The most irritating bitcoin misconception that needs explaining?

[Raxe.io]

Please refer to "Tulip Mania"  (or Beanie Baby Mania, for that matter) and differentiate.  Every time I see that comparison I chalk it up to the person stating it as having no idea what they are talking about and just regurgitating what they've heard other people say, but it's still irritating.

This. Tulips are still beautiful.

[twiifm]

The most common misconception I hear from friends and family is that Bitcoin has "peaked" in value, and that they're "too late" to benefit from investing now.

I've tried my best to explain why that's illogical, but the argument comes from an emotional place (regret, envy of early investors), and people seem largely immune to logical arguments.

Or maybe they don't buy into the hype.  Its bitcoin speculators who are emotional from greed.  For everyone else you guys are nuts buying bitcoins

[GenTarkin]

I have to reply to this thread....

So, when I talk to many people about Bitcoin or if they ask me a question...

Most people are very confused about what Bitcoin is(duh) but those confused people I talk to, think its a "company" and there is a "ceo" ... or "Bitcoin is in risk of going bankrupt" .. Or "going out of business"

Every fucking intelligent person(obviously idiots too) cant wrap their mind around the simple fact that its NOT A COMPANY nor is it controlled by a COMPANY.

I simply respond to them.... "Thats like calling gold a company..."


Id have to say, recently the above is the most irritating misconception I run into.

[MashRinx]

I have to reply to this thread....

So, when I talk to many people about Bitcoin or if they ask me a question...

Most people are very confused about what Bitcoin is(duh) but those confused people I talk to, think its a "company" and there is a "ceo" ... or "Bitcoin is in risk of going bankrupt" .. Or "going out of business"

Every fucking intelligent person(obviously idiots too) cant wrap their mind around the simple fact that its NOT A COMPANY nor is it controlled by a COMPANY.

I simply respond to them.... "Thats like calling gold a company..."


Id have to say, recently the above is the most irritating misconception I run into.

I had a conversation this past Thanksgiving with an in-law who is a current macro econ professor at a well-reputed university here in the US and he kept talking about "yeah, but when the person who controls bitcoin does ..."

There's a looong way to go before most people think of bitcoin or other digital currencies beyond what they see/hear in the media, if even that much.

[Beliathon]

Or maybe they don't buy into the hype.  Its bitcoin speculators who are emotional from greed.  For everyone else you guys are nuts buying bitcoins

I'd argue that most of us early investors did so for reasons other than greed. Speaking for myself, I held onto my BTC for months as it lost value before finally seeing (enormous) profit.

For me, divesting from my nation's fiat was primarily an ethical decision, and that is why I did so with my entire life savings. I was later financially rewarded for my sound ethical choice.

[hilariousandco]

Yeah, that's what he's saying, but then you could call any investment that showed very fast returns Tulip Mania. If Bitcoin collapses quicker than it came, then the comparison will be apt but it's not until it does.

But it's not just that it's rising quickly - it's also that it doesn't have intrinsic value, like tulips. A share of a company that rises quickly in value has intrinsic value in that it means you own a portion of the company. Bitcoin's value comes only from the trust that we share - the trust that if someone gives you bitcoins for a real product, you can spend them elsewhere to get other real products.

What happens when the company goes bust? And if that was the case, you can't compare them just because they do or don't share intrinsic value.

[GenTarkin]

I have to reply to this thread....

So, when I talk to many people about Bitcoin or if they ask me a question...

Most people are very confused about what Bitcoin is(duh) but those confused people I talk to, think its a "company" and there is a "ceo" ... or "Bitcoin is in risk of going bankrupt" .. Or "going out of business"

Every fucking intelligent person(obviously idiots too) cant wrap their mind around the simple fact that its NOT A COMPANY nor is it controlled by a COMPANY.

I simply respond to them.... "Thats like calling gold a company..."


Id have to say, recently the above is the most irritating misconception I run into.

I had a conversation this past Thanksgiving with an in-law who is a current macro econ professor at a well-reputed university here in the US and he kept talking about "yeah, but when the person who controls bitcoin does ..."

There's a looong way to go before most people think of bitcoin or other digital currencies beyond what they see/hear in the media, if even that much.

