The bitcoin pyramid scheme How is that working out, where are the Lambos?

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Charmonium

Diamond Member
May 15, 2015
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#26
This, right here, is exactly what I was talking about. The US dollar and all the currencies based on the IS dollar are based on ...

...

...

...

nothing.
It depends on what you consider 'something.' If you mean something like gold, then yeah, it's based on nothing. But there's such a thing as intangible value. If you've ever taken an accounting course, you know that there are specific rules for intangible assets.

I'm not talking about the same thing in relation to fiat currencies but it's a similar concept. The value of a currency may require a certain amount of trust in the financial system and that contributes to it's value, but it's not the sole source of value.

The value of a currency is a reflection of the strength of the economy that is based on it, which is another way of saying that it's based on the level of economic activity. That activity creates demand for the currency and gives it value.

If you have a use case that requires something like a cryptocurrency, then the demand created by that use case is what would give it value. But I'm not aware of any such use case.

The only one I can think of that would have potential is one that you could use for cross-currency transfers. And while all of them could be used that way, I only know of a couple that are targeting that use case.
 
Jul 1, 2001
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#27
If bitcoin collapses what will crooked TV politicians and business men use to demand payments?
Cash, the same way they've always done it.

I'm more interested in seeing if the Darkweb marketplaces will continue to use Bitcoin if the value continues to drop, or if they will switch over to a more stable cryptocurrency that's tied to the price of something like a Euro or a Dollar. There are projects out there that are promising that.
 
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Jun 24, 2001
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#28
All currencies are based on faith in t
It depends on what you consider 'something.' If you mean something like gold, then yeah, it's based on nothing. But there's such a thing as intangible value. If you've ever taken an accounting course, you know that there are specific rules for intangible assets.

I'm not talking about the same thing in relation to fiat currencies but it's a similar concept. The value of a currency may require a certain amount of trust in the financial system and that contributes to it's value, but it's not the sole source of value.

The value of a currency is a reflection of the strength of the economy that is based on it, which is another way of saying that it's based on the level of economic activity. That activity creates demand for the currency and gives it value.

If you have a use case that requires something like a cryptocurrency, then the demand created by that use case is what would give it value. But I'm not aware of any such use case.

The only one I can think of that would have potential is one that you could use for cross-currency transfers. And while all of them could be used that way, I only know of a couple that are targeting that use case.
All such money is based in faith, whether that is faith in the US government and the enduring value of a dollar or faith that Bitcoin generation will remain relatively constant as technology increases. It’s about finite resources and a medium of exchange. They aren’t exactly trading seashells here.
 
Feb 14, 2002
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#29
Ha Ha I caught the Gold Bug back in the early 2000's, but couldn't afford gold coins so I brought silver rounds instead. Did you know that buying Gold with a CC isn't allowed by the Feds.

Did made about 50% profit when I sold them back in summer 2007.
Nonsense. Who told you that BS? Gold is bought everyday with credit card. How do you think people buy gold on eBay? Go to Apmex and you can buy all the gold you want with credit card.
 
Feb 14, 2002
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#30
I’m curious if the rich Chinese will continue to use Bitcoin to move the money out of China. It’s easier to trust and use when the price of Bitcoin is going up vs down.
 
Jun 24, 2001
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#31
Traditional currency does nothing useful? OK
It serves as a medium of exchange to eliminate reliance on a “coincidence of wants,” which was a major impediment to the free exchange of good and services and enabled us to specialize.

Bitcoin is also a medium of exchange that resolves the coincidence of wants, but does so without giving the power/trust to a bank, government, individual, or group. It ain’t an IOU.

The history of paper money:
https://youtu.be/-nZkP2b-4vo
 
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whm1974

Diamond Member
Jul 24, 2016
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#32
All currencies are based on faith in t

All such money is based in faith, whether that is faith in the US government and the enduring value of a dollar or faith that Bitcoin generation will remain relatively constant as technology increases. It’s about finite resources and a medium of exchange. They aren’t exactly trading seashells here.
I would say trust in the governments that issues said currencies. There are very good reasons why the US Dollar is accepted almost anywhere in the World or at least easily exchanged for other currencies.
 
Oct 10, 1999
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#33
I somewhat regret never Mining Bitcoin/Other Cryptos years ago when it was viable, but I never could accept them as a legit Currency I could Use or Invest in. Many people may have made money Investing in it, but the risk has always been ridiculously high for such a flakey concept. Only those who believed the propaganda that National Currencies are based on nothing more than some dictum could possibly accept Cryptos as legitimate alternatives. The worst part is that Cryptos are a colossal waste of Energy and should be banned for that reason alone.
 

