I won't lose or gain anything because I still don't know how it works. Gold's price is based largely on its rarity in the ground to find.
But itty bitty Bitcoin is just metal. They say the finite amount in circulation is closely controlled by a "small group of friends around the world." And that no more will be made. Good luck with that as a basis for a currency.
-Estaban Goolacki out
4
What are these financial instruments really? I still use my credit cards. Can I pay off my balances with “crypto” coins? Ridiculous.
5
Why does this feel like a hipster pyramid scheme?? Money that exists only in the ether is not really money. But then again, I'm 50 years old and admittedly don't get it.
12
since Bitcoin is worth only what people expect it'll be worth in the future, rife with theft, fraud and hucksters, AND uses an gigantic amount of energy to operate (more than the US Stock Exchange, that has real value!), I think it's time to wind this thing down. Besides, using more energy than the entire country costs something - who is paying?
6
I'd be willing to bet there were countless articles written in the same obnoxious, condescending tone about Alexander Graham Bell, the Wright Brothers, Steve Jobs, Jeff Bezos and various others who pushed the boundaries of what was possible. You can find these critiques by simply searching the internet -- another ridiculous idea from about 20 years ago which now seems to be thriving!
Investors in the early phases of those technologies were also mocked and told to invest in something more conservative -- perhaps like US Treasuries. So, if you'd like to fund the creation of weapons of mass destruction (and subsidize the rich!) in a country led by a deranged megalomaniac - please do so!
Perhaps one day you'll look back smugly (ah schadenfreude!) at the poor, ignorant fools which you truly tried to help. And you can earn nearly 2% annually for this privilege!
Or perhaps you could research things like bitpesa, the use of cryptocurrency throughout developing countries, the advent of privacy coins and how blockchains work.
But, alas, this is not as amusing as mocking millennials in colorful sweaters. Which should obviously be an important point in an article about decentralized technologies.
Lastly, I will mention xspec (Spectre) and xmr (Monero). If for some reason you recall these in a year or so -- please Google them and look at the investment return.
6
Tulip bulbs anyone? I've got a great deal on a rare strain that is bound to go up into the stratosphere. Get yours while you can.
8
I would have appreciated a bitcoin for dummies type into paragraph or two at the beginning of this article. Something like a definition of what it is and how it works. Astounded at all the comments - not sure all the naysayers even know what this bitcoin and cryptocurrencies are. I have learned not to draw conclusions or made decisions without having facts and information first.
5
This reminds me intensely of when, decades ago, my father became an Amway “distributor”. He and his fellow distributors had the exact same mentality. In particular, I remember the huge conventions, complete with musicians singing about the “dream”, the American Way, yada, yada, yada. In the end, the only people who got rich were those at the very top, and those who, like the musicians and the future lawyer quoted in this piece, stayed at arms length from the mania and profited off it. We didn’t know it at the time, but as an added bonus we got the DeVos family, eager to destroy American education and line their own pockets at the expense of the middle class — American Way indeed. This will work the same way — it will produce a few billionaires, and a whole lot of suckers poorer than when they started. And as an added bonus, virulent misogyny (anybody else notice the large painting of a near naked woman in bondage behind one of those guys?). Not the disruption i’d hope for.
41
There's an old saying that may be apropos to the crypto currency 'revolution': If you don't know who's the mark in the room, then the mark is you.
Get out while you can.
7
My only concern when this bubble bursts is what becomes of Mr. Bigglesworth.
14
Gave away my Monopoly money collection to a neighbor's kid. Wonder two things: did I move too soon, and how did they pay for that Delorean?
5
I strongly suspect this is another dot com bust waiting to happen. Like another commenter, I feel for Miss Lomeli. I really hope that she does not lose everything. Most of the people interviewed sound like they are gambling, and the first rule of smart gambling (if there is such a thing as smart gambling) is to only play with money that you don't mind losing. If you are OK with potentially losing everything that you have invested, if you are comfortable with that level of risk, then more power to you. If not, then you need to get out while you still can.
7
A worthless collection of zeros and ones. 000011010010100101.
The emperor has no clothes.
2
Here's how to think about why this is hot air, a simple thought experiment: A few friends create a new "cryptocurrency" and divide it up to 1M "coins", selling it for almost nothing to 1M people over time. It's initially worthless. Now 1,000 of these people make a market and sell it to each other and to external persons such that the price of the last trade is $10,000/coin. Have we just created $10B? (1M coins x $10,000) Nope! There's no way one would be able to "cash out" serious amounts in this kind of environment without moving its market. Until the total amount of money in it is huge AND the amount of transactions is very very large, it's all paper value.
The problem is that, exactly like a pyramid scheme, /some/ of these initial speculators will be offload some of their coins for cash onto incoming suckers, which will be left holding worthless accounts when this all comes tumbling down with the next hack that lets other steal your coins and all the trust erodes. And just like a classical pyramid scheme, the few who actually do manage to speculate successfully and get out will entice other suckers to join the party and the wheel keeps on turning. But the underlying is all hot air. You don't want to be the last one holding the baton...
The true measure of a currency is the volume of legitimate transactions that it is used in. And by that measure, cryptocurrencies are worthless.
15
But if you can’t buy anything with it other than cryptokitties how are they paying for food clothing and shelter?
5
The amount of money that these people make is ludicrous.
Our leaders have fully embraced greed and selfishness as an ultimate goal with no purpose.
The other choice would be a stable vibrant culture and society without the “get rich quick, game show style” antics.
Our government is in control of greedy, selfish people who mostly care about increasing their personal wealth.
Progressive taxation is badly needed.
3
Commenters who don’t understand cryptocurrencies need to read the original white paper by Satoshi Nakamoto. You may start at bitcoin.org. There you will learn what Blockchain technology is all about.
I followed my own advice because I had no clue what this “kids” from MIT where talking about. The mathematics embedded in the system are much too complex for the average person. But, you don’t need to be able to do the math. It has already all been done for you.
I am now all set up to buy, trade and store cryptos. You still have time. Go ahead I challenge you.
1
"The mathematics embedded in the system are much too complex for the average person" --- this is a great reason not to gamble on cryptocurrency.
4
Nothing against anyone that has their own hustle and makes money. Bubble? Don't know, don't care.
New York Times, is now the time for such a title?
Why NY Times continues to publish bitcoin stories indirectly advertising for that phony stuff is beyond my understanding. There are tons of subjects in the world financial markets worth publishing such as gold and commodity. I don't see bitcoin worth the place in NY Times.
5
I read this more as an expose than an advertisement. Isn’t it the media’s role to uncover the truth and keep us informed? NYT should be covering this.
6
Okay, Mr. Fickel said: “We could get rid of our armies because for the first time you’ll have people saying, ‘I want to vote for a global order.’ It’s the internet waking up — it’s the internet grabbing its pitchfork. That’s the blockchain.” This is totally insane, stupid, ignorant and dangerous to say. When will people realize the ignorance, greed and selfishness of IT sector in Silicone Valley? Are those IT richkiddies really as stupid as I think they am? They seem so stupid that I think they should go back to school.
5
Been there, done that, still have the T shirt (literally: "Silicon Investors").
Most embarrassing moment: cries of "dance with a millionaire!" at a club in San Diego the evening of the 2000 QUALCOMM annual investor's meeting.
Somehow I did get to keep some of it and yes, I did get to retire early, so there's that, which in the end made up for a lot of such embarrassing & depressing hangover moments.
6
No pictures of women? Mr. this., he said that? Surely Maria at the end isn't the only woman to buy these currencies? (And I am a woman, BTW -- I don't like the hate comments I often get when I post under my real name.)
1
All great cons are a combination of greed and goodwill... then again, I don't see much difference between this and regular capital...
1
It is odd to watch with what feverish ardor Americans pursue prosperity. Ever tormented by the shadowy suspicion that they may not have chosen the shortest route to get it. They cleave to the things of this world as if assured that they will never die, and yet rush to snatch any that comes within their reach as if they expected to stop living before they had relished them.
Death steps in, in the end, and stops them before they have grown tired of this futile pursuit of that complete felicity which always escapes them.
--Alexis de Tocqueville
4
I am rich. Christ is my Lord and Savior. While the world worships money, it is a tool. I own bitcoin, gold, and silver, books, kitchen tools, skills, and knowledge, amoung the earthly goods. But they are all tools. I was a kid when I found out that the richest man in the world was John Paul Getty, at like 4 billion dollars. By that time I had a huge imagination and every bit od data coming in became story fodder. So I became the world's richest person, Taking his billions and times it by t he current population so I had millions of trillions of dollars in 1975 when I thought those thoughts.
On my blog which ..google my name you'll get it. I have stories of the richest human I have yet to write about. In his unpublished works, he owns whole galaxies. How rich is to rich? Think about The christ follower who has heaven to pass around! How poor are you? That you can only share your bread and wine with someone. The earth is vastly rich with over 107 elements in vast combinations and we all seem to ru around saying oh woe is me. Use the gift of Cretaive thought to expand your riches and share it with others. @BioWebScape is a thought design project on feeding the world and growing more humans than we have today in a vast empire spanning galaxies by the time we start looking Like all our science fictions.
GREAT analogy! cryptocurrency = "gods"
both rely on nothing but faith, designed by conmen to fleece suckers
AND.. SCENE!
(that was fast)
2
Create nothing from nothing and sell it for something—geniuses.
(or maybe we're just fools)
1
*POP*
The world may turn to such media of exchange as cowry shells, bird feathers, glass beads or grasshoppers -- all the same.
Two words for these smarty-pants hipsters: Gordon Gecko.
I won't post it here because I don't want to endorse or contribute to his Youtube views, but CoinDaddy has a song called "Blood Vs. Crypto" which is one of the most problematic and offensive things I've seen on the internet (and I've seen a bit.)
None of my hard-earned cash is going anywhere near this silly, kids-get-rich-quick scheme.
We all know how this ends.
For a technology driven by efficiency, it certainly wastes a ridiculous amount of energy. But who cares, everybody’s gettin’ rich!
detest that headline, just noting. look up US income inequality
Classic libertarians. Bunch of mostly white men talking about how their beautifully disruptive ideology is going to free everyone. Meanwhile they objectify women and pretend not to notice that their "radical" technology is just further concentrating wealth in the pockets of a very, very few. And what a coincidence that the pockets just happen to be their own.
42
I guess they will have to sell bit coins(the 4%) to each other to keep the game in play. I
1
The Bit-coin nay-sayers do not understand what's happening because they're thinking linearly. They do not get it, so they're not recognizing the potential, which is skyrocketing value.
Bitcoin is the initial expression of the underlying blockchain technology.
Blockchain and Bitcoin have global rampability, are efficient and effective (so useful and disruptive), and are decentralized (so unstoppable).
The internet also had these three characteristics.
3
uh there is also the "potential" of plummeting DEvaluation based on the fact that cryptocurrency has ZERO intrinsic value
2
Why would anyone transact in a currency that is not stabilized by a central bank?
I sell my car for bitcoin in the morning and what I received is worth half -- or twice-- what I bargained for in the afternoon. The predictability of the consequence of closing a transaction is part of economic stability. If a transaction is closed in one of these crypto coins, it is not really closed, is it?
9
Nothing funny here. Just corrupt and phony. Time to wake up!
3
In a crisis, crypto currencies will go to $0. There is no buyer of last resort (which is precisely why central banks were created).
Block chain technology itself is valuable, but turning its transaction reports into a unit of currency is absurd. If Bitcoin were called Bit-Reports, would people pay $14,000 a piece to collect them? No way - yet, that's what they're actually doing.
It's only a currency because the founder called it a hypothetical alternative currency, in the likeness of gold (a limited resource). People are conflating the legitimate value of block chain technology with its fatally-flawed adaptation into a currency - untangle those and one can see the technology itself is worth investing in, but the currencies are not.
With cryptos, the millennial generation is simply digitizing gold and sending us back to the gold-standard days of the 1800s, a century of recurring financial crises and bank runs. Fiat currencies and central banks were brought to be because of the inherent flaws of the gold standard - it's only a matter of time until the crypto castles collapse.
11
95% men! I'm waiting for the gender discrimination lawsuit.
5
I can't help but think this is just another tulip craze. Those who don't know their history are doomed to repeat it.
10
NYT readers, ease up on the wealth resentment. If these folks aren't actually producing something of value to others (even if it isn't to you), the free market will fix that soon enough. It always does.
5
Free markets are the space in which these Ponzi schemes grow and thrive. And if they do “correct” themselves, it is the everyday person out there unwittingly eking it out day to day on the base of this crashing wave, that pays the biggest price.
13
I hope that was sarcasm.
That sounds reminiscent of Alan Greenspan telling us that we could trust corporations and banks to regulate themselves just before the last crash.
Or maybe, the rich will stop looting the country as soon as they have enough money and I'm sure that will happen soon enough. It always does - at least until they don't have enough again.
5
I recently read someone who wrote that crypto currencies are about the “Separation of Money and State”
It is the best and most exciting explanation I have read and it made it very happy that it is all coming from the mind of millennials.
4
I read a dozen comments. All warning the bubble will burst. Chicken littles with laptops.
I'm not saying that crypto currencies are NOT going to burst. I don't know, you don't know.
I'm saying that it's telling that so many people will take to the comments section to display their fear of new paradigms.
The lessons of the dot-com bubble (or the Tulip bubble), as valuable as they are, may just not be applicable. History does not always repeat itself. And after all, there are today lots of dot-com billionaires, and the global tulip trade is robust.
All this smug talk of rich fools, pyramid schemes, gambling, Ponzi schemes, etc., displays among the commenters closed-minded fear, and envy of the courage that risk-taking requires.
10
"I'm not saying that crypto currencies are NOT going to burst. I don't know, you don't know." --- they are, and we do.
1
Here's how the game of an economic bubble works:
When things finally come crashing down, you stop the game, punish the innocent, then begin again.
5
the amount of money that these people make is ludicrous.
Our leaders have fully embraced greed and selfishness as a goal with no purpose.
The founding fathers had a goal, a plan for a great country, laying out that goal in the preamble to the Constitution.
But here we are; a game show economy that pits every American against the other in a “survival of the fittest”, “dog eat dog” battle with the rules skewed to benefit the most fortunate.
Unfortunately, the crooks are running every aspect of our government.
Bitcoin is a reason for progressive taxation. It’s time to stop rewarding bad behavior.
A good example:
https://www.nytimes.com/2014/01/19/opinion/sunday/for-the-love-of-money....
2
Hilariously rich is not a good look on these guys. Also, this article is spot-on SF rn.
7
I really wish the old lady in the last paragraph, Maria Lomeli, doesn't lose her lifelong earnings in a flash. It's when your local taxi-driver starts talking about investing in bitcoin that you really know it's all a bubble.
7
Crypto currencies are seemingly a wonderful new tech advance. But they're commodities with no underlying value (and little merit), and they mostly feed on paranoia and delusion.
A currency, as opposed to a commodity, is a stable store of value. Crypto currencies that are bid up by the hour by the unwise and the unwary are the opposite of true currency. And they're not remotely useful as the legitimate means of exchange for a national or world economy. The supply of money and interest rates must be carefully managed, not suddenly appear like beer at a frat party.
Crypto currencies do benefit the early adopters if they're smart enough to get out while the getting is good. Every one of them sounds like a Ponzi scheme with disingenuous promoters who'll first pump and eventually dump their worthless 'currency.'
Crypto currencies are also useful for tax evaders, kleptocrats, money launderers, terrorists, hackers, and the criminal underworld. The Russians recently held an international conference on crypto currencies and block chain technology. It might have been entirely innocent, but the involvement of Putin and his cronies should be a 5 alarm warning.
My best advice? Get out now and put your profits in real money.
4
Congratulations on those who made a fortune in cryptos. May you use it well and benefit society as a whole. Nevertheless, the complexities of crypto currency make it a very unlikely choice for future currency. Tech savvy individuals may scoff at this statement but pray do tell how a nomad in the arid areas in Turkana or the Sahel where even mobile connection is low will be able to transact using bitcoin,ethereum,litecoin,dogecoin & others?
1
What I do not understand is why when so many in the lower middle class ( African American unemployment the lowest on record), the lower class ( ex convicts getting jobs) as well as the rest of the middle class (401k increases, minimum pay increases) are beginning to do well we concentrate on the super rich.
It was not that way when I was young. I had no idea what David Rockefeller was worth, nor did I care Are we just trying to make people feel bad?
3
"Extraordinary Popular Delusions and the Madness of Crowds" - Charles Mackay, 1841
“The investor who says, ‘This time is different,’ when in fact it’s virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing.” - John Templeton, 1933
7
This just seems like bro-bubble waiting to burst. They certainly don't seem intellectual, altruistic, or helpful to any society. Just another profile of young men behaving badly. What is alarming is how pervasive the lack of trust in anything seems anymore. These young men seem in it for themselves and slightly delusional.
