Samson]

Such computer won’t be available generally for a very, very long time. And when it is, you think the first thing they’re going to do with a (currently) hundred mil worth of equipment is break random btc transactions? Regardless, there will be advent of quantum cryptography alongside quantum computing.. because quantum cryptography, among other things, is the requirement for quantum internet.

We do not know how long it will be until such a computer is available. I know googles current outing is pretty far from usable, but we do not know if the science will just turn out too hard or if tomorrows breakthrough will make it the next big thing.

I would have thought that if BTC is still worth thousands then it probably is a pretty highest value use case for a quantum computer.

Sure, we will need quantum cryptography, but that is not bitcoin.

 

[Moriarte]

Sure, we will need quantum cryptography, but that is not bitcoin.

Yes, and bitcoin et al will need to develop and code resistance based on understanding of quantum conditions. That same understanding powers google's quantum computer. What’s stopping quantum computer from breaking NYSE? It’s a wider problem.

 

[Samson]

Yes, and bitcoin et al will need to develop and code resistance based on understanding of quantum conditions. That same understanding powers google's quantum computer. What’s stopping quantum computer from breaking NYSE? It’s a wider problem.

The difference is that while a quantum computer could break the encryption the NYSE uses for its secure communication, it does not break the basic function of the NYSE that is people buying and selling shares. For proof, a quantum computer could not break the NYSE 50 years ago.

Bitcoin relies on the factorability of large numbers for its very existence. There is not an "old version" of it that you could fall back on that does not use this technology. You would have to come up with a completely new cryptographic scheme, and that would not be bitcoin.

 

[El_Machinae]

I don't mean Bitcoin is literally a ponzi scheme, I mean it works in a similar way ...

- you "invest" money hoping to get a return
- your reward is completely dependent on more people "investing" in the future
- your "investment" has no real value
- eventually, when no one's investing anymore, whoever invested last will lose everything

In fairness, step (2) isn't essential. What they're hoping for is that bitcoin gets increasingly adopted. Part of the value of a currency is that a portion of the currency is 'dead'. If we're using bitcoin, we'll all have a bitcoin wallet. Oh, at any given time, we're going to spend any specific bitcoin. But at any given point in time, there's a certain amount that's not being used. Not because it's being hoarded (as it is now), but because it's just not being used 'yet'. Think of it like the float in a savings account. Any specific person might not have much float. But the total float is pretty large.

A lot of bitcoin's current value is in place because it's being hoarded. And people are buying it merely hoping that it will rise in value (rather than having utility in its own way). Current hoarders are just speculators. They're happy to sell to a 'greater fool', but the chain of the greater fools is hoping that bitcoin will be adopted. Individual buyers are only buying 'hoping' that it will go up, and only think it might go up because it's gone up before.

Now, bitcoin might become like gold. People have psychological feelings about its fundamental value. At that point, it becomes a store of value. Everyone just hoards it, but only because everyone else is hoarding it. And, like gold, we waste vast resources just hoarding it.

Bitcoin has real value. It's just not an investment, because buying bitcoin doesn't create any value. In finance, one of the greatest swindles was tricking people into conflating 'investment' with 'savings'. Bitcoin is absolutely a type of savings vehicle.

 

[MaryKB]

Bitcoin isn't like gold, because at least gold has intrinsic value; there are other things you can do with it and sell it for. Oh I totally agree it's a bubble because of hoarding, and its value absolutely could crash, but if you own gold and it does crash, you at least still have something. But with Bitcoin, all you have is ... a number? There's nothing "real", you know what I mean? There's nothing that can produce any kind of value. At least with precious metals, you could make jewelry or something.

And like you say, people buy hoping it's going to be adopted. All it'll take is for adoption to show signs of decreasing and then it'll crash hard and fast (and permanently)

I wouldn't recommend investing in gold either, it's similar to Bitcoin yes but not the same. All of my investments are in mutual funds, because my strategy is to save over time while minimizing my risk.

 

[Zardnaar]

On the face of it Bitcoin isn't any more stupid than say currency exchange.

Money isn't really worth anything except what value we assign to it.

At least money is backed by Central banks though.

It's to volitile for me, price can collapse whenever a government regulates it.

We have retirement type accounts invested in share market, property and virtually zero debt.

We're averaging about 9 or 10% each year money doubles every 7 years or so.

By the time we retire it's automatic millionaires for doing essentially nothing except save.

 

[MaryKB]

At least money is backed by Central banks though.

That really is a huge difference. If you have US dollars for example, the United States government guarantees it will take that currency, so you always have a guarantee of some value. Bitcoin has no such backing.