Yeahp and I think the HUGE thing that people struggle with is the word "Decentralized" ... they dont get how much of an impact that word when it has in relation to current monetary systems.
I dont think they can fathom it. I knew for the first 2 weeks I was introduced to Bitcoin, I was CONFUSED as fuck and Im a nerd/geek for my career & passion for the last 20yrs of my life!
If it was that hard for me, tryin to get an avg person to wrap their heads around it... I can see how they are confused as hell and the media just jumps on that confusion and drives fear into them =( .. scaring them away from potentially the greatest invention in the 21st century ... it saddens me really =(

[GenTarkin]

But it's not just that it's rising quickly - it's also that it doesn't have intrinsic value, like tulips. A share of a company that rises quickly in value has intrinsic value in that it means you own a portion of the company. Bitcoin's value comes only from the trust that we share - the trust that if someone gives you bitcoins for a real product, you can spend them elsewhere to get other real products.

I disagree w/ that ... Bitcoins value goes far beyond that. It functions in ways that money / currency never has for humanity. This aspect alone makes it extremely valueable. Its utility value as money.

Your form of value placed in Bitcoin sounds more like why people trust in government backed fiat currencies.

[twiifm]

Or maybe they don't buy into the hype.  Its bitcoin speculators who are emotional from greed.  For everyone else you guys are nuts buying bitcoins

I'd argue that most of us early investors did so for reasons other than greed. Speaking for myself, I held onto my BTC for months as it lost value before finally seeing (enormous) profit.

For me, divesting from my nation's fiat was primarily an ethical decision, and that is why I did so with my entire life savings. I was later financially rewarded for my sound ethical choice.

Yeah right.   

Unless you can pay taxes in bitcoin you'll have to convert those into legal tender i.e. fiat.  It is impossible for you to divest yourself from fiat. 

[Bit_Happy]

I just learned that some scholars question "Tulip Mania", thinking the stories were exaggerated.
How can we learn from history, if the truth is not known?

....
Then why not just call it a speculative investment?...

Of course, this can be done right away.
So... if I can show tulips were a speculative investment, that would strengthen the comparison to Bitcoin even more? 

Tulips were a speculative investment, they had "formal futures markets".
Here is 'proof':
The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, "unbroken" bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. That year the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold.
http://en.wikipedia.org/wiki/Tulip_mania


ps. When I compare Tulip Mania to Bitcoin it's about the way people rush in trying to make big money fast.
There is a strong similarity, whether you see it or not.
Bitcoin speculation also has some amazing similarities to a Ponzi scheme, but it is NOT a Ponzi.

[twiifm]

Yeahp and I think the HUGE thing that people struggle with is the word "Decentralized" ... they dont get how much of an impact that word when it has in relation to current monetary systems.
I dont think they can fathom it. I knew for the first 2 weeks I was introduced to Bitcoin, I was CONFUSED as fuck and Im a nerd/geek for my career & passion for the last 20yrs of my life!
If it was that hard for me, tryin to get an avg person to wrap their heads around it... I can see how they are confused as hell and the media just jumps on that confusion and drives fear into them =( .. scaring them away from potentially the greatest invention in the 21st century ... it saddens me really =(

Maybe its you who don't understand "decentralized".  Before Centrals Banks all currency were decentralized meaning it was backed by the individual issuer (private banks).

What you don't understand is that bitcoin isn't even money.  Money is an IOU thats backed by the issuer.  For example in the olden days:  Someone holding your gold deposit will give you gold note in return.  You go spend that note and the person holding the note has claim that amount in gold from issuer.

Fiat is money that is not backed by hard asset so it has no intrinsic value.  By definition bitcoin is fiat.  However, fiat is backed by gov't.  The gov't creates fiat on debt.  Then they make you pay taxes so they can pay down that debt in future.  Because we are legally required to pay taxes the demand on dollar is guaranteed.  This assures its stability not some "trust" system.  Fiat currencies valuation are derived from things like GDP and also supply/ demand of money.

What I noticed is that bitbugs get smarmy about their knowledge of bitcoin.  But most don't understand undergrad economics.  The irritable misconception of bitcoin come from the bitcoin community itself not from outside.

Most bit bugs are towing the line without critical thought whatsoever

[hilariousandco]

I just learned that some scholars question "Tulip Mania", thinking the stories were exaggerated.
How can we learn from history, if the truth is not known?

....
Then why not just call it a speculative investment?...

Of course, this can be done right away.
So... if I can show tulips were a speculative investment, that would strengthen the comparison to Bitcoin even more? 

