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I am amazed that in 2017, there is still people qualifying Bitcoin or Ethereum of ponzi schemes. Crypto currencies have a lot of problems (technical, economical

I am amazed that in 2017, there is still people qualifying Bitcoin or Ethereum of ponzi schemes. Crypto currencies have a lot of problems (technical, economical, philosophical, ICO are insanes) but saying they are ponzi schemes is plain wrong. And it just takes 5 minutes of reading on Ponzi Schemes signs and basic knowledges of how those currencies work to understand why.

RexetBlell 9y ago
They are as much a Ponzi scheme as gold (which has almost no practical use) and ugly paintings that cost millions http://www.therichest.com/luxury/most-expensive/10-ugly-pieces-of-art-you-wont-believe-sold-for-millions/ http://www.therichest.com/luxury/most-expensive/10-ugly-piec... If expensive ugly paintings are not a Ponzi scheme, then cryptocurrencies are not a Ponzi scheme.
- BoiledCabbage 9y ago
  Gold isn't a "Ponzi scheme". Even if you believe that investing in gold makes no sense, and it's a useless metal with no practical purposes, and it's a bubble waiting to burst and so on, that still doesn't make it a Ponzi scheme. Even if all of those beliefs above were true, it still wouldn't be a Ponzi scheme. As someone else posted in here, Ponzi Scheme has a fairly specific definition which "Gold" doesn't meet.
  - wc- 9y ago
    [Cryptocurrency] isn't a "Ponzi scheme". Even if you believe that investing in [Cryptocurrency] makes no sense, and it's a useless [tech] with no practical purposes, and it's a bubble waiting to burst and so on, that still doesn't make it a Ponzi scheme. Even if all of those beliefs above were true, it still wouldn't be a Ponzi scheme. As someone else posted in here, Ponzi Scheme has a fairly specific definition which "[Cryptocurrency]" doesn't meet.
  - libertine 9y ago
    Gold has a lot of practical uses.
- ShabbosGoy 9y ago
  Ether is more like oil - it is a fuel source used to power smart contracts, token sales, and autonomous organizations.
  - ailideex 9y ago
    This analogy is not accurate.
    - joshschreuder 9y ago
      What analogy would you use?
      - DennisP 9y ago
        It's the money you spend at the gas station to buy your fuel. The fuel is burned, the money is not.
    - nathan_f77 9y ago
      "gas" is actually a common term used in the Ethereum community. [1] [2] [1] https://ethereum.stackexchange.com/questions/3/what-is-meant-by-the-term-gas https://ethereum.stackexchange.com/questions/3/what-is-meant... [2] https://www.ethereum.org/token https://www.ethereum.org/token
      - DennisP 9y ago
        Yes but ETH and gas are not the same thing. You use ETH to buy your gas. The gas is burned up in use. ETH is paid to the miners, who can use it to pay their expenses.
  - peculiar 9y ago
    Ether is not like oil at all. You only somewhat need ETH. Nothing stops you from using ETC. Or starting your own fork (either private or public). Your contracts will work there just fine. On the other hand, it is not likely you can deploy some magic oil machine in your closet with almost 0 investments and start producing $5c / barrel oil.
lettergram 9y ago
To be fair, Ethereum looks like a scheme of some kind (not Ponzi necessarily). The vast majority of the ether is controlled by a single company, which is literally just selling it for money. ... I get the other advantages to Ethereum, but it's not Bitcoin where there is actually a distributed number of people managing it.
- Jabanga 9y ago
  >The vast majority of the ether is controlled by a single company, Are you sure you're talking about Ethereum, and not Ripple? The vast majority of ether is not controlled by one company.
- RexetBlell 9y ago
  What makes you think that the majority of ETH is controlled by a single company? What company is this? Do you have a source for this?
  - DennisP 9y ago
    Some people get that impression because the majority of ETH was premined. What they miss is that most of that was sold to the general public in the presale. Only 12% of it was not; half of that went to team members (some now sold) and the other half to the nonprofit foundation which is continuing development of the protocol.
empath75 9y ago
I've said this in other threads, but ethereum isn't a Ponzi scheme, it's a platform for Ponzi schemes.
sammyo 9y ago
In many cases crying "ponzi" is likely an exclamation of "something wrong here" which your comment gives several examples. But cash, check and other instruments all have something wrong. I'll suggest that the difference isn't that people know the details of how for example checks clear, few non-experts learn all the details, BUT virtually everyone knows where to go if there is a problem (bank branch). Most non-experts at this point in crypto currency would have no idea where to even go to investigate a problem.
