Over 2 percent of the US’s electricity generation now goes to bitcoin
US government tracking the energy implications of booming bitcoin mining in US.
Over 2 percent of the US’s electricity generation now goes to bitcoin::US government tracking the energy implications of booming bitcoin mining in US.
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How is bitcoin still a thing? I thought it was a ponzi scheme and a scam that benefits drug dealers or something. Was it not those things all along?
I'm not an expert, just asking based on my mainstream point of view.
And if it's a scam, why is it worth $40,000 when a few years ago it peaked at $20k and crashed to a few thousand dollars each.
Also this article is about electricity use. Who cares about that? Electricity is everywhere. Burning coal to generate electricity, though, is very stupid, given the state of the biosphere. So is the "problem" of bitcoin really just a hat on top of the problem with fossil fuels?
I think my point is that bitcoin has often been compared to beanie babies but nobody's talking about beanie babies anymore so I'm really wondering why are people still talking (and mining) bitcoin? Was it not just a fad after all? Did they find some good use for it?
Edit: why is this comment downvoted? Is it beanie baby fans or what?
Well, so a lot of people call it a Ponzi scheme, and it certainly has been used as one before, but the thing that separates it from a true Ponzi scheme is there is a product, and it's not you.
Places accept Bitcoin as a currency, there's Bitcoin ATMs, all that. This makes it valuable as a method to make online purchases, specifically, as a third-party payment processor. First you convert your money to Bitcoin through a service of your choice that's not related to the person you're paying, then you transact, and eventually that person cashes out Bitcoin for money. This generates 3 transactions, which a Bitcoin miner can authenticate and be paid in Bitcoin for their efforts.
This seems convoluted but it's about the same process as using a debit card, with MasterCard or Visa promising to balance everything in a bit and acting as an institution to verify trust.
This process is not the only positive thing about Bitcoin, but it's a major one and ensures two things. The first is that those exchange services give everyone in this "Ponzi scheme" an out. While they're running, you can't be pumped and dumped in the usual way. This creates some confidence, which helps keep people in, which raises the value. A normal Ponzi scheme promises an out, but has none.
The second, because there's people who trust in Bitcoin on actual merits, is that Bitcoin becomes a legitimate investment. It becomes equivalent to currency exchanges, where people exchange their money anticipating the value of USD or the euro to raise or fall. Again, very much like a Ponzi scheme, but since these people have an out, this is a risk, not a scam.
As far as I know (I'm not an expert) these two kinds of transactions are the bulk of the transactions in Bitcoin, but between the two, Bitcoin will remain alive with frequent usage and that enables bitcoin mining. None of this is stable, but it's also not a scam.
During the big push to get some vendors to accept Bitcoin this system hadn't formed, there were plenty of people willing to sell and mine Bitcoin, but few that were willing to buy it, and calling it a Ponzi scheme was appropriate. It's just the end goal wasn't to sucker someone into giving you money, it was to sucker them into supporting an economy that didn't exist. They succeeded, so now it's not a scam, just risky.
No. There is no out.
Charles Ponzi pretended that he had a way of getting extremely high yields on investments, so people gave him their money. In reality, he simply paid out early "investors" with money he got from new "investors". That means he needed more and more money/more and more investors. That couldn't work very long.
This is like bitcoin, in that any profit must come from new people. If someone bought bitcoin for $1000 and sold it for $1 million, that means that 1000 people must have paid them $1000 each. Even more people than that must have paid in, because the electricity bill and the hardware also need to be paid. To pay these people the same profit, you need over one 1 million people to pitch in $1000 and so on.
The cash flow structure is a lot like a Ponzi scheme. It's not so much risky as unsustainable. That's the point of calling it a Ponzi scheme. It's all out in the open, so maybe it's not a scam, as such.
Mind that the crypto space is full of unregulated and unaudited exchanges (=banks), beyond the reach of regulators or police.
I'll grant that it does provide a service by facilitating money laundering. We couldn't have ransomware without crypto.