Charmonium

Diamond Member
May 15, 2015
5,688
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#34
All currencies are based on faith in t

All such money is based in faith, whether that is faith in the US government and the enduring value of a dollar or faith that Bitcoin generation will remain relatively constant as technology increases. It’s about finite resources and a medium of exchange. They aren’t exactly trading seashells here.
It's exactly like trading seashells.

In both instances you have no use case that creates demand for the "currency." Value comes from demand and nowhere else. Even a currency based on a gold standard still relies on demand for gold, which has very little intrinsic value.
I’m curious if the rich Chinese will continue to use Bitcoin to move the money out of China. It’s easier to trust and use when the price of Bitcoin is going up vs down.
I forgot about that particular use case since in the long term, I think that either Chinese capital restrictions will be relaxed or a better way of moving out of yuan will come along. But that's a very good point.
 
Apr 27, 2000
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#35
How would you feel If I bought a house in 2017 for 200k usd. I hand you 10 bitcoin and today you decide to house hunt but just discovered your bitcoin is worth only 33k. That would mean bitcoin is about as good as Venezuelan currency against the USD. The price swings makes it useless as a means of exchange.
While I'll agree, you'll find that most of the current projects that legitimately hope to use blockchain as a payment system would not force you to transact in that manner.

Let's say you have Blockchain X (I'll just call it X) and you want to use it to buy a house. You link the X App to your bank account, select a payment address (given to you by the person selling the house), and then initiate a bank transfer. The slowest part of this transfer might be your bank sending along the money - right now, even "legit" crypto companies like exchanges take up to 4 days to pull money out of a bank account, unless you wire it for a fee. But let's assume someone has actually worked out a deal with the bank to initiate a transfer out of your account and to someone using the blockchain in a reasonable time frame. Perhaps you've signed up with your bank to facilitate effortless exchange between USD and a stablecoin (TUSD, DAI, USDC, etc)

So the money leaves your bank account, gets converted to an exchange token (let's use TUSD in this case) via oracles, and is sent to the target. The target gets TUSD, which is then converted BACK to USD (again via oracles), and then another
bank transfer is initiated to drop it into their account at the bank.

Alternatively, the oracle might convert to TUSD and then leave it that way, assuming the recipient wanted a blockchain asset rather than fiat.

At no point would anyone deliberately buy crypto at an exchange just to buy house, at least not unless they're insane or trying foolishly to drive adoption by avoiding sane payment tools.

Remember anyone can create a new coin, bitcon is just one of many coins. Bitcoin is based on nothing.
In this case, adoption matters. Bitcoin didn't gain value until people started mining it and getting involved in the project. Same goes for the other big chains. I can create my own blockchain and my own blockchain assets, but without a userbase, they'll have no value. Nobody will be trading in them. I can try some wash trading to create false value, yet no index will list those assets. In order for my crypto to have value, I have to create the entire ecosystem to go along with it, and I have to convince people to use some part of that ecosystem.

Now if someone creates a cryptocurrency and its backed by an audited gold store in a insured vault and its backed by a legitimate entity then I can see that cryptocurrency working. But bitcoin is based on nothing, zero. Its worse than fiat because there are no regulations or entity to back it and provide an orderly market etc..
There are cryptos that are based on USD bank reserves, like TUSD. They are (allegedly) audited, unlike USDT. I would be wary of a crypto based on a gold store unless the gold were stored someplace like Switzerland. In the US, physical gold HAS been confiscated in the past.

Cash, the same way they've always done it.

I'm more interested in seeing if the Darkweb marketplaces will continue to use Bitcoin if the value continues to drop, or if they will switch over to a more stable cryptocurrency that's tied to the price of something like a Euro or a Dollar. There are projects out there that are promising that.
The Darkweb uses XMR, not BTC. They'll continue to use XMR so long as it remains secure. It is devalued, but you'd better believe that the Darkwebbers know the risk and probably have multiple onramps and offramps so they can use the crashing market to increase their stack and come back out onto the illicit markets with larger amounts of cash to deal with changing prices.

The worst part is that Cryptos are a colossal waste of Energy and should be banned for that reason alone.
Outside of Bitcoin and maybe Ethereum, who else is using colossal amounts of energy in the cryptosphere?
 
Jul 12, 2000
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#36
I think you can go back to the threads in 2011 and figure out who doesn't have to work anymore if they chose not to.
 
