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Dennis Gorelik
14 December 2017 @ 03:17 pm
Couple of my friends asked me if they should invest into bitcoin.
Here is my answer:

1) Bitcoin is a scam.
If you invest in bitcoin, you have a 90% chance to become a victim of a confidence game (AKA "sucker").

2) There is no legitimate intrinsic value in crypto-currencies.
There is no legitimate activity that bitcoin does that more traditional financial tools (such as banks or PayPal) do not do yet.

3) Financial transactions that government can not control - is not a feature, it is a bug of bitcoin.
Imagine that somebody anonymously orders killing you with payment over bitcoin.
Would you like your government be able to trace such assassination fee over bitcoin?
I, personally, would very much like to grant the government such tracking ability. I believe you would too.
If bitcoin supports such tracking - then it is neither feature nor bug.
If bitcoin does not support such tracking (and guarantees anonymity of financial transactions) then it is a bug and the government would crush bitcoin for that bug.

4) Limited supply of bitcoin is not a feature, but a bug.
United States Federal Reserve intentionally changes supplies of available dollars in order to keep inflation at around 2%/year.
If it made sense to have a limited supply of a currency, then the Federal Reserve would do that. No crypto-currency is needed for that.

5) "But bitcoin grew up to $18,000 - I want to get in"
Try to buy a powerball lottery ticket instead. It would be much less expensive exercise. And for measly ~$10 you would still have a chance to win $50M.
At this stage bitcoin is a clear bubble, propped up by "investors" who do not understand what they are investing into.

Originally posted at: https://dennisgorelik.dreamwidth.org/143435.html