One of Asia's largest banks says bitcoin is 'a Ponzi scheme'

[–]Mojo_66625 points26 points27 points 8 years ago* (37 children) | Copy Link

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[–]goodbeertimes3 points4 points5 points 8 years ago (7 children) | Copy Link

I talked to one banker in India on cryptocurrency sometime ago ~ 3 years ago. He wasn't positive. Infact he used the same term ponzi scheme.

His reasoning is from monetary policy point of view. There is a regulated process every central bank in every country that follows some well known and well appreciated guidelines on how to create money, control the supply and regulate it. Citizens of that country makes use of the money that's created by central bank.

He gave me an ELI5 explanation of how it works because I don't understand that subject at all. Money is essentially created by debt and fractional reserve banking.

Bitcoin is another monetary instrument like a money draft/cheque that can be redeemed on its face value or at strike price. That doesn't fundamentally change anything with the economy or monetary policy as such. So according to him it's a kind of gamble, worse than dabbling in stocks. That's because the value of a stock is attached to performance of the company in some way; in other words there is something real and solid economic machinery behind the stock. Where as Bitcoin has none.

As I said, I am green on this topic and happy to be corrected.

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not impossible but any blockchain is very time consuming and expensive to hack. First you need to hack the cryptography/hash and you then need to somehow get your code onto the blockchain you need to know the hash function so that the nodes maintaining the ledger (miners) are able to output the correct value to add your block to the ledger, you would also need to take control of these nodes yourself, and without super-computing power it would be very difficult as hash functions aren't easy to solve. You need a timestamp and link to the previous block that is part of the chain which needs to be authorised by several parties to be accepted. Everything is also recorded in the blockchain so it would be very easy to see when and how the attack occured.

So basically it is doable but extremely hard and even if you had the money to do it, it probably wouldn't even be worth it. More and more decentralized IT systems are adopting block-chain tech as a form of security

this dude explains it well too https://www.reddit.com/r/MGTOW/comments/7fuclh/one_of_asias_largest_banks_says_bitcoin_is_a/dqf65ta/

[–]MMDT2 points3 points4 points 8 years ago (5 children) | Copy Link

[–]fmanly2 points3 points4 points 8 years ago* (1 child) | Copy Link

Don't people get bitcoins from solving a certain type of problem ?

Yes

And there are only a finite number of solutions to this problem

Sort of. First, the problems being solved do have a finite number of solutions, but there are WAY more of those than there will ever be bitcoins, or even blocks in the chain.

The limit on bitcoins doesn't come from the math but from the algorithm. The blockchain keeps track of how many coins are issued, and there is a formula for how many will be produced in each new block, and the number decreases.

The problem solving is a proof of work contest for the right to create a new block, which may or may not create new bitcoins.

Here is a quick summary of how it works:

You generate a random number, run it through a formula that takes some time to compute, and then get an answer. That answer has to meet certain rules to be valid. 99.999...% of the time it won't be. Once in a while you'll guess a random number that leads to a valid answer. Once you do move to the next step.
Now that you have a valid answer you have the right to add a block to the blockchain. When you do this you run a formula that tells you how many new bitcoins (if any) are created. You then can appoint an account number to receive those bitcoins (presumably one you control). You also can record transactions into the block making them part of the permanent record. You look for outstanding transactions, and add as many or few as you wish to the ledger. Typically you'll take as many as you can, in order of preference by transaction fee (which also goes into your account). I believe each block also cross-references the proceeding one in some way.
You advertise your newly created block to the entire bitcoin network. It includes those transactions, your account number, and that random number that was valid.
Everybody else running bitcoin receives the blocks and checks it against the rules I described above. If anything about it is invalid then they just ignore your block. If your random number isn't a new one they ignore your block.

Bitcoins are finite because each new block creates fewer bitcoins than the one before. You can't just create new ones out of thin air because if you put a transaction like this that violates the rules into a block everybody else using bitcoin will just ignore your block, and you won't get credit for all the work you did to create the block.

The network operates by consensus essentially. If everybody who used bitcoin agreed to update their software so that it allowed more bitcoins to be created then the limit could be changed. However, anybody who didn't choose to go along with it would ignore all those new blocks, and would continue to issue blocks using the old rules. This is what they call a fork of the blockchain. It sometimes happens for cryptocurrencies, and when it does you end up with a new cryptocurrency, effectively (where everybody using the old one gets grandfathered in and then things change from there).