12
So, here is something I still don't get: cryptocurrency is valued in terms of its "exchange value" with the dollar (or some other "hard" currency), and a dollar is worth what people believe it can buy of goods whose price is fixed in dollars because that is what "the market" believes it is worth. In other words, crypto is worth what its owners and buyers believe it is worth if it is used to buy stuff (same with gold). So, when all government-back (fiat) currencies disappear, what will cryptocurrencies be worth? Or is this the snake Ouroborus eating its tail?
4
In America, making millions or billions in a short time is like a fun game.
For others, being able to afford to survive is a from day to day is frightening uncertainty.
Nice.
9
Actions have consequences. What part of having a bunch of kids one can't support in a third world country overrun with poverty has a likely good outcome?
But you think it should? With my money I suppose? As a responsible taxpayer who has consistently more than paid his way as soon as I entered adulthood, I say NOT nice.
1
Seems like the best way to do well in cryptocurrencies would be to first buy $100 or so worth of a new cryptocurrency when it's cheap (e.g. Ether at 30 cents). If it soars in value, pick a point at which you'll sell it, and then do so and don't look back. If it fails before ever taking off, you've lost $100. And, in fact, if the bubble bursts before you get around to selling it, you've still lost $100.
3
I think bitcoin and its ilk will eventually be brought to heel by governments and then exist as only a black market currency. Already China is moving to restrict it, can the Euro-union, the USA, Japan and the IMF be far behind. Once the governments begin regulation, and they will, how does this look any different that the US Dollar?
Said another way, what do you think will happen when bitcoin is used to avoid taxation?
There is also the problem, like all things digital, bitcoin is simply a string of ones and zeros. The challenge is how to let everyone use it without anyone able to replicate or manipulate it unfairly.
8
Anyone who thinks governments will sit idly by IF crypto gets big enough to allow significant tax evasion is completely delusional.
And anyone betting that when the hammer does come down, THEIR crypto investment won't likely be destroyed belongs in a rubber room.
1
That figure that 94% of the wealth is owned by men is staggering. At least in the United States, a family is more likely to have it's money controlled by a woman. This tells me that men have a much higher appetite for risk (and the corresponding reward/ruin). It's a telling statistic to keep in mind when talking about the gender "pay gap" (myth).
1
Using money to make more money represents much that is wrong with our modern economy. Thorstein Veblen saw it all coming over a hundred years ago.
7
Yes.
It has nothing to do with creating a stable and vibrant culture, and probably responsible for creating the opposite.
It provides nothing of value for society.
1
This article keeps cropping up so I might as well glance at it, while understanding that R & F (rich and famous are not in my vocabulary). When an elegant friend, a femme de charme, in Paris asked recently what the privileged among us had on the bill of fare, I suggested possibly 'Swan', before calling it a night.
This groping for riches was never in the cards here. One concept of freedom is never having to think about money or bitcoins. Sending checks anonymously to friends in distress, living on food coupons would be rich.
Hilarious sounds good. We're in trouble in this Green Valley, not far from the Big Apple. Long-time stores, landmarks are closing, our Elders trying to retire to Southern Regions, the cost of living is on the rise. When somebody gets a job behind the convenience counter, it is cause for celebration, and the future does not look encouraging for the younger generation. A few have managed to reach urban lights, visiting their family for the holidays and reunions.
Send us your Rich, your creative spirits and those who are willing to take up a challenge. Strike, while the iron is hot. Magnificent countryside, space for yoga studios, art galleries and restaurants, while the Town People need a simple basic grocery shop, a place for children to play after school, and a broad view to maintain our historical sites and walking trails.
Wake up, young fledglings, come visit and we will work together. Off to explore a gold pot of bitcoins in the garden.
8
Pennies, while formerly made of copper, are now made mostly of zinc because the intrinsic value of a copper penny is about 2.5 cents.
Now consider how much it costs in energy to produce one cent's worth of a Bitcoin. No matter how you calculate, it's a lot more than one cent.
Now, guess who inevitably gets stuck with the cost of producing and supplying that energy? No matter how you calculate, it's never the rich. That's how capitalism works.
9
So, are you saying that the zinc plus the energy required to mint 1 US penny is less than 1 cent of cost?
Some thoughts, as someone with some cryptocurrency familiarity...
Cryptocurrency prices are highly volatile, but this doesn't prevent using them as currency. It just means that prices must remain denominated in USD.
Cryptocurrency prices will remain volatile for the foreseeable future. The tech is still being developed; it's largely speculative today.
Cryptocurrencies are risky investments. Only invest what you can afford to lose. Prices are volatile, so your best bet is to dollar-cost average over time. Don’t day trade; you’re likely to lose against those with insider knowledge.
Cryptocurrencies have no intrinsic value, but that's not a problem. Consider gold. Gold certainly has some intrinsic value due to its useful chemical properties. However, the gold price is largely driven by its use as an asset, not its use as a material. The gold price is driven by the global consensus that gold is a reliable store of value.
It’s easy to be dismissive of cryptocurrencies, but they provide real utility. Not everyone’s local currency is stable. Not everyone’s local government respects private property. Not every sovereign wants to be beholden to the Fed.
It’s true cryptocurrencies are used for illegal things, but so is cash. Private and uncensorable transactions have value to honest citizens. (Should we ban encrypted messaging apps?)
Expect bubbles and crashes, but cryptocurrencies are here to stay. I’m excited to see where this tech is going. 2018 will be interesting!
22
Should we ban taxes? How will society run, if it is run on "private" currencies and ignoring taxes becomes the norm?
That concept (not paying taxes) didn't seem to work out so well for entities like Greece and Puerto Rico, for example.
3
I think taxes are vital.
Cryptocurrencies can be used for tax evasion, but I'm not sure how much of a problem it would be in practice. Large employers would still be compelled to keep accurate books and not break the law. In industries where it's easy to do off-the-books transactions, tax evasion already exists.
(Plus, I expect cryptocurrencies to function more like gold or your Venmo balance, not to replace fiat.)
1
Fascinating article and comments, still I have no idea what to make of this.
14
The photo of Jeremy Gardner's shelves at Crypto Castle worries me. It looks as though the shelves are about to collapse under the weight of everything they're supposed to hold. Nice touch, Times. How drunk did you have to get them before they gave you a tour of everything?
9
Like any strictly monetary-based speculation there resides an upper limit. A month ago Bitcoin was worth $5000 more than it is currently (How's that working for ya?)
But I feel there is some untapped value in the block chain - but these Lambo-cypher-freaks haven't figured it out yet - and probably won't. But it's likely a value assessed at, not millions, but billions. To put it another way, this group is the latest flip-phone with no clue that a new smartphone is being developed behind their backs.
2
While many comments reference other "boom and bust" cycles as proof that this is a fad: perhaps it is.
Yet the concept--not one particular currency or company--may be the more the place to focus on.
For example, it is true that many internet companies failed in the 2000s, such as Pet.com and others, yet today, there is irrefutable evidence that the web has changed business.
I think a more appropriate comparison might be made with "old school" credit cards, or "metal money," as it was initially known by Western Union in 1916, and later by Charg-It and finally Credit Card in 1958.
Initial versions and companies failed, and I'm sure there were many who thought paying for a meal or buying a dishwasher with a piece of plastic with a number on it was preposterous, foolish and insane. Of course safeguards were developed, rules were put in place, banks took over part of the operation, etc., but I wonder if it's essentially comparable this
nascent industry.
In fact, from what I understand--of course I'm not expert--I wonder if it's not too farfetched to think of blockchain as an even more secure yet decentralized and efficient way of conducting transactions--and this seems to be the power and future--meaning it's not really that radical at all, but it another step in efficiency.
7
If you can undercut the egregious 2-3% for every transaction from credit cards, then yes there is a potential. It would also affect pricing in any market where this applies.
Banks are spending more money than anyone on the planet to research and develop blockchain. One of the reasons you don’t see (yet) an institutional acceptance of Bitcoin or Ethereum is precisely because they want to benefit from their own coin development.
For others like Western Union, Ripple is being employed in pilot projects. Now, if you’re Western Union and you can save dollars on every money transfer throughout the world, and make it instantaneous, that’s a game changer.
And, that’s where we are.
3
And that works, unless and until tax evasion on a wide scale becomes a concern. At that point, governments will only allow their own crypto they can control, or ban them altogether.
So at that point, unless you want to be a criminal hiding in the underground, good luck with a prior crypto speculation.
There may be money to be made by choosing the right companies. But like all things with the stock market, it's not easy and it's far from certain.
1
Ironic that those who decry the fiat system essentially want a global one on steroids. It's the Fast and Furious generation that celebrates getting as much as they can for doing as little as possible. They think they are Robin Hoods when in reality they are just as corrupt as the people they despise.
16
I was extremely happy with my 26.68% return (low six figure increase) on my 403b retirement account until I read this article. All of a sudden, I'm feeling very poor. I wish them luck because I wouldn't dare invest in this trade at this level.
3
No mention of the current prevalence of cryptocurrency-mining malware?
8
I wonder if Bella Hadid enjoyed her date with the guy who mentions it in a NYTimes article, like it's another thing to check off on his bucket list?...this article just made me sad...a bunch of young guys who have such a myopic view of the world
33
I see here that most of the commenters here are not aware that the mainstream investment community is beginning to take recognition of cryptocurrencies and are making plans to enter the field in one form or another. For example, the NYSE andd CBOE have filed to list bitcoin ETF's, and MoneyGram is experimenting with using Ripple technology for money transfers. The Russian government is preparing to vote to legalize cryptocurrency trading on organized trading platforms as well. Yes, a lot of what is going on with the millenials highlighted in this article is true, but there is more to this phenomenon than meets the eye.
13
An interesting tidbit from the otherworldly scene that is San Francisco these days. My husband and I were constantly overhearing alarmed, the sky is falling cell phone conversations -- usually a bro, pacing nervously on the sidewalk in our Mission neighborhood. This went on for months (defying our assumption that collapse was imminent) before we realized that its simply a side-effect of co-working spaces that afford no privacy. Meaning that all crisis conversations must happen outside.
15
I'm selling a bridge.
Cash only.
20
well - of course - these would be the same fools that finally win a lottery and invest all of their winnings in more lottery tickets.
"Those who deny chance. — 'No victor believes in chance.'" ~ Nietzsche - The Gay Science (Aph 258)
4
blockchain today...stay rational and have faith.
let one balance the other.
I kind of want to see an article on all the women in crypto.
Being one, I think we are way underestimated. Maybe women just have the sense to stay quiet about their earnings.
23
I don't want that article. Enough already with gender in every tech thing under the sun. Having said that, here's grandmom in her bitcoin T-shirt and her article on cryptocurrency http://www.thesiliconvalleystory.com/the-bitcoin-blockchain-cosmos/
Smart, natural, sincere people get bored, even with millions.
Trust me, you will soon realize this much money is making you act foolish.
You will wake up one day and say "Where is my soul?", then you will become truly rich.
8
My parents had a 50 billion paper Deutch Mark banknote that was real pretty to look at with all its scroll work and fancy fonts and was probably just about enough to buy a loaf of bread in 1923. I remember finding it in my father's old desk drawer and thinking I was going to be fabulously rich. I had fun for a few hours until my father came home from work and explained.
Money has never meant much to me since then. I don't see the advantage of having more than enough to live a happy simple life. I look at people who have too much or these guys who just imagine they have a whole bunch and I see people who aren't living in their bodies. Winners and losers, whiners and boozers, they all end up in the same empty place and have wasted an incarnation on absolutely nothing worth anything.
But hey, what do I know. I'm just an old lady who's seen a lot. The saddest people I met on the hippy trail to Goa were the trust fund babies for whom life was one series of empty days filled with everything money could buy but didn't the holes in their souls. The portrait of Jeremy Gardner in front of his superduper fridge reminds me of them. Full fridge, empty man.
52
So how is this better or worse than the lottery?
Let's say I would buy $10,000 worth of lottery tickets in a year - 50 weeks per year, 2 drawings per week, that's 100, so around $100 worth of tickets per week. 50 Powerball tickets per week might net you $8, based on the odds of around 25 to 1 to get at least $4. You might even, with 5,000 tickets, You could even win $7 a few times. $10,000 in, and maybe $50 out if you are lucky.
But instead I invest $10,000 in Ethereum, and the person I dealt with skips town. Or, I end up with $20,000. Or more.
I'm not sure how either of these is stupid or smart. Buying cryptocurrency seems like a new wave of playing the lottery. The forces affecting cryptocurrency seem more sensible than those affecting the lottery.
I see that Bitcoin is now down quite a bit, *but* if I had bought at the max, near 20K last month, I would still have 13K left! And yes, I could lose that 13K, but as the folks here say, perhaps I could cut my losses and STILL win more than I would have playing the lottery.
Something to think about. I'm not mortgaging my house for a half mill, but putting in 10K sounds like a fun way to see how the cookie crumbles. But if I do well - will I put in a 100K?*
*why not? I am screwed out of the value of my house because of CSS Profile and having kids in private colleges! That's like giving my money away!
4
Four words: headed for a fall. Enjoy the ride, bros!
8
95% of the comments come down to "This scam will fall apart and these fools will end up with nothing." I'm not convinced. I sense that most people are resentful that these arrogant, baby-faced hackers are each worth tens of millions, while they would consider themselves lucky to save two million in their lifetimes. My suspicion is that eventually the wild fluctuations in price will settle down; crypocurrencies will become increasingly accepted and integrated into finance (because blockchain really is the future); and, despite the injustice of it all, the early adopters will end up with staggering fortunes.
17
Probably the only sober, objective comment.
11
Best headline ever.
2
Sounds as real as Dungeons and Dragons to me.
9
This story definitely paints a silly picture of the scene in San Francisco. But I've been following the Bitcoin story for many years and I believe it has merit. Other cryptocurrencies I'm not so sure about.
Maybe it is not the technology that is the bubble.
Maybe it is the new San Francisco mindset that is the bubble.
7
I must be an old fool, because I keep seeing people buying into these 'cryptocurrencies' intending to sell out to someone willing to pay them more than they are paying... and I'm too old for that. I'll let them all be the younger fools. Any asset is only worth what it will do, or what someone else is willing to pay you for it. We all buy into the collective illusion that US dollars are exchangable for goods and services, but who is buying into this illusion for 'Bitcoin', 'Etherium', or the others? What happens when people stop buying the collective illusion? Pop go the assets... tulip bulbs come to mind.
9
Some may break down Berkshire Hathaway's list price per share and break it down by holding and values and look at the company timeline and realize they are part of a collective illusion also.
The sum of the parts.
Many want to be a winner , even if they have to go broke buying the title for a short period.
You're quite right. The key to collective illusions is when there is one, the one with more people 'bought into' the fantasy is the winner. With Trillions of US dollars in circulation, and millions in Hathaway shares freely trading every day, there's lots of reasons to expect that if I buy them today, I can sell them next week or next year, and get something back for them. Bitcoin and etherium, when the flash and dazzle have worn off, will I be able to sell? Will I be able to sell and keep the "2000% gains" that are showing on paper today? Even assets with some real value beyond illusion sometimes lose value when the illusion fades - just ask anyone still upside-down on a mortgage for a house they bought in 2006. Still, they have shelter, even if they don't get the paper profits that had before 2007... and shelter has real value. Burning electrons up to 'coin' bitcoin, if not enough people are willing to exchange real shelter (or food, clothing, medical care, transportation, etc) is just wasted energy. The profits aren't even 'paper' then.
4
Tulips. Florida Real Estate. Radio. Margin Buying on the 1920's Bull Market. Web 1.0. Enron. Mortgage backed securities. Each and every time: "It won't going to be like all those other times. This time it's going to be different." Each and every time, it ended the same way.
19
I can't keep up with these millennials... and I am one!
9
The NYT is doing an envy piece on cryptocurrency: Now I know something is very wrong here.
8
Fascinating story about these kids with their imaginary money. I wonder how many live in their parents' basement. And how much they have in their checking accounts.
9
Remember when people would grow up and become teachers, doctors, architects, engineers, writers?
More and more, people don't even want to grow up.
Much less make a meaningful contribution to society.
40
Did you not read the first paragraph of the article? The Pineapple Fund has already given away millions to impoverished peoples all over the world and underfunded causes with cryptocurrency profits. I call that a meaningful contribution to society - how did you view it? https://pineapplefund.org
3
Tax write-off.
I understand that half of the people commenting on here start off their posts with "what am I missing...?," but what am I missing here? Are cryptocurrencies currencies or investments? Currencies can't function if their value is constantly changing. Currencies are a way of converting a product or service you are selling into another product or service you want. If the value of the currency triples from the time you buy to the time you sell, you're not going to want to buy anything. Conversely, if it drops by two thirds after you sold your product or service, you are going to rush to spend it even if you didn't actually need those five crates of toilet paper or ten identical sweaters. So there may be some value in having a currency that isn't amenable to manipulations by politicians and bankers, but no economy could function with these cryptocurrencies behaving as they have been, even if I did have the faintest clue what they actually were.
