Bill Gates Says Crypto and NFTs Are a Sham, '100% Based on Greater Fool Theory' (cnn.com) 328
Don't count Bill Gates among the fans of cryptocurrencies and NFTs. From a report: Those digital asset trends are "100% based on greater fool theory," the Microsoft co-founder said Tuesday at a TechCrunch conference, referencing the notion that investors can make money on worthless or overvalued assets as long as people are willing to bid them higher. Gates added that he's "not long or short" crypto. And he mocked Bored Apes NFTs, joking that "expensive digital images of monkeys" will "improve the world immensely." Instead, Gates said he prefers old fashioned investing. "I'm used to asset classes, like a farm where they have output, or like a company where they make products," he said.
Get Your Popcorn Ready (Score:5, Interesting)
Re:Get Your Popcorn Ready (Score:5, Insightful)
Re:Get Your Popcorn Ready (Score:5, Insightful)
Same here, crypto is neither commodity nor currency -- no intrinsic value to be a commodity and too volatile to be a currency -- so it must be something else. The most likely something else is a pyramid scheme.
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It's a github repo. And you have to squint to imagine that there's value in owning a commit somewhere in the version history.
Ultimately, Bitcoin(prime) has no technical difference from Bitcoin(n) or Bitcoin(n+1), and so on. The only value exists in which Bitcoin(x) has more people bought into it....which is simply psychological value, not technical value.
Not a pyramid scheme (Score:3)
It may sound like one, and it is definitely a scam, but it's not a pyramid scheme.
A pyramid scheme relies on the flow of value where every subsequent person down the line provides a commission going back up the line. They are highly illegal and trivial to prosecute when they come up. Critically though, no cryptocurrencies have been declared a pyramid scheme by any government because they don't fit the legal definition.
We're going to need to come up with another way of describing the scam.
Re:Not a pyramid scheme (Score:5, Interesting)
With crypto the commission flows up the line by way of the value of existing coins increasing in price. And it flows just like a regular pyramid in that the earlier you got in, the more money flows to you. It doesn't explicitely flow back up the line, which is the genius of settting up a legal pyramid scheme where you can't see the money flow. That doesn't mean it's not a pyramid. Everyone is in it hoping to get rich quick from the next round of punters bidding up the price. When you run out of punters such that the price can no longer rise, then it all collapses just like any other pyramid.
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We know it's a pyramid scheme because:
* 99% of people are in because they hope to get rich quick.
* There is no product or asset underlying it.
* The only way you can get rich quick is if the next layer in the pyramid is bigger than the previous layer. (aka, demand outstrips supply).
And like any pyramid, the time must come when math and the law of big numbers can't allow the pyramid to expand. Then it stops being a pyramid and you lose your shirt.
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I guess we can say that, if we keep in mind the mean time between crashes for regular currency is orders of magnitude greater than with crypto, which makes it a different beast statistically.
Re:Get Your Popcorn Ready (Score:4, Insightful)
Isn't all currency just a pyramid scheme
No, it isn't, not in the way cryptocurrency is. And yes, it takes knowledge of what money really is and how it gets its value and purchasing power to understand the difference. Hint: it's the industry with all the workers in the currency area and its objective, proven ability to turn stuff into more valuable stuff by work.
Re:Get Your Popcorn Ready (Score:5, Interesting)
Isn't all currency just a pyramid scheme that hasn't collapsed yet?
No, it's not. Currency is just a convenient means to remove the difficulties of building up an efficient economy based on barter by representing value of your work in something that everyone accepts. Even volatile currency is *much* a much more sensible proposition than paying your baker with milk because that's what your baker wants, but you have to get your milk from a farmer who really wants a cell phone, but the cell phone owner shop is looking for some nice books and...well, you get the picture. As long as the short-term stability of your currency is sufficient, these N-way exchanges are obsoleted, and even with mildly volatile currency, that creates much less waste than barter, unless your time is worth nothing. So I'm not sure where do you see the pyramid scheme -- currency is simply the least bad of all the bad solutions when it comes to people trading their work. Pyramid schemes don't provide value, but actually working economies do.