If you understand CS then I'll add one more detail. The problem being solved is finding hashes that have certain properties.

I'll give you an example of something simpler that you could understand. You probably understand what squaring a number is. 5² = 25, 10² = 100, and so on. Give me an integer value x such that x² is a number that has 5 zeros in a row somewhere in it. So, if x² = 12345 that would be invalid, but if x² = 1230000045 then that would be valid. Now, that isn't the real formula and I'm sure somebody who is good at math could figure out a way to defeat that one, which is why it isn't the real formula. However, a simple way to go about it is to just keep trying random numbers for x, do the math, and then look at the answers.

This also illustrates the difficulty scaling property of bitcoin. As more and more people mine bitcoin the difficulty goes up so that the answers still get solved at the same rate. Imagine my example but instead of 5 zeros I told you the answer had to have 12 zeros in it. It would obviously take more guessing to find a correct answer that way. The number of needed zeros could be scaled up as much as needed to make the problem the desired difficulty.

[–]MMDT0 points1 point2 points 8 years ago (0 children) | Copy Link

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[–]fmanly1 point2 points3 points 8 years ago (0 children) | Copy Link

That depends a bit.

Internationally that is generally pretty accurate, especially for large sums of money.

Domestically for small sums of money that probably isn't so true.

There are a couple of reasons for this:

International bank transfers generally suck. There are different systems out there and banks tend to charge to use them. Often it involves intermediaries who charge money. Also, all services tend to be priced assuming you're a multinational corporation since most normal people don't deal with this much.
A lot of financial transactions, especially for individuals, have fees based on a percentage of the amount transferred. A 1% fee isn't a big deal if you're moving $100, but if you're moving $100M that is a lot of money to spend on fees. With BTC the fees are fixed per transaction regardless of the amount.
With BTC everything is direct between the parties, which means fewer other parties to get involved, which is more significant for international movements.

And then you get all the regulatory stuff - if you're moving lots of money internationally chances are everybody wants to know more about you so that they can report it to government regulators. I'm sure the same laws apply to BTC but you as an individual are the only one required to comply, so if you choose to do so then that is on you and nobody else will hassle you about it.

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[–]SomeGhostingGuy1 point2 points3 points 8 years ago (0 children) | Copy Link

Exactly. I got slaughtered on the BitCoin forums years ago when I asked if it was possible to create a local coin that could be used for barter/trade in a very low-tech setting with maybe one computer and a printer around. Create 2000 notes that are pretty simple but the printed calculated code shows that this a legit note (coin). Stop creation after X amount of notes, distribute and get things going.

Boy, they DID NOT appreciate the idea of a derivative which in my opinions only shows that: a) They do not want BitCoin, they want real money and b) look for suckers that will exchange really earned money with some c) made up currency. And in my opinion the huge number of "alt-coints" trying to copy the success of bitcoins only shows that this is mostly a get rich quick scheme. Else: Dividends and PM for the win.

[–]Werkzeug815 points6 points7 points 8 years ago (0 children) | Copy Link

[–][deleted] 1 point2 points3 points 8 years ago* (1 child) | Copy Link

You have various cryptocurrencies that improve the blockchain code and enhance it to make untraceable money, products, services, applications and I see them as digital stocks of a company that you have real ownership in.

It also takes away power from the banks and governments who basically control us on all levels and want to keep the power and that is also the reason why I rather stick with crypto. They can make it illegal, yet if people want to accept crypto for their work or retail and decide it has value what are they going to do about it? The whole system we now have with creating money out of debt with no gold to back it up is on it's knees. There is no free market in the real world, when banks and multinational companies are being saved with tax payer's money. If I have my own store and can't pay the bills I am screwed and everything will be taken away from me. When I have a regular job and fuck up I will get fired. These corrupt topmanagers get a golden handshake and a few million when they fuck up? Or they can go on and keep making fuckups? Something is wrong there and everybody is watching and let it happen. I say fuck that shit I am going to use crypto and fuck this lying system. Blockchain does not lie about transactiona and which address owns whatever amount.

Whatever happens in satoshi value it can't go below zero or have negative value, so there is no debt creation. Also when you read the whitepaper it essentially says the new model of bitcoin makes the banks obsolete. You are now your own bank and responsible for it.