 

[El_Machinae]

I wouldn't recommend investing in gold either, it's similar to Bitcoin yes but not the same.

I understand that bitcoin isn't like gold, because gold is 'real'. But the main reason why people want gold is because other people will want gold. At the end of the day, if you own bitcoin, you kinda own a number. It's like owning a drawing on paper. It's worth something if people care about the artist. Otherwise, its last intrinsic value is as kindling.


But, to be clear, buying gold isn't 'investing in gold'. It's 'purchasing savings in the form of gold'. Buying gold isn't an investment, it's a type of savings.

 

[MaryKB]

Oh I do understand, and I agree gold is a speculative bubble, but I'm also saying gold has intrinsic value because it does have uses beyond that, right? Like I said, gold is very popular for jewelry, and there are other things too. So even if no one wants gold for savings, you can still sell it to someone for something. And a drawing on paper may at least even have artistic value, but Bitcoin numbers don't even have that.

 

[El_Machinae]

Gold absolutely has 'intrinsic value'! It's why I am so against people who want it to be used to back dollars. If it has industrial uses that benefit people, it's the wrong decision to deliberately lock it in vaults. As it is, we bribe poor people to destroy their local ecology so that we can move a metal from one point in the ground to put it into another. So, the less we value gold as a savings vehicle, the easier it is to use for industrial purposes. But, it's still a savings vehicle, one not to be ignored.

I'm not going to say that the artistic value of a drawing is much different from a bitcoin. I've no real idea of what a bitcoin is, but it's part of a very complex equation. It's like thinking that a puzzle piece to a very beautiful puzzle has value, I guess. But, with a drawing, at the very least you can burn it or use it as insulation or something. A bitcoin seems to have no underlying value outside of just being mathematically pretty.

 

[uppi]

In fairness, step (2) isn't essential. What they're hoping for is that bitcoin gets increasingly adopted. Part of the value of a currency is that a portion of the currency is 'dead'. If we're using bitcoin, we'll all have a bitcoin wallet. Oh, at any given time, we're going to spend any specific bitcoin. But at any given point in time, there's a certain amount that's not being used. Not because it's being hoarded (as it is now), but because it's just not being used 'yet'. Think of it like the float in a savings account. Any specific person might not have much float. But the total float is pretty large.

A lot of bitcoin's current value is in place because it's being hoarded. And people are buying it merely hoping that it will rise in value (rather than having utility in its own way). Current hoarders are just speculators. They're happy to sell to a 'greater fool', but the chain of the greater fools is hoping that bitcoin will be adopted. Individual buyers are only buying 'hoping' that it will go up, and only think it might go up because it's gone up before.

Now, bitcoin might become like gold. People have psychological feelings about its fundamental value. At that point, it becomes a store of value. Everyone just hoards it, but only because everyone else is hoarding it. And, like gold, we waste vast resources just hoarding it.

Bitcoin has real value. It's just not an investment, because buying bitcoin doesn't create any value. In finance, one of the greatest swindles was tricking people into conflating 'investment' with 'savings'. Bitcoin is absolutely a type of savings vehicle.

The problem is that Bitcoin does not scale well and thus the transaction costs become too large for a serious currency. So waiting for it to get increasingly adopted is futile.

 

[Fippy]

Bitcoin is depressing..used for black market, criminal underground etc payments which always was the only purpose besides gambling on their price.

 

[Zardnaar]

That really is a huge difference. If you have US dollars for example, the United States government guarantees it will take that currency, so you always have a guarantee of some value. Bitcoin has no such backing.

Agree. I remember an earlier statement Ron Paul funbucks.

Can you make money on Bitcoin? Yes. I don't have the stones for it though.

People always like get rich quick schemes. Can you double your money in a year yes. Reverse is that you can lose half your money in a year as well.

Gold also has plenty of industrial uses.

 

[El_Machinae]

The problem is that Bitcoin does not scale well and thus the transaction costs become too large for a serious currency. So waiting for it to get increasingly adopted is futile.

Oh, I know that bitcoin itself isn't viable. I don't think it will ever become a currency, unless there's some serious change written into the underlying concept. As I said, the 'value' of bitcoin as a currency is the same if it's worth $0.50 or $5000. But, we're also in a world where people seem to be buying it because they think it's valuable. It can become a store of value if psychology works out that way.

What I'm saying is that it doesn't have to be a Ponzi scheme to work out for normal buyers.

 

[MaryKB]

I'm not really sure what you're arguing then? Any ponzi or pyramid scheme can feel valuable to you if you believe more people are going to keep buying in, but like you say that value is entirely in your own head. My point though was I highly recommend against it because there's no true value or guarantee of any kind, and as soon as people no longer want it you're screwed.