12
Bitcoin, "mined" from the "ether" is little different from gold. Many of the same millenials who bought into Ron Paul's fantasy of gold-based currencies are now on to bitcoin. As you point out, and the gold markets have shown for decades, a "currency" that fluctuates in value so radically is not useful as a means of exchange. At least you can make jewelry and electronics out of gold...
6
Aaaahem....hence a commodity not a currency
2
Did I just read that Bit Coin will not accept Bit Coin in payment?
7
I couldn't bring myself to do more than SIKM through this article. The less I learn or know about these clowns, the happier I will be.
10
I'll just get this out of the way now: I told you so.
9
Those youngsters would do well to read about Tulipmania before they end up in the gutter.
7
Tulipmania is a false story. Check the Smithsonian article about it
1
No. The Tulip Market Bulb Crash is not false.
There are reams of data in the region to document the event.
7
This article is very poor journalism. I do not appreciate the attempt to marry the writing style with the subject matter. The writing is just plain awful, easily the worst I've ever read in the NYT. There is too great an effort spent on trying to sound hip, flashy, and stylish at the expensive of actual content. The worst offense is its length: such a long piece, and I've learned so little. I'm left with feelings, not understanding. I guess I should've known what I was going to get from the title. Terrible.
30
Bitcoin is a fraud, and sooner or later your coin will bite you.
7
How can cryptocurrency usher in an era of freedom from institutionalized economic control when hedge funds and speculators have already sunk their claws in it? Not to mention 4% of the bitcoin holders hold 95% of the value. Sounds like the same old economic exploitation to me.
11
Most of these hedge funds are new, but you can see that big funds are still not in the game. As per "speculators" of course there are. They are everywhere...I would call people who are investing now true believers, risk takers. In fact most of them say that.
Ownership in Bitcoin is hard to estimate for lot of reason. Even you check the source quoted in the article, they said that it may not reflect reality. So there you have it
2
Sounds about as "valuable" as a degree from Trump University.
Trump made money, the rest got suckered.
15
Some or all of the crypto-currencies might crash but if blockchain is truly open, secure, and private that means we have a 'distributed' technology which no government can monopolize and no hackers can penetrate.
The financial system we have is neither secure from hacking nor safe against crashing. Estonia is developing a promising setup called 'e-Estonia' that they describe as a "secure and transparent ecosystem" for information storage.... information of all kinds.
4
With the election of Trump and the preponderance of essentially mean spirited articles like these, increasingly appearing in The New Times, I sincerely believe, for the first time in my sixty five years, that we've reached the beginning of the end of that noble idea, The United States of America! Remember, the Roman Empire, one of the foundations of Western Civilization, did not essentially fall because of the barbarian invasions, but because it rotted from within!!!
5
Why didn't your generation save detroit... can't blame the millennials on that one can you?
Talk about failure within...
2
That is true, sure it took 400 years, Rome didn't fall in a day. To say if collapsed because of corruption and greed, that would be true. To say that this country is heading that way would be true as well. But history doesn't have to repeat itself, unlike Rome, republics can survive if those who believe in it, fight for it, and not let the few dictate to the many.
2
Good point! However with over sixty million ( fill in the blank!) following their pied Piper in the White House, that's going to be a major hurtle!
4
Second only to fear of missing out is failure to cash in. I once had shares that multiplied ten fold in value then fell sharply. I only doubled my money. In retrospect I did make a modest profit but it felt like a huge loss.
Strangely, my wife just held on (hodl'd on?) and a bigger fool eventually bought at seven times what she paid. The company was Autonomy, the bigger fool was Hewlett Packard.
But no big company is going to invest in bitcoin or other ephemera. They are in to short term trading at the expense of retail customers. What I see advertised mostly in the UK is Bitcoin 'Contracts for Difference'. That is a 90/90/90 trade -
90% of retail customers lose 90% of their money in 90 days.
In fact the truly naïve can lose well over 100% of their investment. The fact that some people have won the lottery does not mean it makes sense to buy a ticket today.
7
If you have to beg people to HOLD under any circumstance..You've got yourself a bubble
17
Yep. Reminds me of Bernie Madoff. Everything was peachy until his clients tried to cash-out their “winnings”.
This is a scam. You have better odds in Las Vegas. Bit currencies will bring down a lot of elderly people which is kind of sad
8
Oh yes. Vegas presents such a even table.
Vegas brings a lot of elderly people down too but they get a few drinks along the way.
3
I'm 19 and my friends and I just cashed out on 3.2 million dollars worth of bit coins.
I plan on starting a nursing home for the elderly, to show my appreciation for the old generation and all they have done for us younger men and women. We will start hiring aids at $7.50 per hour. It's going to be a blast.
3
Well good for you I'm glad that you're doing something good for somebody else by opening ta "home" and hiring people for $7.50 an hour. But at 19 are you sure that you know what you're getting into. It's one thing to stumble into something like bitcoin, make money at it without having any specific skill or knowledge in the unregulated forex.
Why don't you take the money, and set up a business, that would bring something that seniors don't have to them. Like a motor home converted into a hair salon, that you charge little or nothing for. If you took the 3.2 million it could in theory generate income by itself if properly managed, you could use it as seed money, for the mobile salon, as a nonprofit, and take donations to offset operational costs.
My point is, there are many things you can do to help the seniors you want to, (which is a very noble thing, in our me first society). Without taking on the regulatory, and reimbursement (I assume that you want to make something) environment that you'll have to. How about doing something where people who have a clear background, taking seniors to Dr appointments, or just spending time with the most forgotten sector of our population, seniors. Because if you look closely, you'll see a little bit of your self in their eyes. They too were young once, they too, were independent, they too need companionship. If your lucky and live long enough you'll be them.
1
One word of advice. Sell!
6
It would be better to buy a house instead of a Lambo. Houses will probably appreciate and even if the market goes down, they will have a place to live. It's good to have a refuge from the financial storm. Diversification is a good thing no matter what currency you believe in.
6
I still don't know or haven't heard of anyone cashing their bitcoin in substantial amounts. Nice theatre, no more than that.
6
The other day my teenage daughter asked me what bitcoin is. I said I don't really know, so we looked it up and did some research. I still don't really know.
12
Well, at least someone's having some FUN with the crypto craze, not just middle management muttering knowledgeably about obscure things in offices and online. I'm going to take my cue from that cat. Cats know how to find the most comfortable place in any environment. As long as that cat is HODL and not reacting to FUD, crypto may be cool.
3
Until someone has cashed out into an physical asset they only have a promise of a profit. But it's to be expected that the NYT, again, leaps into a sexist direction.
3
Since there is a limited number of Beanie Babies remaining on the planet we need to setup a Beanie Baby block chain to create a buzz. Maybe then people can get back their investments. A Beanie Babies Block chain new one are only crafted after extensive computer mathematical programs are resolved. This will all come crumbling down when someone crack the system and counterfeits bitcoins.. Unlike highly inflated silver, gold and homes there is nothing left when it collapses I think economist call it "a Market Correction".
9
Bitcoin transactions cost $40 and take hours to be confirmed. Combine that with extreme price volatility and it's rendered useless as a currency. Now ask yourself why something that has completely failed at its intended purpose is worth over $10,000.
10
Nothing new. Guess you've never heard of the Dutch Tulip Mania.
https://www.investopedia.com/features/crashes/crashes2.asp
3
Not true. Bitcoin transaction fee is lower today, but sometime it goes up. Please note that there are two solutions coming to solve this issue.
1
Ethereum transactions typically cost less than $1.
Maria- sell now, buy a house in Pacifica with an extra room you can Air B&B. That is the only way you're gonna come out of this ahead.
11
This scam looks to me like another '' black tulip'' melt down.
6
Society will follow this new elite if they are good stewards of the currency and the economy it supports, or will replace them like the new elite are replacing fiat. Just having a lot of wealth is not an issue itself.
Will the last tech guy pushing crypto anything, please turn out the lights when he leaves the room?
11
The bubble will burst when the skeptical, smug, tut-tutting, elitist NYT readers finally cave and buy into crypto
3
The Vitalik Buterin??
1
I have no problems at these kids getting rich. What I do deeply care about is
1) no bank, pension fund or institutional money should be involved
2) no tax payer money should be involved
3) prevent these guys from duping the gullible and poor like Maria..
Once we tighten these 3 screws they can spend all they want and I don’t care ..
15
You’re good to go
This article doesn’t explain the fundamentals underneath crypto. Not one mention of what the block chain is trying to achieve. Here are someone else’s words explaining what’s going on:
“The top 15 cryptos are all “legit”. They’re just all competing to become the next blockchain.
Do you know what TCP/IP is? It’s the underlying protocol that the entire internet runs on. Without it the internet wouldn’t work.
That’s basically what the blockchain is too. It’s the underlying “protocol” for crypto currencies. Right now there’s a battle happening, where these different “crypto startups” are racing to become THE PROTOCOL that everyone uses for this new “Internet of Money”.
Anyway, in the end, I don’t think there will be just ONE blockchain. There will be several that survive. I’m just trying to figure out which ones.
Again it’s like the early internet, where we had Lycos, Webcrawler, AOL, Google, etc. Most of these companies were shit and died in the end. The goal is to figure out who’s the “Google” in this space.
13
I agree, and figure it out early so you can afford to buy enough. Crytocurrencies are here to stay. The one that makes it the most may not have been developed yet.
2
While the fundamentals underwriting block chain is very important what is just a important is what it represents. At the moment it's the best veracity tool out there. It's a technique where the history of something cannot be refuted, at least with current techniques. Since it follows the article it is tied to it represents an unbreakable historical link to it's origin. Imagine having a $1 bill and having it's entire transactional history attached to it. That's what blockchain represents. It's provenance is unquestionable for the most part.
4
There's a reason you don't let children play with firecrackers.
8
This is hysterically funny and what odd young adults. I would never, ever trust my money with a bunch of twenty-something frat boys with this kind of nihilistic and psychotech philosophy. Actually, I would never trust my money with any twenty-five year old. Who would?!
20
God save us from these people.
10
After all these cryptocurrencies go "up in smoke" they are going to wish they owned some "Wimpy-Coin" where they can ask "I will gladly pay you Tuesday for a hamburger today...!"
7
Funny how none of these people seem to recall Bernie Madoff - a swindler who created a buzz built on nothing
12
My God, how empty their lives seem.
16
i wouldn't touch this stuff
but i am already a multi millionaire from bio tech stocks
retired at 48
and yes
you can have enough money
7
I regret that most of today's comments reflect a shocking lack of understanding of the potential of this technology. Comparing decentralized, permission-less, immutable blockchain technologies, which have the proven potential to disrupt the most powerful enterprises and governments in human history to 17th century flower bulbs demonstrates an ignorance of technology, contemporary economic theory, and geopolitics that is uncommon amongst NY Times readers.
Today, even with first-generation scaling and limited network expansion, financial transfers take seconds or minutes on bitcoin or various other cryptocurrency networks. Meanwhile, it still takes days for a transfer from my checking account to clear to my savings account (in the same bank!!). Throw in currency exchange and you may push it to a week and 100s in conversion and transfer fees.
Make fun of these young entrepreneurs all you like, but they don't give a damn about your fiat currency backed by the US government, which the NY Times regularly reminds us, is led by an incompetent and impulsive sexual predator. African nations were already examining holding bitcoin as a reserve currency, even before Trump referred to them as "sh**hole countries." Don't mislead yourselves into thinking that they won't speed up using cryptocurrencies, which don't prop up US hegemony, as reserve currencies.
92
It takes days to clear a check from your checking to savings account??
Are you a flight risk or something? We can do that in seconds.
18
Michael, online banking takes seconds, not days and the transfers are effective immediately- please tell me you don't go to an actual bank to transfer money.
13
Say what you want about our governmental and financial institutions, fiat currency and inflation. Throw around all the buzzwords and libertarian talking points you want, but do we honesty believe these computer nerds have a better solution?
If there is one thing I learned spending time among people like that is while they can be very intelligent, their knowledge and understanding of things outside their area of expertise is not as comprehensive as they think it is.
11
I'm an investor/trader. I remember well the week Time magazine made
Jeff Bezos its "Man of the Year". I thought he was a total idiot and I told my broker the same. Scroll forward
to the present and ask "Who's the idiot now?"
My point is: No one can fortell the future. I have a suspicion that blockchain technology and a more stable cryptocurrency environment can provide an exponential stimulus to trade, computer security, and information storage.
I am much older than these young guys who are leading the charge into the
future. But overall I have a deep respect for their foresight and courage.
Unless you are in the market you may not be able to understand what it's like
to take a 30-50% paper loss in a couple of days. It's truly stomach tightening.
It's easy to be sophisticated and condescending towards these young Turks (no offense intended toward actual young Turkish folks, haha) and find
fault but I have the feeling some of these guys will have the last laugh. I'm in several Facebook groups with these traders/speculators and I respect their
vision, intelligence, and fortitude.
While we mostly stay in our comfort zones they are charging away from the campfire and into the darkness seeing things we cannot see and hoping there
is a new light and a new future for them and for us.
9
No comment, just a title:
"Extraordinary Popular Delusions and the Madness of Crowds" Charles Mackay
Oh, one more word: TULIPS!
7
The Tulipmania had little to do with tulips and everything to do with manipulation of derivatives markets. Read E.A. Thompson's 2006 paper on the topic.
The Tulipmania: Fact or Artifact?
Earl A. Thompson
Source: Public Choice, Vol. 130, No. 1/2 (Jan., 2007), pp. 99-114
Published by: Springer
Stable URL: http://www.jstor.org/stable/27698044
The very opacity of crypto-currencies make them subject to market manipulation. A billionaire or two (Wink. Wink.) can easily drive the price of, say Bitcoins, up through the simple buying and selling and essentially creating appropriate selling opportunities. That no one can know -- by design -- the identities of buyers and sellers -- only makes these artificial instruments ripe for schemes. These are "investments" with un-assessable risk.
1
And you don’t think there’s any “manipulating” going on here?
This all sounds like everything I've read about 1929.
11
Mr. Bigglesworth appears to be clearly skeptical of all of this...
6
Cryptocurrencies are simply pyramid schemes and should be persecuted as such. Founders and whales reap gigantic payouts and mom and pop investors will be left with smoldering wrecks. At their worst, they are money laundering schemes for criminal syndicates and the US/Chinese/Russian kleptocracies to move assets across borders unnoticed from governments and tax authorities. The FBI has their job cut out for them, but are clearly held back.
6
Yeah why is it 'rich guys' are gonna be the revolutionaries, not ' rich gals' or rich millennial's or rich young people??
4
"The revolution will be ushered in by young guys who are also cryptocurrency millionaires."
"The revolution will be ushered in by young WHITE guys who are also cryptocurrency millionaires."
There - I fixed it for you...
5
Tiptoe through the window
By the window, that is where I'll be
Come tiptoe through the tulips with me
Oh, tiptoe from the garden
By the garden of the willow tree
And tiptoe through the tulips with me
Knee deep in flowers we'll stray
We'll keep the showers away
And if I kiss you in the garden, in the moonlight
Will you pardon me?
And tiptoe through the tulips with me
Maybe it's flowers you stray will be the showers of life
And when I kiss you in the garden in the moonlight
Will you pardon me and tiptoe through the tulips with me?
Roger Christian / Gary L Usher
4
I am going back to Wampum or Quohog shells. Anyone care to join me?
11
Casino by another name.
5
Bizarre, just....bizarre.
4
Randy, once you actually understand how money is created and moved around today, you will not see it as bizarre anymore. I am sure you hear that our current monetary system is maintained is such a way that banks "socialize" their losses to all taxpayers, but profits are given as bonus to top "performers". People who believe in crypto currencies believe that our current monetary system is injustice and unfair, in the sens that the world is controled by the strong hands of a couple of elites while the rest of the mass are slaving themselves, getting meager salary, overworked.
Of course Bitcoin is not perfect, so said a core developer and many other people. But Bitcoin has a capacity that no other currency has. Look for example to Sudan, a country under sanction; today no institution can stop you from sending any amount of Bitcoin or other crypto currencies there. If there is a taker, you will convert to local currency. You might see as negative, but we should also recognize that the US$ is the most used currency in illegal activities around the world. US$ is being used, nothing bizarre, no one is creaming.
It's easier to understand Bitcoin if you were living in India now, but wanted to send a large among of money or gold around; Of if you were a South Korean who needed to pay your child education in London with more than $10k; Or if you were doing business in Zimbabwe......or in Afghanistan....You must lean how banks work today, in order to understand Bitcoin.
3
The commenters don't seem to realize what is actually going on. Blockchain and the consensus algorithms that power it are major new technology. They will in time disrupt quite a few monopolies: corporate, legal, and governmental. Bitcoin is only the beginning. Ethereum has a Turing-complete programming language, and can be used way beyond a currency. The bros who are thinking up and coding all these new coins are really software startups. Like all startups, most will go belly up. A few will survive and become the new Amazons.
