Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

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Plz
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Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by Plz »

I had never seen this April 2018 article until recently:

https://www.vox.com/2018/4/24/17275202/ ... -ico-value

But I thought it might interest the community, especially given these threads:

viewtopic.php?t=300778
viewtopic.php?t=283957
And more, just do a search for bitcoin.

Bitcoin bulls, what would you say to the arguments against bitcoin from the article?
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by ARoseByAnyOtherName »

Plz wrote: Wed Feb 26, 2020 11:42 pm I had never seen this April 2018 article until recently:

https://www.vox.com/2018/4/24/17275202/ ... -ico-value

But I thought it might interest the community, especially given these threads:

viewtopic.php?t=300778
viewtopic.php?t=283957
And more, just do a search for bitcoin.

Bitcoin bulls, what would you say to the arguments against bitcoin from the article?
Bitcoin IS actually a colossal scam and the biggest pump & dump scheme in history!

You just gotta be in on the pump and sell before the dump!

:sharebeer
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by harvestbook »

I've been watching Bitcoin during the recent "market in turmoil" and expected it might "prove" its supporters right--that a pandemic and government incoherence would make digital currency a safe haven. Instead, the price cratered much faster than the stock market. I guess supporters could say at least it's utterly uncorrelated with the stock market rather than negatively correlated, but it could also mean even the big players don't trust it in a crisis and want to take the rubes' cash while they still have some. Or it probably means nothing at all.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by nisiprius »

It's a better article than I thought. I sort of agree with most of it. There's nothing in it to faze bitcoin bulls or cryptocurrency fans, though.

But there are some interesting questions.

To call it a "scam" implies that there are scammers. This raises some philosophical questions. In your opinion, are casinos--legal casinos, subject to state laws, with the games of chance properly audited--scams? That is, if you suppose that the roulette wheel is not rigged, is perfectly random, has an honest probability of 1/38th of having the ball fall into slot 26, and you believe that if you put $1,000 on 26 and win, the casino really will give you back a total of $36,000 including your bet... and won't beat you up and rob you before you leave the casino... is roulette a scam? If a slot machine has been audited and certified to return 96% of the money put into it, and it really does return 96% of the money put into it, is it a scam?

Anything with an element of gambling in it attracts scammers. You have to be careful about guilt-by-association. But the existence of pump-and-dump scams in the stock market does not make the stock market as a whole a scam.

To be sure, though, cryptocurrency has an astonishing number of guilty associates.

A question that needs to be asked (and can't be answered) is: assuming he, or whatever he represents, is still alive, what were Satoshi Nakamoto's true motivations?

The paper is quite specific about the stated design goals. Bitcoin is to be practical for "small, casual transactions" and its reason for being is that bitcoin transactions are going to be far cheaper than credit card merchant fees because eliminating reversibility (getting your money back if the merchant doesn't perform) eliminates the huge costs of mediation by a central, trusted authority.

What can be said is that bitcoin has proved useless for that purpose. It did not achieve its stated design goal. Furthermore, the choice (by Satoshi) in the initial implementation of a too-small block size suggests that he never really expected widespread adoption, as it was too small to support global credit-card-scale transaction volume.

The other thing that can be said is, as Harris says, it claims to be intended as a currency; yet nothing in the initial design makes any attempt to stabilize the value and make it feasible as a store of value; on the contrary, the initial design seems intended to make the value unstable and encourage booms and busts.

So the question is: was bitcoin sincerely intended as a real currency, or is "currency" the fig leaf over a pyramid-style scam?

An obvious parallel here is the literal Ponzi scheme, which was based on a plausible story about international postal reply coupons. In theory, it was and I guess still is possible to arbitrage international postal reply coupons if you can buy them in one country and then sell them in another. It's a plausible story because you really could do this in personal-sized quantities and make small-change-sized profits, but it doesn't scale. It's not clear how hard Ponzi ever really tried to do it on a large scale. When the scheme collapsed, auditors found he had a total of $61 worth of international postal reply coupons.

So, international postal reply coupons were the plausible story behind Ponzi's actual scam.

Is "it's a currency" sincere, or is it just the plausible story behind a scam?
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by nisiprius »

I was enchanted by a Planet Money episode, which gives a whole new meaning to the phrase "cryptocurrency scam." It is The CryptoQueen. A transcript is available on the website. I found it well worth the half-hour I spent listening to it. It, in turn, is based on a much longer and more detailed series of BBC podcasts that I have not listened to.

