Some of you might be familiar with my posts about crypto on the ZZL (not ZZLP). Suffice it to say, as someone who taught corporate finance for many years, I think bitcoin is the biggest financial scam in history. By now it's bigger than subprime.
The intrinsic value of a bitcoin is exactly and precisely zero. If I buy a bond, it can fluctuate in value on the market, but no matter what happens, I have an enforceable contract that entitles me to the face value of the bond and unpaid interest. If I buy a stock, I have a pro rata share of the company's earnings; whenever the company gets bought, I get a pro rata share of the purchase price. If the company makes a lot of cash, it will declare a dividend and I have a right to a pro rata share of that.
If I buy a bitcoin, I have an encrypted number placed in a large table somewhere. That is all. Its only "value" comes from the decision of another person to pay you money for something that is worth zero. It's the "bigger idiot" theory of value that is the hallmark of a bubble or fraudulent scheme.
The only thing produced in the bitcoin economy is corruption. There are, to my knowledge, no products produced in bitcoin. Some vendors might accept bitcoin, but they aren't paying their workers in bitcoin and they sure aren't paying taxes in bitcoin. So they accept bitcoin, then convert the bitcoin into cash, and use the cash. You might ask, "why bother with it at all if you can just pay with dollars in the first place" and the answer is "no reason," which is why so few companies actually take bitcoin. But if you order a hit on someone, you might pay the hit man in BTC. The hit man won't convert the BTC to currency, because the hit man will also use the BTC to buy supplies, getaway cars or whatever else goes into the hit. So as an economic matter, BTC's social value is strongly negative.
On the ZZL thread, Bethel and I teamed up (as we sometimes do, as two people with different views but both of whom know something on finance) and got the BTC enthusiasts to admit that the "value" of BTC is basically as a collectible. It's like a baseball card or a collector's item. Baseball cards, of course, do not consume huge amounts of energy to produce.
Bitcoin produces more carbon than Greece. Think about that. The work done by Bitcoin mining is arbitrary. In fact, that's the whole point. It's make work that can't be solved except by randomly choosing a number, dividing it by another number, and hoping that it will have a lot of zeros at the end when represented in binary. It is the intentional waste of processor power -- which means electricity -- to do something completely useless, for the sole reason that it requires a lot of processor power to do.
I don't think there is anything good to say about BTC. If I were in charge for a day, I would ban it and it's not even a close call. The stuff is worthless, but it has a massive PR operation to convince people who don't know finance that it's somehow valuable. I've read the papers that try to justify the value and they are just hilariously riddled with errors. Hence all the Bitcoin bros running around thinking they are smart because they were one of the first ones to get conned. They are smart in the same way that the initial investors in a ponzi scheme are smart.
So the "success" of bitcoin (i.e. that it still has value) has created a situation in which stupid people control lots of assets, and throw those assets around hoping to induce politicians not only to indulge their stupidity but to expand it. This is how we get JD Vances.