[–]Mojo_6660 points1 point2 points 8 years ago* (0 children) | Copy Link

You have various cryptocurrencies that improve the blockchain code and enhance it to make untraceable money, products, services, applications and I see them as digital stocks of a company that you have real ownership in.

That's a technical argument not a financial one, an argument that I get, blockchain is great.

It also takes away power from the banks and governments who basically control us on all levels and want to keep the power and that is also the reason why I rather stick with crypto. They can make it illegal, yet if people want to accept crypto for their work or retail and decide it has value what are they going to do about it?

It doesn't take power away from the banks, they will keep their power, they will probably even use it to take money of people using Crypto, any idea how much of the banks own? nope, neither do I, is it likely that they do? why wouldn’t they, they can afford to pump and dump.

The whole system we now have with creating money out of debt with no gold to back it up is on its knees. There is no free market in the real world, when banks and multinational companies are being saved with tax payer's money.

It's not ideal and it is driven by debt and the guys are the top are fucking everyone else sure, but on its knees? not even close.

If I have my own store and can't pay the bills I am screwed and everything will be taken away from me. When I have a regular job, and fuck up I will get fired. These corrupt top managers get a golden handshake and a few million when they fuck up?

That’s life, someone must be at the top, it's how it works, crypto has it's very own "top, corrupt, big players, big winners" and it sure as hell will have its big losers.

Or they can go on and keep making fuckups? Something is wrong there and everybody is watching and let it happen. I say fuck that shit I am going to use crypto and fuck this lying system. Blockchain does not lie about transactions and which address owns whatever amount.

I have never had a bank lie to me about a transaction, people telling me they do isn't going to convince me, banks are also protected by regulation. Sure, they fuck up, but I would argue that someone working 2 jobs buying 3 houses is a fuck up in itself, no one was forced into the housing bubble by gunpoint as far as I know. They just bought in to it, maybe like Crypto...you decide.

Whatever happens in Satoshi value it can't go below zero or have negative value, so there is no debt creation. Also, when you read the whitepaper it essentially says the new model of bitcoin makes the banks obsolete. You are now your own bank and responsible for it.

Satoshi, the unidentified person who might very well be the Berni Madoff of Crypto? you would be a fool not to have that itching in the back of your mind.

I own Crypto, but I’m not blind to ALL possibilities.

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That part is just cosmetic and could be fixed by using terms like microBTC and such. 0.00003633 BTC = 36.33 uBTC.

The problem isn't the number of zeros. The problem is this: Suppose today your product costs you 30uBTC to make, sells for 36 uBTC, and your competitors sell it for 38 uBTC. Sounds good, right? Well, the problem is that BTC is increasing in value, so a new competitor starts up and they can get their product made for 25 uBTC, because uBTC has gone up in value. So, you need to go back to all your vendors and negotiate price decreases, so that you can drop your prices.

Nobody really prices anything in BTC today for this reason. Even if they take BTC for payment they price everything in local currency and do a spot conversion at the moment of purchase.

Imagine running an ad on TV or on a website offering to sell a car for 2BTC. That would be insane, because either BTC goes up in value and everybody says "no way that car is worth 2BTC" or BTC goes down in value and everybody says "wow, I couldn't get a motorcycle for that much" and you sell at a loss.

For a currency to be convenient the value needs to be stable. If 36 uBTC buys a big mac today, it ought to buy a big mac in a few years. A bit of inflation/deflation is fine, but the new price should be 30 uBTC or 45 uBTC, not 0.01 uBTC.

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im not understanding this. I've bought, sold, and converted bitcoin to cash. Lets say you spent $10,000 usd back during the fork to invest in bitcoin (btc was at $2000).

the value of your $10,000 investment would be close to $50,000 now. You can easily convert it to cash by selling on coinbase, or on another site like localbitcoins

the value of the coin may not rise forever, but whoever bought and held can turn it into cash whenever they are ready.

Also, with the fact that Paypal fucks over many merchants, (some) people are switching to bitcoin for online transactions. I don't accept paypal anymore unless it is coming from a reputable company. You can lose whatever item you had very easily fucking with Paypal (item not described, item not received, chargeback - etc. - paypal sides with the buyer a majority of the time and it's very easy to scam sellers.)

i'm persoally invested in some cheaper coins though. I feel like I missed the chance to really capitalize on btc, so i'm in on XLM (0.05) and NXT (0.18) at the moment.

