Topic: The Ponzi scheme argument - page 2. (Read 5546 times)

I'm curious to know how the first steps in the acceptance of bitcoin differ from the first steps of acceptance of a 'legitimate' online currency.

1) Introduce currency.  It has no value because no one uses it.
2) People start speculating in it based on anticipated use.
3) People start using it because it has the value speculators have introduced to it.
4) It increases in use and stability.

You seem to be arguing that because our car is only one mile down the road it'll never get a hundred miles further.  I'm thinking the same way it got the first mile, am I crazy?

After all i was wrong! Not every dumbass will understand... 

So, what you're basically saying is that bitcoins, USD, gold, silver, wheat, salt, rice, beef, pork, etc, are all Ponzi schemes.

But this is no different than infusing a token product in a pyramid scheme to pull them over the line of being seen as solely money shifting. Multi-level-marketing is all about selling a "product", but in reality, the sales of that product are never what drives the operation, but rather the recruitment of new members and their "initiation fee".

Saying that Bitcoin has this intrinsic usefulness as a payment mechanism (or currency) doesn't matter, if the injection of value into Bitcoin is really to get a payout as its value rises. The fact that (1) Bitcoin is *not* being used as a currency (except for alpaca socks, drugs and cofee), and that (2) there is no real attempt by the developers to streamline its safety or increase simplicity in order for it to actually be adopted as one, tells me that Bitcoin currency potential is not what makes Bitcoin attractive to current investors (despite their claims to the contrary) and, moreover, was never really was intended to be. Frankly, I think the whole "cryptocurrency" angle is the most brilliantly designed patter upon which a ponzi scheme was ever be built. Forget jewelry, or super-vitamins, here you are part of an ideological revolution!

Simply put, if Bitcoin really was a useful and viable payment system, the Bitcoin economy wouldn't almost entirely consist of speculation on exchanges. The reason all people are running around, putting up posters to expose people to Bitcoin is so that more "initation fees" can be collected.

1. Gold or oil or any other commodity can then be said to have value based on investors 'believing the story.'  There is some truth here but it can be applied to ANY investment (real estate, stocks etc.)

3. if 30% of the world's gold reserves were to be sold RIGHT NOW - what would happen to the price of gold?  It would certainly drop a lot (currently at $1588/oz) possibly by upwards of 50% or more as margin/leverage calls would likely come into play driving the price down further.  However, at the end of this process gold would still have some value, some proportion of 'gold bugs' 'believing the story' whether that value was $800/oz or even $150/oz.


IMO Bitcoin acts as an asset AND a currency, and is so quite different from a Ponzi scheme.

How does that differ from all the world's gold holders panicking and trying to liquidate millions of ounces of gold within a few hours?

How is any commodity or currency or investment 'safeguarded' against market volatility? I'd love to hear your explanation.

Commodities can *only* be liquidated if there are people buying the commodity (be it gold, silver, palladium, platinum, oil, coffee beans, tulips or bitcoins).
Obviously if there are 10 million people selling something and only 1000 people buying, the price will drop because holders want to get rid of their possessions for any price available.

Blabla.

1. Invest in me, I am BTC I only gain in value. However, nobody actually creates a justifyable increase in value outside of speculation/being told so(150% gainz!!111). It is thus "empty". There is no reason a BTC should be worth something other than people who "believe the story".

2. Get told: Oh sure, cash out anytime you want with the profits made! It's a currency!

3. If all BTC holders were to attempt to cash out RIGHT NOW, there would be a huge percentage that would not be able to find any takers.

4. Different to ponzi in 0 ways.

5.

6. Profit!

Thanks for that. That's the best one sentence explanation for why bitcoin is not a Ponzi scheme.

Finally, someone that can explain it in a way for every dumbass to understand that Bitcoin isn't and will never be a Ponzi scheme.

+1 for you, my friend

Ponzi schemes in a nutshell:

1. Charles Ponzi says, "Invest with me and I'll pay you 150% whenever you cash out!"

2. Trusting individuals give Ponzi their money.

3. Whenever someone wishes to cash out, Ponzi pays them from what he's accumulated from other investors or, if he's already spent it, he gets more people to give him money and uses that. There is no other source to draw from.

4. Someone finally asks too many questions or a significant number of investors attempt to cash out and the whole house of cards comes crashing down when it becomes public knowledge that Peter was being robbed to pay Paul.



Differences with Bitcoin:

1. There is a finite number of BTC in existence. Their value increases because the demand for them increases.

2. The only advantage "early adopters" may have is that they were able to acquire bitcoins at a time when it was relatively inexpensive to mine them. There was no "Charles Ponzi" to receive an investment! Bitcoins are still created the same way but just at a higher difficulty rate and with much more competition.