- chrisco255 9y ago
  It may be true today but the banking system has matured to that point over hundreds of years. There have been many instances of runs on the bank, run away inflation, worthless paper currencies like the Continental in the history of cash.
the_cat_kittles 9y ago
they resemble ponzi schemes in that you get in early and benefit as more people adopt it. further, like all fiat currency, there is no "underlying" value, so your success depends entirely on how many other people adopt it. so, to me, it does resemble a ponzi scheme. my guess is that you take issue with the connotation of that word, implying its a scam. i dont think it is, but i do think it resembles a ponzi scheme.
- ThrustVectoring 9y ago
  Fiat currencies have underlying value. If you want to operate a steel mill in the US without getting arrested, you need to procure a certain quantity of US Dollars and remit it to the IRS. No, you can't pay your taxes with bitcoins. It has to be dollars. That's why the US Dollar has inherent value - you can redeem them for the right to operate a business in the US.
  - logfromblammo 9y ago
    The exercise of a right cannot be taxed. You can redeem them for the privilege of operating a legally distinct incorporated business entity in the US. At a strictly technical level, I believe it may still be possible to live your life entirely lawfully, without being taxed, but the amount of legal analysis necessary to work out exactly how that may be accomplished is beyond me. It's far easier to just earn enough dollars, and then pay up. (Note that relying on Supreme Court opinions will not get you to anywhere you might want to be if the IRS decides you need to pay them.)
    - ThrustVectoring 9y ago
      What? Of course exercises of legal rights can be taxed. Taxing natural rights is problematic, of course, but the legal rights granted to you - like operating a steel mill, or enforcing the ownership rights to your home for you, or operating a motor vehicle - are completely taxable.
      - logfromblammo 9y ago
calafrax 9y ago
AFAIK the definition of a Ponzi scheme is a fake investment where no actual investment in productive activities takes place and all profits are paid out from increasing intakes. Bitcoin matches this definition exactly since pumping up the currency is not connected to any real world productive activity. Ethereum has some theoretical practical uses but most of the ICO nonsense is pure Ponzi. Defining a Ponzi can be difficult because in order for something to truly be a Ponzi scheme it must be engaged in with fraudulent intent. Really stupid people who "invest" in really stupid things and waste their money on useless stupid activity don't count as a Ponzi because they don't have fraudulent intent. They are just really stupid. Whatever participants in digital currencies are not in the first category are in the second category so it isn't much to be excited about.
- ericb 9y ago
  >AFAIK the definition of a Ponzi scheme is a fake investment where no actual investment in productive activities takes place and all profits are paid out from increasing intakes. The way to tell your understanding is wrong is that it would describe every currency, and every possible asset (land, valuables, etc).
- SippinLean 9y ago
  Well you have a poor understanding of the definition of a Ponzi scheme. ICOs do not make any promise of a return on investment or paid dividends, the way a Ponzi operator would. Coin makers do not use the income from new investors to pay dividends to older investors, the way a Ponzi operator would. You are buying the currency, once you receive it the contract with the coin's creators is fulfilled, you are not an investor, you do not own any shares of any company. It is a one-way transaction. Perhaps you meant pyramid scheme, of which ICOs are also not an example.
libertine 9y ago
I've asked this for quite some time and still no one was able to answer. If the power has shifted to an elite who controls the great majority of the currency, and has the power to withdraw/dump coins (basicaly influencing the supply side of the market, and control the value) - I'm pretty sure there are people/organizations who invested into such positions - and have the power to simulate value and draw people into this gold rush... Where is the line drawn between this and a scam/fraud? Is it when the control party withdraws all the value from it and dumps it? For as long as everything is being valued in a positive way, everything is fine?

