[Stubb]

Crypto isn't a Ponzi scheme. A Ponzi scheme is form of fraud where funds from recent investors are used to pay (fictitious) profits to earlier investors. Say the ringleader claims a 10% profit. An early investor had deposited $100 and wants their $100. The ringleader had blown that investor's $100 on coke and hookers and gives him $110 from new investors.

Crypto is more accurately a pyramid scheme. But then so are precious metals and fiat currency.

[coldcode]

But at least gold has some inherent value, crypto is just math that is worth whatever the buyers/sellers think it should be. Stock in a company that stays in business will never go to zero as the company always has some value due to having revenue, but crypto has no real world floor (though unlikely to actually get to zero since someone will always buy).

[sendbitcoins]

More precise way of expressing this is: gold has industrial uses not "inherent value".

[Stubb]

The value of crypto is the access to the underlying network, which lets the users of that network transfer a known supply of tokens in a manner that's not forgeable, repudiable, confiscable, etc. or reliant on the permission of outside authorities. Final settlement takes an hour. It's worth whatever people will pay for that access.

[fny]

Gold does not have inherent value either. It's price is determined purely by a market and there are no other pricing mechanisms.

You can't use discounted cash flow. You can't use comparables. You can use raw materials. It's a straight up rock that people price.

[XorNot]

It's still an actual rock though.

Cryptocurrency is less then that. Cryptocurrency is expended energy. You can't use a cryptohash for anything. Whereas I can melt down gold and make earings with it.

[symlinkk]

What a bizarre opinion to have on an IT website. “Software is worthless, it’s just expended energy, you can’t use it for anything, whereas I can melt down gold and make earrings with it”

[XorNot]

Bitcoin is not software though.

Bitcoin is a computation carried out by software.

Think of it this way: if you turned off all the Bitcoin nodes tomorrow, and then later on a bunch of people said "hey, cryptocurrency would solve this issue for us!" - is there any reason for them to try and bring back old Bitcoin wallets in order to deploy it? No - none. They just fork the Bitcoin codebase, rename a few things and start a new network.

Bitcoin the software implementation which is already free is valuable. Specific wallets, bitcoins etc? Not at all, and not reusable.

[broighbrobroigh]

A failure of imagination to do something useful with crystalized math is more a commentary on the failure of imagination vs. the utility of math.

If you compare any esoteric financial instrument against the melted rock utility test that you mention, the laity will err on the side of melted rocks.

[jerf]

"A failure of imagination to do something useful with crystalized math"

I don't think I could possibly describe BitCoin as "crystallized math". It's not like it is somehow convertible into some useful solution to some other math problem. It's a solution to a math problem that is essentially designed to not be useful for anything else on the grounds that said "utility" would be a potential mechanism for cracking the hash algorithm. (e.g., if you built a "hash function" that also provided a solution to some isomorphic bin packing problem, your hash function would have the weakness that the correspondence would reveal a lot a lot of theoretical bits about what was hashed.)

Besides, even if it is "crystallized math" than said math is independent of BitCoin's utility itself. If it were that useful you could go compute hashes until they have large numbers of zeros on the front all by yourself, without having to be involved with BitCoin. Since nobody has any conceivable use for such a thing as evidenced by the complete failure to do so, I have no idea what you think you're saying here. Merely working really hard at some computation does not make that computation useful for any other purpose.

[abriosi]

I read crystallized meth every time

[lanstin]

Only in the same sense that nothing has inherent value. Gold is pretty and durable and people like it. That gives it value in the system of exchanging stuff amongst humans.

[twic]

Wheat has value because you can eat it. Dollars have value because you can pay your taxes in them.

Gold does have craft and industrial uses, but not enough to explain its value.

[SavantIdiot]

Well, gold is a better conductor in electronic circuits than bitcoin, so it has SOME intrinsic value. ;-)

[imtringued]

I can buy overly expensive shiny rings made out of gold. The utility is purely cosmetic but it exists.

The worst thing that could happen to your gold is that it gets turned into jewelry at a fraction of its original purchasing price.

[arcticbull]

Roughly 0.1% of the entire world's gold output is used to make bitcoin miners.

[inter_netuser]

Gold's monetary premium dwarfs its industrial value. Something like 90%+ is purely monetary usage.

[onemoresoop]

And that consists of taking gold out of the ground and putting it back under the ground - in vaults and adding an extra dash on paper. That's a lot of energy expenditure with destruction of the environment as well (cyanide is still used in gold mining).

What we need is a more efficient digital currency and stores of value. Gold is not the answer either.

[inter_netuser]

Yes. That currency/store of value is Bitcoin.

No cyanides, no blown up mountains, and can be powered by clean energy.

Everyone thinks it will boil the oceans, for some reason. If renewables cannot provide power - then we have to either improve renewables, or accept that nuclear is the answer and move on.

[phist_mcgee]

Silly comparison. Crypto holds value for its utility. Why do you seem to think that its utility will just vanish?

[camgunz]

Cryptocurrencies do have a couple of extra utilities:

- they can be pumped and dumped without state oversight

- with the use of a tumbler, you can launder money pretty effectively (in fact we should stop calling them tumblers and start calling them money launderers, that's exactly what they are)

It's pretty obvious that this is bad for society. In addition, the transactions are extremely slow and wildly expensive--even without factoring in externalities like carbon burn. The price is extremely volatile. It's highly unavailable (ex: good luck getting your money if Coinbase goes down). The governing structures don't inspire confidence (look at ETH's PoW -> PoS, or BTC's block size debate).

