[nmaley]

Some remarks from Captain Obvious here.

The primary use case for crypto is simple: (1) People buy crypto because it keeps going up in value (2) It keeps going up in value because people keep buying it. (3) For why people keep buying Crypto, see (1).

That's the logic of a Ponzi scheme. All previous Ponzi schemes failed because either (a) sooner or later the scheme runs out of new suckers, and/or (b) the authorities intervene and shut it down, and/or (c) The founders cash out and 90% of the money just disappears into thin air.

The truly fascinating thing about crypto is that neither (a) or (b) appears likely in the near future. It's a Ponzi scheme with fungible shares.

For (c), as with other Ponzi schemes, the founders make a lot of money, the later entrants lose a lot of money. Sooner or later, the founders of BTC (for example) will start to cash out. At the moment, they seem to be cashing out gradually, so as not to cause a crash in their remaining holdings. That is one reason BTC prices are so volatile.

At the same time as the BTC founders are trying to find the optimum point in their cash out equation, there is another use case for crypto which continues to drive demand: crime and money laundering. Crypto is a great way to move money between jurisdictions. For some criminals, it is well worth the risk of volatility.

Ponzi logic and money laundering logic will continue to drive the price of established cryptos upwards. I suspect it might be quite a while before the game stops. That makes cryptos like BTC an interesting short term speculation. But to paraphrase Gurf Morlix: stay in too long, you're gonna get cut, and you're gonna bleed.

[lukeramsden]

> Sooner or later, the founders of BTC (for example) will start to cash out. At the moment, they seem to be cashing out gradually

Who are these "BTC founders" that are cashing out gradually? The only actual founder of Bitcoin, the anonymous Satoshi, has not moved any BTC since they disappeared from the internet: https://whale-alert.medium.com/the-satoshi-fortune-e49cf73f9...

[cuteboy19]

That's the real innovation behind cryptocurrency. There is no single founder, and so there is no one to put behind bars when the whole thing collapses. But still the formula of paying old investors with new investors money remains. It's quite brilliant really

[klntsky]

> so as not to cause a crash in their remaining holdings. That is one reason BTC prices are so volatile.

I may not have all the data, but is there any evidence that at least one observable price drop was caused by someone's cash-out e.g. in BTC?

[jmstfv]

> Sooner or later, the founders of BTC

Tell me you don't understand Bitcoin without telling me you don't understand Bitcoin.

[rufus_foreman]

>> That's the logic of a Ponzi scheme

No, that's not the logic of a Ponzi scheme. Crypto is not a Ponzi scheme.

Ponzi promised a 100% return on investment in 90 days. He got money from 15,000 investors. He needed 30,000 investors in 90 days to pay off the original 15,000. By the end of the year he would have needed 240,000 to keep the scheme going. By the end of 5 years he would have needed 16 billion investors. Crypto has been around what, 14 years now? In 14 years he would have needed 1080863910568919040000 investors.

Ponzi schemes don't collapse sooner or later, they collapse sooner. Ponzi started his scheme in January of 1920 and it collapsed in April of 1920.

Crypto is just a normal speculative investment. People buy it because they think someone else will pay more for it later. Same as speculating in gold, Amazon stock, or MTG cards over the last 14 years.

[robjan]

Amazon stock represents ownership of a company and gold has both utility and intric beauty. They are demonstrably valuable

[rufus_foreman]

>> Amazon stock represents ownership of a company

So? It doesn't pay a dividend. The only way people have made money off of that over the last 14 years is to sell the stock to someone willing to pay more for it than they did. Well I guess you could loan it to a short seller, but for the most part, it has just been a purely speculative asset, same as crypto.

>> gold has both utility and intric beauty

Crypto has utility as well, as the parent post pointed out. Many people suspect that for both gold and crypto, their utility value is tiny compared to their speculative value.