Current Events > Bill Maher: Cryptocurrency is a ponzi scheme

(+) Yeah! (+)

DuranOfForcena posted...

it's not a ponzi scheme, it' s a pump-and-dump scheme

This could be argued, at least

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the whole idea is to lure tons of people to buy in so that you can cash out for an actual, legitimate currency

Crypto marks seething in this topic.

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Beveren_Rabbit posted...

can you make a good profit you just spend a $100?

Some people spent 100 bucks on Bitcoin back when it was less than 1 cent.

It is currently 57k+ per bitcoin.

This means if you spent 100 dollars when it was...let's say 18 cents, cuz you got in kinda late.

You'd have 500 or so bitcoin.

You'd have 5 million dollars right now.

So yes, 100 dollars can make you a good profit. If you invest wisely, know the risks, and get lucky.
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Beveren_Rabbit posted...

can you make a good profit you just spend a $100?

you might

you might not

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99% of these cryptocoins are absolutely pump and dumps.

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VigorouslySwish posted...

notice how NONE of the critics are discussing crypto's amazing function of not having the govt involved in your money?

I wonder why that could be hmmmm.......

Because it's not an amazing function. Libertarians like to think so, but they don't understand that de facto governments tend to form in open systems. Take the supposed solution to the inefficiencies of Proof of Work. The "solution" is apparently Proof of Stake, which is to give those with more coins more say. Gee, I wonder what other system exists where those with more money decide how transactions are settled.

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He's right that it has no intrinsic value and it primarily benefits people who got in early, but that's not really the full definition of a Ponzi scheme.

It's not really a pump and dump, because that requires someone deliberately misleading investors. The closest analogous example is a speculative bubble akin to Denmark's Tulip Mania.

Tulip bulbs really had no actual value, but once people started profiting from investments with them, it was "free money" until it collapsed.

No matter how smugly people insist otherwise, cryptocurrency will collapse eventually. Yes, people have made a lot of money and it clearly has beaten the stock market consistently over the past several years. But that was true for tulip bulbs as well.

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Dogecoin is a true speculative bubble for sure

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Pretty spot on monologue. Especially when it comes to the amount of energy this nonsense consumes.

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Proto_Spark posted...

He doesn't seem to know that American currency isn't backed up by anything either. So his justification for what's wrong with crypto also applies to US Currency

It's backed by the American economy.

Crypto and covid makes it so easy for people to let the world know they have no idea what they're talking about but they saw a tweet once that told them what they wanted to believe.
EndOfDiscOne posted...

There is no underlying business activity

Just like a ponzi scheme, do you not know what a ponzi scheme is?

EndOfDiscOne posted...

no distribution of profits real or imagined

And completely false. Crypto only has value by people buying in and you only get return if someone believes there are still more suckers out there. There is no product, no jobs, and no way to exchange it for food, shelter, or anything meaningful without first getting someone to give you a real currency for it.


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He's just a salty old moderate ass lib who's mad that a flaw of late capitalism was exploited to allow some upward mobility.

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ZMythos posted...

He's just a salty old moderate ass lib who's mad that a flaw of late capitalism was exploited to allow some upward mobility.

It's not like crypto is equitable either. There's a ton of risk involved and implied losses for lots of people, and generally the wealthier/more risk-proof you already are, the better your odds are at succeeding with it.

The anti-capitalist angle on crypto doesn't really work. It's just people who also are trying to get rich and pretending that taking some other path makes them better.

Interesting responses. I thought this board was all in favor of cryptocurrency.

People had the same fears when we went from bimetallism to floating fiat money. None of it has ever been all that stable. The supply of gold and silver was historically volatile, governments collapse and their currencies go extinct, and some cryptocurrencies will bust. It's all monopoly money, to a degree.

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SevenTenths posted...

It's backed by the American economy.

Crypto and covid makes it so easy for people to let the world know they have no idea what they're talking about but they saw a tweet once that told them what they wanted to believe.

Just like a ponzi scheme, do you not know what a ponzi scheme is?

And completely false. Crypto only has value by people buying in and you only get return if someone believes there are still more suckers out there. There is no product, no jobs, and no way to exchange it for food, shelter, or anything meaningful without first getting someone to give you a real currency for it.

That is not what a profits distribution is

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The one critically big flaw with cryptocurrency is that it's not a good currency to spend. It's in a perpetual state of deflation, with a value that continues to rise almost exponentially. That also means that the intrinsic value of cryptocurrency is essentially backed by regular currency. Ergo, Tulip bulbs.

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berlyman101 posted...

he's getting close to a realization here, but it's no more a ponzi scheme than any other currency.

Yeah....no. Regular currency is not an asset people are holding in hopes more new buyers buy in so they can profit. People SPEND real currency.