The reason the coin guys seem more like bros than the typical startup nerds is that right now it's a mix of coding and trading. So it gets a different type of person.
One last thing. Will the Times do a story on the consensus algorithms? I have not seen this discussed in any major publication.
6
Although Mr. Sinthrough is scaring the living crap out of me, I'd like to second very strongly his suggestion that the Times do an article on what exactly consensus algorithms are (hopefully not algorithms that compel consensus among idiots who want to throw their money away).
I would also like to know what a Turing-complete programming language is and I'm afraid if I google either of the above terms, I'll get an answer in Turing-incomplete or Turing-replete or Turing-parakeet, none of which I have the least fluency in (I am slowly learning to understand Trumpish, but very much against my will).
8
Dizzy stuff for sure. It’s all about the blockchain Stupid , not bitcoin. Sort of .. fascinating to hear about how the folks at Prospectus.com are attempting to manage expectations on part of wannabe billionaires
Instant wealth brings out the worst in people and results in disaster for most. Just look at the lottery mega-winners.
For that matter wealth, and the love of wealth, tends to corrupt people... all the way up to the highest and most vulgar. [you know who]
I'm wondering, if you buy a "bitcoin" for $100 and later exchange it for $100,000 luxury car, is that considered both a capital gain and a purchase? In other words, are you taxed on the capital gain and then pay sales tax on the purchase?
9
Yes and yes
3
Seems so, that's how the tax is structured. It is a capital gain, and it is a sale, since it would have to be recorded at the point of sale, as a car sales.
2
The cryptomania is to the economy as fantasy football is to the real thing (and PTSD).
Made me remember the colleague who invested all he had into dot.coms. Then persuaded his mother to let him invest her retirement funds.
8
Consider Maria Lomel, the housekeeper and Chante Eliaszadeh the blockchain lawyer. One of these two people is going to be incredibly successful. Guess which one.
My money (regular old US currency, no cybermoolah please) is on the lawyer.
9
Bitcoin has gotten a bit nutty lately, but it is still useful and to my mind, has value. From rural North Carolina I can purchase computer chips from Korea, PC boards from England and assembly talent from China, and all the transactions executed quickly and efficiently.
They are like Email's ability to send digital items to anyone in the world, Bitcoins give the ability to send digital value to anyone in the world, and not send you financial info.
To me, they has significant value, so I don't think its a bubble. Bitcoins may go down and they may go up, but Digital Money is here to stay.
Whether Bitcon
Consider a poor country
4
Like I said, it's the technology that's driving the crypto craze, not the currency itself.
Cryptocurrency market is a global zero-sum poker game.
Don't gamble if you can't afford to loose.
4
Two bitcoin!
And not even a haircut.
2
The creation and use of Cryptocurrency demands enormous amounts of energy. If these young turks are not working to change that, I hope their wealth burns up before they help cook the planet.
8
Perhaps a review of the Seven Deadly Social Sins is in order:
1. Wealth without work.
2. Pleasure without conscience.
3. Knowledge without character.
4. Commerce without morality.
5. Science without humanity.
6. Religion without sacrifice.
7. Politics without principle.
19
I recently remember logging into my e-Trade dashboard and seeing the bold faced banner announcing BitCoin Futures. I blinked and recalled the insanely current high valuation and in the back of my mind something shook its head and whispered: "That's not a good sign." And then on my way to work here in Brooklyn, I stopped in a Starbucks for a once-in-while latte and was shocked to hear passionate shouting from a clutch of tables crowded with men and laptops...I heard the words 'Bitcoin' and 'Buy Now! Buy Now!'
Again, the little voice in my head said: "Not a Good Sign..."
The note about about 4% holding the majority of cryptocoin value can be quibbled over: 3% or 7% or even 10%. It's still just a small handful or double handful of people who actually started out when blockchain was just a 'Thought Experiment'. They will be able to cash out an insane amount of $$$ with some Ones & Zeros that were literally WORTHLESS when they started.
And when they cash out-- they will be walking away with virtually all the Money that everyone else, like that cleaning lady, worked so hard for. And as for these young men: Some will luck out...but when the rest will start running for the lifeboats they'll only find the boat hooks hanging empty.
9
Just like the Titanic only those with inside knowledge or a remote understanding of a financial bubble collapsing under it own weight. For most investors in crypto they are naive to think that bit coin or any other crypto is fail proof, it isn't especially an unregulated one.
Because some brokerage firms set up crypto futures, doesn't mean they back it, oddly, surprisingly, for them it's a win win win situation. Since you have to understand what a future is. They will be ones to take grandmas pension that her financially uneducated 20 something grandson told her was a good investment.
3
I remember the late 1990's when I was a young kid starting out. I couldn't believe the money some people were making in the stock market. I quickly opened an e-Trade account and put $3,000 into a penny stock. The company made a tablet PC. Or, at least they said they did. They had a website with pretty pictures on it. I couldn't wait to put in my 3 grand. My investment doubled in about two months. I was blown away. Then, it kept going up. One day, I made like $1500 just sitting there watching this thing from my desk at work. I think my investment was worth over $8,000 in just a few months. It was unreal. I couldn't concentrate at work. I was thinking I was a sucker for coming to this job. Man, did that end badly. At least I didn't quit my job.
16
LOL Yep!
This subculture is quintessentially where American culture seems to be headed. A focus on wealth without working for it, obtaining power and seeking some level of notoriety. It's a reality game show.
The young men (boys really) want a new global world order, but they never drew a vision of it beyond the focus on wealth. They seem without character or wisdom, much like Donald Trump. I fear the reality in which they design a "new world order."
I'm not opposed to a redistribution of wealth, but I believe integrity, character, equity, respect, experience, and wisdom should guide it. I don't see that here.
85
I trade stocks at home. To me, it's very hard work. It's extremely stressful and often terrifying, but I take many big leveraged risks. I start reading stock news at 6:30AM each morning and don't break for lunch. I watch stocks from 6:30AM to 5PM each day. It's not manual labor, but it's grueling, in its own way. I've lost 30 grand in a day and not slept for two nights.
Three years ago, I had to sort out an old traffic violation. This required that I work with county clerks at two courthouses (or whatever) in Westchester. These people were helpful, but never at work. They seemed to come in at 10AM and leave at 3:30PM. Sometimes, they just took the day off. My guess is they worked about 28 hours a week. I work maybe 60 hrs each week. Granted, they don't earn much, but it did make me think that people OUTSIDE of finance don't work that much. There seems to be a misconception that finance people don't work. Many finance people work long hard hours but put on a happy relaxed mask in social situations, because they know it pays to appear happy and relaxed, even if you have a sick stomach from the stress.
4
This problem is actually not much of a concern. If you Google "lottery curse," you'll see that those who end up with a lot of money without knowing how to manage it, very quickly lose it all. So either these rich boys are a temporary phenomenon, or they actually learn how to run businesses and organizations, in which case we may be in better hands than we are now, considering almost all of them are anti-war, anti-corruption, anti-corporatism, etc.
4
Rassah,
I doubt the "lottery curse" applies to Princeton graduates. It may apply to professional athletes who get super rich by age 24 after not attending college, but I'm pretty sure that finance bros who come from Colby families and attended Vanderbilt are probably ok at handling new wealth. I think many of these guys come from upper middle class homes.
1
I still haven't heard how governments around the world will be able to collect taxes and survive if various cryptocurrencies are widely accepted. It would appear to be difficult to audit anyone who uses an untraceable currency so who will report any income at all?
9
The blockchain isn't untraceable. It's actually the opposite of that, it is literally a public ledger of all transactions.
Governments can demand that real capital be bought and paid in local currency. Real capital has title and deeds and can be seized. What does it matter if you have 10 billion bit-bucks if you can't buy a house or income generating capital with it? These boys are living in a fantasy.
4
If I win the next Powerball Lottery, I’m gonna sign up for Obamacare, pay off the $728.55 I owe VISA for my Christmas shopping and invest the rest in Bitcoins. President Trump and Paul Ryan are our leaders, these are perilous times, and one cannot be too careful.
6
If I felt that way, I'd be buying shotgun ammo and body armor, not bitcoins.
If I win the next Powerball Lottery, I’m gonna sign up for Obamacare, pay off the $728.55 I owe VISA for my Christmas shopping and invest the rest in Bitcoins. President Trump and Paul Ryan are our leaders, these are perilous times, and one cannot be too careful.
3
I'm less worried about the founders who become instantly paper rich with holdings of crypto currency, than I am for the working people who get lured into exchanging real currency for digital credits, and can ill afford to lose the wager.
It's hard not to see a mania building, and a day coming when everyone looks back and asks, 'what were we thinking?"
18
Let´s bear in mind that all cryptocurrencies are pure software. Now, let´s also remember how any software in beta or release 1.0 is full of bugs. Lets also note that every software is constantly patched to cover vulnerabilities. So no matter what wonderful utopian dreams of transparency and security are hyped around cryptocurrencies, there are no certainties about who authored the code, what bugs lie hidden or even if the whole thing is a gigantic ponzi scheme. To me it seems like the whole thing its anything but transparent.
12
If you have concerns about certainties about who authored the code, what bugs lie hidden or even if the whole thing is a gigantic ponzi scheme, then you should get informed. That information is all out there.
Umm he sounds pretty informed, why is it if anyone takes an opposing stand they're uninformed or they don't know what they're talking about.
1
I understand that the financial value of anything is what the market says it is, but what am my missing here? How are any of these "cryptocurrencies" not pyramid schemes where a few will get phenomenally wealthy while the desperate latecomers will lose everything?
25
Agree. Now that bitcoin trading is allowed, it has moved, though, from being a Ponzi scheme to being legalized gambling. The house always wins and that's why such a small percentage of owners hold the most winnings.
15
It's no different from early investors investing in a stock and becoming rich, with late investors investing and earning less. Bitcoin is a technology with its own businesses and economy, and no one really loses by investing in it any more than anyone loses investing in, say, Google. Sure, the value of Google may decline sometimes, just like the bitcoin economy may decline, but there aren't any pyramid or Ponzi schemes here. Money isn't being transferred from new adopters to old like it is in those schemes. When you buy bitcoin, you own the value of what you actually bought, same as when you buy a share of stock.
2
And that's the crux of it, no software is safe from hacking, why, well hackers it's THEIR JOB to hack to find the weakness within the coding. Unless that coding is constantly changing on the fly, it's hackable. To your point of no value, this is a true fact, it has no intrinsic value, aside from what someone tells you it's worth.
1
Wow, I think many of the commenters do not really understand blockchain and all its ramifications.
The “value” being added here is security, immediate incorruptible transactions, product supply chain verification etc.etc.
This will thwart counterfeiters on eBay, and other sales platforms, improve the pure ness of medical drugs, car parts, etc.; promote identity verification of people and products, establish applications for peer to peer transactions, and on and on. I hope it eliminates credit cards, late fees, overdraft fees and bankers...
Law has applications as does Real Estate, government taxation almost every multifaceted transaction you can think of.. so long to middlemen, insurance agents, mortgage brokers, pharmacists and much more...
More power to them and bring it on..Transparency, security and on time...
11
It's not blockchain that is objectionable. It's non-state currencies that are risky to the investor and destabilizing o the government. Article I, Sec 8 of the U.S. Constitution vests only Congress with the power to coin money and regulate the value thereof. Bitcoin and associated currencies, in the long run, will either have their values tied to the U.S dollar in a manner that caps their value or the use of cryptocurrencies will b tested in the Supreme Court.
5
What does it take to get some people to understand how a currency works, who can make it print it strike it give it value. Since the government is the only one empowered to give crypto it value, it won't ever replace the US governments monopoly over currency.
1
I remember the first dot com bust when I Living in San Francisco. Fortunately I had a real job so I was not affected except as a beneficiary of the many garage sales as folks liquidated their assets prior to moving back in with mom and dad.
I’m seeing the same thing starting to happen again as fortunes based on vapor, smoke and lots of mirrors are staging up to disappear over night. The only difference is that I’ve already picked my spot, set up my lawn chair and have all the beer and popcorn I need to bear witness to what I believe will bean epic crash.
I can’t wait.
28
What is your opinion of Amazon, Microsoft, Apple, and other massive dot com companies that emerged from that?
Microsoft and Apple were never dot coms, and were around long before the dot com bust
7
One might be more secure putting their money into a 'fog bank'. Or how about a 'sand bank'.
11
I'd rather be poor & happy, than to to be rich and without a soul or true purpose in life.
31
Maybe a few of these young guys can combat the Koch brothers a little bit...
9
Didn’t you see the “don’t tread on me” flag and note the hobbies claimed by at least one of these young guys: reading 4chan and vintage pornography? I certainly don’t assume any effect they might have on the real world would be beneficial.
9
Why sure! We can all eat cryptobits and get rid of needless farming! Who needs petro-derived fertilizers anymore? Someone please pass the LSD.
4
So much for the Harry Bailey’s of the world that want to build real things and help people. I hope these young Turks have a wonderful life in their ether. A couple of the ugliest sweaters I’ve ever seen, I might add. Money, real or not, can certainly not buy good taste.
18
Or good manners/class.
6
Never forget: Financial markets are driven by sexual markets. All these guys pursue wealth to date models. I speak about myself as well. In high school, popularity gets you girls. So, everybody anguishes over popularity.
5
If girls is the only thing on your to do list, and if that's the only thing that's important to you. Well, it's safe to say, you need friends or a hobby.
2
Um, James, I think it's pretty natural for a man to enjoy female companionship. At 48, I'd like to have wife and kids. But I do ski, race cars, and slowly work my way through 'A Theory of Justice' by John Rawls.
I find it hard to make friends. I don't drink or watch sports and I get richer with every passing year. Most people I meet drink, watch sports, and get poorer with every passing year. It doesn't make for easy connections.
1
psst -
I can get you a sweet deal on tulips, but you have to act fast.
23
Can you wire them over the internet and guarantee you won't devalue them by making more? If not, not interested.
2
And we’re worried about Trump destroying this country? Someone surely jests.
2
I'm just waiting for the stick man to say, "Seven out, line away."
Greed is good! The movies told us so!!!
4
The "HODL" or you are not one of us is a classic pyramid scheme con. Why do they want everyone to hold, not even start spending? What happens if you do sell? Could it be that their value depends upon you holding?
184
The fact that most of the currency is held by a tiny minority makes it sound as though little of the supply is actually available for purchase. So limited supply leads to higher prices, but that theoretically drives up the "value" of all the withheld bitcoin. When those are sold, prices will fall.
I suppose that even if the price falls a lot, the tiny minority will still make out like bandits given how high the prices have become.
2
You know, I think this HODL is being misinterpret. Bitcoin has been under constant attack since it started...CEO, important personalities, most nations have taken some sort measure against it....and every time these "FUD" happen, people tend to sell. So the community came up with this term to "calm people down" during these uncertainties. But it doesn't mean an invitation to never spend bitcoin; in fact any company who publicly stated that they will accept Bitcoin is usually overwhelmed by the order received from Bitcoiners (recent example: KFC in Canada). These people wants to find a way to spend the crypto currencies and HODL should be used in proper context.
1
Re: HODL
Exactly - I doubt anyone with a lot of skin in the game wants a run at the Bitcoin bank...
1
These "currencies" are backed by a song and a prayer. A couple of system outages (like almost every other enterprise has had at some point even big banks, airlines and governments) possibly one that it doesn't recover from and these clowns lose everything. Or those starting one fo these decides he's heading for Bolivia. Or governments decide they've tracked enough illegal actives and finally shut them down. Good luck with your dreams. As the proverb goes, a fool and his money are soon parted.
4
It's happened, a crypto fell some 30% in a day, and trading platform refused to remunerate investors that lost money, go figure.
2
If you have any doubts about crypto-currencies just read this article; it should put all your doubts to rest.
4
If we did this with ink and paper it would quickly be treated as counterfeiting. i.e. Making up a 'currency', and then trading it for real legal tender. i.e. Fraud.
15
Never mind that most ICOs are illegal unregistered securities offerings and a bunch of these guys are going to go to jail.
7
What exactly is a 'derivative'? Even after watching the film, 'The Big Short', I still don't understand what it is. This and what is it exactly that hedge funders do that makes them all so fabulously rich? Bitcoin seems to be part of this secretive money club. In short, if you don't understand it, do not invest in it.
7
To the best of my knowledge, a derivative is any financial product whose value depends in part on the value of a stock. Calls and puts are derivatives, because their value derives from the value of the underlying stock and they are bought and sold merely as the opportunity to buy or sell the (underlying) stock at a certain time or value. When their own value in calculated, it is calculated based upon the fluctuations or possible fluctuations of the actual stock to which is is tied. Many traders don't buy and sell stocks. They buy and sell the right to buy or a sell a stock two weeks from now.
Let's say you buy a pair of BBB sneakers today. I might buy the right to purchase them from you in six months. You might think, "great. they'll be six months old and worth less they are now." I might think, "a year from now they will be a collector's item and this guy who owns them almost never wears them." So, I give you 25 dollars for the right to buy them from you on On June 14th for a fixed price (let's say what you paid minus 35 dollars). I'm betting that the sneakers increase in value.