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Nope. Get some education. Fiat currencies can crash under very specific circumstances, usually in connection with a state failing. They are not a "pyramid scheme" in any way though. Pyramid schemes are assured to crash, typically in less than 5 years. The crypto-currency scam is unique in that it has lasted so long. Probably because it is more distributed. But crash it must and will.
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You can't plan around it, e.g. be paid partially or fully in advance to deliver something in a month or six months. And even in smaller transactions, if you just sold say your laptop for bitcoin, you'll want to exchange it for $ immediately if you fear btc will go down.
A lot of it is psychology, if people everywhere decided crypto should be a currency that would make it so, but it doesn't look like it will.
Re:Get Your Popcorn Ready (Score:4, Insightful)
too volatile to be a currency
How so? Suppose I want to purchase a commodity, and the easiest (maybe even only) way for me to do so is with cryptocurrency. I purchase just enough of it to make the purchase, and I'm done with it.
You're already not using it as a currency, you're just using it like arcade tokens.
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The only "commodities" which require crypto are drugs, illegal porn, weapons and NFTs. And the problem you are not addressing is the time it takes between paying for a commodity, and the seller receiving the funds, in which time major swings can happen on the cyptocurrency's price. Which makes it sort of useless once you enter a bear market.
Re: Get Your Popcorn Ready (Score:3)
Re:Get Your Popcorn Ready (Score:5, Informative)
What are you talking about, the shares have value because you can get dividends from them, and they represent a share of the assets of the company. You can buy up all of them and take the assets if you believe the shares have become too cheap. It's not a gamble because the results are not luck, they are based on the fundamentals of the trading of the company.
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Holy crap, there is a lot of stupid in there. The ONLY thing you said that is correct is that 'the shares weren't a loan'. They also were not a gift. They were a PURCHASE of part of the company. When you sell your stock, the new owner now owns that part of the company. From an 'investment' point of view it makes zero difference whether you purchased your shares directly from the company or from someone else. In both cases, your fortune is tied to the performance (and expected performance) of the compa
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Slashdot is pretty solidly in the anti crypto and NFT camp. Most comments I've seen agree wholeheartedly with Gates.
Re:Get Your Popcorn Ready (Score:4, Interesting)
Early on (when a pizza cost several Bitcoin) it looked like Bitcoin could bring down VISA and MasterCard. That was cool and nerdy.
Unfortunately it turned out not to scale. A currency you can't actually transact in is pretty useless, except as a pyramid scheme.
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I am not sure Anti Crypto is the correct term. When it was new, a lot of us were actually rather interested in it and what it could bring to the world. However what it ended up becoming is a far cry to the objective we hoped it would achieve.
For long timer Slashdotters (spun has a low number). If in the late 1990's we would say 25 years into the future. Most devices would be running off of Linux or Unix, Apple would be a major Tech company, Windows would be delegated to mostly just business use, and old
Re:Get Your Popcorn Ready (Score:5, Insightful)
Slashdot is pretty solidly in the anti crypto and NFT camp.
I take this as evidence that, despite what one might infer from reading posts, there actually are a lot of smart people using this site.
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probably not actually pro-crypto, just preying on clickbaity stuff which crypto tends to be nowadays.
In fairness to NFT people... (Score:2, Offtopic)
Re:In fairness to NFT people... (Score:5, Insightful)
Bill Gates purchases paintings for tens of millions of dollars (e.g. dude in boat for 36m)
and I have an exact copy of it on my wall. no, actually I do not.
Re: In fairness to NFT people... (Score:5, Insightful)
Re: In fairness to NFT people... (Score:4, Insightful)
Re: In fairness to NFT people... (Score:5, Insightful)
Well, *it depends*.
There's two distinct kinds of value -- utility value and rarity value. You can certainly find an artist somewhere who can copy Winslow Homer's *Lost on the Grand Banks* convincingly enough to fool yourself, provided you aren't an art expert. For you.it would have all the use value of the original. But it would not have the rarity value of a genuine Homer canvas, the worlds's supply of which was fixed forever 112 years ago.
