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Bitcoin: Is the crypto-currency doomed?
Comments
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Fightsback wrote: »In essence it is a Ponzi scheme, very much like the entire capitalist system. Those at the top are left holding the money and others (late comers) are left holding worthless bits of paper after those at the top of the tree have been paid out. Didn't credit default swaps teach you anything ?
Fundamental economics isn't hard, it's that those in economics who like to apply pseudo-scientific jargon to differentiate essentially the same problem.
You see in this world there's two kinds of people my friend - those with loaded guns, and those who dig. You dig.
Just because 2 animals may 4 legs each doesn't mean its the same animal. I'll happily admit that many financial instruments have the same outcome but it doesn't mean they are essentially the same thing.
Your definition to its logical extension really means any situation where person A makes money and person B loses money is a Ponzi scheme, which makes it a pretty useless definition, really you just want to spread propaganda and extend your own personal shock value.
Not to mention you're very hung up on the speculative part, many people use it for paying people or transmitting value. I did the same thing with some euros recently (admittedly not a great idea) but whether its a Ponzi scheme is the lease of my worries.0 -
Not to mention you're very hung up on the speculative part, many people use it for paying people or transmitting value. I did the same thing with some euros recently (admittedly not a great idea) but whether its a Ponzi scheme is the lease of my worries.
A lot of crims use it for nefarious purposes, notably drugs, tax evasion, money laundering and extortion (ransomware).really you just want to spread propaganda and extend your own personal shock value
I'm old and wise enough to be wary of new shiny financial instruments, if people want to buy tulips or invest in the south sea that isn't backed by a sound central bank then on their heads be it, grown ups are allowed to come to their own conclusions.Science isn't exact, it's only confidence within limits.0 -
Tax evasion best reason, almost untraceable. Its why the US govt hates it0
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Apologies for coming across all smug and superior, but I think my background in Economics and Computer Science gives me the right to act as if I know what I'm talking about.
First and foremost, Bitcoin is an experiment, and as experiments go, it's already been an extraordinary success.
Second, it is NOT a Ponzi scheme. A bubble, maybe, but not a Ponzi scheme. There is a difference.
Third, you have to understand that the problem Bitcoin faces is both technical and economic.
Fourth, nobody knows how this will play out.
The technical problem is that, in its current design, there is a maximum rate at which the global Bitcoin network can process transactions. This limitation was a reasonable trade-off at the time Bitcoin was first designed. The designers knew that, if the limit was ever reached, it could be easily fixed with a simple software upgrade.
But there is an economic problem that prevents the upgrade. Factors like economies of scale and the importance of location to the running costs of a Bitcoin miner mean that most of the Bitcoin network is in the hands of a small number of people in China. The nature of the Bitcoin protocol gives these people effective control over whether this upgrade can be implemented. And, for technical and economic reasons that I won't go into here, they don't want to upgrade.
A crisis is certainly looming, and the frustration is causing people like Mike Hearn to bail out. But we're in uncharted territory, and it's impossible to predict how this will play out. Nevertheless, for your amusement, I'll layout a few plausible scenarios.
1. Bitcoin is killed
Unable to clear the current technical / economic logjam, Bitcoin is badly damaged and never recovers. It ends up remembered only as the seed of the blockchain idea.
2. Bitcoin tries to limp on
The crisis hits, and Bitcoin loses value so quickly that the obstructionists are forced to concede. The technical problem is solved, but the economic issues that caused things to get out of hand are as serious as ever.
Bitcoin survives for a while because there is still a need for an anonymous electronic currency, but it is only used for shady transactions because nobody else will tolerate its growing flaws.
As the association between Bitcoin and illegality grows, governments start to crack down on it, and Bitcoin is eventually strangled.
3. What doesn't kill Bitcoin makes it stronger
The Bitcoin community learns from what happened, and puts in place the necessary technical and economic measures to ensure that Bitcoin will be well managed for the foreseeable future.
I can't imagine what these measures might be. But if someone was clever enough to dream up Bitcoin in the first place, maybe there's someone clever enough to fix it?
The history of network protocols has plenty of good examples of this kind of thing. For instance, in the mid-80s the whole Internet kept collapsing under load. Nobody could figure out why, until a smart chap called Van Jacobson studied the problem and figured out that we needed to redesign the flow control algorithms. To this day, his algorithms are in all the network connected devices we use.
4. Bitcoin evolves into a clearing system
This idea has been kicking around for some time. I haven't studied it closely but, at first glance, it makes a lot of sense to me.
It seems a waste to hit the whole Bitcoin network for every transaction we do, and it won't scale. So let's use Bitcoin as a central clearing mechanism instead.