Tulips were a speculative investment, they had "formal futures markets".
Here is 'proof':
The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, "unbroken" bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. That year the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold.
http://en.wikipedia.org/wiki/Tulip_mania


ps. When I compare Tulip Mania to Bitcoin it's about the way people rush in trying to make big money fast.
There is a strong similarity, whether you see it or not.
Bitcoin speculation also has some amazing similarities to a Ponzi scheme, but it is NOT a Ponzi.

I can see the similarity, but it's still a misleading and invalid comparison, and so is comparing it to a Ponzi. Ponzis are a scam. Tulip Mania had the quick rise then the quick fall to worthlessness. You can't say it's half Tulip Mania because it meets the criteria of the first half. It's Tulip Mania because of the rise and fall. Can we compare the Pope to Adolf Hitler because they both wore trousers?

[twiifm]

I just learned that some scholars question "Tulip Mania", thinking the stories were exaggerated.
How can we learn from history, if the truth is not known?

....
Then why not just call it a speculative investment?...

Of course, this can be done right away.
So... if I can show tulips were a speculative investment, that would strengthen the comparison to Bitcoin even more? 

Tulips were a speculative investment, they had "formal futures markets".
Here is 'proof':
The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, "unbroken" bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. That year the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold.
http://en.wikipedia.org/wiki/Tulip_mania


ps. When I compare Tulip Mania to Bitcoin it's about the way people rush in trying to make big money fast.
There is a strong similarity, whether you see it or not.
Bitcoin speculation also has some amazing similarities to a Ponzi scheme, but it is NOT a Ponzi.

Besides tulips there were a lot of speculative bubbles and they all share similarities regardless of asset class.  

Definition from investopia:  A speculative bubble is usually caused by exaggerated expectations of future growth, price appreciation, or other events that could cause an increase in asset values. This drives trading volumes higher, and as more investors rally around the heightened expectation, buyers outnumber sellers, pushing prices beyond what an objective analysis of intrinsic value would suggest.

The bubble is not completed until prices fall back down to normalized levels; this usually involves a period of steep decline in price during which most investors panic and sell out of their investments.

[dotcom]

About it being 'untraceable' or pyramid/ponzi scheme.

^ this

I hear this all the time, no one ever has a logical argument to back it up, but yet they regurgitate the opinion everytime btc comes up in a conversation

[K128kevin]

I disagree w/ that ... Bitcoins value goes far beyond that. It functions in ways that money / currency never has for humanity. This aspect alone makes it extremely valueable. Its utility value as money.

Your form of value placed in Bitcoin sounds more like why people trust in government backed fiat currencies.

I mean, bitcoin objectively has zero intrinsic value =/ neither does a dollar bill really. Just so we're on the same page as far as what intrinsic value means, the intrinsic value of a dollar bill doesn't go much beyond its use to snort cocaine or write on. Compare a hundred dollar bill to a hammer - the hammer honestly has much more intrinsic value despite the fact that it is not worth $100. Intrinsic value means the value of the thing in itself, and not the value that you can obtain from it by trading. If someone had all the bitcoins in the world but nobody was willing to accept any of them or give any money for any of them, they would be worthless because they have no intrinsic value.

And it is true that the value of bitcoin comes from trust only... it is not backed by the government and it has no intrinsic value - we trust each other to attribute value to it. I personally don't see this as a problem, but it's still true. It's value as a currency is easily replicable, as we can see with all of the alternative cryptocurrencies.

What happens when the company goes bust? And if that was the case, you can't compare them just because they do or don't share intrinsic value.

I don't understand what point you are trying to make. If the company goes bust then you lose money, but it's still different from the tulip craze because the company has (or had) intrinsic value. It didn't become valuable because people trusted that it would, as was the case with tulips and as is the case with bitcoin. It became valuable (presumably) because it produced a desirable product.

[GenTarkin]

Yeahp and I think the HUGE thing that people struggle with is the word "Decentralized" ... they dont get how much of an impact that word when it has in relation to current monetary systems.
I dont think they can fathom it. I knew for the first 2 weeks I was introduced to Bitcoin, I was CONFUSED as fuck and Im a nerd/geek for my career & passion for the last 20yrs of my life!
If it was that hard for me, tryin to get an avg person to wrap their heads around it... I can see how they are confused as hell and the media just jumps on that confusion and drives fear into them =( .. scaring them away from potentially the greatest invention in the 21st century ... it saddens me really =(

Maybe its you who don't understand "decentralized".  Before Centrals Banks all currency were decentralized meaning it was backed by the individual issuer (private banks).