Debt swaps are also a form of derivative.
4
Thanks rich guy! I get it now, sort of.
3
Google and Wikipedia are your friends. No excuse anymore not to know things you want to know.
1
Metaphor Alert: the liquor shelves in Jeremy Gardner's bar/pantry look as if they're about to give way.
16
Much of the US economy is a scheme one way or another. People who invested in the housing market had some crazy idea that housing prices would go up forever. Ever see an amortization table for a house with a reverse mortgage. Utter nonesense how banks came up with values.
At least with these cryptocurrencies, when they fail, since the backers loath government and central banks so much, they can’t seek redress from the “government”. All the risk is on them. Good luck!
5
Why oh why do we celebrate this kind of adult immaturity so erroneously disguised as success and then somehow- worthy of emulating?
Guess it's the way now of our emoji addicted world. Ugh.
13
Focusing on the flamboyant ‘investors’ in crypto-currency fosters the impression crypto-currency warrants an initial reaction that’s derisive and born of mockery. One cannot deny the Wild West feeling but this reaction is a mistake.
Blockchains and associated algorithms are compelling confluences of math, currency, and technology. Wells Fargo, Goldman Sachs, and almost all of the major Wall Street institutions are engaged in analysis of the use of crypto-currency/technology. Should Wall Street’s involvement be viewed with alarm? Perhaps. Will failure to understand these explorations create another avenue that will exploit people and deepen inequality? Probably.
I jumped into Bitcoin in early 2011 to explore the technology. I have participated in ICOs (the rough equivalent of our Fiat Currency used for IPOs). been an early adopter in several of the exchanges Stellar/Lumens etc. So I am not writing from a 'fear of the unknown'. I am also not overly stylish, bell-bottoms are not in my future, and the idea of stickers on my refrigerator is an anathema. Those I have met who both understand and are aware of crypto currencies are, without exception, more like me than what is portrayed here.
In the future, there may be ROI that arises from these ‘experiments’ beyond enriching a few. There may be something here that benefits society on a global basis; much like the advent of micro-lending. Few understood it would change the face of developing Nations...until then It is gambling.
6
Probably all we need to know, is that even the people involved speak of the value of these things in terms of dollars...
11
This article could have provided some better background for those of us who do not have a clue. But based on what I read, I'm not impressed by any of these people or what they are doing. While they party and yearn to buy Lamborghinis, the majority of the world is succumbing to climate change, erratic weather, poverty, lack of education, starvation (and resulting severe illness), and homelessness, as well as subjugation by tyrannical, greedy, and abusive governments (including in the USA). Really the whole bitcoin philosophy seems selfish, arrogant, and misguided. Change the world? Yes, OK then, you can start any time. There are hundreds of homeless people in my small town awaiting your vision.
11
what a handsome group, making an important contribution to society!
hopefully they'll all be back to driving for Uber soon.
13
I am one of these guys. Most of the other commentators here are criticizing cryptocurrencies and their adherents, but that begs the question: are these naysayers multi-millionaries like me?
If not, they can be: open a web browser, type "create your own cryptocurrency" into the search box, and spend a couple of minutes following the instructions. Create a quantity of coins and a dollar price per coin that, when multiplied together, come out to a nice round number like $5 million (or $5b if you're feeling greedy).
And voila! Now all you have to do is decide what color Lambo to rent! (Yes, sorry, rent, because the Lamborghini dealers are all still so clueless that they only accept real money).
9
I have to admit, I don't really understand the regular stock market, let alone this cryptocurrency business. I am skeptical of wealth that isn't attached to any kind of actual product, although maybe so much of the modern economy is built on smoke and mirrors and anticipated value that it doesn't really matter.
What I do see, though, despite the rhetoric about liberating the world, or whatever these guys want to do, are a bunch of young men trying to find ways to get wealthy without doing any work. They might appreciate the glamour of it, but all I can see is a void of meaning. I'd rather toil meaningfully away and earn a paycheck than take a picture of my flashy clothes. Maybe I'm just an aging Gen Xer who just doesn't understand...
28
Reading these comments it becomes clear that most people do not understand what cryptocurrency is, how it actually functions let alone what the value of the currency is actually based upon. It also showcases how little people understand about the global financial markets and the US dollar.
4
The essence of any pyramid scheme is that those on the lowest rung — last in — always sound evangelical in their zeal to get others in. Of course, like a pyramid, each rung gets larger, until finally there are too many in, and not enough marks out there, which is when the pyramid collapses.
I can't tell you how many times I've had friends (acquaintances, more like) try to entice me into one of these.
8
Great and kinda funny article. If someone spent $500 and made millions USD, what is the problem? Obviously, these currencies can be converted to dollars, euros, and other currencies when necessary. That may be the wrong way to handle them, but who cares? Those are the terms in which we currently use to value cryptocurrencies, but that will soon change when stabilization happens. If the person that invested $400k and has not started cashing out or investing his millions then he may be a bit foolish leaving it all in cryptos but who knows what will happen. The fact is most of us (me included) invested meager amounts that have ballooned into the thousands and if it goes to millions, great!! It is doubtful I will lose very much as I invested little and will invest most of my earnings elsewhere, as people do with other currencies, when I have reached a certain point. With the costs and fluctuations as they are now, I wouldn't buy Bitcoins, but maybe buy one of the others that are still cheap. One commentator brought up that the web attracted early adopters of ill repute, therefore soiling its early reputation but then the web become the standard point of global interaction, be it communication or capitalism. A similar thing is happening here; a new standard is being born.
2
Investing in anything requires foresight, timing and a willingness or capability to hang in there for the long run. The idea of investing in cryptocurrency is on the same level of investing in credit default swaps. ( we know what happened there )
However, the idea of possibly wresting away control of the world currency from a select few and their policy to another select few and their datamining doesn't seem that much revolutionary, but more of anarchy.
Perhaps that is the whole point.
7
We need to reward these young geniuses who are adding so much value to our future.
How about a "crypto-currency" Oscar award?
It can be a large golden bouquet of tulips in a glass vase.
Except the gold won't be real.
And the vase will be made out of thin-air.
And there won't actually be any tulips.
And it won't actually be an award.
But we will all agree that there are a significant amount of people who are pretending it is.
Or we can at least pretend to agree.
And as long as we pretend to agree that there are significant amount of people pretending that it is a glass vase with a golden bouquet of tulips... a glass vase with golden tulips it shall be.
33
Well said.
2
This is like a game of musical chairs where, right now, there are a lot more participants than there are chairs. No one knows when the music will stop, but it will.
17
The preferred "currency" of thieves and terrorists, on a casino making a few - mostly greedy and immature - very rich.
What could go wrong?!
31
@Susan
It's not like it can destabilize the entire world currency market or anything, right?
I think everyone just needs to calm down.. *smirk
(((waving)))
2
These crypto-guys are selling the chance to "change the world" via their system. I would interpret this to mean they don't approve of the state of the world generally and the wealth distribution the world specifically. Yet, they accumulate wealth to take care of themselves, their closest associates and in some cases their families while hanging out and going to parties.
It sounds to me that this group of youngsters is merely surfing another dotcom wave for all the fun of the moment, dodging any responsibility for anyone else's losses by shrugging off questions with dismissive "I don't know" answers and being all Yoda about their own mortality.
I'm struggling to see how this is different from the highly reviled 1%.
16
Sounds like a take on pyramid schemes. I remember here in Seattle when the dot.com bubble burst after so much money had chased companies that had no viable products, services or sales. The Ferraris and high rollers that flaunted them selves and their money all over town disappeared almost overnight. The high end businesses such as restaurants, clubs and fashion retailers went dark. I expect to see a repeat performance here. The primary rule of investment is "If it sounds to good to be true it is". Let the buyer beware.
21
That's not an investment community, it's a clown party. Can one in ten of them explain blockchain? Can they explain its value without any underlying relation to assets or government guarantees, or its lack of value as a means of exchange given its volatility. For most it is merely fascination at watching a number increase. They're watching the ebb and flow of cricket scores without knowing what cricket is.
16
Capitalism is pretty simple: add value to other people and you might get paid for it. That's what is required from an economic system mostly based on private ownership of the means of production, and mostly free-to-enter markets (every economy is a mix of private and public ownership). So what's the value proposition for cryptocurrencies - how to they add value to people, aside from some people (aka Ponzi schemes) getting $$ from getting in first and taking value from the fools who get in too late - which isn't creating wealth, but simply redistributing it, like casinos (and to a certain extent stock markets do, though stock markets provide capital for enterprises to add value to people's lives and get paid for it, hopefully with some profit left over). Are cryptocurrencies providing capital to people who are solving human problems and so getting paid and earning a sufficient profit to be around next year and next decade? I can't tell. And so I can't tell whether the wild claims of creating new, wonderfully independent means of exchange are going to make the world a better place or not. Mostly or wholly, anarchy simply doesn't do that. A key to a more sustainable economy is transparency - transparency of the lifecycles of goods and services. Basic economics says that with "perfect information" markets will well serve people's needs. Do cryptocurrencies promote more transparency, or social/enviro responsibility? If so, let's use them. If not, what's their value?
11
This is not going to replace money: in order to buy and sell Bitcoins you must still supply a wallet with your bank account no. or debit no.. So the banks and the Central Bank still have you.
It's not the new gold, either. Gold is gold because it is rare & unique, it is scarce, malleable, inert, distinctive, non-radioactive, and it doesn't tarnish. It has a functionality that is unlike any other precious metal because it has the right combination of traits. Bitcoin is programmed to be scarce but it has no otherwise unique properties. The same goes for every cryptocurrency. The functionality of any cryptocurrency can be replicated quite easily. Eventually I would imagine the price of a cryptocurrency will purely be a function of the cost of the power needed to supply the computers to "mine" the code plus the cost of maintaining the servers to host the client programs and the price of the programmers and cryptographers to write the software. Heck, I think it will even be possible to program a bot to program cryptocurrencies, ad infinitum, so you can probably eliminate the humans, too.
All people are in essence trading is a line of computer code that is a solution to a cryptographic puzzle created by a software client. There's nothing that special about that, this can be done an infinite number of times.
It will be fun to watch this bubble burst. Just like it was fun to watch everyone who said that the price of housing would never go down get their same comeuppance.
18
Bitcoin? When my local veterinarian accepts them- then I will reconsider their value.
15
The blockchain is clever and will probably have some valuable uses once its made more efficient. But a world-shaking paradigm shift it is not. At the end of the day, it's just a decentralized ledger. How many major problems are caused by a lack of a good, decentralized ledger?
These cryptocurrency millionaires will be important going forward because they are millionaires, not because of cryptocurrency. And that is a wonderful distillation of capitalism's greatest flaw. Lasting wealth and power can be redistributed on the momentary and capricious whims of a few.
20
Good points. I wish more people would recognize the distinction between a blockchain based decentralized ledger. and the current spate of digital currencies. Although blockchain is a concept that was invented to support these digital currencies, it should not be mistaken for those currencies. For sure, blockcahin will endure, due to its value with other types of assets. The fate of the privately created digital currencies remains to be seen.
5
Very interesting article. I am impressed by how honest these people are. Of course this will end as previous economic bubbles have, but you cannot fault these people for being dishonest.
6
The only honest voice I noted in the article is the core developer who said it does not solve all the problems. The value of the technology itself is separate from the value of the coins. For example, blockchain is used in Estonia's promising e-gov system. But the value of the bit coins depends on demand. So, the people in this story who are stoking demand - painting fantasies of a new consciousness, telling people they have to hold, even when they want to sell - need that demand to sustain their values. You don't think that smacks of a con game?
7
The community is generally more honest than the rest of the world since it's bound by an ideology of transparency around the tech itself. But that also means being exposed to some of the unsavory aspects of human nature that a lot of people can't really handle. (A big reason why most people didn't get in earlier.) It's a double-edged sword but then again, you could say the same thing about how the internet developed as well, too. Progress never comes clean.
1
It will all end in tears and lawsuits. If these stories are even half-believable, and some nut case has "hundreds of millions" from his 400K "investment" and is holding onto that gain, he deserves what's coming his way.
16
If its popular with criminals and drug dealers and money launderers, con men, grifters and frauds - it can’t be a good thing. And we all know how the dot com boom ended with investments in businesses that had no revenue monetization plan. This is the perfect current for the Trump administration - soon to be used at all of his hotels and properties.
Tells you everything you need to know
10
This is much worse than the dot-com boom. That involved real companies with real business plans and generally (like pets.com) real revenue. Many of them failed, and most were overvalued, but almost all had at least the possibility of success.
Cryptocurrencies are hollow: there is nothing there of any conceivable value. Blockchain may turn out to be useful, but it is not proprietary. It isn't even patented (and if it were, bitcoin would not entitle its owners to a share of the patent rights).
4
I have a bunch of tulips I'll sell you for Bitcoin.
27
The cryptocurrency culture seems as though some clever videogamers have gone on a spring break binge. Rather than to the beach, they retire deeper into online escapes. Perhaps, it is my age showing. Can anyone recommend articles by Nobel prize winning economists (Paul Krugman?) that explains the "value" on which cryptocurrencies are based?
9
You don't need to be an economist, let alone a prize winning economist to understand. The block chain technology is complicated to explain, but Bit Coins have added a twist that is not a required part of the technology. Unlike current currencies, each digital currency has a fixed and unalterable number of coins. The architects have designed it to favor a run up in value based on scarcity.
5
If the 90's told us anything- even in a bubble, investing in disruptive technology pays off in the long run. If you invested $5,000 in amazon at its initial price prior to the dot-com bubble bursting, you would be a millionaire today.
53
Only if the technology enables a profitable business. A software company developing blockchain might be such a business. Owning bitcoin isn't---it doesn't come with rights to whatever economic value blockchain might have.
8
For every Amazon, there were 200 or 300 companies that raised 10's of millions of dollars and folded in a puff of dust. There most valuable assets were pithy domain names they could sell for 10's of thousands of dollars and servers they sold off for pennies on the dollar.
19
Since no one at the time could separate Amazon from the many dozens of prominent start-ups that failed, it's very difficult to maintain what you wrote — unless, that is, you can explain how investing in, say, 3 dozen companies in the late '90s including Amazon would still have paid off in the long run.
4
Pure, natural drinking water will be worth more than gold in the future.
Can't drink gold, art, diamonds, oil, dollar bills, Apple stock or bitcoin.
Most of us are already late to that party. Look at people like the Bush family, who bought up 800,000 acres in Paraguay for the water rights alone.
The Coca Cola company has been racing around the planet buying up all water resources for decades now. Real estate in New Zealand is also a solid investment.
22
Only when there is no greater fool available to buy crypto currencies will we know what they are worth. Someone rightly said that you know who is swimming naked only when the tide goes out.
14
Tulip bulbs all over again.
11
Tulips are pretty flowers, and cost something at the florist's. Bitcoin?
1
The only way that bitcoin is converted to cash is by having someone exchange their dollars for a digital bitcoin. As long as you have a supply of "suckers", the bitcoin trade goes on. One day, you exhaust the supply, and every realizes the game is over. Some are navigating their exit now, and forever we will hear their stories. But the larger story will be the loss of wealth by many.
16
The end is nigh....between Trump, geopolitical shifts and these greedy nerds my optimism about the next ten years is waning and I’m only in my 30s. As they say “easy come, easy go”. Funny how none of these people are trying to find ways to protect their assets..nope they just go out and buy Lamborghinis. Sigh.
9
For some of us wealth exists in order to buy a Lamborghini. I'd rather live in a 2BR and own a 911 GT3 RS than live in a mansion and drive a slow car. I care more about cars than homes, but I do understand that property holds its value better. Lamborghinis are a lot of fun, but I'd rather have a Porsche or a McLaren.
When I think about wealth, I think about driving my dream cars, skiing all winter anywhere I want, and sending my kids to private school. To me, rich = tracking a GT3 RS 30 days a year. That'd be the life. I guess I'd also like to have to Patrick Stewart and the RSC perform Macbeth for me any time I want to see it.
Thanks for validating all our assumptions about the shallowness of the wealth-seeking scammers and fraudsters of your generation.
6
During the 25 years I've lived here in the Bay Area, I've seen 2 major bubbles - and now this. Trust me, the warning signs are evident - crypto-currency mania, raw water, $6,000 per month 1 bedroom apartments, etc. The winds of change are blowing - and lots of unicorns are going to turn into donkeys.
48
Why, as Mr. Fickel states, would the entire world reorganize itself and get rid of its armies for the benefit of the 5% of the 13,000,000 account holders? Stated another way, why would the world adopt a currency that puts all but these crypto guys at a permanent and severe disadvantage?
21
The revolution won’t happen—at least, not with bitcoin kids leading the way.
Goldman Sachs has a trading desk for crypto now. The money has been made. Now comes the finger on the scale to prop up the portfolio, as with every other commodity a bank takes on.