It's about a cryptocurrency product called "OneCoin" which is estimated to have had more than €4 billion invested in it. The brilliant innovation was that they sought and got the help of experienced, successful multilevel marketers. It was sold in typical MLM fashion, via big, exciting, rallies. Victims promoted it to their friends and became scammers themselves. The face of OneCoin was one Ruja Ignatova, and the podcast has sound bites of her pitches (as well as interviews with victims and with top-of-the-pyramid MLM promoters).

Image
Picture the scene. This is an enormous, packed arena, thousands of cheering fans. Actual fire shoots up from the stage. Then out walks this woman. She's wearing a floor-length red ball gown. She's incredibly well-groomed, well-dressed, long flowing black hair, incredibly expensive jewelry, brooches, dangling earrings. I mean, she looks incredibly wealthy. But she's also sort of incredibly mysterious in some ways as well. There's something about her, I think, that you can't quite - you can't fully understand. Her name is Ruja Ignatova, and people call her Dr. Ruja. And while she's not a doctor-doctor, she does have a Ph.D. in law.
Now, what is scammier than cryptocurrency? Fake cryptocurrency. There was no cryptocurrency, there was no blockchain, you basically paid money for access to a website that would show you the imaginary increasing Euro value of your holdings.

So I guess the lesson here is, if you must buy cryptocurrency, at least be sure it is a genuine cryptocurrency... :)
Last edited by nisiprius on Thu Feb 27, 2020 8:11 am, edited 7 times in total.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by ARoseByAnyOtherName »

nisiprius wrote: Thu Feb 27, 2020 8:02 am I was enchanted by a Planet Money episode, which gives a whole new meaning to the phrase "cryptocurrency scam." It is The CryptoQueen. A transcript is available on the website. I found it well worth the half-hour I spent listening to it. It, in turn, is based on a much longer and more detailed series of BBC podcasts that I have not listened to.

It's about a cryptocurrency called "OneCoin" which is estimated to have had more than €4 billion invested in it. The brilliant innovation was that they sought and got the help of experienced, successful multilevel marketers. It was sold in typical MLM fashion, via big, exciting, rallies. Victims promoted it to their friends and became victim-and-scammer.

Now, what is scammier than cryptocurrency? Fake cryptocurrency. There was no cryptocurrency, there was no blockchain, you merely paid money for access to a website that would show you the increasing Euro value of your holdings.
The BBC wrote a long article about her not that long ago:
https://www.bbc.com/news/stories-50435014
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by cashheavy18 »

Hello,

Would you please edit the subject line of this post for accuracy: Bill Harris isn't the founder of Intuit, Scott Cook is. Bill was CEO from 1995-1999.

Thank you.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by jpelder »

I agree with the author. Bitcoin itself may not be a scam per se, but at best it's currency speculation. His points about the resource cost of mining (a single Bitcoin requires 2 years of average household electricity to mine) and the risk of pump and dump are especially salient.

I'm not buying any sort of virtual currency. I wouldn't recommend it to anyone, simply because it doesn't actually do anything. All of the price changes are based on pure speculation
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by nisiprius »

Oddly enough, the "stablecoins" which are supposed to be stabilized by being backed somehow by real assets, seem to me to be even scammier than the purely free-floating ones. I think at this point it's accepted that Tether, supposedly tied to the dollar, was fraudulent.

I guess I have no reason to think that the Petro is a scam. This is the cryptocurrency that is supposedly linked to Venezuelan oil and gold and (do I really understand this correctly?) is the official backing for the Venezuelan national currency.

Is there a way to create a cryptocurrency that has a stable value without linking it to any real currency or asset, thus depending on trust in the manager of the cryptocurrency to hold the stated assets?
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by David Jay »

nisiprius wrote: Thu Feb 27, 2020 8:44 am.Is there a way to create a cryptocurrency that has a stable value without linking it to any real currency or asset, thus depending on trust in the manager of the cryptocurrency to hold the stated assets?
I think this would require that it was backed by a sovereign entity that was solvent (unlike, say, Zimbabwe). Just like a currency. Most US dollars are just ledger entries at banks, not physical bills.

The Petro appears to be specifically designed to “get around” Venezuela’s financial issues, which does not bode well for that crypto.
Last edited by David Jay on Thu Feb 27, 2020 9:06 am, edited 1 time in total.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by hagridshut »

I don't think Bitcoin is a scam, because I haven't seen any evidence that the creator of Bitcoin intended it as a method to defraud people of their money.

I do think that Bitcoin's value is unknowable at this point.