Jul 1, 2001
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#37
Outside of Bitcoin and maybe Ethereum, who else is using colossal amounts of energy in the cryptosphere?
I think that any Cryptocurrency that relies on Proof Of Work style bruteforce hashing to verify transactions will waste Electricity. I know that Google had to ban cryptocurrency mining from their free cloud hosting trials because Monero and Nimiq miners were signing up for a bunch of trials and were wasting space in their datacenters. I'd imagine that other hosting providers have had to do the same.
 
Jun 24, 2001
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#38
It's exactly like trading seashells.

In both instances you have no use case that creates demand for the "currency." Value comes from demand and nowhere else. Even a currency based on a gold standard still relies on demand for gold, which has very little intrinsic value.
I forgot about that particular use case since in the long term, I think that either Chinese capital restrictions will be relaxed or a better way of moving out of yuan will come along. But that's a very good point.
Not “exactly like. ...or not YET at least. A rate-limit to how many can be mined/harvested is supposedly built-in to Bitcoin, which is why I said it requires faith in the rate continuing to be limited. Cowry shells can be harvested with abandon or farm-raised using modern techniques. While it’s possible that technology will eventually break crypto currencies in a similar way (quantum computing?), the value we put into it requires faith that it will not and it will remain sufficiently difficult to procure.

Also, Cowry shells were only used because they were sufficiently difficult to obtain in quantity with the technology of the time and they did have an aesthetic appeal. Like many gems, it didn’t have to be useful to gain value and much of the “demand” was due to the perceived currency value (not the aesthetic). They reinforced each other.

Outside of Bitcoin and maybe Ethereum, who else is using colossal amounts of energy in the cryptosphere?

The Chinese government.
 
Apr 27, 2000
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#39
The Chinese government.
Eh? How? Are they running their own PoW algorithms?

I have sometimes suspected that Monero (and related) are also causing some serious power draw issues. But Monero is harder to track since it can hash pretty well on some CPUs, so you don't have centralized powerhog farms like you do with Bitcoin. XMR can be mined piecemeal across millions of machines in disparate locations. Thanks to various viruses/trojans that's happening right now.
 

Charmonium

Diamond Member
May 15, 2015
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#40
Not “exactly like. ...or not YET at least. A rate-limit to how many can be mined/harvested is supposedly built-in to Bitcoin, which is why I said it requires faith in the rate continuing to be limited. Cowry shells can be harvested with abandon or farm-raised using modern techniques. While it’s possible that technology will eventually break crypto currencies in a similar way (quantum computing?), the value we put into it requires faith that it will not and it will remain sufficiently difficult to procure.

Also, Cowry shells were only used because they were sufficiently difficult to obtain in quantity with the technology of the time and they did have an aesthetic appeal. Like many gems, it didn’t have to be useful to gain value and much of the “demand” was due to the perceived currency value (not the aesthetic). They reinforced each other.
You seem to be focusing on the supply side of the issue. Something is more valuable if it is rare or at least difficult to obtain.

But value is determined by the intersection of supply and demand. If there is no demand, then supply is irrelevant.

I'm focusing on the demand side. What use cases are possible for cryptos? IOW, where will demand for a given crypto come from in the future?

No govt on earth will allow its economy to function, even in small part, on a currency that it doesn't control - to the extent that they have a choice in the matter at least. You do see some economies that use the dollar as their defacto currency but that's only because their own currencies are usually worthless.

Crypto advocates seem to focus on this use case though. But it assumes that all fiat currencies will eventually become worthless. I call that the apocalyptic use case.

Aside from that and the use of cryptos for speculation, what use cases exist or can exist for them?
 
Jan 12, 2005
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#41
This, right here, is exactly what I was talking about. The US dollar and all the currencies based on the IS dollar are based on ...

...

...

...

nothing.




US dollar is based on nothing. It only has value because we believe it does.
WTF. The US dollar is very much not based on nothing!
 

whm1974

Diamond Member
Jul 24, 2016
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#42
Crypto advocates seem to focus on this use case though. But it assumes that all fiat currencies will eventually become worthless. I call that the apocalyptic use case.

Aside from that and the use of cryptos for speculation, what use cases exist or can exist for them?
This would be ironic but if an true EOTWAWKI happen, wouldn't every Cryptocurrency suddenly become worthless?
 

