Topic: Traditional Banks Vs Ponzi Schemes. (Read 228 times)

Interesting.
Before I started judging this in my mind, I was wondering if same can be applied to Bitcoin (what will happen if everyone decides to withdraw his/her coins) so I don't sound like a hypocrite, then I realize that unless people sell their bitcoins and Bitcoin demand decreases, it won't be affected much if people start withdrawing from custodial Bitcoin platforms.  

If what you describe is true, especially the part about banks unable to pay all investors/depositors if they decide to withdraw at once, then I guess it's better we keep it silent to avoid panic that will cause them to fold like typical ponzi. Typically ponzi are not very sustainable and moral though, because they seem to gurantee investors that they their money will be greatly multiplied at a specific time... While banks only give depositors what they deposited with little to no Interest. It will take mismanagement, lack of transparency, lack of accountability etc to make them default

As long as that bank is operated by the government, we do not have to worry about the scam because if something worst happens to the bank, the government will refund all of the customer's money and will take care of everything. The Ponzi scheme banks does not have that and once it crashed, it will be gone forever.

There's really not much to discuss here; a bank simply doesn't fit the definition of a ponzi scheme.
Yes, a bank can go bankrupt, yes a bank needs some amount of money from its customers to operate, but it's still a whole different thing.
Heck, we're all here to support Bitcoin and most of us hold the firm belief that Bitcoin is better money than 'bank money' / fiat money, but it's just wrong to compare a bank to a ponzi scheme.
The bottom line is not if they can run with the money or not or any of those points, it's that the bank makes real money in different ways and is not just distributing a fee that new clients have to pay to enter the system, like is the case in MLMs & ponzis.

When entering a ponzi scheme, you usually have to pay a hefty fee of ~1,000$ normally (that you never get back - it's a fee, an entry ticket), while a new bank account is usually free and the money you put into it can be taken out whenever you want. Sure, not everyone can cash out at the same time because they use the money to invest, but it's not 'gone' to early members like in a ponzi.

Also there is no pyramid element involved in banks, no paid referrals. It's not like I create a bank account and then refer friends to get a reward from the bank. Instead, when joining a ponzi scheme, you absolutely need to refer people to at least make back your 1,000$ entry fee.

Finally, nobody creates a bank account to 'get rich quick'. The sole purpose of ponzi schemes is to make you money. While when creating a bank account, you're paying usually a monthly fee for their service of keeping your money safe (opposed to e.g. stashing cash in your home which might burn down or get robbed) and guaranteeing your (fiat - of course) funds. They also allow you to get out cash at ATMs and offer loans which you repay with a fee. The purpose of the two and the goal you want to accomplish when 'joining' either are completely different.

Bank != ponzi.
qed.

I believe in the bank. I can go to the bank and request for money at anytime and in this process the bank will give it to me, the back can't run with my money. I know government control the bank.
Ponzi scheme is not regulated by government, it can be crashed . If anything happens money invested can be lost forever

I voted no because they are regulated and the deposits are safe if there is a bank run the government will help banks to secure funds of depositors and if there are false transactions the bank will look at the details and they can do refund, compared to the Ponzi scheme banks offer insurance of their depositor's money.

Well, banks are legal and no one can declare them ponzi. Even though banks also collects a lot of money in terms of fees and fiat currency loses value due to inflation. People lose money indirectly but for sure its not a scam.
Ponzi schemes are short term duration and you never know the original owner running the ponzi scheme.

To some extent they are they need money coming from their new depositors to run their business, I consider them legalized Ponzi scheme, they hire businessmen and creative thinkers to use their depositor's money to grow the money, I don't think they can manage a business without using their depositor's money once money stops coming in,  they will have a hard time with their liquidity.

There are ponzi schemes that have been registered with SEC. And if they're not registered, SEC will declare them as an illegal ponzi, the problem I think lies with who governs with the country's SEC.

Not just because they're trying to register to make it look like they're legitimate, there should be some standards being set and being truthful to what they're registering. I've seen bunch of those registered scams and I think there's a weakness that has been seen by these scams on SEC's part.

Of recent I understood that Bitcoin and fiat will surely co-exist and complement each other.
I did not intend to underrate government related things. I only tried to uncover what is hidden from us.
All my allegations were about the banks and not fiat.
We talk Bitcoin vs Fiat
And Banks vs Exchanges.
You can be correct if you feel I am over rating Bitcoin, but as for Banks, I see them as hub of injustice. I see them being favourable to the rich and punishing the poor.  I see them as people that feast on the ignorance of the masses and defraud them.
Someone said I should rather see the bank as a general business. If I see them from this angle, that means I need to have a shandshake with the entrepreneur behind the idea.