Bitcoin advocates correctly point out that Bitcoin is backed, or representative of, an ecosystem that includes developers (hardware and software) and miners (those who process the transactions). However, for Bitcoin to succeed as a unit of economic value, it needs to work as well or better than existing methods of value storage, or provide some unique benefit.

Right now, Bitcoin is slow to transact and not widely accepted as payment. This puts it at a severe disadvantage to credit/debit cards. Bitcoin transactions cannot be reversed. The one advantage I can see for Bitcoin is ease of International portability. As long as the owner of Bitcoin can keep their private keys memorized, their Bitcoins travel with them.

I classify Bitcoin and Cryptocurrencies in general as speculative investment. Their potential is unknown. Their technology could eventually become widely used, in ways we cannot imagine. The creators of the ENIAC computer and early computer networks probably did not anticipate mobile devices and an Internet teeming with websites, apps, and services. Or, the Cryptocurrency technology could be an evolutionary dead end. We just don't know.

I do not hold any Cryptocurrency in my portfolio and have no plans to do so.

However, I am keeping an open mind. If something were to change and a path to widespread use became viable, I would not be averse to owning Cryptocurrency.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by firebirdparts »

Why would you need to read another article to understand what bitcoin is? Enough already.

Bitcoin is simply a collectible. That's all you need to know. If you want to collect it, that is your business. It doesn't matter what I think.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by nocebo »

The article was released after one of the biggest run up and dump in bitcoin history ever... so good timing by the author but nothing he says is new.

It's a currency in some ways (not in everyday use) and a store of value in some ways. Is it the best cryptocurrency? No. Has it been around the longest? A new way of thinking about money and has been time tested against attacks from scammers/politics/hackers/etc for over a decade? Yep.

With any new technology or market, there's always area for scams or pump/dumps. There were a lot of people that did not value bitcoin/cryptocurrency correctly in 2017/2018 and got burned from all the fomo.

I cant say with 100% certainty about anything but theres smart people on both sides arguing for and against bitcoin. I side with bitcoin is here to stay and will increase in value.

1-5% of your PV should be in bitcoin, in my personal opinion. It's speculative, it's a collectable, it's digital "gold", it's a hedge, it's all of the above.

90% traditional investments, 5% capital to give you flexibility/bigger safety net over your emergency fund/overall room to pivot, and 5% bitcoin.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by JoMoney »

Who is the market for buying Bitcoin? As far as I can tell it's just people who think they'll find another sucker willing to pay more for it.
For every legitimate use it's suggested for, there's already a more effective, widely used, less risky alternative... and even the illegitimate uses seems like a bad choice, every transaction is logged and able to be traced through a ledger trail going back forever :confused
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by 3CT_Paddler »

I wouldn't say it is a scam. It is only as valuable as the community who participates in it agrees it has value.

What bothers me about Bitcoin is this... there is no limit to the number of clones out there that can replicate or do something similar. Only being the first in the game and the creation of a community around it keeps Bitcoin viable. If the community decided overnight that New Flashy Bitcoin 2.0 is better, the value could crater overnight.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by jdilla1107 »

JoMoney wrote: Thu Feb 27, 2020 9:22 am Who is the market for buying Bitcoin? As far as I can tell it's just people who think they'll find another sucker willing to pay more for it.
For every legitimate use it's suggested for, there's already a more effective, widely used, less risky alternative... and even the illegitimate uses seems like a bad choice, every transaction is logged and able to be traced through a ledger trail going back forever :confused
I would never buy bitcoin, but I disagree with this. Bitcoin is a massive innovation in the world of black market transactions. 20 years ago people involved in black market transactions literally had to move suitcases of cash around the world to avoid the banking system. This is now all electronic and instantaneous. The idea that bitcoin transactions are just being fueled by at home speculators is wrong.

My personal belief is that bitcoin is adding huge liquidity to black market financial transactions and that there is a very real demand for this. It's a real market. But, not one I would recommend entering.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by nocebo »

3CT_Paddler wrote: Thu Feb 27, 2020 9:22 am I wouldn't say it is a scam. It is only as valuable as the community who participates in it agrees it has value.

