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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsCryptocurrency aka Bitcoin/Dogecoin/etc : what am I not understanding ?
I think I have the basic concepts correct. You can use it, instead of USD or euros etc to pay bills, buy legal stuff, buy illegal stuff or "simply preserve your privacy". El Salvador is now the first country to recognize it as legal tender.
Call me hopelessly out of date, but... I don't feel any motivation to use it. I am not that worried about my privacy and I don't buy anything illegal. I know if you "buy low, sell high" you can make a fortune off bitcoin, as some have.
What am I missing ? I have read the stories that the Fed and the Euro Central Bank have contemplated also making it a fiat currency, if I am using the correct term.
Thanks in advance. Trying to get educated. Usually people here know the scoop.
Steve
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Walleye
(44,728 posts)
Voltaire2
(15,377 posts)miners get paid to perform hard computational tasks that validate new transactions. They can also generate new 'coins' , but that gets harder and harder to do as the specific platform ages.
Archae
(47,245 posts)Legal, maybe, but still a scam.
Nothing tangible, nothing to back up crypto "money."
jimfields33
(19,382 posts)To allow it if it were illegal. I know he doesn’t run the fed but he has some influence.
Voltaire2
(15,377 posts)We went off the gold standard like 50 years ago. And even then, the value of gold is also a fiction. As long as people accept your 'money' token, dollars, bitcoins, bullion, copri shells, whatever, in exchange for goods and services, that token has value.
The anti-gay orange juice ad lady is quoting William Jennings Bryan?
DenaliDemocrat
(1,777 posts)Which I guess is something, although nothing tangible
Voltaire2
(15,377 posts)is primarily what gives that 'money' value in any national economy.
LanternWaste
(37,748 posts)Or is simply more open-sourced, uncited editorials?
Voltaire2
(15,377 posts)Here: https://u.osu.edu/extensioncd/2018/01/04/why-money-has-value-and-the-national-debt/comment-page-1/
It’s called modern monetary theory.
fescuerescue
(4,475 posts)After they legally seize them from criminals.
It's not a scam. It's just a new form of property that many people don't understand yet.
https://www.coindesk.com/markets/2021/06/18/us-government-to-auction-off-seized-litecoin-alongside-bitcoin/
Archae
(47,245 posts)The "About" page at the website you posted is openly advocating replacing real money with crypto.
"We are building the most influential, trusted media platform for a global community engaged in the transformation of the financial system and the emerging crypto economy."
fescuerescue
(4,475 posts)That referenced the Federal sales.
There are some that want to replace cash with all crypto. that will -NEVER- happen in the US.
The reason is simple. The Federal government cannot inflate the currency supply with crypto currency. Both the Left and Right love to spend by printing money and it's done every year. Plus, no secret spending can occur in Crypto currency. EVERYTHING is public. can't have that now can we?
Personally I don't believe that crypto currency itself will be that big of deal. C.C. itself is simply an application of blockchain. It's blockchain that will change the way we do a lot of things in the future.
In 20 years out, I fully expect that stocks, bonds and land and art titles will be routinely traded over blockchain. Some banks are already issuing bonds over blockchain.
hunter
(40,671 posts)There are a few basic functions for the ultimate managers of any hard currency and these functions do not resemble household or corporate finance in *ANY* way.
First of all the enforcement of contract obligations must be managed in a way that's not corrupt and generally regarded as just. In modern times that means we reject debtor prisons and the shooting of knee caps. Bankruptcy is highly regulated. Bank failures do not wipe out the savings of average working class or retired people.
Second, whenever there is too much money in circulation it must be pulled out of the system by taxation. Best practice is progressive taxation. The wealthy pay most of the taxes because they most enjoy the benefits of a well regulated economy.
"Flat" taxes are bullshit. Regressive taxes are bullshit.
Third, when the economy stagnates, money must be put into the system. Best practice is to create jobs for the unemployed, better jobs for the working poor, and increased benefits for the unemployable. The people who need the money get it, and they are the most likely to spend it on necessities.
Personally, I think the government ought to compete directly with the crappiest employers, offering better jobs and better pay.