5
So a Bitcoin is worth 2000, or was it 20,000. But 20,000 what? Dollars you say. Therein lies the rub. If it were really a currency you wouldn’t need to constantly quote its dollar value. You could say a Bitcoin is worth a latte, or a millionth of a mansion in Monterey. Let’s call it what it is: a collectible. This too will end in tears.
28
Let's say for the sake of argument that all the value of cryptocurrency came from non-criminal sources. Even if true the criminals would be fools to not use this amazing money laundering too. Thanks for a great article.
7
Just me, or anyone else notice there seem to be no women in this scheme? Imagine a world where everyone lives in a greed-bubble like this. No doctors, no teachers, just millionaires created by the inverted pyramid of labor-wealth.
20
Just the women who clean their houses...
2
The women are smart enough not to buy into this rubbish. Maybe they have experience listening to boys like these and how their promises pan out.
3
So you take real money and put it into a machine/computer. Then you wait to see if you have won anything. Your winnings come in the form of some type of token that you can't really use to buy anything unless you change it back into real money. Hmm, this is old news in Nevada; it's called gambling.
41
It's a game of musical chairs......just wait till the music stops, Coinbase and all the other exchanges will crash because they won't be able to handle the volume, the exchange owners will cash-out first and leave the rest in the dust. Like the article said, 4% owns 95%, when they try to cash out, it's over. Anything based on speculation is fraud. If you disagree and believe that Bitcoin will hit $1,000,000 then you should cash in you 401k, max out your credit cards, and smash the piggy bank to get in now.
10
PT Barnum is still correct. These are merely a virtual pyramid scheme crossing wires with a Ponzi scheme. Yeah the founders get rich--sometimes--and maybe obscenely rich too, but at least a literal 'snake-oil' salesman gives you a vial of something.
11
Banks are designed to steal! The government's monopoly on control of currency is destined to end! You can play a role in bringing it all down, man! Invest in this wacky new thing that even supporters acknowledge is currently experiencing an unsustainable bubble! Put your retirement savings into it! Put your kids' college fund into it! Please don't actually pay attention to the fops and straight-from-central-casting tech bros who are behind it all!
4
I remember when the web was young and people said “it’s nothing but a place for criminals and pornography”. On top of that, the early web was slow, buggy, and ugly. Fortunately, some people saw the underlying value. Blockchain will have a profound impact on your money and life, eventually. Don’t throw the baby out with the bathwater.
I'm not pretending to be an investment guru but I was one of the few who was regularly dismissed for predicting the 2008 real estate collapse long before it finally occurred. My prediction was based on something I'd learned from decades of running successful businesses. When so many halfwits are able to "beat the system" with any illogical investment "opportunity" a major crash is inevitable. Voltaire observed "Religion began when the first scoundrel met the first fool." His insight is a fitting description of cryptocurrency. As long as the crypto geniuses hold onto their coins and publicize/celebrate their paperless fortunes (which are little more than numbers on computer screens), the inflated values will keep going up, or at least hold, by attracting more fools willing to overpay rather than risk missing the gravy train. The problem is that eventually, smarter investors will try to turn air into actual cash. A lucky few might walk away with huge profits. But the many who hold on too long will receive an expensive and painful lesson in how supply and demand work when the demand for a concept based on belief and faith dries up.
278
HODL!!!
The “smart” investors are just that - investors. The founders are against the financial global order. Artificial intelligence will make everyone’s job obsolete by 2030. 401ks appreciate at rates that will never take care of boomers or any subsequent generation. Wake up!
1
You were not one of “the few”. There were many, many, many.
This. I don’t understand what these valuations are based on. You can’t use bitcoin to buy most stuff. The numbers on your screen are useless until you sell to someone else. To transform your coin into cash. Ultimately the way money functions as a store of value has to be related to your ability to buy stuff with it. Food and shelter. I can’t wait for this bubble to burst, especially because I can’t stand the tech bro mentality. May they rip off each other.
5
One of the primary objectives of the Federal Reserve Bank is to keep the value of the US Dollar stable, because we can’t have a functioning economy when the value of the money is bouncing around all over the place, like we have with Bitcoin. It’s dysfunctional. But, I’m intrigued by the blockchain technology Bitcoin uses. I think it could serve other useful purposes, like validating a contract, will, or maybe a person’s identity.
12
There will always be lottery winners, but there's more to it than that, the concepts of block-chain and crypto-currencies are real and add value and are the future of financial and trusted transactions, being decentralized.
But there will be a shakeout. Bitcoin is only a proof-of-concept and first generation block-chain technology that does not scale and uses an inefficient proof-of-work method for trust.
The future is looking more likely to be the third generation platforms such as Cardano, and possibly the second generation such as Ethereum, if it can successfully migrate its platform third generation and beyond with improvements such as to proof-of-stake for efficiency, scalability and sustainability.
I dipped my toe into Bitcoin in 2015. Nellie Bowles is the first woman that I have ever heard even mention the word 'bitcoin'. Maybe I need to get out of the house more.
Great wealth from nearly no actual work? Sounds like more stuff from the system that brought us derivatives and credit default swaps. This "financial industry," its "products," and its "workers" need to come down to the real world.
55
When the lights go out, or the fad passes, so will bitcoin. I put more faith in government than millennials.
15
And what government success stories can you site to put your faith in government?
1
How about the US and it's currency, the US Dollar which has fueled the world's economic well being and growth for a century.
6
The defeat of the Axis, the establishment of the NIH, and CERN come to mind immediately, as does the eradication of illiteracy in much of the world and the provision of clean water to many who may never have had it otherwise.
After all those, I have to admit I need to stop and think.
3
History repeated says, in a favorite comment, "Back in the day, I worked for one of the hottest optical startups around. We were all going to be rich. My plebeian share was worth anywhere from $5M-$10M, gross. But, as an astute grey-beard warned with a sign on his cube: "You aren't a millionaire until you exercise your options, sell your shares, and pay your taxes". Well, our IPO got yanked, 9-11 happened, NASDAQ crashed, and the telecom winter set it. I did get a $0.09 check for my shares after the 11M:1 reverse split. These guys all have virtual money. It's worthless until it's turned into something tangible."
Excellent post, History repeated! People simply have to understand that every aspect of "stocks" are manipulated by the Top 1% Global Financial Elite Robber Barons. Right now 401ks might be rising, and Big companies might be handing out bonuses and giving raises but THEY are the ones profiting from The Con Don's tax giveaway.
An article today in Bloomberg gives a perfect example. "Hank" Paulson, who is named in the article as the second-highest winner in this payback is the one who convinced OUR U.S. government to bail out Wall Street and other markets when they crashed the economy in 2008. You get $1 they get $1MILLION dollars.
WE THE PEOPLE must DEMAND SERIOUS STOCK MARKET REGULATION to stop the theft of OUR treasury and lives.
https://www.bloomberg.com/news/articles/2018-01-13/bank-of-america-warra...
62
And please notice - the true Financial Elite are buying up land and other real estate - and OUR real world resources like oil, natural gas and water - so they can control the lives of the rest of us.
WE THE PEOPLE - each one of us - control it. Get YOUR money out of the gambling casinos called "markets" and buy a home or put the money into your local bank/credit union and watch what they do with it like a hawk.
27
Brilliant, hilarious article; anthology bound.
Bowles must have struggled mightily to resist using the following references:
"A company for carrying out an undertaking of great advantage, but nobody to know what it is".
Mssrs. Merdle and Melmotte.
"Dare to be great."
Multi-level marketing.
Kudos to the picture editor who resisted the easy choice of this:
https://getyarn.io/yarn-clip/0982442c-0c1c-4897-9bd0-8deb2735c025
And the face-palm that followed:
https://pbs.twimg.com/media/CMcQgLdW8AA0Q32.jpg
No doubt Nellie Bowles will maintain contact with her subjects, to get their versions how how they handled the collapse. She even get expenses to visit the ringleaders in their New Zealand boltholes.
8
The article says, "Investors trying to grok the landscape compare it to the dot-com bubble of the late 1990s, when valuations soared and it was hard to separate the Amazons and Googles from the Pets.coms and eToys."
Most educated people say it's like the "tulip mania" that was the first stock market scam.
The article also says, "Data suggests that about 94 percent of the Bitcoin wealth is held by men, and some estimate that 95 percent of the wealth is held by 4 percent of the owners."
Hedge funders are the ones driving up the price, and destroying everything. They constantly betting for and against all stock just to enrich themselves with no concern for reality or the social good.
Do not get sucked in. Elect people who will turn stock exchanges back into helpers for commerce - not pirates of OUR fortunes and lives.
62
I wonder if these "men", seemingly so far removed from our system of government, actually bother to vote in our elections...
1
NYC, 1996. I enjoyed dozens of parties in cavernous under-furnished “Silicon Alley” lofts with 20-somethings exactly like the individuals featured in this story, except that we had better music (Biggie, TCQ) and were graced with the presence of non-virtual females in greater proportion than the tech bros. One lad mounted a coffee table announcing the launching of a web site allowing anyone to publish an article and email it to your friends. He earnestly bellowed: “We’re gonna make everybody here RICH!” Internet self-publishing tools would eliminate the information monopolies of governments! We would build a new civilization based on truth, transparency and knowledge, as citizens would have instant access to unlimited facts! We would all get rich monetizing utopia with virtual currencies of “clicks and eyeballs” defying old laws of economic gravity! As Web 1.0 revenue models collapsed in the dot-com bust, the bricks & mortar economy was indeed disrupted by the infrastructure of the Internet, in unexpected and often dystopian ways. Similarly, ICO Ponzi schemes will soon hit their mathematical walls. From the rubble of vanished savings accounts, the underlying blockchain infrastructure will emerge to transform financial services and trusted transactions. A select few currencies and development platforms that enable blockchain, such as Ethereum, may survive to become the foundation of this new paradigm. But in the meantime, it’s back to the future. Humans. They never learn.
392
I see many skeptics on this forum. I want to remind those who think that Bitcoin is backed by drug money that US dollar is the currency for most of the illegal trade in the world. Like cryptographic currencies, paper currencies have no intrinsic value. Cryptographic currencies are the most important innovation, since the beginning of the Internet in the early 1990's. This innovation is going to disrupt and transform the banks, stock exchanges, brokerages, insurance and majority of financial institutions including central banks in the next 20 years.
8
Bitcoin is backed by drug money. That is not fiction but a fact. That acknowledged, Bitcoin is really no different from the thousands of other get rich schemes that have proliferated over the course of our democracy. Yes, a few will get rich, including drug dealers, but the others who sign on later in an attempt to reap profits all lose it all. That is always the way it happens. And I can't imagine Bitcoin will be the exception to the rule.
5
"...that US dollar is the currency for most of the illegal trade in the world"...
Why are you so surprised since it is also the currency used for much of the legal trade in the world as well. Now the big question. Why is that?
2
What's the old saying? When the guy who shines your shoes is investing in the stick market it's time to get out.
25
Ponzi scheme. Those in early may do very well. Those in later, not so much.
34
Forget about Panama or Cayman. Bitcoin is a financial laundromat. Put your drug, corrupt or any shady earned money in it and it will come out sparkly clean.
23
Until it doesn't. What makes you so sure some governments haven't already tapped in and monitoring what goes on and gets the biggest players. Remember Silk Road??? That guy is in jail for life or close to it.
1
This article makes me feel many unhappy emotions
Sadness
Disgust
Jealousy
Shame that I have any jealousy
But mostly disgust.
THIS is what Americans strive for ?
These are the people who might drive the human race?
Sad
64
Maybe, the people who are improving society in useful but quiet endeavors are not newsworthy but they're out there.
It seems like an easy get rich quick scheme. Create a crypto. Price it at around $0.80. Market it. Make millions.
12
Perhaps I may be wrong, but this sounds much like a Ponzi scheme, which may just be on par Bernie Madoff.
So, with all this new found fortunes from trading these crypto currencies, when these traders cash out to make purchases of luxury cars, etcetera, what all they cashing out with?
The answer are hard curries, like the good old US dollar!
25
Heh, heh, there's a reason it sounds like a ponzi scheme.
5
Why don't all y'all who are so skeptical of bitcoin simply do a few hours of research on it and see what you think, instead of taking to tired assumptions ("those other guys who have money from nothing") that align with your existing sociopolitical views?
3
Bitcoin may go away but blockchain technology and cryptocurrencies are here to stay. Research ethereum (ethereum.org). This is about way more than "digital gold" or stores of value.
3
J, enlighten us with at least one hint of what it is all about? You dont offer anything
2
Capitalism kills love (google that). Everyone hated the Velvet Underground at first. This does wreak of annoying frat boy culture, but the kids who couldn't make the LAX team bro : ) Interesting article however
3
Ha! And they’re worth more than the Goldman thieves!
Bitcoin and the rest of the cryptocurrencies are an evil plague. They have absolutely no redeeming value, they perform no economic function. They are purely a vehicle for speculation. Their only potential to perform a function of economic value is as an alternative currency for economic transactions. But their extreme volatility has made them totally unsuitable and undesired to perform that function. Those who continue to promote Bitcoin and the other cryptocurrencies are doing nothing less than promoting a fraud.
19
They are under the impression that they are building something. Other than making money with a strange named currency, pray tell, what is being built, produced, created by these superficial young people? By choosing to live in dorm style houses and by choosing to wear t-shirts and beaded jewelry, traveling around to events about a currency, celebrating themselves are they not the privileged, why calling us elitist ?( I assume the readers of NYT, such as myself, although may what is called a 'bourgeois' life style, a house where we eat at the table, yet have intellectual pursuits and be an activist for political, social causes.)
28
The "something" is Digital money that can be instantly sent anywhere in the world.
Hence, making money from money. Not tangible. Helpful to criminals to move currency for obscure transactions. Not helpful to sick, to poor, not helpful in Education, in Science, not important, not helpful in any significant way to Humanity (come to think of it, even to Nature, to Animal Kingdom, shall I continue? )
Money that has no backing except for what cartel figures and other criminals have provided...certainly not the fiat money backed by the "full faith and credit of the United States..." can this really be accepted as currency? How long before this government in the USA and others crack down on Bitcoin because it's also where drug money is washed and human traffickers hide their profits?
17
And how confident are you in the "full faith and credit of the United States..." to back our currency and never let it fail? 20 trillion in debt, can we pay it back?
The national debt is not a debt that needs to be "paid back" the way your or mine does, so in that sense "debt" is a misnomer.
On the other hand, if the dollar were to be challenged in its status as the global reserve currency, we would have some serious problems selling T bonds, for starters, and the current price for existing issues (and the value of existing portfolios) would fall.
If that were to happen, what do you suppose the fate of cryptocurrencies would be?
From the moment you read the title of this article it's designed to make you feel bad. Judging from the top voted comments here, it's working. The FOMO is real and people that haven't understood the cryptocurrency revolution as early as the people in this article aren't happy about it and literally want it to fail. Despite the fact that it carries significant technological advancements that will benefit society far more than the latest app craze like Snapchat. Two things:
1) This isn't just about some new digital currency, it's about an entire new series of decentralized technology that has the potential to change almost every industry in the world.
2) Unless the government steps in and forcibly shuts this whole thing down, the cryptocurrency market is the stock market of the 21st century. Yes, the people that got in early make the most money but the concept is the same as the stock market. This isn't a tulip craze, this isn't beanie babies. There is serious technological advancements to be found here. If there is a crash (there are 30% market correction regularly) it will rebound way faster than the dotcom bubble. People hate on the volatility of the market but in the end it's the volatility that will save it from the crash because of the fast rebound potential.
8
Whatever you say.
2
By the time people start reading articles like this it is too late. Recently a friend confessed he had sold all of his stock in 2009 because he thought the world was coming to and end. He has not been in since. What do you tell someone when the Dow is over 25,000? Same with housing in 2008. I heard secretaries talking about flipping houses in Florida. And then that game came crashing down. The Bitcoin craze will end with a bang also. I bought a condo in Sonoma at auction when no one wanted it. It has tripled in value! Be first and not last. Old investment pro!
31
The attitude, the belief, that one can make millions, billions, based off what amounts to nothing more than lies, misinformation, slight-of-hand, speaks loudly to the attitude, the belief, that to get ahead, one must do anything and everything.
On one hand, it sounds like an obvious truth: wealth will not simply drop into one's lap. On the other hand, it smacks of a nasty truth: one can get rich by methods, legal and illegal, that are wholly self-serving and, likely, exploitative (used quite broadly) and even destructive.
Someone loses money to make someone else ultra-rich. Hence, one (of many) good arguments why there should be no Rich people: because necessarily so, there must be Poor people.
Anyway, one can only hope for immediate karma in the world. A bit of rational and sane thought would be nice too, but I'll not wager on that.
19
I get that this is just a clickbait title designed to stir up everyone's fist shaking, but one of the main *points* of the article is that its *not* everyone getting rich.
