Yes, the last bit is crucial. Ultimately traditional currencies are backed by the state’s monopoly of legitimate violence. Which is very powerful.dyqik wrote: ↑Wed Nov 16, 2022 6:01 pmAnd fundamentally, the credibility of the Federal Reserve rests on political foundations created by the United States legal requirement to accept dollars as discharging debts, the United States legal authority to levy taxes and impose fines, and the United States legal authority to impose criminal sanctions on individuals who do not pay taxes and fines.IvanV wrote: ↑Wed Nov 16, 2022 5:17 pmMoney thus gains credibility from the credibility of the issuer to satisfy you, to redeem their IOU. The Federal Reserve has considerable credibility to satisfy you. A lot stands behind it. Some central banks have less credibility, it is traditional to mention Argentina at this point, for example.
How credible is Bitcoin to satisfy you? Not a credible as a long-standing big bank with large assets.
FTX
- Woodchopper
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Re: FTX
Re: FTX
I'm still up on my Ethereum coin holdings... maybe I should sell...
You can't polish a turd...
unless its Lion or Osterich poo... http://dsc.discovery.com/videos/mythbus ... -turd.html
unless its Lion or Osterich poo... http://dsc.discovery.com/videos/mythbus ... -turd.html
Re: FTX
This is an interesting perspective on crypto. I’m still not seeing the great revolution that undermines the big banks.
https://mobile.twitter.com/henrymance/s ... 9080132609
https://mobile.twitter.com/henrymance/s ... 9080132609
Re: FTX
Well duh.
What captured some of the income of the big banks was the transfers for pennies revolution. Crypto is the opposite, extremely expensive transfers if used as a currency. But those high costs are hidden by the Ponzi aspect.
What captured some of the income of the big banks was the transfers for pennies revolution. Crypto is the opposite, extremely expensive transfers if used as a currency. But those high costs are hidden by the Ponzi aspect.
Awarded gold star 4 November 2021
Re: FTX
It depends precisely what you mean by scam. But essentially ones like bitcoin have nothing behind them, and are worth nothing but the confidence people have in them.
Though you can say the same of many "collectable" items which have no value except what other collectors will pay. Is art a scam? I bought a painting recently, whose value was purely as a decorative item, and that's fair enough. I don't care if it is worth anything later, that's not why I bought it. But some paintings can be worth 10 or 100 times more if their attribution to a famous painter is accepted. It's just the same object, of the same "artistic value", whoever painted it. Is that premium value a scam? At least you still have a decorative object to put on your wall if the attribution is later rejected. Rich people and criminals buy valuable art objects to launder money and avoid taxes, just as they use bitcoin. That's probably part of what is driving the very high values for art objects attributed to famous artists.
Stablecoins claim to have backed by real assets, like a proper bank. But they aren't proper banks and regulated as such. So whose word are you taking that the assets are there? Some of them crashed and didn't seem to be telling the truth.
Re: FTX
There is a near-finite supply of Van Gogh paintings, with passable forgeries rarely entering the money painting supply.
There's an infinite supply of crypto "coins". We could invent Scrut coins right now and pump & dump them into the vast universe of suckers.
There's an infinite supply of crypto "coins". We could invent Scrut coins right now and pump & dump them into the vast universe of suckers.
Awarded gold star 4 November 2021
Re: FTX
The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art by Don Thompson is a good read about why and how the high end art world is so high end.IvanV wrote: ↑Mon Nov 21, 2022 4:34 pmIt depends precisely what you mean by scam. But essentially ones like bitcoin have nothing behind them, and are worth nothing but the confidence people have in them.
Though you can say the same of many "collectable" items which have no value except what other collectors will pay. Is art a scam? I bought a painting recently, whose value was purely as a decorative item, and that's fair enough. I don't care if it is worth anything later, that's not why I bought it. But some paintings can be worth 10 or 100 times more if their attribution to a famous painter is accepted. It's just the same object, of the same "artistic value", whoever painted it. Is that premium value a scam? At least you still have a decorative object to put on your wall if the attribution is later rejected. Rich people and criminals buy valuable art objects to launder money and avoid taxes, just as they use bitcoin. That's probably part of what is driving the very high values for art objects attributed to famous artists.
Stablecoins claim to have backed by real assets, like a proper bank. But they aren't proper banks and regulated as such. So whose word are you taking that the assets are there? Some of them crashed and didn't seem to be telling the truth.