NFTs try to create a kind of synthetic rarity value. What you get is a hard-to-alter entry in a distributed blockchain ledger, that is rare as long as nobody decides to make an alternative blockchain ledger, which anyone could.
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Agreed it's not identical, but the value of 36m, as opposed to some random professional's quality painting of "dude in boat" for a few hundred dollars is due to similar reasons that NFT's have value.
Yes and no. An NFT has, again, no physical presence of any intrinsic value. The painting is a physical creation -- your SUBJECTIVE valuation is NOT THE SAME as having NO INTRISIC value.
You might pay $5, I might pay 500$ and someone else might find the value easy at 500k.
Regardless of your OPINION on the product, its at least a PHYSICAL product.
Re: In fairness to NFT people... (Score:4, Informative)
To be clear, if you buy the NFT for something, generally all you own is a receipt. You don't own the actual object (or its copyright).
Re: In fairness to NFT people... (Score:5, Funny)
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An NFT that comes with the copyright isn't an NFT, it's a copyright transfer.
Re: In fairness to NFT people... (Score:5, Insightful)
The actual physical raw materials are close to worthless.
Let us be honest that it's no different from art collecting and that in practice artwork's value is due to name and greater fool. I remember reading about a painting of which even experts weren't sure whether it was made by Rembrandt van Rein or a student thereof, but in the former case the value would be a thousand times more than in the latter case if ever found out. — It isn't valued for the art itself but simply due to the name of the artist and the greater fool.
“Greater fool” is simply everywhere and much of the value of paper money also derives from it.
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What? No they don't. What is the intrinsic value of a painting then?
Intrinsic value is worth in its own right. Things like beauty, truth, etc. Works of art, like paintings, absolutely have intrinsic value. Unlike NFTs, the overwhelming majority of paintings are not purchased as an investment, but for display. People commission paintings all the time, after all.
That doesn't mean a painting can't also have extrinsic value, though that would necessarily be in addition to its inherent worth. All of the value of an NFT is extrinsic.
Some NFTs are scams, not all.
They all look like scams to me. Do you h
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And look, here's a free Pog I made to go with the binary.
Except you don't actually get the Pog. You just get to look at it until for a little while, which you could do even if you didn't buy it...
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The only real difference I can think of is that classical paintings have a centuries' long track record of ever-greater 'fools.'
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It's a fair point. A painting is at least a physical object, but a reprint of one has the same aesthetic and material value - which is maybe a couple hundred bucks, leaving the rest of that $36M valuation to anticipated resale = greater fool.
Original works of great art are the single best store of generational wealth there is. There's never going to be another Starry Night, the value only goes up over time, usually outpacing inflation.
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Actual crafted works of art, one of a kind paintings by world famous painters, in marketplace that has been active and vibrant for centuries.
Bill Gates isn't buying up all the art produced in high schools and universities and kindergartens around the country. Nobody is.Just because someone made it doesn't mean anyone wants it.
The overwhelming majority of paintings produced each year are valued primarily based on how nice the frame is.
So why would procedurally generated digital cartoon apes that are triviall
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exchange rate (Score:2)
"my monkey picture post has 32M likes, it's worth $8M."
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There is value just not how you think (Score:5, Insightful)
Maybe a good way to think of BitCoin is this way - each BitCoin represents a desire to send someone else value without interference or external controls potentially blocking or delaying the transfer.
The problem is the purity of this desire to have a free currency, has been muddied by a lot of financial shenanigans, and the value pumped WAY up by excess money printing from governments everywhere.
So currently you have no way of knowing how much this ability to conduct free transactions is worth to people, but the values as they are seem way too high because even now most current value is propped up by sheer speculation rather than utility.
Maybe when BitCoin returns to around $5k or so we might see a more stable price, but then again maybe it would just explode again.
It BTC would ever just stabilize I'd be a lot more interested in it.
Re:There is value just not how you think (Score:5, Informative)
You're not sending anyone value with bitcoin, the token is exchanged for money at time of transaction. Your tiniest transaction takes 2MW to processes, same as burning a ton of coal, look it up.