A ponzi / pyramid scheme has no actual product and is based purely on bringing in new people. The newcomers finance everything, there is nothing else bringing in cash. To make it legal, nowadays they have to have an 'alibi product' like energy contracts, but those usually bring in little to no money at all.
https://en.wikipedia.org/wiki/Ponzi_scheme

Instead, a bank makes cash by selling (financial) products and trading with money from the customers. That's why it's not a Ponzi.

It's undeniable fact.

However, the world must have laws and governments in whatever kinds of organization: capitalism, communism or else (I don't want to mention). Governments, banks and laws are components that will never disappear. It's another undeniable fact.

Fortunately, Bitcoin and some privacy coins can give us freedom, privacy or anonymity. Unfortunately, they will not overtake governments, banks or fiat (in the future, CBDCs).

They are only mutual components in the world economy and society.

Your intention is to under-rate government-related things and over-rate Bitcoin, and it is misleading attempt.

You seem correct here. But in a business as the bank there is a conspiracy. The conspiracy of trust in particular. Once the system has worked over the time, the people will trust it blindly. Hence it is trusted, all her sins would be covered. It will take a seasoned economist or a financial educator to understand this from the angle I am coming from. I may not have enough points to buttress, but I quite understand what I meant within me.


The banking system has its peculiarities across the countries. No matter which country, it is correct that the banks and the government are one or working together. This bond or marriage is to preserve the nations fiat.

It will be fine if you can come up with the alleged deception. Either disprove any of the above personal points or lecture me about them to correct my illusion rather than acting like a bank personnel in the forum.
Please don't make me feel that I am in battle with the banks or I am hired by Bitcoin to discredit the banks. Correct me if I am wrong.[/list]

I know the fact that I and most of you love Bitcoin and want to show your optimism with Bitcoin but over-rate Bitcoin, exaggerate it is not good.

• It's worse if you mislead people about banks just to lift Bitcoin higher.
• Let me tell you: Fiat, CBDCs, Bitcoin, crypto (altcoins exclusively) will co exist on Earth. Bitcoin won't kill fiat or CBDCs and vice versa
• The world is controlled by governments (capitalism to communism) so one currency can be more preferred by people but government-backed currencies won't disappear at any cost

I think bitcoin is a beautiful thing because it allow us to "unbank"... but spreading misinformation about banks makes no sense.

Banks are custodial services. They also provide services. They have billions and billions and even trillions of profit every year. How come they do not have money on their own?

Don't you use credit card/atm or make wire transfers? These are services provided by banks.
Don't you want to buy stocks? You need a financial institution to do so. And stocks are not ponzi.

Banks are companies looking for profits. They somehow create oligopolies and are very powerful companies, they have more than they really deserve imo. But they are not useless, neither pure ponzi schemes. They provide good services.

What we need is an alternative, and bitcoin is becoming a very good one.

When signing up for a legally binding agreement, everyone used to ignore the terms and conditions, as well as the policy. Every bank has a policy that all customers must adhere to and obey. This is what keeps them out of consumer trouble.
Ponzi schemes, on the other hand, will make promises but then disappear with your money. Banks may be criminals, but Ponzi schemes are the true devil.
   
My previous reply still applies here, Policies



Sorry to mention that banks have products because you use their debit and credit cards to conduct transactions; you pay for using these cards at their machines and online businesses and don't forget that some banks charge monthly fees for transaction alerts sent via SMS and email. They may appear insignificant, but they will add up to a significant sum of money in a month from thousands of consumers.
They also provide loan and borrowing services; have a look at the interest rates they charge clients in the short term. I neglected to mention point of sale; banks make a lot of money from retailers, both physical and online.



It's not about how long they can stay in fraud; it's about how much money they have to settle the circle of input and output deposits of customers. This is where Ponzi schemes always go wrong; they make sweet promises, and by the time they realize they can't manage the system anymore, they exit through the back door.
Banks may fail due to pressure from the government, central banks, and politics, rather than a failure to pay their clients.


This might be true though.