Yeah the out is that you can buy goods and services with it. I could've paid for my VPN (Private Internet Access) with Bitcoin, Overstock takes Bitcoin, those ATMs exist.
If everyone suddenly wanted to cash out, it would crash and very few people would get money for it, but that's also what separates it from a Ponzi scheme, the fact that I don't need to transform it to USD to spend it. There was a hard push by Bitcoin enthusiasts to get some places to accept it directly for exactly that reason.
Yes, just like in a Ponzi, you can cash out as long as new money comes in.
Whether one exits the scheme by taking goods or money is a distinction without a difference. Involving goods may make MLMs legal but they are still pyramid schemes.
ETA: The difference to a literal Ponzi scheme is that profits are not guaranteed. When Ponzi could not pay, his scheme was revealed as a fraud. When new money stops pouring into bitcoin, then the line simply no longer goes up. The point about the Ponzi comparison is that you are throwing away your money. It cannot work. There is nothing behind it.
Under the spoiler is a more thorough explanation on why (non-fraudy) stocks are an actual investment and crypto is not.
If everybody suddenly sold all their USD, EUR, or other currency, that currency's value relative to other currencies would also crash. That's not unique to Bitcoin.
People cash out their currency to buy goods and services, that's the whole point. You accept currency knowing you can spend it later. It's useless in and of itself. In order for them to spend it later, somebody has to be their "exit liquidity" and trade a good or service they have for that currency. You can call that a ponzi scheme if you want, or you can just call it currency, because that's how currency works.
I mean it supposed to be a currency, so the point is supposed you spend it on actually good and services like at overstock.com or whatever
Um.. we very much had ransomware and viruses before crypto. Bank wires have been irreversible.. forever. Before crypto, ransomware also demanded gift cards and prepaid debit cards. 99% of the crime on earth is paid for using fiat currency, not Bitcoin.
It recently got ETF approval by the US government, so hate to break it to you, but this "scam" is here to stay.
If you're wise, you'll buy in now while the price is still relatively cheap.
There will be 21 million coins minted. Ever. That is Bitcoin's fiscal policy. There are 62 million millionaires in the world. There isn't enough Bitcoin for every millionaire in the world to have an entire coin. An entire coin currently costs around $40,000. Y'all do the math.
And for those who don't know: you don't have to buy a whole coin at once. Buy as little or as much as you can afford to put in.
So is it like a status symbol to have 1 BTC? Is that the point of bitcoin now?
I remember years ago it was advertised as a way to "bank the unbanked" and help with remittance payment for migrant laborers and such, seeing as how money transfer services screw you over directly proportionately to how poor you are. Or for people who are cut off from SWIFT to have more financial access.
I'm saying that the transition to a Bitcoin-based economy will be a massive shake-up in global wealth distribution. Where each individual person ends up at the end of it is a factor of how soon they stop calling it a ponzi scheme and instead recognize its value as a currency. We have an opportunity to fix global wealth inequality, particularly the wealth inequality enforced through the dollar the the debt-cycle trap so many countries have fallen into. The dollar is a tool of US imperialism, it's traditional colonialism with a few extra steps. We extract trillions of dollars of value from other countries which rely on the dollar because we print currency which is essentially a tax on the entire world.
There is a fantastic overview of how the US uses the dollar to control other countries and extract trillions of dollars from them while keeping them in a cycle of debt. The Human Rights Foundation https://youtu.be/7qRWurFaUD0?list=PLe0djdakvnFb0T-oZAeF49A-EZChise4n&t=14009 and another one on how France abuses its currency influence in Africa to keep the colonial legacy alive https://www.youtube.com/watch?v=_-u1Pjce4Lg&pp=ygUxaG93IGZyYW5jZSBjb250cm9scyBlbnRpcmUgZWNvbm9taWVzIGZyYW5jb2RvbGxhcg%3D%3D
Bitcoin is still capitalism, it can't fix capitalism's flaws, but it can move us towards a world where the flaws of fiat currency and currency imperialism are fixed. It can move us to a world where the government isn't constantly printing away the value of your hard-earned money, where governments must increase taxes to fund wars. That world looks very different.