Bitcoin is a gambling token with horrendously energy wasting infrastructure with badly designed distributed database that chokes under load. Not money, not liquid, no utility, extreme volatility, not anonymous as cash even.
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You're not sending anyone value with bitcoin, the token is exchanged for money at time of transaction. Your tiniest transaction takes 2MW to processes, same as burning a ton of coal, look it up.
A MW is measure of power, which means that it's a rate. Saying 2MW doesn't specify a quantity unless you also specify a duration. Did you mean 2 MW-hours? That seems like it would work out. That's about the energy in 300 kg of coal, but that's thermal energy, actually generating power from that would be around 30% efficient or so, which means that it would take about a ton of coal to generate it.
Of course, the bitcoin enthusiasts argue that the "tiniest transaction" you mention could actually encompass a ve
Re: There is value just not how you think (Score:5, Insightful)
Which is why people don't invest in dollars, they spend them. The only way that stupid 'lost 99% of purchasing power' makes any sense is if you literally had a paper dollar that you kept since 1920. And nobody does that.
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Exactly. Everyone with any "wealth" has comparatively little cash. You own a house, or a business, or equity/stocks (including mutual funds), or you just have "you" including your education, which is a form of wealth. For most people in the first half of their career, their own value as an income earner (which is the net present value of their entire future income) is worth far, far more than any money they have in the bank. Heck, even their limited amount of "stuff" in their apartment is typically wort
Re: There is value just not how you think (Score:5, Insightful)
I would say buying treasury bonds is investing in the US, not investing in the dollar. You are not hoping the value of a 'dollar' will increase while you hold the bond (which would be stupid, because it never does).
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The other thing that a lot of people aren't looking at: as the price of crypto dives, it becomes unprofitable to do the work on a proof-of-work coin, so people stop doing the work. This causes transactions to slow and transaction prices to rise, making it less attractive to use. It can quickly become a death spiral.
For example, have a look at the hashrate chart of Ethereum [coinwarz.com] over the last 3 to 6 months. People are getting the fuck out because it's not worth it. And if they set off the "difficulty bomb" an
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If BTC would ever just stabilize I'd be a lot more interested in it.
But the people who run, own, code and own bitcoin have no reason to stabilize it, it was never built to be a stable and flexible means of exchange, it was never designed to be a replacement currency by any stretch of the imagination.
It was a neat technical idea that got immediately swamped by speculators and scam artists, even the truly eager true believers were unwittingly becoming or falling victim to scammers.
If an actual crypto-currency is to actually take hold and not under control of a government then
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Even at a reasonable value, the entire Bitcoin structure was not designed for what it is now. Everything from the woefully inadequate capacity to handle peak transactions to the fact that stuff stays on the blockchain forever, to the size of the blockchain only growing and can never really be pruned... and you have to either parse it yourself, or use a trusted node (which removed a lot of the value of a decentralized currency) to ensure you are not being double spent.
What would be nice is a Bitcoin 2.0 cur
Hard to argue (Score:2)
I wouldn't say they're 100% a sham, at least not any more than buying physical artwork is a sham. The value is determined by the purchaser. Still, I'd say that leaves 99.9(repeating)% of all NFTs being complete money grabbing shams.
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Agreed. NFTs are in the craze mode right now and once that craze dies down (maybe its starting?) all the suckers who were unlucky enough to dump a bunch of money in at end will be left holding the bag.
NFTs and crypto are basically get rich quick schemes that have benefitted a few while the many will end up getting shafted.
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Not comparable. You can actually own and moreover insure artwork against theft or damage. NFT are just gambling tokens that aren't even physical, same as so-called crypto-coin. The are dependent on a networked systems that can vanish or become worthless in an instant. All NFT could be gone from this earth in less than 10 years, it's a fad.
Artwork with pedigree still appreciates less than equities over significant timescales though, I'd can it an investment hobby for those that like it.
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If I buy a painting from a no-name artist, regardless of value, I have a tangible object which can sit around, get hung on a wall, or get tossed for firewood. A NFT gives me a signed URL, and nothing more. It means no ownership of the work, no copyright ownership, no rights to duplicate it (like I would with a painting)... just a URL signed pointing to a wallet.