RexetBlell 9y ago

They are as much a Ponzi scheme as gold (which has almost no practical use) and ugly paintings that cost millions http://www.therichest.com/luxury/most-expensive/10-ugly-pieces-of-art-you-wont-believe-sold-for-millions/ http://www.therichest.com/luxury/most-expensive/10-ugly-piec... If expensive ugly paintings are not a Ponzi scheme, then cryptocurrencies are not a Ponzi scheme.

BoiledCabbage 9y ago
Gold isn't a "Ponzi scheme". Even if you believe that investing in gold makes no sense, and it's a useless metal with no practical purposes, and it's a bubble waiting to burst and so on, that still doesn't make it a Ponzi scheme. Even if all of those beliefs above were true, it still wouldn't be a Ponzi scheme. As someone else posted in here, Ponzi Scheme has a fairly specific definition which "Gold" doesn't meet.
- wc- 9y ago
  [Cryptocurrency] isn't a "Ponzi scheme". Even if you believe that investing in [Cryptocurrency] makes no sense, and it's a useless [tech] with no practical purposes, and it's a bubble waiting to burst and so on, that still doesn't make it a Ponzi scheme. Even if all of those beliefs above were true, it still wouldn't be a Ponzi scheme. As someone else posted in here, Ponzi Scheme has a fairly specific definition which "[Cryptocurrency]" doesn't meet.
- libertine 9y ago
  Gold has a lot of practical uses.
ShabbosGoy 9y ago
Ether is more like oil - it is a fuel source used to power smart contracts, token sales, and autonomous organizations.
- ailideex 9y ago
  This analogy is not accurate.
  - joshschreuder 9y ago
    What analogy would you use?
    - DennisP 9y ago
      It's the money you spend at the gas station to buy your fuel. The fuel is burned, the money is not.
  - nathan_f77 9y ago
    "gas" is actually a common term used in the Ethereum community. [1] [2] [1] https://ethereum.stackexchange.com/questions/3/what-is-meant-by-the-term-gas https://ethereum.stackexchange.com/questions/3/what-is-meant... [2] https://www.ethereum.org/token https://www.ethereum.org/token
    - DennisP 9y ago
      Yes but ETH and gas are not the same thing. You use ETH to buy your gas. The gas is burned up in use. ETH is paid to the miners, who can use it to pay their expenses.
- peculiar 9y ago
  Ether is not like oil at all. You only somewhat need ETH. Nothing stops you from using ETC. Or starting your own fork (either private or public). Your contracts will work there just fine. On the other hand, it is not likely you can deploy some magic oil machine in your closet with almost 0 investments and start producing $5c / barrel oil.

lettergram 9y ago

To be fair, Ethereum looks like a scheme of some kind (not Ponzi necessarily). The vast majority of the ether is controlled by a single company, which is literally just selling it for money. ... I get the other advantages to Ethereum, but it's not Bitcoin where there is actually a distributed number of people managing it.

Jabanga 9y ago
>The vast majority of the ether is controlled by a single company, Are you sure you're talking about Ethereum, and not Ripple? The vast majority of ether is not controlled by one company.
RexetBlell 9y ago
What makes you think that the majority of ETH is controlled by a single company? What company is this? Do you have a source for this?
- DennisP 9y ago
  Some people get that impression because the majority of ETH was premined. What they miss is that most of that was sold to the general public in the presale. Only 12% of it was not; half of that went to team members (some now sold) and the other half to the nonprofit foundation which is continuing development of the protocol.

empath75 9y ago

I've said this in other threads, but ethereum isn't a Ponzi scheme, it's a platform for Ponzi schemes.