"The goal may be decentralization, but the money is extremely concentrated. Coinbase has more than 13 million accounts that own cryptocurrencies. Data suggests that about 94 percent of the Bitcoin wealth is held by men, and some estimate that 95 percent of the wealth is held by 4 percent of the owners.
There are only a few winners here..."
Uhh, hello?
10
Thanks for this point. Bitcoin may have the power to change the infrastructure, ideally leading to a "better world." But apparently it doesn't have the power to change the character of this juvenile frat boy (and I do mean "boy") culture. Hmmmmm
4
Irrational exuberance. It's happening again. The Fed can nip it in the bud by significantly raising interest rates, but they act in slow motion and with minimal 25 basis point rate increases. This is not rocket science, despite what Janet Yellen makes it seem when she spews her monthly financial speak. Stop the runaway stock market freight train now, or face another financial meltdown in the near future.
14
Rational thoughts: 1) All forms of currency are faith-based, including the US dollar. 2) Cryptocurrency was originally invented as a secure and anonymous way to trace transactions. 3) Those who "invest" in cryptocurrency are entering a pyramid-scheme-- gambling, but in a game where those in early have a huge advantage over those in late. 4) This bubble will burst when enough rich fools lose money in this game, because faith can deflate faster than a blink. 5) Anybody who gambles this way should keep their day job and retain wealth in more traditional currencies that are far less likely to deflate.
233
The US is faith based but it's backed by the largest economy, backed by the strongest military ever to exist, and trusted as a reserve by all of the largest economies, including China.
What's backing up Cryptocurrencies? Nothing.
8
"Nothing is backing cryptocurrencies" is a false claim. Bitcoin is very clearly backed by joules of energy. It takes a fixed amount of energy to flip a bit on a chip, and a measurable amount of bits need to be processed to mine a Bitcoin block. The more joules of energy that are used to mine Bitcoin blocks, the more secure the network is.
Even if you think that energy is the wrong abstraction to secure a currency, and military, for example, would be a better system. It's pretty nonsensical to claim that Bitcoin is "backed by nothing"
30
Ever watch Schoolhouse Rock's "The Energy Blues?" It's about how we need to find ways to conserve energy. In a world where so many environmental woes directly result from the sheer size of our energy usage, do we really want to incentivize as much energy use as possible by making energy use a source of wealth? I don't think so. https://www.youtube.com/watch?v=0dn_pV9fbCE
4
It's ironic that the BitCoin conference wouldn't take BitCoin to pay for registration (within two weeks of the conference, that is) - the rational was that the transaction fee was too much, but it's probably that BitCoin was going down in value at the time.
Part of the "value" of BitCoin is that it takes "enormous amount of power" to mint, er, mine one BitCoin (I think that's totally bogus, btw.... - just a story), but the same claims are not being made about the newer cyber currencies - they are just riding the coattails of how BitCoins are being made.
Hey, at least BitCoins are backed by drug cartels, unlike the others.
5
I'm a new crypto investor who was lucky to get in the market with BTC, ETH and LTC right before the recent run up in prices. I did a lot of research and continue to read up on blockchain and the dynamics affecting crypto markets, there are a lot of moving pieces to consider. I have to say the investment returns have been fun, but so has learning about the technology and the markets' evolution, it's all pretty fascinating and I can see how this can become like a hobby. My new knowledge certainly made for good conversations at holiday cocktail parties, a lot of folks are very interested and want to get involved, but are starting from scratch.
4
Bitcoin and the other crypto currencies perform no economic function since their extreme volatility makes them thoroughly unsuitable and undesired as currencies. But Bitcoin is worse than merely a worthless fraud. It actually causes waste of enormous resources and it causes substantial air pollution and contribution to global warming. How? Because the structure of Bitcoin requires that production of an electronic Bitcoin be accomplished by an enormous amount of computing power which uses an enormous amount of electricity. Therefore, such Bitcoin "mining" locates itself where electricity is very inexpensive, like near Columbia River hydroelectric dams. While the electricity Bitcoin mining uses does not itself pollute or emit greenhouse gasses, that electricity is not available for other users and therefore more electricity must be produced by burning fossil fuels than would otherwise be necessary.
45
That's what mass-medias claim but...
1 - The vast majority of the bitcoin circulating supply (the bitcoins that aren't lost) and ether (Ethereum) are used to make investment in tech startups. That money never sit, it's always circulating and invested.
2 - The energy used in Bitcoin mining has no competitors. Mining farm can be located anywhere, far from habitations and doesn't require transportation of goods nor ressources. It's not used by humans nor other industries and that's the reason that energy is free. It's impossible to make money in Bitcoin mining if you pay electricity, mind my words, it's impossible. Bitcoin mining use only niche-energy.
1
Too true. It’s not difficult to generate electrons. The bigger challenge is to use those electrons for good. Don’t see much good coming out of crytocurrencies. But then again don’t see much good coming out of utilities who saddle ratepayers with debt for electricty projects which fail massively. Maybe there is too much liquidity in the system and not enough rational people with ideas that actually help humanity.
1
Edourd:
This past week, CNBC carried a video report about a Bitcoin mining company located in Wenatchee, Washington (along the Columbia river near a hydroelectric dam. That operation mines 5-7 bitcoins per day using 7.5 megawatts of electricity (electricity bill over $100,000.00/month even at the cheap rates from hydropower. They are in process of expanding to 43 megawatts. And according to the report, there are at least 2 other companies in the same local area that are also Bitcoin mining.
These miners are definitely not using "free" energy. Furthermore, your use of the term "energy that is free" is similar to the foolish statements of defenders if the huge government subsidies to home solar systems. There is no such thing as free energy. And home solar is extremely inefficient and wasteful of resources. Utility scale solar electric generation costs only about half as much as home solar to produce each kilowatt of electricity.
3
Right. This reminds me of the hype about Second Life, a decade ago. Same empty promises of wealth and fame built upon nothing. Remember when the zealots said we would all have avatars in a few years?
37
Crypto Crackhouse it is; complete with pimps and dealers, hungry for money, and selling euphoria and promises of winning the biggest lottery in a system the small investors don't understand. With no rules.
44
Why don't you bet on the collapse of this system if you have such a deep understanding and conviction ?
Put your money where your mouth is.
This is not going to end well. Why? The frothiness is so bad that the very wealthy speculators in these cryptocurrencies--all well-connected, highly educated white men in their 20s--are going after small-time investors like Ms. Lomeli, the house cleaner, who is not male, not young and not well connected.
There are securities laws from the 1930s, and stringently policed by the Securities and Exchange Commission (SEC) and other federal agencies, along with the FBI, to keep small-time, unsophisticated investors from speculating their life savings in these rickety investment schemes. These laws were set up for a very good reason--the Great Depression opened up with a bang when millions of small-time investors lost all their savings in lightly regulated pump-and-dump investment schemes whereby these investors bought shares in these schemes through margin buying. And then they were left holding the bag, left utterly impoverished, when the bubble popped in 1929 and 1930, while the pump-and-dump speculators went laughing all the way to the bank.
The smart money, including these unscrupulous rich speculators, will bail on these "investments" as soon as they smell an unraveling of this market. The people who will be fleeced out of their money will be the house cleaners like Ms. Lomeli.
I hope the SEC and the feds are keeping a close eye on cryptocurrencies, and that they indict the malefactors when the tide goes out. Something very fishy is going on with these markets.
136
I suspect that the SEC is doing nothing. Maybe the feds will when the bubble bursts, depending on who's President.
6
"highly educated white men in their 20s" then "life savings", it doesn't make any sense. You don't have life saving in your 20s. This is actually your only chance to pay back all your dept in a year.
1
Remember exchanging some replies with a German graduate student (probably not a student anymore) who wrote his master thesis on blockchain when Mt Goi was in the news. I still think bitcoin is more bitecon even though blockchain technology, as explored by the likes of IBM, is a legitimate, indeed powerful, technology.
Good luck to those who choose to play the game. Some have no choice. Like the people who try to launder their corrupted money in China. Russia and Venazuela thought they might have a way to dodge sanctions. And once bankrupted companies like Kodak thought they could revive their company fortune by latching on crypto mining even when their balance sheets tell a different story.
Good luck to those dreamers and desperadoes. For others, STAY AWAY!
26
Wow! Blaming Kodak for writing blockchain to protect photography rights? Something that has been very costly and is largely ineffective by rights companies (typically lawyers). Maybe best that only a few due get rich with such closed minded people reading the Times.
When I read about Bitcoin and blockchain technology in 2014, it was explained by the creators and early adopters as a world changing movement that would not only change the way we think about money but perhaps replace it entirely. Sadly, none of those dream states came true and it has become a vehicle to make a few handful of people in silicon valley rich, which couldn't be any more similar to the status quo. As this stage, blockchain hasn't revolutionized the way society thinks about anything, it's only reinforced it.
56
Too early and too little knowledge to make such bold conclusions. It was never claimed that Bitcoin address inequality but access to an uncensored financial system.
1
If retailers and businesses do not accept these crypto currencies as money, then it is -- literally -- worthless. One might as well "own" 4 million particles of dirt. Currency DEPENDS upon being able to exchange it for something else.
The most important part of being an entrepreneur is creating something that people will pay you for.
Fascinating article.
96
Agreed. That’s why this sounds like a ponzie scheme to me.
3
That’s the rub, isn’t it? One of my students has a friend who invested in bitcoin. After making quite a bit of money he decided he would sell some of his holdings and could not find a buyer. So much for his newfound wealth! Then the currency dropped, wiping out most of his investment. Stay away! That is what I tell anyone thinking of investing in this foolishness. It reminds me of a Fred Flintstone get-rich-quick scheme.
7
Rule of thumb, from perusing bankrupt business residue, is to stay well clear of anyone who uses alcohol on the job. Quite a lot of alcohol mentioned and visible in this article.
Blockchain, as others have pointed out, is interesting. If there were only ten ideas in computer science a few years back, now there are eleven. Worthwhile business deployments of blockchain are probably beginning.
As for bitcoin, the price closely tracks the Google search statistics for bitcoin. It is a way to gamble on that most fickle of things, a popular trend.
34
Blockchain's real long term value is in making things more hacker proof. Bitcoin is for tax evasion and money laundering. Also check most of these men for child trafficking and sex abuse, at least check their travel records.
1
Full blown alcoholism is right around the corner for that guy in the picture. I hope there is a follow up article in ten years.
There's a lot of skepticism in the comments. Most of the apprehension seems to be about things that are not true. Or snide comments like 'if these guys are rich why do they live together eating cereal'? I've been to these homes, and they are great - not in the sense that an elitist would look for, rather in the sense of how fulfilling they are - friends working together, helping each other, building disruptive projects.
As the article says, companies are being built that are more valuable than Facebook. It's wonderful to witness, and to be a part of.
I run a crypto investing company - one that surveys all active management strategies in crypto and picks the best. You can make fun of crypto investors all you want, but even just Bitcoin - which is low-performing compared to the active strategies - has appreciated 50%/month the last few months. And, as opposed to the false information I see in these comments, you can get your money out at anytime, and into USD. ($12B of bitcoin is currently traded per day).
I love how crypto has brought out the best comradery of the tech community in SF and beyond. I'm proud to be a part of the community, and I'm glad I didn't stick my fingers in my ears for the last several years. Yes, the returns are beyond everyone's dreams, but the value of not only the community but also what's being built is extremely fulfilling.
- Joe DiPasquale
CEO, BitBull Capital, the first crypto fund of funds
22
Cycles happen. It’s time to sell once cab drivers and housekeepers are talking about it.
7
"And, as opposed to the false information I see in these comments, you can get your money out at anytime, and into USD."
Interesting that you mention an investor can get their "money" out at any time, for some good ole "greenbacks".
Other than the tracking mechanism behind these crypto currencies, where is the economic value, other than early investors cashing out and spending their greenbacks?
Even if every country in the world decides to trash their current currencies, this does not solve economic inequality but only transitions the power of wealth from one small group to another.
7
"And, as opposed to the false information I see in these comments, you can get your money out at anytime, and into USD." Yeah, sure. Are you willing to bet $$ (U.S. dollars in cash - no checks, IOUs, or cryptocurrency, thank you) on that statement?
1
This really does sound like The Twilight Zone.
Cue Rod Serling and that music.
26
Oh no, I'll not be fooled by theses intangible financial 'assets." I prefer concrete investments like pet rocks and Cabbage patch dolls.
71
Tulip bulbs Hector. The future is in tulip bulbs........
5
Nothing retains its value like a Rolex Submariner, Daytona, or Explorer. I'd feel safer having a suitcase of genuine Rolex watches than a lot of bitcoin. A Rolex retains value better than gold.
Are beanie babies chopped liver?
1
The laughing sounds you'll hear will come from those who short the crypto bubble before it bursts.
The hilariously former-rich speculators will lose their shirts, pants, houses, cars, boats, businesses, families and lives....taking down the global economy with them.
Oh, but nobody saw this coming.....
91
"Those who short the crypto bubble before it bursts."
Is is possible to short this though? How would that work in this instance?
Reading this reminds me that at some point, I'd like to be short crypto via some well regulated futures account at some point, say via PUT options to limit the risk.
The problem is the whole thing is just so insane that I have trouble trusting ANY part of it, given the level of mania occurring.
I don't know if the mania will last long enough to let the new futures markets in this settle down enough to give me enough confidence to even hold puts.
How do you short crypto?
It smells like 1928. Puffy values. Empty edifices. Sand is called bedrock.
116
Fred Flinstone lived in Bedrock. Recall his many schemes to get rich fast?
Is it me or does it seem like so many things are flying high on artificially inflated value except for old-fashioned "work"? Does it bother anyone that "work" is the ONLY thing that can actually produce ANYTHING yet has so little value? Without "work" being accomplished, there would NO monetary value of anything.
416
Young, educated up-and-comers see what Zuckerberg did and think they can do the same.
8
True. And work has more than just monetary value.
2
Where in the world did they get the idea that you could make tons of money by selling to other the people the idea of making tons of money without actually doing anything?
6
I like to work for money.
When work involves civil rights law, it doesn't feel like work. And you don't even think about money.
As soon as you can afford to do something like that, I recommend trying it. In fact, I bet a lot of people can afford it already.
47
When work involves a daily practice of connection to one's own humanity, and then making an effort to contribute something to the rest of the human race and the world, it's called living with integrity. It doesn't matter if you are an attorney doing public interest law, a housekeeper cleaning toilets, a sales clerk at Walmart, a doctor, or a petty bureaucrat. Workers who have an ethic of caring to bring value to other humans are working an honest day's work. These self-absorbed sociopathic young white frat boys represent the worst of what it means to "work" - contributing to the enrichment of self above all, the rest of humanity be damned. The worst of these crypto traders are young Donald Trumps in the making - beware.
2
When I first looked at bitcoin, it seemed to me to be a classic pyramid scheme. The first few people in got most of the coins, everyone else had to work like crazy to get just a tiny bit, the later you got in the harder you had to work for less and less. It looks to me now that lots of other groups are simply copying the successful scam. My bet is that eventually the whole thing will crash, just like every pyramid scheme before.
113
It resembles, in part, a pyramid, except that multi-level schemes demand that each level add new incoming levels to support the structure which then expands exponentially as does the value (or income) of higher levels. If the pyramid simply collapses it does so when are not enough new levels coming in...as it cannot sustain its own mass. The original pyramid schemes were simply cash-in programs, no products involved.. Then the government demanded that some "product/service" of value be added, which let to the multi-level marketing product companies today (in which 99 percent of sales are actually internal from so called "partners" (the people who sign up to be reps). Reps (or "partners") make money by recruiting and signing up new Reps and selling products. Reps may feel they are saving money by purchasing the products from the multi-level marketing companies as their own-private Costco (some of the products are as good, if not better than those found at retail, some may not be so great). These internal sales are the mass that keep the current multi-level marketing companies afloat and seeking new markets (most assuredly, Asia). Personally, I have no financial involvement in any of this, but have to admit that XS by Amway may be the best energy drink on the market today. By best I mean providing energy without any of the harmful ingredients found in almost all others. But that's just my opinion.
Crypto has a key advantage over traditional pyramid schemes: there is no ringleader to arrest. You can go after as many participants as you like, and likely crash the value quite a bit, but the blockchain will remain, it’s value to be inflated again and again.
Bitcoin, Shitcoin (haiku) "Crypto currencies - will decentralize wealth and - change the world order"
10
Was this the call to arms during the Tulip bulb craze? I'm not worried about a lost opportunity as much as I'm worried about the aftermath of the pop. The irrational exuberance of crypto currency pricing will proly correct when wall street does. That bubble might be easier to see.
37
"It's going to get rid of armies, man...decentralize wealth-"
These people are so naive. 95% of the bitcoin wealth is owned by 4% of the people in the market. So, until the surrounding institutions in society change, a new currency (bought with real world money) isn't going to make a dent in inequality or voter power.