What bothers me about Bitcoin is this... there is no limit to the number of clones out there that can replicate or do something similar. Only being the first in the game and the creation of a community around it keeps Bitcoin viable. If the community decided overnight that New Flashy Bitcoin 2.0 is better, the value could crater overnight.
You'd need consensus to do that... that's why there 50 different versions of bitcoin and only the original (though not in original form as this stuff evolves) has been at the top... because it's hard to get everyone on the same page, for better or worse.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by JoMoney »

jdilla1107 wrote: Thu Feb 27, 2020 9:24 am
JoMoney wrote: Thu Feb 27, 2020 9:22 am Who is the market for buying Bitcoin? As far as I can tell it's just people who think they'll find another sucker willing to pay more for it.
For every legitimate use it's suggested for, there's already a more effective, widely used, less risky alternative... and even the illegitimate uses seems like a bad choice, every transaction is logged and able to be traced through a ledger trail going back forever :confused
I would never buy bitcoin, but I disagree with this. Bitcoin is a massive innovation in the world of black market transactions. 20 years ago people involved in black market transactions literally had to move suitcases of cash around the world to avoid the banking system. This is now all electronic and instantaneous. The idea that bitcoin transactions are just being fueled by at home speculators is wrong.

My personal belief is that bitcoin is adding huge liquidity to black market financial transactions and that there is a very real demand for this. It's a real market. But, not one I would recommend entering.
To be clear, I never said it was "just being fueled by at home speculators"
There are clearly very large institutional speculators involved in the pump-and-dump of Bitcoin and other crypto-currencies
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by Plz »

hagridshut wrote: Thu Feb 27, 2020 9:02 am I don't think Bitcoin is a scam, because I haven't seen any evidence that the creator of Bitcoin intended it as a method to defraud people of their money.

I do think that Bitcoin's value is unknowable at this point.

Bitcoin advocates correctly point out that Bitcoin is backed, or representative of, an ecosystem that includes developers (hardware and software) and miners (those who process the transactions). However, for Bitcoin to succeed as a unit of economic value, it needs to work as well or better than existing methods of value storage, or provide some unique benefit.

Right now, Bitcoin is slow to transact and not widely accepted as payment. This puts it at a severe disadvantage to credit/debit cards. Bitcoin transactions cannot be reversed. The one advantage I can see for Bitcoin is ease of International portability. As long as the owner of Bitcoin can keep their private keys memorized, their Bitcoins travel with them.

I classify Bitcoin and Cryptocurrencies in general as speculative investment. Their potential is unknown. Their technology could eventually become widely used, in ways we cannot imagine. The creators of the ENIAC computer and early computer networks probably did not anticipate mobile devices and an Internet teeming with websites, apps, and services. Or, the Cryptocurrency technology could be an evolutionary dead end. We just don't know.

I do not hold any Cryptocurrency in my portfolio and have no plans to do so.

However, I am keeping an open mind. If something were to change and a path to widespread use became viable, I would not be averse to owning Cryptocurrency.
If blockchain technology does become widely used, it doesn’t necessarily mean bitcoin will do well
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by hagridshut »

Plz wrote: Fri Feb 28, 2020 2:44 am
hagridshut wrote: Thu Feb 27, 2020 9:02 am I don't think Bitcoin is a scam, because I haven't seen any evidence that the creator of Bitcoin intended it as a method to defraud people of their money.

I do think that Bitcoin's value is unknowable at this point.

Bitcoin advocates correctly point out that Bitcoin is backed, or representative of, an ecosystem that includes developers (hardware and software) and miners (those who process the transactions). However, for Bitcoin to succeed as a unit of economic value, it needs to work as well or better than existing methods of value storage, or provide some unique benefit.

Right now, Bitcoin is slow to transact and not widely accepted as payment. This puts it at a severe disadvantage to credit/debit cards. Bitcoin transactions cannot be reversed. The one advantage I can see for Bitcoin is ease of International portability. As long as the owner of Bitcoin can keep their private keys memorized, their Bitcoins travel with them.

I classify Bitcoin and Cryptocurrencies in general as speculative investment. Their potential is unknown. Their technology could eventually become widely used, in ways we cannot imagine. The creators of the ENIAC computer and early computer networks probably did not anticipate mobile devices and an Internet teeming with websites, apps, and services. Or, the Cryptocurrency technology could be an evolutionary dead end. We just don't know.

I do not hold any Cryptocurrency in my portfolio and have no plans to do so.

However, I am keeping an open mind. If something were to change and a path to widespread use became viable, I would not be averse to owning Cryptocurrency.
If blockchain technology does become widely used, it doesn’t necessarily mean bitcoin will do well
I agree with that.

First movers do not always emerge as winners. Yahoo!, AltaVista, and Lycos got steamrolled by Google in search technology. Facebook overtook MySpace. iPhone and Android eliminated BlackBerry.