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So, I'm a fan of blockchain in general but not BTC in particular. I think that BTC is in a bubble. However, I think some of your questions are off the mark. Here goes:

What happens to your Bitcoins when the infrastructure fails?

Well, for it to fail globally you essentially need a long-lasting widespread communication disruption. That isn't likely. You could have local failure of course. Paper currency is convenient when there is a blackout.

That is definitely a constraint on all the blockchain currencies. They don't support offline operations at all really. The same is true of digital cash.

What happens when there are no more coins that can be mined?

That isn't a problem in theory, because the existing coins just become more valuable. It is really no different than gold in that sense. There is a finite amount of gold in the ground, and more importantly there is only so much that is commercially viable to extract at any given time.

What happens when there are no more people willing to buy into it?

That is of course the problem with bubbles. If it were actually used for anything practical there would always be people buying in for intrinsic value. However, absent that the price could drop instantly.

Why isn't Bitcoin being used as an actual currency?

This is the thing that BTC adherents don't like: BTC works more like a commodity than a currency. It is a commodity that is easy to move around (which does make it more like a currency). However, unlike a currency its value isn't stable.

If it were used widely in actual commerce it might have a more stable value, but BTC directly can't be used this way, because the entire system by design can't handle more than 10 transactions per second. NASDAQ alone trades 4000 transactions per second, and it looks like Visa does another 2000 or so per second, and that is just scratching the surface.

What happens to your Bitcoins when China decides to pull the plug on it to hurt the US and other western countries?

Couple of things here:

First, nobody really controls BTC. If a bunch of people stop participating, then it just falls under the control of those who still participate. You can get forks if the network splinters, but those forks don't affect each other directly.

That said, if countries ban BTC it does make the currency less useful since you can't transact with everybody in it.

There is also another issue with BTC: the difficulty scaling. The BTC protocol automatically adjusts to changing computing power allocated to BTC mining to keep the overall rate of block production the same. These computations are done every time a new block is created. So, if processing power goes way up the difficulty factor adjusts very quickly in time - a few blocks get created too quickly and then the difficulty adjusts and now they come in at the right speed. However, if processing power goes way down then it takes a much longer time to adjust. Again a few blocks have to be produced at the new rate, but these blocks take longer to produce. If 90% of the mining capacity went away overnight it might take days or weeks for the rest of the miners to produce enough blocks to cause the difficulty to drop to a point where they're back to the correct rate. Then somebody could in theory step back in with the 90% and mine a bunch of blocks quickly, and drive the difficulty back up, and then step away again.

This is one of the reasons that I say that I like the concept of blockchain in general, but I don't like BTC.

What goods and services does Bitcoin produce?

So, as a currency I don't think this really matters. USD doesn't produce any good or service. However, nobody buys USD as a "long term investment." I think this is a fair question for anybody considering BTC an "investment" but it doesn't really go to its usefulness as a currency. It is actually pretty ideal if a currency doesn't produce anything directly useful because then its value isn't tied to something else that could go up or down.

[–]MadPreacher1AD[S] -1 points0 points1 point 8 years ago (8 children) | Copy Link

-1.- So you admit that Bitcoin cannot be used when you need it most. Why should I choose it over gold or ammo?

-2.- There's a problem with your assumption and shows your ignorance of currency. Gold isn't more valuable because they found more of it. No, what makes gold more valuable is that the FRN and the world currencies have more paper and coins out there then there is actual gold. This is what they call inflation. An ounce of gold still buys the same amount of goods in 500 BC till today. This is why $1 rose 2391.5% since 1913. The amount of gold is the same, but the amount of FRNs increased.

-3.- Or in a Ponzi scheme since Bitcoins are not physical this is the best description for it. Bitcoins do not have an intrinsic value. It's obvious you have no clue as to what that is. Gold has intrinsic value because it can be used for multiple applications from the decorative to the industrial. What can Bitcoin be used for?

-4.- Actually, currency's value isn't stable either. They call that inflation and it's only pronounced in fiat based systems. In order for Bitcoin to qualify as a commodity it must be a physical thing.

-You made an invalid comparison logical fallacy. The NASDAQ actually trades physical shares of stock in companies. Said shares of stock entitle you to ownership stake and dividends into the company that the stock is for. Bitcoin is neither stock or a commodity.

-5.- Actually, China controls it. Stop with the lies over it.

-Now what you just described is a Ponzi scheme. You have to keep shuffling the magic widget around to new people or the entire scheme collapses.

