Bitcoin is a Ponzi scheme by Eric Posner on Slate.com. All quotes from Eric Posner.
{Post Script Note} I go from objective to slightly subject towards the end. Sheesh. Slate.
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Bitcoin is a fantasy. The Internet’s currency—a secure, private, decentralized type of money that makes possible anonymous and virtually costless transactions across borders—contains the seeds of its own destruction.
Every sentence is factually incorrect. Bitcoin is real in the sense that people are not using it in their dreams. Bitcoin is not the "Internet's" currency. It does cost to do bitcoin transactions. You could get away with free transactions, but not quickly.Quote
More than anything else, it resembles a Ponzi scheme
"resembles" a Ponzi scheme is different from "is" a Ponzi scheme as claimed in the title. Quote
As more bitcoins are produced, the problems become more complex, requiring more computer power to solve them, and this limits the total number of bitcoins that can be created over time
Factually inaccurate. Number of Bitcoins is hard limited to a maximum of 21 million. The limitation is not due to the effect of the "complex problems...require more computer power"Quote
Bitcoin may be useful for certain types of transactions, especially illegal ones.
You can just as easily replace this with: "Quote
...without any government role, so designed as to make inflation impossible and bank transfer fees unnecessary...
Inflation and deflation is possible as recent swings have shown keeping the number of coins relatively same.Quote
These features are supposed to make bitcoins irresistible for consumers.
Where is the reference to your survey of customers? Quote
Meanwhile, stripped of the power to manipulate currencies to advance nefarious ends, governments will collapse, and we will live in an anarcho-utopia.
Every currency's secondary objective is to become the de-facto currency in the world. Bitcoin is no different from others.Quote
Hoarding accounts for the large increase in the value of bitcoins;
That might be true. Its the same for any currency. Just that its easier to manage by printing more money. A single Bitcoin might get divided into fractions.Quote
An even more fundamental problem with bitcoins, and indeed any private currency, is that there is no way to limit its supply. True, bitcoins cannot be manufactured beyond the limits set by Nakamoto.
Two logically conflicting sentences negate each other.Quote
But there is no way to prevent future Nakamotos from creating bitcoin substitutes—say, bytecoin, or botcoin.
If there is more demand for one product over the other, the other lesser in demand product will die. So? When this hits, value of Bitcoin will fall, and hoarding people will sell in panic and other people will buy.
If Bitcoin can die so can any currency. Cases in point:
1. Brazilian Cruzeiro -> Cruzeiro real -> Real
2. Euro replacing other currencies.
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Unless a bitcoin has value as a currency, it has no value at all, and its price in dollars will fall to zero.
A value is anything someone is willing to pay for an item. This statement may or may not be true because it is set in the future without proof. I call it worthless sentence. Quote
A regular Ponzi scheme collapses when people realize that earlier investors are being paid out of the investments of later investors rather than from the returns on an underlying asset.
Ok... I'm still looking for how is it a Ponzi Scheme. Lets assume the first investor bought 1 bitcoin for 1 cent. Today 1 bitcoin is bought for 100 cents. In a Ponzi scheme, you buy and hold the asset and get a return from later buy ins. The Bitcoin is not generating anything if you just hold it. It only becomes valuable if you exchange it for something of value. Once you do, you lost possession of the bitcoin asset. So who's paying returns to whom while still holding the asset? How's Bitcoin any different than a stock IPO?If you are complaining now, you missed the boat.
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A real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion.
Without proof, anything can "seem" like anything.Quote
Given this, why all the enthusiasm for bitcoin? Partly, the technological ingenuity of the scheme, of course. And people have misinterpreted the run-up in price as a sign of success rather than failure.
"Of course." What is the point of this sentence? As a counter example, have people correctly interpreted run-up of the DOW as sign of failure?Quote
Yet history shows that private currencies always end in tears; if central banks sometimes abuse the trust we place in them, the alternatives are worse.
Possibly true. How does it relate to your "Ponzi" claim?Quote
The strangest feature of the bitcoin saga is that people who are so suspicious of government put their trust in Satoshi Nakamoto, who could be anyone, or anyones—eccentric academic researchers, mischievous Fed economists, DARPA, U.N. globalizers in black helicopters, a criminal syndicate, a bored 11-year-old Ukrainian genius.
L.O.L. (yes I put the periods). No one trusts Nakamoto more than the next person. The Bitcoin source code is open source. If I use Linux OS, that does not mean I trust Linus Torvalds.I don't know how much reputation Slate.com has for journalism, but there is no hint of even attempting to scratch the surface.
Any logically biased and non inquisitive, English essay like this would have been shredded by my English professor who teaches in a third world country who's native is not even English.