*Blockchain* is absolutely going to change the future - but since it's not patented, its success isn't tied to these cryptocurrencies, which are extremely vulnerable to price shocks (think takedown of the Silk Road, China changing policy on this issue, other unexpected happenings).
I feel really awful for the nanny in this article. All the big money has already been made, and the kingpins aren't letting go of their coins anytime soon. I don't care if they go bankrupt, but people like her, man, what a shame.
187
This was so well told... Cinematic. Thank you.
34
I can't get past the bit where the 26-year-old multi-millionaire has $400,000 to invest in his early 20s. That clearly came from mom and dad (where else would it come from?). Why wasn't that examined or mentioned?
I am so unimpressed that someone with access to $400,000 was able to turn it into many millions of dollars via financial investments. Just another wealthy white guy born on third who thinks he hit a triple.
711
Sometimes I rail at myself that I didn't put money into Amazon when I realized in the late 90s they might be big. Then I remind myself that in the late 90s I could have begged, borrowed, and stole and not been able to come up with more than $500, so I suppose that shooting star wasn't meant for me anyway ;)
15
This is not uncommon in Silicon Valley for people who happened to have gotten into the right company at the right time. For example, when Facebook went public, it reportedly minted over a thousand millionaires, some of whom came out with much more than that. This happens because employees are often paid in either stock options or stock "units" which grow with these companies' stock prices.
Being unimpressed with this guy is fine, but why bring up his skin color and assume he thinks he deserved it? I know plenty of people out here who became wealthy by accident and realize it's largely because of luck.
6
"Just another wealthy white guy born on third who thinks he hit a triple."
AWD,
Why is his race relevant? Since tomorrow is Martin Luther King's birthday, this might be a good time to quote him: "I look to a day when people will not be judged by the color of their skin, but by the content of their character."
Maybe you should heed Dr. King's words and try to advance his cause. A good start would be to stop stereotyping people by race.
1
It is apparent that every one of these young men missed Economics 101 in (name any college or community college). Tulips, Gold, name the markets that over the centuries have inflated and burst. It looks easy until it's not.
The dollar is currency that is backed by the full faith and credit of the United States - which is why it is so stable and other countries peg their own currencies to it. Bitcoin is currency that is backed by the full faith and credit of...who? These guys? Other anonymous guys on the internet?
I'm with Jamie Dimon on this one, kids. Wealth takes disciple and time.
177
Economics 101 can explain why many of the coins (NOT necessarily bitcoin) will skyrocket in the future: supply and demand.
Increasing demand and fixed or decreasing supply means means increasing price. Currently supply and demands of cryptocurrencies is 100% speculation, but as blockchains start to have real world uses, the demand will shift and become more logical.
Also, JP Morgan is a founding member of the Ethereum Enterprise Alliance. There's a lot more to cryptos that bitcoin.
Best wishes to you.
I'm with Jamie too! :"JP Morgan's Jamie Dimon softened his stance on bitcoin during an interview on Fox Business Network's "Mornings With Maria," saying he regretted earlier comments calling the virtual currency a fraud."
5
Wall Street inflates bubbles and then pops them. There was tech in 1999-2001, housing in the runup to 2007-2008, and now...
7
A question that comes to mind is, if it's such a great opportunity, will you let me buy into your I.C.O. with another cryptocurrency?
138
Perfect.
Sometimes, just one well-conceived and well-phrased question is all that is needed.
8
Yes, everyone allows this, that's how ICO investing is done.
8
That's part of the genius. To buy into an ICO, the only accepted form of payment is often Ethereum, which at this point is an appreciating asset. So the ICO sponsors sell their brand new close-to-worthless tokens for valuable consideration without having to give up any equity in their companies. Great for them, but where is the due diligence and careful consideration on the part of investors?
2
Currently, coins are skyrocketing due to speculation about the future price.
In 2018 and 2019, I believe we will see a shift to select coins skyrocketing for more logical reasons: increased demand and decreased supply of certain coins and tokens.
Take ethereum as an example: When they implement Proof of Stake (google it), "stakers" will receive a guaranteed return of at least 1-3% on their ETH. This will increase the demand, especially if the guaranteed return is 3% or higher, and decrease the tradeable supply, because ETH that is staked can't be traded.
It's still very early in the blockchain revolution. Do your research and own your decision of whether or not to invest.
Remember, happiness can't be bought.
7
In the early days of the internet it seemed that every IPO was snapped up as no one wanted to miss out on the next Microsoft, Apple or whatever. Of course most of these companies tanked as no one really had any idea what they were looking at or what constituted a company worth investing in when it was "online". I'd suspect this is the same.
7
Where can I get a sweater like that??
4
read the artcle; there is a link
1
The unpolished gem of interest here is blockchain technology, which to me has significant potential in revolutionizing data security and data storage. I could care less about any cryptocurrency, "mining it" or the clear lack of security in everyone's "cryptocurrency wallet."
13
Besides Maria the mark and the half naked woman in bondage “art”, are there any women in this game? Feels like an extension of gaming bro culture. Sounds like they’re full enough of themselves and their cult that they’ll blow themselves up. Maria, good luck but I’d suggest you get to the safe zone.
247
Yup, I'm a woman. I am completely fascinated & inspired by the Bitcoin, the blockchain technology potential, and by the stratospheric interest in all the cryptocurrencies. I'm not young, I'm not male, and I haven't staked my entire fortune in it. 10% is the recommended amount. I have 10% of my "surplus" money in it and I have doubled my money and am on HODL!
11
If you've doubled your money, then have you rebalanced your stake by cashing part of it out, to bring you back to the 10% of "surplus" that is "the recommended amount"?
Did that work out? Let us know.
14
Here's another acronym: FOMO (fear of missing out) effect, and it's underlying the speculation going in with crypto currencies. A bubble that can only eventually burst, disappearing into the ether south everyone's savings....
There's a major omission in this story, which is that it apparently takes a MASSIVE amount of energy to create and process the crypto coins. How much can the blockchain technology really advance before it consumes the majority of the world's energy?
63
The amount of energy currently required to mine cryptos is absurdly large. However, traditional crypto mining and the associated energy use will be made obsolete by Proof-of-Stake consensus, being developed by ethereum researchers. Google it, it will solve the crypto energy issue.
4
Bitcoin takes a lot of energy because of its particular consensus algorithm. There are numerous other algorithms that do not. Remember, when Bitcoin was started, they had no idea of what would happen.
Thanks for the info, I'll check it out!
I remember when I was a kid we use to play business, leaves from bushes were the money. We would each pick a designated amount of leaves then open businesses. Someone would make a fake restaurant serving rocks and sticks for food. Someone would make a taxi service using a wheelbarrow. Someone would open a casino where one would pay to guess where the jackpot was hidden under three rocks. Someone would open a bank and collect a fee to hold your leaves. Someone would sell art. And someone would inevitably try to pick more leaves without telling the others, breaking the rules. So we made a fake jail.
I am not sure what is going on with crypto-currency, but it feels like kids playing business, picking leaves and saying it's real, and everyone in the group agrees to play for awhile. Everyone agrees that these leaves, these bitcoins, have worth. However in this game, the kids have actually figured out how to get the adults to buy some leaves with real money. And some of the adults have decided to go pick some leaves and start their own market.
My question:Who decides when people get to pick new, fresh leaves? Who is their Janet Yellen, their Greenspan? What are the rules? What happens when the one with the most bitcoins cashes out, the market implodes, and everyone else is left holding leaves?
238
Picking leaves is easy, convincing people your leaves have value is hard. There are lots of scam and overvalued projects out there and lots of speculators will get burned. However, there are several legitimate projects, such as ethereum, who currency will increase in value due to utility even after the speculation bubble pops.
3
Bitcoins are awarded to the first person to guess an extremely large number. A contest is run about every 10 minutes so that it takes all the Bitcoin miners about 10-20 minutes to guess the number. Its all those computers guessing numbers that uses so much energy.
sounds like how all "currency" starts.....
1
Please do a sensible article on people who exchange their bitcoins for real money. You'll find they are very few.
You see, it's not that easy to cash your bitcoin in for currency like real U. S. dollars. Okay, if you don't want dollars, you'd rather have stuff, there are a handful of companies who will accept bitcoin. If I owned bitcoin, I'd be stocking up on as much stuff as people are willing to sell me.
If you want to live in bitcoin world where drug dealers do business (which is why these cryptocurrencies took off in the first place,) good for you.
Bitcoin traders will sucker fools in, take their U. S. dollars or other legitimate currency, and leave a whole lot of saps holding the bag. These currencies are like tulips, beanie babies, and hummels: they're only worth what people are willing to pay for them.
The real world is not going away. Good luck, folks.
342
There's much more to cryptocurrencies than bitcoin. Your analysis applies to bitcoin, but I think it doesn't apply to more complex projects such as ethereum. The current value of ethereum is driven by speculation but I believe in 2018 and 2019 we will see it driven by utility.
If you see bitcoin as representative of all cryptocurrencies, please do a little research on ethereum. Prepare to have your mind blown :)
Good luck to you as well.
5
I don't understand why people think this other than willful ignorance. It takes about 30 seconds to execute a sell order of Bitcoin or Ethereum on Coinbase or Gemini (US based and insured exchanges) , and about 2-3 business days for the USD to ACH transfer into a bank account. You can also wire it if you want it faster.
2
In other words, just like any security that takes a few days to clear a transaction, it seems easy enough to exit, as long as the bubble is inflating. What’s a couple of days? Well, as soon as he ride turns, it might as well be a couple of years. You will not be able to exit.
1
There are real negative consequences here. This relentless speculation of digital fairy dust is the extraction of wealth from more productive aspects of society, and from those of us who work for a living, to some greed driven fantasy machine. There's nothing exceptional about this, it's just another tulip bubble. I still remember the start up culture of the late 90s...it's all about getting rich quick, with some fool eventually holding the bag.
Don't kid yourself, this is a zero sum game. I hope it doesn't end well for these clowns, but unfortunately housekeepers like Maria get taken in and destroyed in this punk game.
172
Currently, the prices are driven by speculation and greed. However, I would encourage you to research blockchain technology and ethereum. The blockchain revolution is just starting, there is real value being created, and it is not a zero-sum game. Best wishes to you.
1
Bitcoin is a negative sum game. It costs real money to buy and run mining computers. The cost to run mining computers is paid for by producing more bitcoins (especially at the start) and by transaction costs (eventually all of the revenue for mining will come from transaction fees).
As transaction fees are paid in bitcoin, as the price of bitcoin rises so does the transaction fee. Transaction fees have exploded as bitcoin has both risen in price and the fraction of return to miners has shifted to transaction fees. Transaction fees went from less than a penny per transaction to an average of $55.16 on December 22, 2016.
Buying a pizza and paying $55 in transaction fees doesn't make much sense.
Tulip bulbs are a positive sum game. Buy one, plant it, grow more.
4
I still don't understand what the heck a Bitcoin is - and the guys hanging out at this Crypto Club are just...I'm so grateful to have a real job.
60
A Bitcoin is ‘mined’ when someone, usually with the aid of a powerful computer, finds a prime number which satisfies certain criteria. Whoever finds the number gets to keep the bitcoin. The blockchain is a distributed ledger system which allows everyone on the bitcoin network to see who has created each bitcoin and who transferred coins to whoever else. Mathematically, you can prove that only a certain number of these special prime numbers exist, which eliminates the possibility of runaway inflation.
2
Now this is intriguing. Could you provide a reference for the criteria? Every subset of prime numbers meeting a certain set of criteria that I am aware of is infinite, but in some cases only a very small number of primes from that subset are known.
Similar to transcendental numbers, we know there are as many of them as there are real numbers, but proving that a particular number is transcendental is hard.
Oops, made a mistake. It is not known whether Mersenne primes are an infinite set. This is a conjecture; a lot of people are trying to prove that it is.
Of course it is not known to be finite.
I'm wondering if that was what you were referring to.
We were talking about this at Christmas lunch. My son, a previous merchant banker, is very interested. But as he says "I'm a gambler". This is premised on buy and never sell, hence HODL. Pure pyramid, you get your crypto dollars from the mugs after you who put their money in. I would do it until I got say $100,000 in value then pull it out in a real currency. Except I'm not sure how you do that. Can anyone tell me?
3
can you do a follow-up story a year from now, to see how these "rich" guys are doing?
451
Yes, well, I agree with the implicit point for sure -- concerning cryptocurrencies. But I would not be surprised if these fellows end up in "great" (i.e., very well paying) jobs in media/advertising.
Far too many jobs are fake jobs, now. Remember, somebody out there is growing food, somebody is making clothes.
Best Comment yet. Wait a year and rewrite this story.
Like the Trump administration, this will not end well.
157
The best quote is from law student Chante Eliaszadeh: "Obviously the bubble's going to burst and everyone's going to need a lawyer."
Smart. Bet she ends up wealthiest of all.
727
Reminds me of the old chestnut that only the merchants selling shovels got rich during the Gold Rush. Guess it's the lawyers selling advice who will make money in the Coin Rush.
3
No, it isn't obvious a bubble is going to burst but legal marketing never stops. Therein lies a bigger bubble. If everyone needs a lawyer we need Elon to get us to Mars asap 'cause it isn't worth staying.
I think most people are going to end up without causes of action, unless they are able to prove that they were defrauded and lied to and had no way to know that they were being defrauded and lied to. People are voluntarily investing in systems that are unbacked by the government and are based on speculative value, so they have no contract claims nor will they be able to prove unjust enrichment if the bottom falls out of the whole thing. They will have no tort claims because they are all apparently walking into the same dark alley everyone else is.
In other words, they are gambling and know it.
1
So the guy in the fake mink coat and the Halloween hat and shoes is the goal??
I'd rather have some land.
150
I am pretty sure he is NOT the goal and that his outfit is some kind of joke, if not for him then for most of the people around him.
Most of these people are just kids or at least they're still kids in terms of lifestyle. Quick money makes people behave weirdly, especially young people who haven't built even a sense of self. It's a bad look. It looks especially bad to someone who has worked hard, has responsibilities, and not a lot of money. I think the "bad look" is the point of the article.
Back in the day, I worked for one of the hottest optical startups around. We were all going to be rich. My plebeian share was worth anywhere from $5M-$10M, gross.
But, as an astute grey-beard warned with a sign on his cube: "You aren't a millionaire until you exercise your options, sell your shares, and pay your taxes".
Well, our IPO got yanked, 9-11 happened, NASDAQ crashed, and the telecom winter set it. I did get a $0.09 check for my shares after the 11M:1 reverse split.
These guys all have virtual money. It's worthless until it's turned into something tangible.
538
So are the fake mink coat and hat rented?
5
Yes that's why it's important to cash out now and then. I started investing in cryptocoin on Nov. 15. I turned $10K into $20K despite making a lot of dumb mistakes and bad trades. I took $10K back to the bank and left the remaining $10K on deposit in the exchanges, to come what may in the next two months.
4
Interesting that these guys measure their wealth in dollars not cryptocurrency.
6
Can't decide whether this is more sad -- cleaning ladies putting their hard-earned savings into this fantasy -- or pathetic.
33
To all you "normies" reading this asking yourselves what it's all about: look beyond the crypto-currency excess detailed here and look into the blockchain technology on which it all runs. That's the truly revolutionary change taking place here. It absolutely will transform the world.
These early adopters are like the very first people who bought Google and Amazon because they were fascinated and believed in the technology. The resulting wealth is just a side effect for many of these folks.
The good news is that it's barely even started.
15
No one's doubting blockchain. Blockchain is an innovative technology.
What we're doubting is these fools and their cryptocurrency.
8
Don't worry, we're already bored. Norm-core is always in style. [Where'd my New Balance go?]
1
Except the high energy=cost needs means it’s all being mined in Asia now.
2
It is truly the case that appearance and illusion are more powerful than reality.
It is much easier to believe and follow than to know. Thus people long for virtual friends, go to virtual universities, to make virtual work, create and spend virtual currencies in virtual paradises until all the phantasms recede to expose the harsh reality.
27
These are the kind of people who are considered "deplorable" here in San Francisco. They have made it almost impossible to afford living here. I hope they crash and burn...
306
Do landlords take these currencies for real estate rental or purchase? Doubt it so please explain how this us actually floating
Virtual work, virtual computers, virtual money. I guess tangible things no longer matter.
As with all investments, value is in perception. Whatever it is may not actually be worth anything (remember tulips?)
It's all about perception and the art of the sale.
I'll also give a nod to Rob's comment, if these guys are so rich why are they living out of suitcases communally eating cheez-its and Nutella?
32
If these guys are so rich, why are they living out of their suitcases in a crypto-crack house communally eating Nutella and Fruit Loops?
407
Wealth and frugality aren't mutually exclusive. Their wealth is currently virtual. They seem to be building something they believe in rather than cashing out.
9
Because they are super young and have fun living that way.
11
Apparently, the coins are not very liquid. You can buy them.. but you are limited on how much you can sell for cash each week. They are rich on paper.. holding illiquid assets.
4