3. The project is open source and, consequently, there is no deception inherent in it. The code does not lie.

4. Bitcoin is a currency, not an investment. You may choose to invest in this currency with the hopes that it will increase in value but it is not required for it to function in its intended role.

BitCoin is a Ponzi scheme in the same way that Real Estate is a Ponzi scheme.

The defining feature of a Ponzi scheme is having a "Mr Ponzi" equivalent who runs it all, and benefits by lying to the investors.  There is no real investment, and the investors don't know that.

Bitcoin is not a lie.  It's not necessarily going to make money, but investors enter with their eyes open.

First, Apple has not paid a dividend because they have always reinvested their income. They could pay a dividend at any time.

But:

A Ponzi scheme necessarily involves fraud. If the investors know that they are only getting money from future investors, it's not a Ponzi scheme.

A Ponzi scheme creates no value for investors unless new investors are brought in. Even if no new money were ever brought into the bitcoin economy, bitcoins would still create value for people who used them because they would enable transactions that would otherwise be impossible, more expensive, or more difficult. Even if every dollar going into bitcoins were balanced by a dollar going out and the value of a bitcoin never significantly changed, bitcoins would still produce added value for everyone who used them.

With a Ponzi scheme, everyone who makes money is offset by someone who loses at least that much money, usually more. Every dollar made is someone else's loss. In principle, nobody need ever lose money on bitcoins. Again, suppose the price of bitcoins remains forever stable at $14. Exchanges will still make money enabling transfers between national currencies and bitcoins, merchants will still gain value accepting bitcoins where those payments are easier, and consumers will still gain value using bitcoins to make purchasing easier.

Except that because Apple make a profit without paying a dividend, their total assets increase and your shares represent the same proportion of a bigger pie, so they're worth more. In practice shares are generally valued at a premium to assets, representing the expectation that the company is expected to make future profits. You could slice up the company and divide up the value of the assets between the shareholders, and this does sometimes happen when one isn't using its assets efficiently, but generally it's worth more as a going concern.

For example, there was an interesting period where Acorn Group plc, who created the ubiquitous ARM processors that are now used pretty much everywhere and spun this off as a joint subsidary with Apple, had shares in ARM worth more than their entire market capitalization. Acorn Group was bought and split up as a direct result of this.

Bitcoins are different in that they're just numbers in a database; there's no underlying assets and certainly no-one doing useful business using said assets. Or to quote another /.er:


Also, an important distinction between the two is that Apple's value is not simply "what it does", it's that they can take their assets and use them in a way that makes money. Bitcoin's value, on the other hand, lies solely in the fact that you can find someone else willing to pay you for the bitcoins either in fiat money or in goods. The two are not quite the same.

Any winner. If you're the loser in a Ponzi scheme, you will sue whoever made a profit out of it. Because his profit was your damage.

Let me guess.

These people at "slash dot" i must be a noob for not knowing or caring what slash dot is, I'm assuming it's just another site like reddit for random people to voice their opinions on topics..

I'm assuming they have nothing to do with bitcoin and are looking at it from the outside.

Therefore in my eyes, their opinion just doesn't matter.  As American's most of us think we're doing good by occupying all of these countries overseas.  Do we give a fuck what some jihadist thinks about our invasion?  absolutely not.. his opinion doesn't matter at all.

What I've come to realize is that Bitcoin is a ponzi scheme. But so what?

The US Dollar is also a ponzi scheme, by the definition of a ponzi scheme.

A ponzi scheme is just anything in which the first people to get in benefit greatly at the expense of those who are late to get in.

The difference? In Bitcoin people who are smart and took to the concept early are rewarded, in US Dollars, banks and governments are rewarded, and we the people are SCREWED time and time again.

I for one would much rather be a part of a ponzi scheme that is actually controlled by the people as a whole, instead of some elite power structure. And I think the average people feel that way as well. Every person I know hates banks, they're simply sick of getting raped by them. They just don't know what they can do about it. Yet.

If you think that is enough then Bitcoin is a Ponzi scheme.
1. The persons holding bitcoins may very well create something of value, but just because they have some bitcoins and you do does not entitle you to any of the value they create. They can just as well realise that value through other currencies. Bitcoins do not *create* value, at best they help you preserve value that has already been created.
2. Almost all increase in the value of bitcoins comes from the fact that more and more people are putting money in bitcoins, and only a small fraction of the coins in circulation are being sold. A lot of money has been taken out of the system and will not go back in, so if for some theoretical reason everybody suddently wanted to sell they would on average get much less than they spent.

well, things do get improved with time.

ponzi is not practical these days since you get sued and lose everything.

so somebody had to invent a new modification, one without (being) a central authority that can be sued.

Precisely. How can it be a ponzi scheme without a central authority that benefits. Are you claiming early adopter are behind it? In that case, what a brilliant scheme. The ponzi, without the ponzi.