Re: FTX
So what?
eta I mean you’re not entirely naive here.
Re: FTX
If that were true, don't vendors of 'stable coins' come under traditional financial institution legislation as they are trading in real financial assets?
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Re: FTX
That’s not the same as it being an intentional scam though. And I believe you can say the same thing about any investment that’s about speculation on how much someone else’s will pay, like gold or fine art etc (rather than productive assets like I profit making company). Or you hold some distinction here?
Re: FTX
Depending quite how they are set up, the trade in stablecoins can be subject to the some kind of regulatory oversights, as they are a bit like a tokenised form of corporate bonds. See the opening discussion in the
Treasury's consultation on cryptocurrencies, from last year, which concluded that they need a lot more regulation.
Re: FTX
As I said, it depends what you mean by "scam". There has been some fraud in the crypto market, and that is not entirely surprising, and those cases were scams in the usual sense. But as far as can be told, there is no reason to believe that fraud is pervasive in the market. So let's put those put those in a separate box and talk about fraud-free crypto.Bewildered wrote: ↑Tue Nov 22, 2022 4:40 amThat’s not the same as it being an intentional scam though. And I believe you can say the same thing about any investment that’s about speculation on how much someone else’s will pay, like gold or fine art etc (rather than productive assets like I profit making company). Or you hold some distinction here?
Fraud-free crypto is completely open about what it is. It is not, so far as we can tell, hiding anything from us about what it is and how it works. You can look at its rules, and modes of operation, and come to your own conclusion. I think you can probably even look at the code. It is not a scam in that sense.
But it bears some comparison to the tulip mania episode in the 17th century, when there was a bubble in the price of tulip bulbs, especially attractive new varieties that were perhaps limited to a handful of bulbs when first created. Or the South Sea bubble. Or the ostrich bubble of the early 90s. In each case you knew exactly what you were getting. But it was also being marketed to you at a fancy price, and there were some people around saying that the price was fair and you could make a lot of money. And that is what gives it a sense of being a scam.
In all of these other bubbles, what was being marketed wasn't entirely valueless. Even the South Sea Company was actually an active trading company and would continue to carry on trading for many years afterwards, just not to anything like the profitability that was being mooted when the bubble occurred. Although it had been granted a monopoly in the trade of slaves from Africa to Spanish colonies, it was always unlikely it would be able to engage in that trade to any great degree, for reasons that were perfectly plain. With crypto, there is literally nothing there. And a lot of costly activity is being undertaken for which is essentially worthless.
The scam, to the extent there is a "scam", is the talk about what it might be worth.
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Re: FTX
We’ve discussed this before and Crypto does seem to have an intrinsic use as a means to move and store money outside of government oversight and regulation. There is a large demand for such a service in many developing countries in order to evade taxes or avoid other negative consequences of having large cash reserves.
Of course most of the demand for bitcoin has been speculation. But it seems to me that this intrinsic use for tax evasion may explain why Bitcoin has never followed the classic boom and bust cycle we associate with a bubble. Even now the bitcoin price is higher than it was during 2020. If it was like Dutch tulips or shares in the Southsea Company the price of bitcoin should be zero.
Of course most of the demand for bitcoin has been speculation. But it seems to me that this intrinsic use for tax evasion may explain why Bitcoin has never followed the classic boom and bust cycle we associate with a bubble. Even now the bitcoin price is higher than it was during 2020. If it was like Dutch tulips or shares in the Southsea Company the price of bitcoin should be zero.
Re: FTX
It's a big planet with 8 billion potential suckers. It could easily take hundreds of years to fall to zero. Other fictions that transfer cash from the masses to the elite are still running after thousands of years.
Awarded gold star 4 November 2021
Re: FTX
Lol “I will be proved right in a million years just you lot will never know”
Re: FTX
This is what fools the gullible. They follow a faulty logic chain: a bitcoin can be useful, therefore people and businesses will want to use it as a product, therefore value will transfer to owners of the product.Woodchopper wrote: ↑Tue Nov 22, 2022 10:26 amWe’ve discussed this before and Crypto does seem to have an intrinsic use as a means to move and store money...
But value does not flow from users of bitcoin to owners of bitcoin.
If you own a share of Visa Inc, you know people and businesses find Visa useful and will pay a fee of a penny per transaction and your share of those fees will work their way back to you as a share owner. If you own a share of High Security Bank Vaults Ltd then people will use your product to store money and a fraction of their fees will flow back to you. This is so commonplace it feels like the natural ordering of the financial world.