If we give money to people who don't need it they tend to "invest" it in schemes that do not make the world a better place, too often in schemes that only increase their political power. For example, here in the U.S.A., buying politicians is too easy. Especially Republican politicians.
fescuerescue
(4,475 posts)However we absolutely positively do increase the money supply every year.
Most all of the "printing" is done on an electronic ledger.
hunter
(40,671 posts)... by powerful people who want to oppress people -- usually the sort of people who don't want to pay their workers a comfortable living wage or taxes.
fescuerescue
(4,475 posts)
Cuthbert Allgood
(5,339 posts)MoonlitKnight
(1,585 posts)Except you have to pay capital gains taxes on transactions. And if you actually use it to buy stuff the tax consequences would be a nightmare.
Oh, and if you forget how to access your digital currency it’s gone. There are literally millions of dollars worth of Bitcoin that can’t be recovered.
Champp
(2,409 posts)Now that you've got the ball rolling, MoonKnight, I reckon #BeanieBabyBucks may soon overtake The World Bank in estimated value.
hunter
(40,671 posts)The true nature of cryptocurrencies is obfuscated behind some fancy math incomprehensible to the average Bitcoin user. Basically a Bitcoin is a number instead of a physical postal address.
Essentially people are paying others in goods and services for the spectacular "opportunity" of being part of this chain.
https://en.wikipedia.org/wiki/Chain_letter
Normal currencies are not arbitrary "fiat money." The strength of hard currencies arises from the intricate government regulation of debt and debt collection, taxation, property ownership, corporate shares, wages, etc..
Bitcoin and other cryptocurrencies may or may not collapse depending upon the faith people place in them. The price of gold and the amount of gold uselessly hoarded is still great because people many people believe gold has some sort of intrinsic value beyond its utilitarian purposes.
One of the things I find abhorrent about cryptocurrencies is the high energy cost per transaction. These energy costs are many thousands of times greater than the cost of ordinary banking transactions. The environmental destruction caused by gold mining is something similar.
Sogo
(7,186 posts)
Celerity
(54,333 posts)smdh
Almost ALL major currencies in the world are fiat, including (obviously) the US dollar (since August 15, 1971, when Nixon took the USD off the gold standard)
https://www.investopedia.com/terms/f/fiatmoney.asp
these threads are just so depressing in terms of the lack of knowledge exhibited on multiple levels and subjects
LeftInTX
(34,216 posts)E-check is also an option.
I used to pay with credit card from a place in California that bought it in bulk from India and resold it, but the feds stopped it. It is illegal without an Rx. US cost was too high, so a black market sprung up. My daughter showed up with long lashes and she told me how she was using generic Latisse purchased from India.
So, if I want long lashes, gotta do this clandestine thing. Oh well...not gonna do it.
lagomorph777
(30,613 posts)I'm certainly not going to get involved in the criminal underground to buy some crap I can't even understand what it is.
LeftInTX
(34,216 posts)Is there a medication to thicken eyelashes?
Yes. The medication bimatoprost — marketed under the brand name Latisse — is approved by the Food and Drug Administration (FDA) to treat inadequate eyelashes (hypotrichosis). Bimatoprost is also marketed under the brand name Lumigan, which is used in prescription eyedrops to treat glaucoma. Eyelash growth was an unexpected side effect of Lumigan, which led to the creation and marketing of Latisse.
With regular applications along the lash line of the upper eyelid, Latisse gradually encourages growth of longer, thicker and darker eyelashes. Latisse isn't meant to be applied to the lower eyelid. For full results, you must use the medication daily for at least two months. Eyelash improvements remain as long as you continue to use the medication. When you stop using Latisse, your eyelashes will eventually return to their original appearance.
The same medication is used to treat glaucoma. It causes lashes to grow.
lagomorph777
(30,613 posts)Keep their crap away from your eyes. Who knows what's really in it (if they actually ship anything at all).
LeftInTX
(34,216 posts)Indian pharmacies do not accept US credit cards.