It's a bit like how bank transfers work. If I, as an ordinary customer, pay you by bank transfer, it looks like the money has gone straight from my bank account to yours. In reality, no money will change hands until the end of the working day, when the net result of all the transfers between our two banks is calculated and sent through the central clearing system as a single payment.0 -
I'd not ever use it - the whole fact it's a made up thing, on the Internet, used for anonymous transactions .... I figure if it ever went teets up I'd be in up to my whatsits and lose out big time.
I don't like to trust what I can't see/understand, touch/trust.
I've no need for clandestine transactions...0 -
Apologies for coming across all smug and superior, but I think my background in Economics and Computer Science gives me the right to act as if I know what I'm talking about.
Nope it doesn't, so called [strike]idiots[/strike] economists using fatally flawed trading algorithms and investment vehicles created a perfect storm that caused the 2008 collapse without the slightest inclining of how chaos can quickly unravel a model. Computer modelling of protein folding is hard, economics isn't. The wiser old heads saw it early on for what it was, the creation of money without sound asset.Second, it is NOT a Ponzi scheme. A bubble, maybe, but not a Ponzi scheme. There is a difference.
It can be argued that pyramid schemes, bubbles and ponzi schemes are all manifestations of the same phenomenon where the true asset value is only a fraction of the schemes alleged worth, it's just the actors and slight methodologies which are different.
May I draw your attention to the bitcoin exchange rate from Feb 5th 2014 to Feb 16th 2014 where the Sterling/BC rate spectacularly collapsed from £559 to £150.
http://www.xe.com/currencycharts/?from=XBT&to=GBP&view=5YFirst and foremost, Bitcoin is an experiment, and as experiments go, it's already been an extraordinary success.
I'm a chemist and electronics engineer by profession and I've see plenty of experiments that were seen to be going well either suddenly stop functioning or spectacularly explode (not mine) all over the bench. As far as my money goes, I consider it far too valuable for others to experiment with.
“I feel entitled to point out that we here regard our function as the encouragement of constructive investment, and not the financing of mere gambling transactions.” - Dennis Price.Science isn't exact, it's only confidence within limits.0 -
People, in fact it's fair to call them punters, are known for chasing easy money. They see other people 'making' a paper fortune by buying an asset class, and feel they are going to be left behind without having the sophistication to perform their own independent valuation. This is why penny stocks get ramped, house prices escalate, etc. Feeling left out fuels the greed, an artificial sense of urgency compounds it, and bovine excrement lazy reporting by the red tops hammers it home. Like a chain letter, if you're early to the party other people will give you free money and be left holding the bad asset (US subprime mortgages, for instance).
The public ledger distributed database is a very cool bit of technology and absolutely deserves to live on. In fact someone recently suggested that the UK government implement their own (slightly different design, more suited to their needs) and it's being hotly debated in technical press at the moment. I'm of the thought that it could actually be tremendously progressive in terms of a distributed signing authority which is ideal for open governance.
Some say it's a solution seeking a problem, and to a degree they're right, but it's interesting enough to start investigating. Does that have any meaning in terms of btc/usd exchange rates? None whatsoever. That was just pure ramping and speculation.0 -
People, in fact it's fair to call them punters, are known for chasing easy money. They see other people 'making' a paper fortune by buying an asset class, and feel they are going to be left behind without having the sophistication to perform their own independent valuation. This is why penny stocks get ramped, house prices escalate, etc. Feeling left out fuels the greed, an artificial sense of urgency compounds it, and bovine excrement lazy reporting by the red tops hammers it home. Like a chain letter, if you're early to the party other people will give you free money and be left holding the bad asset (US subprime mortgages, for instance).
The public ledger distributed database is a very cool bit of technology and absolutely deserves to live on. In fact someone recently suggested that the UK government implement their own (slightly different design, more suited to their needs) and it's being hotly debated in technical press at the moment. I'm of the thought that it could actually be tremendously progressive in terms of a distributed signing authority which is ideal for open governance.
Some say it's a solution seeking a problem, and to a degree they're right, but it's interesting enough to start investigating. Does that have any meaning in terms of btc/usd exchange rates? None whatsoever. That was just pure ramping and speculation.
Precisely why BC is fatally flawed as a trustworthy and stable standard medium of exchange. It is not backed by asset and is entirely an article of faith, which I shall leave to those of a religious persuasion.Science isn't exact, it's only confidence within limits.0 -
A lot use dollars for the same purposes.Fightsback wrote: »A lot of crims use it for nefarious purposes, 0 -
Moneymaker wrote: »A lot use dollars for the same purposes.
Trouble is it's bulky and doesn't move at the speed of light Science isn't exact, it's only confidence within limits.0
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