-Are you declaring all your transactions as capital gains? Failure to do so means you violated tax laws. Oooppss.

-Which means it's magical fairy dust that isn't really based upon true mathematics, but rather a random number generator. There is a legal name for that. It's called gambling and it's illegal pretty much everywhere.

-6.- Another invalid comparison logical fallacy. The USD does produce goods and services. The goods are the paper manufacturing, ink creation, and the entire minting process. The services are every company, citizen, and government uses to transact business.

-Another invalid comparison logical fallacy, no, it's not an investment. An investment is buying stock in a company, gold, silver, real estate, etc... all things that protect wealth. Bitcoin does none of those things.

So why all the lies about what your Ponzi scheme is? How much do you have in Bitcoin?

[–]fmanly0 points1 point2 points 8 years ago (3 children) | Copy Link

So you admit that Bitcoin cannot be used when you need it most. Why should I choose it over gold or ammo?

I don't advocate stocking up on Bitcoin in the first place.

However, it is certainly more useful than gold in practice. Gold is physically difficult to exchange with others, while that is one thing Bitcoin mostly has going for it (and alternatives to a larger degree).

Gold isn't more valuable because they found more of it.

I never claimed it was, which makes the rest of your paragraph irrelevant (though I agree with all of it). My point was limited supply of a currency doesn't harm it. Mining the last BTC no more values BTC than mining the last oz of gold devalues gold.

Bitcoins do not have an intrinsic value. It's obvious you have no clue as to what that is. Gold has intrinsic value because it can be used for multiple applications from the decorative to the industrial.

I'm aware of what intrinsic value is, and that Bitcoin is a fiat currency. I will also note that very little of gold's market value is based on its intrinsic value. The US government doesn't keep bricks of gold in Ft Knox just in case it decides it wants to produce a quintillion microprocessor chips or whatever.

Actually, currency's value isn't stable either. They call that inflation and it's only pronounced in fiat based systems.

Sure, but in most currencies that anybody wants to use the inflation is at a very low rate. If inflation of the USD were at 20% everybody would abandon it. At 2% it is fine. If BTC were inflating at 2% nobody would bat an eye. Even a bit of deflation is inconvenient for a currency (2% inflation is easier to deal with than 0.1% of deflation). And BTC is deflating at an insane rate - probably hundreds of percent annually.

In order for Bitcoin to qualify as a commodity it must be a physical thing.

Well, that is haggling over definitions. But, whether or not it is a commodity it behaves more like a commodity than a currency in practice.

The NASDAQ actually trades physical shares of stock in companies. Said shares of stock entitle you to ownership stake and dividends into the company that the stock is for. Bitcoin is neither stock or a commodity.

Sure, but neither is USD, and every one of those NASDAQ transactions is processed in USD and that doesn't cause any issues. My point was that BTC has a limit on the number of transactions it can handle in a second, and that makes it pretty useless as a currency.

Are you declaring all your transactions as capital gains? Failure to do so means you violated tax laws. Oooppss.

I don't own any BTC, so I have nothing to declare.

The USD does produce goods and services. The goods are the paper manufacturing, ink creation, and the entire minting process. The services are every company, citizen, and government uses to transact business.

While producing a paper USD bill requires those goods, that doesn't mean that it is an investment in those things. If the demand for paper goes up, the value of the USD doesn't go up. And most USD exists as numbers in databases and there is no paper or ink anywhere.

The only reason USD are worth something is because the US government says it is worth something, and the US government is a very large concern.

If McDonald's printed its own currency and said that it would accept it for purchases in addition to the local currency, then that currency would have value too. People might actually use it, because it is backed by a fairly large company. Now, it wouldn't get the same backing as the USD or EUR, because McDonald's doesn't own an army.

Another invalid comparison logical fallacy, no, it's not an investment.

I never said it was an investment. I'm not sure when you think I said it was. Neither BTC, USD, or gold are investments really. They can all go up/down in value, but an investment typically has some kind of capital behind it - a means of producing wealth. It isn't just owning something. Land can be an investment if you're using it productively.

How much do you have in Bitcoin?

And hence the reason I started my post with the words "So, I'm a fan of blockchain in general but not BTC in particular. I think that BTC is in a bubble. However, I think some of your questions are off the mark."