There's a presumption that the same applies to bitcoin, that the intrinsic value as a means to move and store money must somehow lead to that value flowing to bitcoin owners. It doesn't. There's no mechanism. There's only cost, with transaction costs of buying/selling and the risks of holding.
Awarded gold star 4 November 2021
Re: FTX
On that, do more Bitcoin transactions make each Bitcoin transaction more expensive over time, as the chain gets longer? I'd hope something that obvious has been spotted by the large tech companies using Blockchain for non-crypto, but you never know with a hyped tech.lpm wrote: ↑Tue Nov 22, 2022 10:48 amThis is what fools the gullible. They follow a faulty logic chain: a bitcoin can be useful, therefore people and businesses will want to use it as a product, therefore value will transfer to owners of the product.Woodchopper wrote: ↑Tue Nov 22, 2022 10:26 amWe’ve discussed this before and Crypto does seem to have an intrinsic use as a means to move and store money...
But value does not flow from users of bitcoin to owners of bitcoin.
If you own a share of Visa Inc, you know people and businesses find Visa useful and will pay a fee of a penny per transaction and your share of those fees will work their way back to you as a share owner. If you own a share of High Security Bank Vaults Ltd then people will use your product to store money and a fraction of their fees will flow back to you. This is so commonplace it feels like the natural ordering of the financial world.
There's a presumption that the same applies to bitcoin, that the intrinsic value as a means to move and store money must somehow lead to that value flowing to bitcoin owners. It doesn't. There's no mechanism. There's only cost, with transaction costs of buying/selling and the risks of holding.
The value of wider adoption of Bitcoin to Bitcoin owners is that it becomes easier to use your Bitcoin, but then that's competing with "dollars", and as you say, the only place that Bitcoin has an advantage there is for illegal transactions.
Last edited by dyqik on Tue Nov 22, 2022 10:53 am, edited 1 time in total.
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Re: FTX
I think people should be careful to differentiate between these. There are many intentional scams in crypto and things surrounding it, when people keep calling the whole thing a scam it confuses the issue and I expect that does lead to more people missing the warnings.IvanV wrote: ↑Tue Nov 22, 2022 9:09 amAs I said, it depends what you mean by "scam". There has been some fraud in the crypto market, and that is not entirely surprising, and those cases were scams in the usual sense. But as far as can be told, there is no reason to believe that fraud is pervasive in the market. So let's put those put those in a separate box and talk about fraud-free crypto.Bewildered wrote: ↑Tue Nov 22, 2022 4:40 amThat’s not the same as it being an intentional scam though. And I believe you can say the same thing about any investment that’s about speculation on how much someone else’s will pay, like gold or fine art etc (rather than productive assets like I profit making company). Or you hold some distinction here?
Fraud-free crypto is completely open about what it is. It is not, so far as we can tell, hiding anything from us about what it is and how it works. You can look at its rules, and modes of operation, and come to your own conclusion. I think you can probably even look at the code. It is not a scam in that sense.
But it bears some comparison to the tulip mania episode in the 17th century, when there was a bubble in the price of tulip bulbs, especially attractive new varieties that were perhaps limited to a handful of bulbs when first created. Or the South Sea bubble. Or the ostrich bubble of the early 90s. In each case you knew exactly what you were getting. But it was also being marketed to you at a fancy price, and there were some people around saying that the price was fair and you could make a lot of money. And that is what gives it a sense of being a scam.
In all of these other bubbles, what was being marketed wasn't entirely valueless. Even the South Sea Company was actually an active trading company and would continue to carry on trading for many years afterwards, just not to anything like the profitability that was being mooted when the bubble occurred. Although it had been granted a monopoly in the trade of slaves from Africa to Spanish colonies, it was always unlikely it would be able to engage in that trade to any great degree, for reasons that were perfectly plain. With crypto, there is literally nothing there. And a lot of costly activity is being undertaken for which is essentially worthless.
The scam, to the extent there is a "scam", is the talk about what it might be worth.
Regarding the more general sense I was going to try to play devil’s advocate and argue about the value it has as a currency and why some people believe in it. But I think woodchopper already did a better job than I can there. Anyway i don’t think any crypto is a good idea as a currency and I hope they fail more even than i expect it, but I find arguments above a bit odd when they they acknowledge this.