There is no way to know whether Cryptocurrency in general will have any long-term value, and if so, which specific cryptocurrencies will be the winners. Or if blockchain technology will have any long-term value.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by nisiprius »

hagridshut wrote: Thu Feb 27, 2020 9:02 am...I don't think Bitcoin is a scam, because I haven't seen any evidence that the creator of Bitcoin intended it as a method to defraud people of their money...
Just to be clear, you do not think the following things are circumstantial evidence of shenanigans?

1) Bitcoin was claimed to be a currency, yet was not designed to have a stable value, and thus not designed to serve as a store of value.

2) Bitcoin was designed to have engineered scarcity and constantly increasing value, thus rewarding early adopters. The creator of bitcoin had the opportunity to be the earliest of adopters.

3) "In 2010, an explicit block size limit of 1 MB was introduced into Bitcoin by Satoshi Nakamoto. He added it hidden in two commits in secret."

4) The original paper gave "small, casual transactions" as bitcoin's reason for being. The block size limit prevented bitchain from scaling and made it unfeasible for supporting small casual transactions on a large scale. I have no idea why he would do this but it seems at least fishy when the developer secretly introduces a feature that makes it impossible for bitcoin to fulfill an explicitly stated goal. Yep, free-floating paranoia.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by hagridshut »

nisiprius wrote: Sat Feb 29, 2020 4:51 pm
hagridshut wrote: Thu Feb 27, 2020 9:02 am...I don't think Bitcoin is a scam, because I haven't seen any evidence that the creator of Bitcoin intended it as a method to defraud people of their money...
Just to be clear, you do not think the following things are circumstantial evidence of shenanigans?

1) Bitcoin was claimed to be a currency, yet was not designed to have a stable value, and thus not designed to serve as a store of value.
I don't hold this against Bitcoin, because I don't think it is possible for a person to design a currency to have stable value. Stable value would mean relatively constant purchasing power, and there is no way that Satoshi Nakamoto could have mandated how much bitcoin a pizza would cost, or a stable BTC to USD conversion rate. Once BTC was released into the economy, the value was out of their hands.

2) Bitcoin was designed to have engineered scarcity and constantly increasing value, thus rewarding early adopters. The creator of bitcoin had the opportunity to be the earliest of adopters.
This is true. Is there any evidence that early Bitcoin addresses (that might be controlled by Nakamoto or possible conspirators) liquidated large amounts of BTC for government-backed currency?

3) "In 2010, an explicit block size limit of 1 MB was introduced into Bitcoin by Satoshi Nakamoto. He added it hidden in two commits in secret."
My understanding is that this was an design decision to promote decentralization of the network, but I don't know enough about the actual system to say if this is plausible or not.

4) The original paper gave "small, casual transactions" as bitcoin's reason for being. The block size limit prevented bitchain from scaling and made it unfeasible for supporting small casual transactions on a large scale. I have no idea why he would do this but it seems at least fishy when the developer secretly introduces a feature that makes it impossible for bitcoin to fulfill an explicitly stated goal. Yep, free-floating paranoia.
I could easily be a mistake or lack of foresight. Designers make mistakes all the time. For example, Facebook was supposed to be a "place for friends" and unify the world in a sharing utopia. Instead, Facebook has become a platform for political disinformation, and seems to make people more bitterly divided and miserable than ever. Large, complicated systems sometimes diverge significantly from their original intended purpose.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by danielc »

nocebo wrote: Thu Feb 27, 2020 9:10 am I cant say with 100% certainty about anything but theres smart people on both sides arguing for and against bitcoin. I side with bitcoin is here to stay and will increase in value.
I'm sure it's "here to stay", but that doesn't make it an investment, or a currency. Ponzi schemes are here to stay. The Nigerian scam is here to stay. Bitcoin has joined a long list of scams that extract money from victims and gives it to fraudsters.
nocebo wrote: Thu Feb 27, 2020 9:10 am 1-5% of your PV should be in bitcoin, in my personal opinion. It's speculative, it's a collectable, it's digital "gold", it's a hedge, it's all of the above.
Calling it "digital gold" isn't helping your argument. Gold is not an investment as it is, and I would sooner buy gold than "digital gold". At least physical gold is pretty to look at. Bitcoin is not a hedge any more than lottery tickets are a hedge. Investopedia says: "A hedge is an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security." --- Bitcoin does not reduce risk of adverse price movements.
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Re: Article by the founder of Intuit and Personal Capital: Bitcoin is a scam

Post by Plz »

Just want to bump because we haven’t really heard from bitcoin bulls. I am genuinely curious and want to understand all my options.

I think bitcoin is particularly interesting juxtaposed to the coronavirus pandemic.
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