I disagree with your arguments, but I do think that BTC is in a huge bubble, and I don't think it will be used in the real world ten years from now to any substantial degree. I don't own any BTC. Nor do I own any gold, though I'd certainly own gold before I owned BTC.

[–]MadPreacher1AD[S] 0 points1 point2 points 8 years ago (2 children) | Copy Link

-1. You just contradicted yourself since this point is about SHTF scenario. You still advocate using Bitcoin over gold when there is no power or infrastructure. This is what we call talking in a circle.

-2. Actually, you did claim it and I destroyed your argument.

-3. Bitcoin isn't even a fiat currency. It just does not exist and if all the computer systems go down for any reason you no longer have access to it. The gold in Ft. Knox actually belongs to the people not the government, but thank you for playing.

-4. No it's not haggling. This is the definition:

In economics, a commodity is a marketable item produced to satisfy wants or needs. Often the item is fungible. Economic commodities comprise goods and services.

-4 continued. Bitcoin is not a tangible item and therefore fails as being a commodity. Try again.

-5. Seriously are you going to do an invalid comparison between stock certificates and a FRN? This means you have no argument. So BTC is no longer a currency even that is what it's called. Are you fraking nuts? Do you expect me to believe that this isn't a Ponzi scheme when you keep changing definitions of words at a whim?

-6. Do you have any digital widgets? If you do and use them you need to declare them.

-7. That's because a USD is not an investment and never was. You trying to pass of Bitcoin as an investment is called financial fraud which means that this is a Ponzi scheme.

-No, the USD has value because of the inherent value of the taxes collected, GDP produced, property, and gold overseen by the US government. The USD is actually backed by something. Do you want to try again?

-If McDonald's did that then they would be shut down and in prison. Do you want to know why? Counterfeiting and this already happened to the company that produced Liberty Dollars.

-8. Really you never said the word investment? Let me refresh your memory.

I think this is a fair question for anybody considering BTC an "investment" but it doesn't really go to its usefulness as a currency.

-See you claimed it was an investment. Actually, gold is an investment and any financial planner will tell you that. Here's one such article.

https://www.investopedia.com/articles/basics/08/invest-in-gold.asp

-Gold hasn't changed value in the slightest it has always bought the same amount of goods in 500 BC till now. So why are you lying about something so well known?

-9. And yet, I defeated everything you put forth with facts. Why did you lie and twist the definitions of words to fit your agenda?

[–]fmanly0 points1 point2 points 8 years ago (1 child) | Copy Link

You just contradicted yourself since this point is about SHTF scenario. You still advocate using Bitcoin over gold when there is no power or infrastructure. This is what we call talking in a circle.

I agree that in a SHTF scenario bitcoin is useless. It simply can't work without a fairly large communications infrastructure.

If you want to plan your life around SHTF then obviously you're going to be stocking up on gold, food, ammo, and so on. I don't think anybody really debates this.

Actually, you did claim it and I destroyed your argument.

Citation? As in a direct quote? I certainly don't see it. I said that gold is finite in supply. I did not say that made it useless as a currency or commodity.

Bitcoin isn't even a fiat currency.

Sure it is. You don't have to own gold to issue a fiat currency. You just have to issue a currency and declare that it is worth something, and others have to accept that.

Bitcoin is not a tangible item and therefore fails as being a commodity.

Great. It isn't a commodity. My point was "BTC works more like a commodity than a currency." There is a reason I used the word "like."

Seriously are you going to do an invalid comparison between stock certificates and a FRN?

I'm not comparing the two. I'm saying that when you buy a stock on NASDAQ you exchange FRNs for some stock certificate. That is literally what an exchange is. And I pointed out that this happens about 4000 times per second. That was the entirety of my point here. I'm not saying the two are equivalent. I'm saying that real currencies are used to execute thousands of transactions per second, while this cannot be done with BTC.

Do you expect me to believe that this isn't a Ponzi scheme when you keep changing definitions of words at a whim?

It is a Ponzi scheme. You seem to be convinced I'm claiming otherwise...

Do you have any digital widgets? If you do and use them you need to declare them.

I don't know what a "digital widget" is but I'm sure I would declare any capital gains on them if I held any, just as I'm sure you would declare any capital gains on gold you sell.

FWIW, you don't need to declare the ownership of BTC, but just the sale of it. You declare gains when they are realized.

You trying to pass of Bitcoin as an investment

Again, I'm not suggesting that BTC is an investment. It isn't one. It has no intrinsic value really, unless it actually starts getting used as a practical currency, which I think is unlikely.

