The most irritating bitcoin misconception that needs explaining?

[Bit_Happy]

....
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?

...the first half
The 2011 "Bubble" lost over 90% from top to bottom, so we had one complete Tulip cycle.  


I'm not looking to "win" a debate; My point is about similarities.
(For example)
 comparing it to a Ponzi

"We need new money coming in"
"The early investors/miners are way to wealthy!"
"Careful the bubble might burst"
"First one out the door gets the best prices, sell before the whales".
^^^
The above quotes are all said about Bitcoin (even by many supporters), and they are also true about certain stages of a (temporarily) "successful" Ponzi.


Is BTC a Ponzi?

Q) Does a single person reading this post remember Stock Generation?
http://en.wikipedia.org/wiki/Stock_Generation

I never invested a penny, but I was curious.
Q) Does anyone reading this question remember 'hundreds of posts' on the Stock Generation forum about members (literally) looking out their window hoping to see the UPS/FedEX truck pull up to deliver a check?


Bitcoin is not a Ponzi
Observing some of the people here, you would never know the difference.
...Oh look, another new crapcoin is launching:
https://bitcointalk.org/index.php?board=159.0

[K128kevin]

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.

If a company "goes bust" it still had intrinsic value before which is what caused it to go up in value in the first place. People invested in the company because they thought it would be successful and provide some valuable product/service to the world, and therefore rise in value. They are investing in ownership of the provider of this product/service. When you invest in bitcoin, you're investing in something that does not have intrinsic value and only holds value because people TRUST that it does. Once again, this is different from investing in a company because people make these investments because the actual product or service the company provides is intrinsically valuable.

The only intrinsic value of a tulip is that it's pretty (at least as far as I know). And to say something has intrinsic value because it is useful as a currency really does not make sense. Anything can be used as a currency - honestly gold probably holds the most intrinsic value of anything in that regard.

[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

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

I just defined money for you.   Its an IOU.

Bitcoins are "mined".  Money is like for a carpenter to buy  bread but the baker doesn't need a chair.   A bank creates notes so these people can exchange stuff.  But these notes have to be backed by assets or credit

How does bitcoin do this?   It doesn't.  Its a public ledger that tracks exchanges using a network.

Its more of a transfer system than money

[Bit_Happy]

....
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?

...the first half
The 2011 "Bubble" lost over 90% from top to bottom, so we had one complete Tulip cycle.  


I'm not looking to "win" a debate; My point is about similarities.
(For example)
 comparing it to a Ponzi

"We need new money coming in"
"The early investors/miners are way to wealthy!"
"Careful the bubble might burst"
"First one out the door gets the best prices, sell before the whales".
^^^
The above quotes are all said about Bitcoin (even by many supporters), and they are also true about certain stages of a (temporarily) "successful" Ponzi.


Is BTC a Ponzi?

Q) Does a single person reading this post remember Stock Generation?
http://en.wikipedia.org/wiki/Stock_Generation

I never invested a penny, but I was curious.
Q) Does anyone reading this question remember 'hundreds of posts' on the Stock Generation forum about members (literally) looking out their window hoping to see the UPS/FedEX truck pull up to deliver a check?


Bitcoin is not a Ponzi
Observing some of the people here, you would never know the difference.
...Oh look, another new crapcoin is launching:
https://bitcointalk.org/index.php?board=159.0

Does the sudden silence indicate people are tired of my stubborn persistence, or that I was able to effectively communicate a "winning" argument.   
// I am only 1/2 serious, it hasn't been the best day; Please pardon my odd humor. 

[lunarboy]

 You don't have to buy 1 whole Btc   

[counter]

yea when I hear it is a ponzi scheme it irks me because people were running around like chickens with there heads cut off trying to get others to invest and see the value in it....  Their were also many people giving away coins to anyone interested for a while until the "crash" took place and people lost good chunks of change.

[smoothie]

Perhaps the Bitcoin exchanges are not Bitcoin itself?

[vnvizow]

How miners can generate Bitcoins with their computers and why they (the audience) can't.

[Sindelar1938]

one misconception that pains me is that folks assume that you cannot buy fractions of btc

[exponential]

Add another vote for the ponzi scheme.  Not necessarily a misconception but how about an episode where it is clarified where Bitcoins come from.  More specifically, how the block solved reward system works.  "Who put the Bitcoins in the block" is a common question.  Something that answers that in an easy way would be beneficial IMO. 