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ZMythos posted...

He's just a salty old moderate ass lib who's mad that a flaw of late capitalism was exploited to allow some upward mobility.

Lmao. This seems like a fantasy.

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Squall28 posted...

Yeah....no. Regular currency is not an asset people are holding in hopes more new buyers buy in so they can profit. People SPEND real currency.

Honestly, if you compare it with real currencies, it actually makes cryptocurrency look really bad. The level of deflation would cripple an economy built on cryptocurrency.

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Wake me up when cryptocurrency stops being referred to in US dollars and actually becomes a massively used currency. It would cost far too much electricity for everyone to use cryptocurrency. For now, it is a massive ponzi scheme and those currently invested don't want to be caught holding the bag.

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Slayer_22 posted...

Some people spent 100 bucks on Bitcoin back when it was less than 1 cent.

It is currently 57k+ per bitcoin.

This means if you spent 100 dollars when it was...let's say 18 cents, cuz you got in kinda late.

You'd have 500 or so bitcoin.

You'd have 5 million dollars right now.

So yes, 100 dollars can make you a good profit. If you invest wisely, know the risks, and get lucky.

Virtually nobody would have held that long unless they were in a coma, woke up, and remembered how to access their crypto wallet lol.

The thing with investing really low is you really need to ignore it for so long, which is hard because even if you ignored it, you'll see news of it hitting record highs or rapid gains occasionally, which will prompt you to reevaluate your position. 10k from $100 is a sweet deal, only in hindsight do you kick yourself for "almost having made 5 million."


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YellowSUV posted...

Wake me up when cryptocurrency stops being referred to in US dollars and actually becomes a massively used currency. It would cost far too much electricity for everyone to use cryptocurrency. For now, it is a massive ponzi scheme and those currently invested don't want to be caught holding the bag.

If anything the last half year or so taught us about the market it's that stocks and crypto isn't fundamentally tethered to market fundamentals or the current state of the economy. My psychology degree makes me more equipped than an economics degree would to understand market behavior. Because it's essentially an analogue to human behavior.

There's a lot of money to be made by simply following the hype in a Machiavellian way. Set limit sell orders to a bit below the hype targets and you'll still beat conservative gains from index funds and EFTs by magnitudes. Not financial advice.

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BlameAnesthesia posted...

If anything the last half year or so taught us about the market it's that stocks and crypto isn't fundamentally tethered to market fundamentals or the current state of the economy.

It's sort of is. Just not the US economy.

https://www.forbes.com/sites/petertchir/2019/02/10/bitcoin-wont-rally-until-dictators-stop-selling/

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Bill crushing it again!

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My psychology degree makes me more equipped than an economics degree would to understand market behavior.

Dunning-Kruger


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BlameAnesthesia posted...

If anything the last half year or so taught us about the market it's that stocks and crypto isn't fundamentally tethered to market fundamentals or the current state of the economy. My psychology degree makes me more equipped than an economics degree would to understand market behavior. Because it's essentially an analogue to human behavior.

There's a lot of money to be made by simply following the hype in a Machiavellian way. Set limit sell orders to a bit below the hype targets and you'll still beat conservative gains from index funds and EFTs by magnitudes. Not financial advice.

FYI they do teach psychology to econ majors.

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DarkRoast posted...

The one critically big flaw with cryptocurrency is that it's not a good currency to spend. It's in a perpetual state of deflation, with a value that continues to rise almost exponentially. That also means that the intrinsic value of cryptocurrency is essentially backed by regular currency. Ergo, Tulip bulbs.

just because you know about microbiology clearly doesnt mean you know about crypto, comparing it with tulip bulbs lol, last rich people Ive seen do that have been allocating part of their portfolio into crypto

ROOTFayth posted...

just because you know about microbiology clearly doesnt mean you know about crypto, comparing it with tulip bulbs lol, last rich people Ive seen do that have been allocating part of their portfolio into crypto

Yes, people became millionaires with tulip bulbs too.

So far, the only really rational argument for cryptocurrency not being a speculative bubble is that it's also a legitimate currency.

Except it really isn't a legitimate currency. The extent to which its value increases makes it much more lucrative to acquire than it is to spend, and if there ever does come a time in which it undergoes inflation, its value to investors will crash. Essentially, you can either view it as a potential hyperinflation event waiting to happen, or a speculative investment bubble.

The irony being that considering it legitimate because it's designed to be a currency actually is an even worse argument for its legitimacy than considering it a speculative bubble.

While I disagree with it being considered a Ponzi scheme by definition, it does have some characteristics. Especially since it will primarily benefit the people who got in early at the expense of the people they suckered into buying late while the original investors were gearing up to sell.

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eh the more i read the statement the more it made sense. if you disagree, go spend some of your doge right now.