I would not obtain other stuff from India. Latisse doesn't go in your eye, it goes where eyeliner goes. It's applied like a cosmetic.
Iwasthere
(3,512 posts)I've made several hundred thousand on my initial investments in less than two years. Started with 30 thousand. Listen to Michael Saylor. Bitcoin is still early stages https://www.cnbc.com/2021/02/23/microstrategy-ceo-michael-saylor-sees-bitcoin-100-trillion-market-value-one-day.html
PSPS
(15,313 posts)lagomorph777
(30,613 posts) Javaman
(65,686 posts)think 1929 stock market before the crash.
lagomorph777
(30,613 posts)Only without the actual product; only electrons.
Javaman
(65,686 posts)
PSPS
(15,313 posts)El Salvador's adoption has more to do with its role in the drug market than anything else.
sir pball
(5,340 posts)Or is that just your gut feeling?
PSPS
(15,313 posts)The only real demand for bitcoin is to engage in transactions related to criminal activity such as:
- Money laundering
- Illegal drug trafficking (El Salvador garners most of its income from illegal drug trafficking)
- Ransomware
- Child pornography
Silent3
(15,909 posts)They want to be treated as currencies like dollars and euros, etc., but what you want most out of a currency is stability. Traditional currencies, of course, aren't always stable, but that's their ideal state.
They also want to be treated as high-growth investments. But that requires an instability that is a antithetical to use as currency.
Amishman
(5,928 posts)Most major smart contract crypto platforms, now support a stablecoin - a sub chain where the coins / tokens are pegged and freely exchangeable with a major real world currency (dollar, euro, etc).
Since these run on top of a Blockchain, the transaction fee is paid using the native coin of that chain (Ethereum, Tezos, Eos, etc).
I have nothing good to say about Bitcoin itself, however many of the projects that gave followed in it's footsteps are very interesting and promising bits of technology
Martin68
(27,677 posts)transactions secret, and 2) a speculative investment opportunity.
lagomorph777
(30,613 posts)sir pball
(5,340 posts)Who are the ringleaders, at the top of the pyramid? How are they collecting the money that's ostensibly being used simply to buy BTC? How do they disburse their takings, to pay off the early investors and maintain the scam?
If you're gonna make the claim you best be able to back it up.
lagomorph777
(30,613 posts)It has no intrinsic value. You can’t eat it, wear it, or heat your house with it. Unlike gold — which at least feels nice and looks shiny on your spouse’s ring finger — you can’t even see Bitcoin.
It is not a productive asset. It’s not a factory that produces an item. It’s not a field that produces cucumbers. It’s not a firm that offers a service. It contributes nothing to society.
It has zero underlying value. None. It’s not backed by land or commodities or — as with national currencies like USD or GBP — the threat of violence (in the form of wage garnishment, asset seizure, and imprisonment.)
It has minimal utility. Because the price fluctuates so wildly (what healthy currency doubles in a month?), it’s virtually ineffective as a safe representation of value or means of trade.
Its value is solely derived from the trust that the price will continue to rise indefinitely. That there will always be new investors to buy out the old ones.
How Does It End for Bitcoin?
Certainly not like your usual Ponzi scheme.
Bitcoin’s “CEO” Satoshi Nakamoto — whoever he/she/the team might be — might already be dead or imprisoned in Guantanamo. (Heck, Bitcoin might be an invention of the NSA or advanced artificial intelligence for all we know.) Either way, Bitcoin isn’t a company, so it won’t be shut down.
It’s unlikely that anyone will ever “acquire the company” by cornering the market on Bitcoin. (And to do so would make the currency completely worthless because you’d have no one to trade with.)
And since it’s mathematically impossible for Bitcoin to grow forever, that leaves us with option three: A Black Swan event causes its demise as an investment. This is the only likely outcome. Perhaps a wildly superior cryptocurrency makes Bitcoin as irrelevant as the Model T versus a Tesla. Perhaps nations or groups of nations make a concerted effort to destroy Bitcoin, or more likely, Bitcoin owners. Or maybe Bitcoin simply levels out when it reaches max coinage, shedding its identity as an investment and becoming a stable trust-based currency. In doing so, it will drive away all the exuberant speculators who are currently propping up its inflated price. No matter how it happens, at some point, millions of Bitcoin investors are going to lose billions of dollars.
sir pball
(5,340 posts)I don't even argue with the premise it's a bubble of a valueless item...but it's not a fucking Ponzi scheme. It's much more like tulip bulbs.