Charmonium

Diamond Member
May 15, 2015
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#43
This would be ironic but if an true EOTWAWKI happen, wouldn't every Cryptocurrency suddenly become worthless?
If we're talking a dystopian, post-apocalyptic world, then sure. I was thinking more of a financial apocalypse. Some might argue that's almost what we had in 2008 and something like is going to happen again. The only question is when. Personally I agree with that prediction but I'm not convinced that the financial system won't recover next time too. But if it doesn't, would some sort of global cryptocurrency be our first choice? That seems unlikely.
 

whm1974

Diamond Member
Jul 24, 2016
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#44
If we're talking a dystopian, post-apocalyptic world, then sure. I was thinking more of a financial apocalypse. Some might argue that's almost what we had in 2008 and something like is going to happen again. The only question is when. Personally I agree with that prediction but I'm not convinced that the financial system won't recover next time too. But if it doesn't, would some sort of global cryptocurrency be our first choice? That seems unlikely.
Well back in 2008, cold hard cash didn't all of the sudden became worthless. We would need the Feds to totally collapse for that to happen.
 
Oct 9, 2002
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#45
It depends on what you consider 'something.' If you mean something like gold, then yeah, it's based on nothing. But there's such a thing as intangible value. If you've ever taken an accounting course, you know that there are specific rules for intangible assets.
Yes. Cryptocurrency is also an intangible asset.

I'm not talking about the same thing in relation to fiat currencies but it's a similar concept.
Same really.

The value of a currency may require a certain amount of trust in the financial system and that contributes to it's value, but it's not the sole source of value.
Yes. Crypto also requires trust in the system for it to work. The level of trust people have is swinging wildly, so the value is volatile.

The value of a currency is a reflection of the strength of the economy that is based on it, which is another way of saying that it's based on the level of economic activity. That activity creates demand for the currency and gives it value.
Yes. Yes. All of this applies to cryptocurrency as well.
 
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Apr 27, 2000
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#46
I'm focusing on the demand side. What use cases are possible for cryptos? IOW, where will demand for a given crypto come from in the future?
Most of the utility tokens amount to time shares on a distributed, decentralized computer network. Some models are more centralized than others, like EOS. What the computer network is intended to do can either be broad (EOS, NEO, ETH, etc.) or narrow (VEChain). Or some tokens are subjects to a host chain (example, OMG is a tokenized smart contract that runs on top of Ethereum). To know more about how that helps in the real world, you have to understand the blockchain itself, its governence and function, and so forth.
 

Charmonium

Diamond Member
May 15, 2015
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#48
Most of the utility tokens amount to time shares on a distributed, decentralized computer network. Some models are more centralized than others, like EOS. What the computer network is intended to do can either be broad (EOS, NEO, ETH, etc.) or narrow (VEChain). Or some tokens are subjects to a host chain (example, OMG is a tokenized smart contract that runs on top of Ethereum). To know more about how that helps in the real world, you have to understand the blockchain itself, its governence and function, and so forth.
I'm not really familiar with those. Maybe ETH a little. But it seems to me that the value of the tokens would depend on how much demand there is for the services the network can provide.

If we're just talking about decentralize storage or computing, then the networks would be competing with normal vendors who provide those services.

If we're talking about things like smart contracts, that's a bit of a pipe dream. I don't practice anymore but I'm a licensed attorney and I can tell you for a fact that for smart contracts to work - i.e., be enforceable, any system using them is going to have to find a way of interfacing with the legal system of each and every country where the contracts are used. That will be entertaining to watch.
 
Apr 27, 2000
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#49
But it seems to me that the value of the tokens would depend on how much demand there is for the services the network can provide.
Exactly. In the case of existing blockchain tokens like ETH and NEO, their value currently is based on speculation regarding the future value of their respective computing networks.

If we're just talking about decentralize storage or computing, then the networks would be competing with normal vendors who provide those services.
Decentralized, in this context, means decentralized governance/enforcement. No one party can control the entire process (ideally). Everyone has to follow the rules of the software that defines the behavior of the network. Multiple parties verify actions on the network to assure that nobody can manipulate the process. If you choose a normal vendor, then the normal vendor creates the agreement you must sign to use their service, and then everyone follows that agreement.

If we're talking about things like smart contracts, that's a bit of a pipe dream. I don't practice anymore but I'm a licensed attorney and I can tell you for a fact that for smart contracts to work - i.e., be enforceable, any system using them is going to have to find a way of interfacing with the legal system of each and every country where the contracts are used. That will be entertaining to watch.
That's uncharted territory. Though for now, smart contracts mostly control how assets loaded onto the chain are to be treated. Those assets - tokens - are largely unregulated. The legal implications of automated contract enforcement haven't really been tested (to my knowledge).
 
Oct 9, 2002
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#50
...

No govt on earth will allow its economy to function, even in small part, on a currency that it doesn't control - to the extent that they have a choice in the matter at least. You do see some economies that use the dollar as their defacto currency but that's only because their own currencies are usually worthless.

...
Government wouldn't really have any say in the emergence of an independent economy from crypto.
 

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