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well its still way too early to be used as a currency, I do not know which crypto will prevail so Im just speculating but thinking crypto is anything like tulip bubs is delusional, theres a use case for a ton of these projects, seems extremely unlikely at this point that crypto goes to zero, plenty of coins will go to zero but crypto is here to stay

fwiw I know its a niche market but in the poker world we use bitcoins to deposit and cashouts and its extremely convenient compared to bank wires and other payment processors

ROOTFayth posted...

well its still way too early to be used as a currency, I do not know which crypto will prevail so Im just speculating but thinking crypto is anything like tulip bubs is delusional, theres a use case for a ton of these projects, seems extremely unlikely at this point that crypto goes to zero, plenty of coins will go to zero but crypto is here to stay

fwiw I know its a niche market but in the poker world we use bitcoins to deposit and cashouts and its extremely convenient compared to bank wires and other payment processors

Do you believe the coin that wins is going to be the one that appreciates the most? Seems to me the one that wins would end up being widespread, plentiful, and cheap.

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Squall28 posted...

Do you believe the coin that wins is going to be the one that appreciates the most? Seems to me the one that wins would end up being widespread, plentiful, and cheap.

of course its going to stabilize when its widespread, the idea at the moment is to hedge myself against inflation and crypto seems to be the best bet for that, I also have stocks and real estate but just more crypto because I think the expected return is better

None of the coins are going to "win" because none of them are actual currencies, and they never will be.
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UnholyMudcrab posted...

None of the coins are going to "win" because none of them are actual currencies, and they never will be.

might want to share that crystal ball of yours

ROOTFayth posted...

of course its going to stabilize when its widespread, the idea at the moment is to hedge myself against inflation and crypto seems to be the best bet for that, I also have stocks and real estate but just more crypto because I think the expected return is better

ROOTFayth posted...

might want to share that crystal ball of yours

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Of course, you think tomorrow it can't go from 54 to 0?

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Joeydollaz posted...

Of course, you think tomorrow it can't go from 54 to 0?

I think you're more likely to be involved in a plane crash and survive 10 times in a row than bitcoin going to zero within a day lol

also what's up toothbrush, not sure why you quoted both of my messages

ROOTFayth posted...

also what's up toothbrush, not sure why you quoted both of my messages

Because you criticize one user for making predictions when you're doing the same thing.

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1337toothbrush posted...

Because you criticize one user for making predictions when you're doing the same thing.

ah, I didn't though, you misunderstood my post

DarkRoast posted...

My psychology degree makes me more equipped than an economics degree would to understand market behavior.

Dunning-Kruger

The point is more so that an economics degree doesn't give you a 100% sure analysis of markets, and neither does psychology, but understanding why meme rallies on social media lead to these huge speculative jumps on things not tied directly to market fundamentals is a bit easier to wrap my head around, while these boomer analysts keep bemoaning how terrible all these pump and dumps are because they make no sense. GME has been hovering in the mid 100s for a while now with no real discrete action; I don't think that's a fair market price for what the stock is worth. Definitely worth more than when it was $3, and definitely worth more now that they are half a billion cash rich and debt free and can pivot as a business. But this requires insight into just how widespread meme culture is in a demographic that is starting to hit their stride more professionally and might invest in ways differently than boomers.

Seeing the likes of cuban and elon affecting market behavior through hype, the rapidness of meme culture leading to sustained "holds" on what are essentially meme stocks. These are the things that someone can observe in the market today that wasn't really the case even 5 or 10 years ago.

I think it's been rather easy to make money by following where the hype is going, but not taking it at face value and not trying to time peaks.

Maybe it's just an effect of a bored, aging millennial generation and the relative ease of casual retail day trading these days combined with stimulus checks. I guess anyone can sound smart in a bull market.

I talk about this with my attendings and they just kind of shrug, and yet I have like 3-4 colleagues from med school who turned 1k-5k into 6 figures over the recent craziness between GME, AMC, Doge, etc. They're happy with 10-20% gains on their play money when they talk stocks, and we're sitting here with 100-2000%.

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This past year has been an anomaly. Don't take it as an indicator of things to come.

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BlameAnesthesia posted...

Virtually nobody would have held that long unless they were in a coma, woke up, and remembered how to access their crypto wallet lol.

The thing with investing really low is you really need to ignore it for so long, which is hard because even if you ignored it, you'll see news of it hitting record highs or rapid gains occasionally, which will prompt you to reevaluate your position. 10k from $100 is a sweet deal, only in hindsight do you kick yourself for "almost having made 5 million."

Unless you realized it would keep growing. Some people have invested only 100 in Doge and it hit pretty big amounts.

Not everyone is gonna sell immediately just because they have a decent increase.
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