Things don't have value simply because people decide they have value. This is a weird kind of tautology or circular reasoning based on a deep misunderstanding of markets. It's clearer to say that people price things based on a perception of value. Crypto seems like it does--a lot of people go around saying so--but unless you're a comic book villain, it doesn't.

However, things like gold or oil do! You can make electrical contacts out of gold. You can refine oil into fuel. Commodities have physical utility. BTC doesn't.

State-backed currencies also do! You can get pretty much anything for USD. You can get a great pint for GBP. This is because the states and entities producing those goods price them in currencies they can get other goods for, reliably. You can't reliably use BTC to get other goods, and you can't reliably say your BTC will hold the same value even minute to minute. Further, it's very likely your transaction fees will be more than the purchases you make.

[inter_netuser]

Sounds so great, what can I get for my rapidly depreciating Turkish Lira nobody wants to take?

BTC seems a lot more accessible than the great and amazing US or EU banks, who have nearly failed and had to be bailed out barely a decade ago. Doesn't inspire confidence, tbh.

[camgunz]

I think it'd be more productive if you engaged with the substance of what I wrote, rather than engaging in whataboutism with USD/Euro/etc. I'll try and do that here with what you wrote.

> What can I get for my rapidly depreciating Turkish Lira nobody wants to take?

A couple of things about this:

- You can get Dollars/Euros/GBP/RMB.

- Crypto cannot solve the "so you're born in an oppressive or poorly-run state" problem. You've gotta trade the currency you have for crypto, and if that currency isn't good, crypto doesn't help you at all.

- There's really no examples of crypto helping people in oppressive or poorly-run states (Venezuela still has horrendous problems, for example).

- The transaction fees are bad enough in USD, but valued in (say) Bolivars they're prohibitive.

- In particular, Bitcoin is super bad for the planet, and people in oppressive or poorly run states are disproportionately susceptible to ecological disasters and climate change.

> BTC seems a lot more accessible than the great and amazing US or EU banks, who have nearly failed and had to be bailed out barely a decade ago. Doesn't inspire confidence, tbh.

I think you don't mean "accessible", but rather you're saying because banks need bailouts that fiat currency is unworkable? My counterpoint here is mostly what I wrote in my previous post; fiat is superior to crypto in every way, unless you're a criminal.

Furthermore, cryptocurrency systems are vulnerable to a whole class of problems central banking isn't, i.e. someone lost the keys, Sybil attacks, developers making changes that destroy your stake/economy.

There is no recourse for this. Are heads of state supposed to join a Discord channel or w/e and lobby crypto devs?

[inter_netuser]

Sadly, you are absolutely uninformed.

1. no, you cant get FX. capital controls.

2. USDC stablecoin actually has explicit sanction exemptions from US Govt to help people in Venezuela. They aren't easy to get at all, but I guess according to USDC does absolutely nothing in Venezuela, so it must've been a waste of effort.

3. transaction fees are measured in milli-cents on Lightning Network. They are also instant. Still Bitcoin, with the same security budget.

4. Why is using renewables super bad for the planet? Either renewables can power the planet and our industries - or they just don't work. Make up your mind.

If you think proof of work is waste and you need to lobby devs - you have literally everything upside down. very unfortunately it's a common situation on this board.

a. Proof of Work exists to remove any subjectivity from consensus. Longest valid chain with most work, period. Subjectivity = politics, and everything that comes with it.

b. devs do not have anywhere as much control as you think, and the ecosystem can trivially eject malicious devs. happened a number of times.

The entire point of Bitcoin is that it is objective and transparent.

As for "criminal" - people commit on average 3 felonies per day: https://ips-dc.org/three-felonies-day/

Everyone is a criminal.

Especially Turks, Venezuelans and Nigerians seeking to escape their broken systems and banks. Must be some savvy criminals - recording their crimes on a globally replicated open ledger, visible to the entire world.

[lottin]

Because the only utility it has is that it appreciates over time. Of course, until it no longer does, then becomes worthless.

[phist_mcgee]

And that I can send money worldwide to anyone at any time with no middleman.

[nikanj]

No, you can send arbitrary hashes to anyone at any time. It's just a mutual agreement that those hashes are worth anything at all.

[phist_mcgee]

And so is our physical money a shared belief that those pieces of plastic are worth something as well. Really though man, this argument has been hashed out in so many places on the internet innumerable times. Stop the downvoting and let's agree to disagree.

[imtringued]

This mostly matters for avoiding capital controls. Those shouldn't exist in the first place.

[lanstin]

D5CF5A343CEE5CF02556B7790D24C950495E04B9 Really a reply to the sibling.

[imtringued]

>Crypto holds value for its utility.

You mean ETH and the ability to bypass capital controls? Sure, I'll accept that these things exist but that doesn't mean I can accept needless power consumption. Bitcoin bubbles don't meaningfully contribute to avoiding capital controls.

[mumblemumble]

It's neither. A defining feature of both pyramid schemes and Ponzi schemes is centralized control of the ledger and who is allowed to participate. And a defining feature of cryptocurrencies is, at least theoretically, the lack of such centralized control.

I understand that people feel like there's something fraudulent going on with crypto. Given the sheer density of fraud and scamming surrounding crypto, it's hard to argue with that. But trying to make one's argument seem more concrete by picking the name of some well-known class of fraud and blithely using it to describe crypto in general is counterproductive. It muddies the waters, and makes it more difficult to have an organized discussion by removing clarity from the language we have to discuss these things.

The urge to do so should be resisted for the same reason that we should resist the urge to try and make arguments involving statistics seem more authoritative by just guessing at numbers when we're not sure of them. False precision is, well, false.