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds.
So can you, in your own words, explain how this is a Ponzi scheme? Or even a conscious scam?
lagomorph777
(30,613 posts)Good luck with your "investment".
Have a nice day.
sir pball
(5,340 posts)They're far too volatile, as I said BTC is a repeat of the tulip thing.
Do you even know what a "Ponzi Scheme" is? And can you elucidate how BTC is a "Ponzi Scheme"?
Answer the fucking questions.
muriel_volestrangler
(106,160 posts)They encouraged others to join (who then could provide them with early profits) because they too thought they could encourage yet more people to join.
Profits are not coming from product sales or successful investments; they are coming from later investors joining.
There was, however, no lying about hard facts involved, so it may not be fraud, legally. They just convinced people that this scheme would continue to work (which is a prediction that will go wrong in the end), and people would continue to pay more and more to buy bitcoin.
Morally, it may be the power consumption that is the worst aspect of it. That affects everyone whether or not they take part in the game.
sir pball
(5,340 posts)It's the same as the tulip bulb thing, or any other market bubble - but arguing that cryptocurrency is a Ponzi scheme, or is itself inherently meant to scam, is downright wrong.
It's a legitimate system, how it's used is a whole different question.
muriel_volestrangler
(106,160 posts)So that's not like tulip bulbs, or bubbles that are just from "exuberant optimism".
It's closer to the South Sea Bubble; while there was a genuine company involved, its stock sales were structured to make money for those in the know, and rumour and speculation was designed to draw in later money. In that case, only a few things they did were illegal at the time (and one guy conveniently escaped so he couldn't implicate people he'd bribed), though much more of it would be now; after it burst, they wondered about retroactive legislation to punish the directors. But in the end, they confiscated much of the profit, and largely swept things under the carpet, to protect the powerful and to rebuild "trust".
Martin68
(27,677 posts)the early investors make a fortune, later investors pick up the ball in hopes of making a fortune, too, and so it goes until the bubble bursts. Cryptocurrency is not a "legitimate business activity" in any sense of the word. No product, nothing to prop up the "value" except investors belief that it has value and will continue to increase in value.
lagomorph777
(30,613 posts)A Ponzi scheme, or "ponzi" for short, is a type of investment fraud with these five features:
People invest into it because they expect good profits, and
that expectation is sustained by such profits being paid to those who choose to cash out. However,
there is no external source of revenue for those payoffs. Instead,
the payoffs come entirely from new investment money, while
the operators take away a large portion of this money.
Investing in bitcoin (or any crypto with similar protocol) checks all these items. The investors are all those who have bought or will buy bitcoins; they invest by buying bitcoins, and cash out by selling them. The operators are the miners, who take money out of the scheme when they sell their mined coins to the investors.
Features 3, 4, and 5 imply that investing in bitcoin, like "investing" in lottery tickets, is a very negative-sum game. Namely, at any time, the total amount that all investors have taken out is considerably less than what they have put into the scheme; the difference being the amount that the operators have taken out. Thus the investors, as a whole, are always in the red, and their collective loss only increases with time.
The expected profit from investing in such a scheme is negative. While some investors who cash out may make a profit, that comes at the expense of other investors, who will lose more than their "fair" share of the general loss above.
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.
The observation that investing in cryptocurrencies is a ponzi scheme is not new or a cheap shot. Among many others, it was expressed in 2014 by economists Nouriel Roubini of NYU [CDK1] and Kaushik Basu of the World Bank (WB) [CDK2] and echoed by investment analyst David Webb in 2017 [CFO2] and by WB's president Jim Yomh Kim in 2018 [CFO1].