[S4VV4S]

one misconception that pains me is that folks assume that you cannot buy fractions of btc

^^ That and also the Ponzi or Pyramid scheme.

Plus another thing I get all the time is:
How can Bitcoin not be a Pyramid? it has nothing to back it up (Gold, etc). It's not even physical. You cannot touch it.
If you can create a short clip explaining that it would save A LOT of us sometime trying to explain it

Thanks

[DCLacoste]

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.
[....]

[...] Before Centrals Banks all currency were decentralized meaning it was backed by the individual issuer (private banks).

[...] 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.

[....]

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

I just defined money for you.   Its an IOU.

Bitcoins are "mined".  Money is like for a carpenter to buy  bread but the baker doesn't need a chair.   A bank creates notes so these people can exchange stuff.  But these notes have to be backed by assets or credit

How does bitcoin do this?   It doesn't.  Its a public ledger that tracks exchanges using a network.

Its more of a transfer system than money

So I thought it was both:  Bitcoin is the transfer system with the trust, and bitcoin is the currency.  Maybe this is what needs explaining ...

[Kazimir]

Retarded comments along the lines of "Bitcoin is nothing, it isn't even real, it's a bubbly, it's air, it's worse than the tulip mania, you're paying something for nothing" and so on.

I always feel a bit depressed, having to the absolute basics explain YET AGAIN. Would be great if there is a short, yet crystal clear explanation against this sort of bullshit, that I can refer to.

[Bitcoin For Dummies]

That was an incredible input, thank you all!

So far seems like Ponzi and Tulip are the most irritating ones. We will do both but probably Ponzi first.

Now the next step is to explain it in the simplest way possible in under 2 minutes
help is welcome

[Bitcoin For Dummies]

Here is the auction that will determine the one that gets to have his product/site placed in the video
https://bitcointalk.org/index.php?topic=538342.0

[TopherB]

Please refer to "Tulip Mania"...

If you bought only $50 to $100 of BTC in early 2010 and sold in late 2013 you would have ~$12,000,000 (12 Million) USD for every small purchase 3 years earlier.
No matter how great (and different) Bitcoin is, the "Tulip Mania" references are rational and fair.

$100 @ $5 per bitcoin would be 20BTC. If you sold them right at the peak of Nov 29, 2013 at $1242, you would have received $24840.00. Far outside the limits of the '~' symbol I would say.

[MashRinx]

Please refer to "Tulip Mania"...

If you bought only $50 to $100 of BTC in early 2010 and sold in late 2013 you would have ~$12,000,000 (12 Million) USD for every small purchase 3 years earlier.
No matter how great (and different) Bitcoin is, the "Tulip Mania" references are rational and fair.

$100 @ $5 per bitcoin would be 20BTC. If you sold them right at the peak of Nov 29, 2013 at $1242, you would have received $24840.00. Far outside the limits of the '~' symbol I would say.

Looking at bitcoincharts for MtGox in 2010, the highest open/close I could see in 2010 was $0.46 / BTC.  The lowest was much lower, below $0.05.  Using these number you end up between $270,000 and $2,484,000 depending on when in 2010 you assume someone bought btc.

[Erdogan]

The idea that bitcoin is virtual.

[Bit_Happy]

Please refer to "Tulip Mania"...

If you bought only $50 to $100 of BTC in early 2010 and sold in late 2013 you would have ~$12,000,000 (12 Million) USD for every small purchase 3 years earlier.
No matter how great (and different) Bitcoin is, the "Tulip Mania" references are rational and fair.

$100 @ $5 per bitcoin would be 20BTC. If you sold them right at the peak of Nov 29, 2013 at $1242, you would have received $24840.00. Far outside the limits of the '~' symbol I would say.

Looking at bitcoincharts for MtGox in 2010, the highest open/close I could see in 2010 was $0.46 / BTC.  The lowest was much lower, below $0.05.  Using these number you end up between $270,000 and $2,484,000 depending on when in 2010 you assume someone bought btc.

In early 2010 (pre-Gox) BTC commonly sold for under 1/2 a penny.
Try again and you'll see:
You can spend $100 ....Give away/lose/sell 50% ....and still end up with $12,000,000 in late 2013.

[Peter R]

Bitcoin is deflationary.  There is no one to fight inflation so the value of bitcoin would deflate if widely used.  

(Many people seem to think that inflation and deflation are synonyms (prices going up / money going down).  If you ask them if they'd prefer their money to go further next year than it does this year, they normally say yes, however, so there is still hope).