If McDonald's did that then they would be shut down and in prison.

I guess you've never heard of gift certificates then.

See you claimed it was an investment.

The sentence doesn't say what you think it says. First, I used quotes around "investment" because I consider that term dubious. Second, I was talking about people considering BTC as an investment, I wasn't saying that I was such a person.

Gold hasn't changed value in the slightest it has always bought the same amount of goods in 500 BC till now. So why are you lying about something so well known?

I'm not sure where you think I said that. It certainly has increased in value relative to the dollar, but not generally compared to most other tangible goods. Oh, I'm sure it has changed slightly because both the supply for gold and its consumption go up and down all the time. New mine opens up, value of gold drops a tiny bit. New microprocessor factory opens up, value goes up a bit. Lots of people decide to buy/sell gold it also changes. But, on the large scale I'd agree that it basically stays constant in value compared to an average commodity.

Why did you lie and twist the definitions of words to fit your agenda?

I'm not sure what you think my agenda even is here, or what specifically you're replying to, because you aren't even quoting my text in your replies. I have no idea what "#9" even refers to.

[–]MadPreacher1AD[S] -1 points0 points1 point 8 years ago (0 children) | Copy Link

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[–]zyk0s0 points1 point2 points 8 years ago (3 children) | Copy Link

What happens to your Bitcoins when the infrastructure fails?

The infrastructure failing would imply the internet as a whole failed. At that point, I don't think even gold would be a good currency, people would be trading in food and water.

What happens when there are no more coins that can be mined?

Same thing that happens when there is no gold left to be mined: you trade in existing tenders. Mining volume is designed to decrease asymptotically.

What happens when there are no more people willing to buy into it?

Nothing, beyond its price following supply and demand, trades continue between existing stakeholders. This is why you can't call bitcoin a ponzi scheme: the value does not depend on more and more people buying into it, with diminishing returns. The value is intrinsic to the trustworthiness of a decentralized public ledger. Even if a new system appears that improves on bitcoin in every way, people can still decide to use bitcoin for its properties.

Why isn't Bitcoin being used as an actual currency?

Not sure what you mean by that. That no government uses it as its official currency? Because they already have their own, widely used currency that they can control centrally. But it is used as in "actual currency" in that you can trade other fiat currencies for it, and some businesses accept it as payment.

What happens to your Bitcoins when China decides to pull the plug on it to hurt the US and other western countries?

I'd also like to know what you mean by "pull the plug". If "China", i.e. the Chinese government, shut down its mining facilities, it would mean more hash power for the other miners, including private Chinese ones. If the Chinese government outlawed all cryptocurrencies, again, more hash power for the rest of the world, and better return on investment for their hardware.

What goods and services does Bitcoin produce?

What goods and services does gold produce? What goods and services does the US dollar produce? What does that question even mean?

You absolutely should be skeptical of cryptocurrencies, and know their limitations, but it doesn't sound like you know what you're talking about at all.

[–]MadPreacher1AD[S] -1 points0 points1 point 8 years ago (2 children) | Copy Link

Actually, in Iraq they started using gold for transactions after the fall of Saddam's regime. However, I do agree with them trading with physical goods.
The problem is that we can still mine gold. Sure we'll have to travel to an asteroid but we can still mine it.
Actually, you're not a stockholder/stakeholder. Bitcoin isn't a company. I can call it a Ponzi scheme. If that were true then why is the value rising and falling every day? No, it has no intrinsic value and you have no idea on what that is.
So you admit that you don't know what currency actually is and how it functions. Now why would I listen to you about currency when you don't even know what it is?
You mean to tell me you don't know what the phrase pull the plug means? HAHAHAHHAAHAHAHAHAHAAHHAAHHAAHAHHAAHHAHAHAHAHAHAAHHAHA
Gold: Mining, electronics, industrial applications, jewelry making, etc... USD: Paper and ink production plus minting itself then is used by every facet of society to do business.

Accuse others of what you, yourself, are guilty of.

You have no clue about currency or even economics. Welcome to ignore moron.

[–]zyk0s2 points3 points4 points 8 years ago (1 child) | Copy Link

Actually, in Iraq they started using gold for transactions after the fall of Saddam's regime. However, I do agree with them trading with physical goods.