At any time, the website with that URL can go down and toss it. 20 years from now, that painting may be worse for wear and moths, but it will sti
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What of money you have on the bank?
What of transferring that money to pay for a service? Do you accept electronic money for your payment?
It's entirely greater fool and relies on the expectation that one can transfer those bits to someone else for services and find someone who accepts it. The only difference with bitcoin is that the system actually has more concrete guarantees to solve double spending that banks do not have.
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It's entirely greater fool and relies on the expectation that one can transfer those bits to someone else for services and find someone who accepts it.
That, and 5,000 thermonuclear warheads.
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That is really, really, stupid. Electronic transfers have nothing to do with 'greater fool'. Electronic transfers are a convenience.
Whoa (Score:5, Funny)
I'm as smart as Bill Gates, who could've thought!
Re:Whoa (Score:4, Insightful)
I'm as smart as Bill Gates, who could've thought!
Doesn't take much smarts - only fools don't see NFTs as the obvious scam that it is.
It wasn't necessarily a scam (Score:3)
So last year those loopholes got closed and you couldn't get away with that anymore. That brief period of time when nfts went crazy was a bunch of rich people testing the wa
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Up Next: (Score:3, Insightful)
Microsoft announces new "stable" coin and a boat load of new NFTs to celebrate Windows 11's one-year anniversary!
The grand master plan of crypto (Score:2, Interesting)
The plan for all cryptocurrencies isn't what they want to make you think it is. It's more sinister than the egalitarian image the crypto boys portray for it.
After the 2008 financial meltdown, cryptocurrencies were born out of it, declared to be the means by which people could be freed from banks/governments, and promised to avoid any such future meltdowns from happening ever again.
But the crypto boys watched closely the result of that meltdown, and formulated their plan: create a new form of currency, and
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Crypto is ponzi. NFT's are beanie babies (Score:2)
I mean, yeah, you can make tons of money off this crap. If you're at the top, immediate investors. Then you get to eat the poor buggers that come after you.
P. T. Barnum may have said it first: "There's a sucker born every minute" The internet just allowed all the suckers to get sucked in at the same time.
Yeah (Score:3)
This is something I agree with Bill Gates on.
No surprise there (Score:5, Insightful)
And NFTs are used to perpetrate every kind of scam under the sun. The simplest being junk art (Bored Ape + a grillion other variants), but ranging to selling digital swamp land, rug pulls and all the rest.
It is unsurprising that a lot of people get burned by crypto currency. The sad part is that the market will collapse but in a year or two there will be a fresh wave of suckers to build it back up again.
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Online free markets are based entirely on fungible cryptos. It's the only thing you can use there.
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Exactly like paper, unless you actually use the paper for something, which, incidentally, is a crime in many jurisdictions to destroy money, so one can only use it in a nondestructive way.
I'm not buying crypto... (Score:4, Funny)
And Bill should know (Score:2)
We is movin' yo UI around again, sucka!
He's 100% right (Score:3)
Not a person on the planet can tell you or put a value on the price of crypto, because it has no value. If you want to compare it to another market for moving money, I can move money at my bank for free. The other 'benefits' of crypto aren't there - anonymity or regulation - anymore.
Pogs. (Score:3)
Putting all your eggs in a fool's basket (Score:2)
So it's like Azure.
Greater fool theory (Score:2)
I had not heard it put that way before, so I had to go look up more information on that phrase. Turns out, I'm somewhat familiar with other instances of the theory in my own life... I was talked into being the Greater Fool by a very bullish real estate agent, not long before the housing crash of 2008.
I mean, it doesn't really make me feel better about the money I lost, but at least now I can put a name to it.
This'll hurt (Score:3)
This is going to make it much, much harder to find new victims for the ponzi schemes.