Banks periodically disclose their properties and a large part of depositors’ money is in the treasury of the Central Bank, which distributes liquidity based on requests, but this does not mean that you cannot withdraw your money as you can pay without the need for cash in many places.
The distinguishing feature of Ponzi schemes is the speed in promoting and thus attracting more customers for no other reason than that they cannot generate much money to continue to scam and therefore the more time is delayed the more dangerous the scheme is to generate profits.

Eh those factors you mentioned above doesn't really related with ponzi scheme, but much be related with a business in general i.e lending. Bank, ponzi scheme, pyramid scheme, lending, etc are work same, if they completely failure they will not give you an insurance.

1. It depends how the bank and ponzi scheme can manage the money from investors, since bank has a lot depositors they can invest on precious metal, mutual funds, or other low risk investments. Bank also earn profit from credit card, lending, fees, service charges etc while ponzi scheme we really don't know what they do with our money. The ponzi scheme platform could do like what Bank does, but I think they can't since they offer crazy return to investor and earn with low risk investment wouldn't earn that much as the profit they offer to their investor.

2. I disagree Bank do make a lot of money they earn from credit card 15-20%, loan 5%, fees, and other service charges. I was once work on Bank so I know how Bank make money from their service, probably you never work on Bank so you don't know the mechanism. The reputation and trustworthy from their customer is the key they can earn money not like ponzi scheme with low reputation.

3. Of course if they don't have money, they can't pay their customer right?

4. Yes it called as time deposit, one of some strategy to make their customer reinvest again to gain more interest.

5. It's true because to establish bank you need to follow many requirements and laws of the government, and you need to a lot capital for emergency situation/failure. The government want to make their customer not panic and feel safe, because if the bank has lose the reputation and trustworthy it will be more dangerous.

tldr Bank aren't a ponzi scheme and not promising will give you crazy return, Bank has high reputation and trustworthy even not 100% safe as Bitcoin due to centralized entity.

Recently, I became curious and suspicious that banks are kind of Government Sponsored ponzi schemes, which are never and will never be busted. If my curiosity is positive, that means Bitcoin needs to be medaled for championing the battle against the all time ponzi.
I highlighted below some similarities between the bank and a ponzi scheme. Hence, I urge the forum to take her stand on this.

1. One of the factors that defines a ponzi scheme is; Ponzi scheme have no plans of paying all their investors  incase they request simultaneously.
     -The Banks:
The entity called Bank has no money of her own, rather it is the peoples money. What will be the fate of the bank if all her depositors, including pensioners request their money same day. Will it not collapse as ponzi schemes do?

2. A ponzi scheme do not have a product. Even if it has, I does not pay the investors from their profits, rather they pay older investors with the funds of newer investors.
     -The Banks:
Banks do not have products. They also do not pay customers with profits, rather with others deposits. I have this feeling that if I save $200 with a bank, then I request to withdraw $50, there is no place that $200 is seated that $50 would be subtracted from. The bank quickly will merge me with any current depositor. This may sound silly, but I believe something worse than this happens at their backoffice. Banks are however glorified because most of her customers (investors) do not want interest or profits (unlike the known ponzi schemes)rather they want safe keeping of their money. This is an expression permission to reap all and return the devalued capital without thanks.

3. A ponzi scheme can be legal or illegal:
Some ponzi schemes are not ponzi schemes from inception. They may be registered with FEC and other authorities. Complete all paper works and certified. On the long run, the investment ideas fail and they turn ponzi schemes.
     -The Banks:
The Banks are government backed, such that they are legal, even when about bankrupting, without clear deposit insurance or because of bad investments, unplayable loans, the government bails them out with tax payers money.

4. The ponzi schemes deliberately offer extended opportunities to older investors; this is to discourage withdrawal of funds in order to keep the system alive.
     -The Banks:
Banks also offer a fixed deposit account. In this account, you cannot withdraw till the stipulated date. On the stipulated date, you can choose to reinvest the capital and interest. This is to avoid massive and unexpected withdrawal of funds in order to keep the system alive.

5. Ponzi schemes last longer if there is no panic: It is only when there is panic due to suspicion, rumours of police investigations that investors will demand their money, hence the failure will be facilitated.
     -The Banks:
The bank is stable and will continue to be stable because they do not experience such panics. Even when they encounter a bit of it, government will quickly intervene by assuring the masses that their monies are safe.

In conclusion,  I have this feeling that there are some extent or outrightly, high street banks(not the central bank that mints money) are ponzi schemes, manipulating depositors against one another either by themselves or in conjunction with fellow banks and the government. If this is true;
Thank you Bitcoin!