Yes, because only Iraq's infrastructure fell, not the rest of the world's. Bitcoin is decentralized, there are miners in a lot of different countries. The whole system shutting down would imply that the internet as a whole shut down.

The problem is that we can still mine gold. Sure we'll have to travel to an asteroid but we can still mine it.

And if everyone wanted to keep mining bitcoin, they could by consensus change the block reward progression function to one that doesn't have an asymptotic limit. Do you even understand how bitcoins are mined?

So you admit that you don't know what currency actually is and how it functions. Now why would I listen to you about currency when you don't even know what it is?

"currency: something (such as coins, treasury notes, and banknotes) that is in circulation as a medium of exchange". Bitcoin is a currency. You state something like "isn't an actual currency", then accuse me of not knowing what a currency is? You're starting to sound very disingenuous. I'll ask again: by what criteria of yours is bitcoin "not an actual currency"?

You mean to tell me you don't know what the phrase pull the plug means?

Again, instead of telling me how you think this is going to happen, you accuse me of ignorance. So I'll do the same thing: "China" cannot "pull the plug" on bitcoin, anymore than it can "pull the plug" on the internet.

Gold: Mining, electronics, industrial applications, jewelry making, etc... USD: Paper and ink production plus minting itself then is used by every facet of society to do business.

Ok, so you're conflating industries for the production of the currency (mining, paper and ink production) with manufacturing of products with the object that is used as currency (electronics, jewelry making). If that's your definition, then bitcoin supports the bitcoin ASIC production industry and the power industry (it uses more power than a few countries). I'm not sure what that's supposed to indicate though.

Look, you want to have a serious discussion, or you just want to accuse others of ignorance when they ask you questions you don't know how to answer?

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[–]SanJustSan1 point2 points3 points 8 years ago* (2 children) | Copy Link

The fact that you actually think this means you don't understand what a stock is and probably severely underestimate how risky bitcoin is.

A stock pays dividends.

A stock gives you partial ownership of a company and its assets. It gives you voting rights at company meetings.

Bitcoin is a currency. It does not pay you a dividend. It does not give you ownership of anything apart from a bitcoin and it doesn't give you any rights to vote on anything.

The fact that a stock is expected to pay you an annual income through its dividends is what gives that stock value. What gives a currency its value is a widely held agreement to use it as a means of exchange. In the absence of widely held agreement as to a value of a currency, the value of that currency collapses. It places crypto currencies in a position where they are extremely vulnerable to regulation. If a large country or countries decided to outlaw bitcoin, the price would collapse long before you could get a penny out of it.

Investing in bitcoin is extremely high risk - hence the high rewards to date. Investing in shares is not in the same ballpark*.

*addendum: ok, well there are some ultra high risk stocks out there that threaten the ballpark - pennyshares in oil exploration companies where they either have a massive stash of oil or a worthless block of land comes to mind...but the point stands. Bitcoin is ultra high risk. Good for a laugh, you might make a good amount of money but for the love of god don't bet the house.

[–]chadbhava0 points1 point2 points 8 years ago (1 child) | Copy Link

[–]MadPreacher1AD[S] 0 points1 point2 points 8 years ago (0 children) | Copy Link

You really can't be that stupid can you?

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.[1] When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders. Distribution to shareholders may be in cash (usually a deposit into a bank account) or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or share repurchase.[2][3]

A dividend is allocated as a fixed amount per share, with shareholders receiving a dividend in proportion to their shareholding. For the joint-stock company, paying dividends is not an expense; rather, it is the division of after-tax profits among shareholders. Retained earnings (profits that have not been distributed as dividends) are shown in the shareholders' equity section on the company's balance sheet – the same as its issued share capital. Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from the fixed schedule dividends. Cooperatives, on the other hand, allocate dividends according to members' activity, so their dividends are often considered to be a pre-tax expense.

Title	One of Asia's largest banks says bitcoin is 'a Ponzi scheme'
Author	MadPreacher1AD
Upvotes	35
Comments	154
Date	November 27, 2017 10:43 AM UTC (8 years ago)
Subreddit	Posted in /r/MGTOW
Original Link	https://old.reddit.com/r/MGTOW/comments/7fuclh/one_of_asias_largest_banks_says_bitcoin_is_a/
Archive Link	https://theredarchive.com/r/MGTOW/one-of-asias-largest-banks-says-bitcoin-is-a-ponzi.530885 https://theredarchive.com/post/530885

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