He's not wrong (Score:2)
Backed by full faith and credit of ponzi schemers (Score:4, Informative)
At one point money was metal. Then it became backed by metal(s). Now the US dollar is backed by the full faith and credit of the US government. While faith in the US government has waned, it still far exceeds the faith and credit in random tech bros. Faith in the tech bros, who now are more interested in running a ponzi scheme, actually makes some sense. They continue to posses crypto coinage and there is no reason for them to stop pumping it and start dumping it.
Most cryptos at least come close to something of value. They are honestly not that different from those corporate/municipal coinage. Bristol, England for example, has the "Bristol Pound". If the company behind it, "Bristol Pound Community Interest Company" goes bankrupt or evil, the Bristol Pound becomes worthless instantly.
Personally, I think the decentralized nature of Crypto has certain advantages. But it is in no way close to the value of any real national currency. The Euro, the dollar, the Yen, the Frank, etc. are all more stable and more valuable.
Note, one sign of stability is the fact that it does NOT sky rocket in value. Going up that quickly means it can go down that quickly, as shown by recent history.
NTFs are legal contracts for special rights to a URL, but do not represent ownership in ANYTHING.
In fact, the contracts generally do not even require that what currently is displayed on the URL will remain so. For some reason the companies that make them do not want to take on any legal requirements. So the companies generally have the legal right to change it for anything - even porn or terrorist creeds.
For this reason, NFTs are the stupidest thing in the world. They literally are worthless. A subscription to any websight makes more sense than buying an NFT.
Wait a minute - Windows (Score:3)
Well... (Score:3)
I once bought an inkjet printer... I believe I am the greater fool here.
Wrong before (Score:3)
He also said "640KB would be enough for anyone"
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He also said "640KB would be enough for anyone"
Also he's been (essentially) right before
"A computer on every desk and in every home."
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You do realize most of this came along after Gates left Microsoft, right? ... Right?
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Gold is just as much a sham. Nobody has to value it more than rocks. It's just a mass mutual agreement that makes it work.
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So it's fiat turtles all the way down...
Re:Didn't we have a similar story before? (Score:4, Informative)
Uh, gold is a crucial industrial metal. People value it more than rocks because it has more uses than rocks. From electronics, to aerospace, to the manufacture of modern glass, gold is used in many industries.
Which actually makes it even worse as a token of exchange or store of value. How do you keep gold supply pegged to the size of the economy, when it has actual industrial uses?
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People value it more than rocks because it has more uses than rocks.
I'm not sure that's true, I see a lot more rocks being used around me than gold.
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But the difference is that central banks/governments cannot conjure gold out of thin air as they can with $. So you, as a user of gold, know that your 1 oz or whatever, is 1/N of the whole amount and will remain so for ever (modulo people digging more out of the ground, which is a slow process). It's the inability to create more that ensures it retains its value over time.
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Nobody has to value it more than rocks.
That's not true, it's a base material in electronics due to it's unparalleled corrosion resistance, and conductivity properties. Due to that, it will always have an inherent value higher than rocks. Any material needed to manufacture a physical good will always have a base value according to its difficulty to obtain.
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Gold is simply as valuable as it's industrial application, which are numerous, and it's scarcity.
The fundamental thing about gold is that it's an element, a raw material, in the sense that every piece of gold bullion is the same and interchangeable.
Expensive paintings are in the interesting situation that if I can make a replica of the Mona Lisa such that no expert can tell the difference, it wil stil be worth far less than the original if there exist some tracking mechanism that can tell it from the origin
Interesting post thread (Score:3)
So it starts out with:
"Wait 1-2 months, and BTC will be twice its value."
then:
Anonymous: "Then wait another two months and it will have crashed again."
longer timeframe, but still absolutely correct - then:
reanjr: "But it will still be higher after the crash than it is now"
BWAH-AH-AH-AH-AH-AH-AH! TOO FUNNY!!
Re:Pyrite Pete's failed prediction (Score:5, Insightful)
and a lot of us were only half right about bitcoin, we thought it would crash to zero about now, but it is on it's way just a bit slower.
No utility, no value, no liquidity, not universally accepted, not stable in value.. crypto "coin" my ass. It's not money, not an investment.
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crypto "coin" my ass.
Exactly - more like "crypto con".
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