Cuthbert Allgood
(5,339 posts)And so I don't need to do two posts:
1. the people who invested first aren't paid by the newest people's money which means eventually the funds run out. A single bitcoin has a value based on demand just like stocks.
2. just like the stock market, there is no "operator" to take away a large portion of the money. Some people make money some people lose money.
But, buy the way you are interpreting these elements, the stock market is a ponzi scheme. Which, of course it isn't. Nor is bitcoin.
lagomorph777
(30,613 posts)I didn't want to quote too much, but it's a very clear and informative article.
sir pball
(5,340 posts)And slapped a laughably wrong label on it. Even if BTC is a scam, which it isn't, it's not a Ponzi.
DU is less tolerant than Imgur so I shall leave it at that.
LanternWaste
(37,748 posts)DU is quite tolerant though... criticisms of a sacred-cow, a sport or hobbies are not intolerance.
Martin68
(27,677 posts)Cryptocurrency is not.
Cuthbert Allgood
(5,339 posts)
Bettie
(19,669 posts)It allows criminals turn dirty money into clean money.
sir pball
(5,340 posts)It's actually terrible for anonymity; the entire concept of blockchain is traceability. BUYING BTC anonymously is a thing but that's an entirely different issue.
Disclaimer, I own no cryptocurrency and would never buy it.
fescuerescue
(4,475 posts)Every single transaction that has ever occurred is fully publicly viewable. every single one. From pennies to billions.
tenderfoot
(8,982 posts)eom
hunter
(40,671 posts)They usually end up like their hero Ayn Rand claiming to the bitter end, even as they are collecting their government benefits, that their ideology might have worked if everyone had played by *their* rules.
They're very similar to Communist ideologues in that way.
The twentieth century pretty much proved, beyond any shadow of a doubt, that carefully regulated mixed economies work best and that it doesn't matter if these evolve from a purely capitalist ideology, a socialist ideology, a communist ideology, or even a religious or monarchical ideology.
fescuerescue
(4,475 posts)Not exactly the libertarian crowd.
cryptocurrency itself won't go the way the libertarians want it to.
Blockchain will be the fabric that stocks, bonds and titles will be traded. However currency itself? I don't see that ever becoming mainstream.
the governments will NEVER EVER cede the ability to issue more currency. Plus governments absolutely positively do not want every transaction being public.
muriel_volestrangler
(106,160 posts)Is there an excessive overhead, or are there many disputes about who owns it? If not (and I don't get the impression the markets complain about those kind of problems), then what's the benefit of using blockchain for them?
I think banks are diving into investments that service crypto users.
Voltaire2
(15,377 posts)just the secure digitalization of what are now still mountains of paper is an enormous savings. No vaults, no fraud, no ambiguous ownership.
fescuerescue
(4,475 posts)Doing it via blockchain is also doing it electronically, but with a FAR FAR higher level security and accountability.
Sogo
(7,186 posts)I learned a lot from the discussion.
48656c6c6f20
(7,638 posts)Proponents of, this is how we always have done it, to raise angry fists in the air and shake them from the comfort of their lawns.
Martin68
(27,677 posts)
D_Master81
(2,558 posts)What Bitcoin was designed to be it no longer is. It has turned into a way for people to essentially invest in as a “store of value” similar to gold.
Most cryptos aren’t necessarily a currency as much as a digital asset. You invest in a company by purchasing their token. Now some are on blockchain which I still don’t know how it works, but will say there are real world applications, especially if it’s ethereum. Now most won’t understand how crypto markets move so it’s confusing and easy to lose money. But once you’ve been in it for a year or more there is tremendous opportunity to make a lot of money as I’ve been blessed to find out.
lame54
(39,721 posts)It's traceable
Quixote1818
(31,155 posts)It literally could go to zero.
JCMach1
(29,198 posts)days...
It's essentially the same thing except with an encrypted (i.e. blockchain) record of transactions.
As there is consensus agreement on value (markets) it's the same as using any other currency with the exception of the encrypted record.
It is no more corrupt than people doing illegal stuff with cash which still vastly outweighs any of BTC's most feverish dreams. Because there is s permanent record, Bitcoin is actually much more traceable.