What you don't understand is that bitcoin isn't even money.  Money is an IOU thats backed by the issuer.  For example in the olden days:  Someone holding your gold deposit will give you gold note in return.  You go spend that note and the person holding the note has claim that amount in gold from issuer.

Fiat is money that is not backed by hard asset so it has no intrinsic value.  By definition bitcoin is fiat.  However, fiat is backed by gov't.  The gov't creates fiat on debt.  Then they make you pay taxes so they can pay down that debt in future.  Because we are legally required to pay taxes the demand on dollar is guaranteed.  This assures its stability not some "trust" system.  Fiat currencies valuation are derived from things like GDP and also supply/ demand of money.

What I noticed is that bitbugs get smarmy about their knowledge of bitcoin.  But most don't understand undergrad economics.  The irritable misconception of bitcoin come from the bitcoin community itself not from outside.

Most bit bugs are towing the line without critical thought whatsoever

Um ok dude.... go look up the meaning of "money" and get back to me.

[bbeagle]

This is a pretty awesome idea! I think the ponzi scheme myth is a good one. I feel like when people say bitcoin is a ponzi scheme it just shows that they really don't know what bitcoin is and they also don't know what a ponzi scheme is lol... and too many people hold this irrational belief.

from what I heard, lots of people define a stuffs as a ponzi scheme if it satisfies this property
1) pay stuffs at low price
2) go home and wait
3) get more money later with what you bought earlier

Which covers pretty much every act of investment.

I see where you think it's similar. But when you buy some other 'investment' like a stock, there is something BEHIND that backing that. If you buy Disney stock, there is a company 'Disney' which the value in the stock is related. The stock cannot just go to 0 if people still believe in Disney, and Disney is still making money. Eventually most people will not believe Disney is worth the value in it's stock price - and sell it, and the stock will fall, but it won't fall forever, the value will reach a point where more people believe that Disney is worth more money than it's stock price, buy more of it, then it will rise. In a stable company, the price will rise and fall, but generally settle in an area.
 
Investing in bitcoin is investing in something that has no intrinsic value. Nothing is backing it. This is one part of a Ponzi Scheme.

The other part of the Ponzi Scheme is that people early in get bitcoins for free or with no real effort, and it's exponentially harder for anyone else to get them. Yes, people who were with Disney early get more stock options than those that come in later - but they don't get it for free. They worked hard - were usually underpaid for what they did, and did it for a long time before getting stock options. The stock options were their 'reward' for working so hard.

Another part of the Ponzi Scheme is that you need more people to join your cause to make it's value rise. And a cult-type following occurs. This is not true of a stock. Sure, the more people buy the stock, the more it might rise, but it can't rise just by people buying it, because at some point other people will sell when the value skyrockets too much, and the stock will stabilize. Lots of profits are made in stocks when a group of people buy a stock low, advertise it and pump it up like crazy (and lie about some 'secret' thing that they say will make the stock soar) until other people buy it based on their recommendations, and then the original people sell, and the newcomers are stuck with stock they paid too much for. This happens all the time, and is just as bad as a ponzi scheme, and is illegal.

So, yes, bitcoin has a lot in common with a ponzi scheme, but it doesn't necessarily make it one. If bitcoin eventually becomes a currency, the ponzi scheme aspects of it will be forgotten.

[hilariousandco]

What happens when the company goes bust? And if that was the case, you can't compare them just because they do or don't share intrinsic value.

I don't understand what point you are trying to make. If the company goes bust then you lose money, but it's still different from the tulip craze because the company has (or had) intrinsic value. It didn't become valuable because people trusted that it would, as was the case with tulips and as is the case with bitcoin. It became valuable (presumably) because it produced a desirable product.

Because he's using the example of a company (or having shares in one) having "intrinsic value". It doesn't if it goes bust. And didn't tulip bulbs had "intrinsic value" then too? People were using them as medium of exchange and you could also grow them.

[Dallas5]

I would say the 0 transfer fee for sending bitcoins!, this is total BS. This came from someone working in a bitcoin related company.

You have to pay the fee or wait a few years for tx to arrive.

[hilariousandco]

I would say the 0 transfer fee for sending bitcoins!, this is total BS. This came from someone working in a bitcoin related company.

You have to pay the fee or wait a few years for tx to arrive.

Slight exaggeration there. Wasn't even a couple days last time I sent a transaction without a fee.