sammyo 9y ago

In many cases crying "ponzi" is likely an exclamation of "something wrong here" which your comment gives several examples. But cash, check and other instruments all have something wrong. I'll suggest that the difference isn't that people know the details of how for example checks clear, few non-experts learn all the details, BUT virtually everyone knows where to go if there is a problem (bank branch). Most non-experts at this point in crypto currency would have no idea where to even go to investigate a problem.

chrisco255 9y ago
It may be true today but the banking system has matured to that point over hundreds of years. There have been many instances of runs on the bank, run away inflation, worthless paper currencies like the Continental in the history of cash.

the_cat_kittles 9y ago

they resemble ponzi schemes in that you get in early and benefit as more people adopt it. further, like all fiat currency, there is no "underlying" value, so your success depends entirely on how many other people adopt it. so, to me, it does resemble a ponzi scheme. my guess is that you take issue with the connotation of that word, implying its a scam. i dont think it is, but i do think it resembles a ponzi scheme.

ThrustVectoring 9y ago
Fiat currencies have underlying value. If you want to operate a steel mill in the US without getting arrested, you need to procure a certain quantity of US Dollars and remit it to the IRS. No, you can't pay your taxes with bitcoins. It has to be dollars. That's why the US Dollar has inherent value - you can redeem them for the right to operate a business in the US.
- logfromblammo 9y ago
  The exercise of a right cannot be taxed. You can redeem them for the privilege of operating a legally distinct incorporated business entity in the US. At a strictly technical level, I believe it may still be possible to live your life entirely lawfully, without being taxed, but the amount of legal analysis necessary to work out exactly how that may be accomplished is beyond me. It's far easier to just earn enough dollars, and then pay up. (Note that relying on Supreme Court opinions will not get you to anywhere you might want to be if the IRS decides you need to pay them.)
  - ThrustVectoring 9y ago
    What? Of course exercises of legal rights can be taxed. Taxing natural rights is problematic, of course, but the legal rights granted to you - like operating a steel mill, or enforcing the ownership rights to your home for you, or operating a motor vehicle - are completely taxable.
    - logfromblammo 9y ago

calafrax 9y ago

AFAIK the definition of a Ponzi scheme is a fake investment where no actual investment in productive activities takes place and all profits are paid out from increasing intakes. Bitcoin matches this definition exactly since pumping up the currency is not connected to any real world productive activity. Ethereum has some theoretical practical uses but most of the ICO nonsense is pure Ponzi. Defining a Ponzi can be difficult because in order for something to truly be a Ponzi scheme it must be engaged in with fraudulent intent. Really stupid people who "invest" in really stupid things and waste their money on useless stupid activity don't count as a Ponzi because they don't have fraudulent intent. They are just really stupid. Whatever participants in digital currencies are not in the first category are in the second category so it isn't much to be excited about.

ericb 9y ago
>AFAIK the definition of a Ponzi scheme is a fake investment where no actual investment in productive activities takes place and all profits are paid out from increasing intakes. The way to tell your understanding is wrong is that it would describe every currency, and every possible asset (land, valuables, etc).
SippinLean 9y ago
Well you have a poor understanding of the definition of a Ponzi scheme. ICOs do not make any promise of a return on investment or paid dividends, the way a Ponzi operator would. Coin makers do not use the income from new investors to pay dividends to older investors, the way a Ponzi operator would. You are buying the currency, once you receive it the contract with the coin's creators is fulfilled, you are not an investor, you do not own any shares of any company. It is a one-way transaction. Perhaps you meant pyramid scheme, of which ICOs are also not an example.

libertine 9y ago

I've asked this for quite some time and still no one was able to answer. If the power has shifted to an elite who controls the great majority of the currency, and has the power to withdraw/dump coins (basicaly influencing the supply side of the market, and control the value) - I'm pretty sure there are people/organizations who invested into such positions - and have the power to simulate value and draw people into this gold rush... Where is the line drawn between this and a scam/fraud? Is it when the control party withdraws all the value from it and dumps it? For as long as everything is being valued in a positive way, everything is fine?