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Absolutely, I wish people would call it out as a Ponzi scheme more. A good example is if ETH or some other ccy takes off and BTC withers. What is a BTC worth?

• dallashoxton 9y ago
  >Given that the original owners make the money from new entrants - that is the definition of a pyramid scheme. By that criteria, any company that undergoes an IPO is also a pyramid scheme.
  • rb808 9y ago
    A company has real assets, and profits that can be distributed to owners. Crypto currencies have neither.
    • dallashoxton 9y ago
      Yes, but what defines a pyramid scheme is its unsustainability from a mathematical standpoint, not necessarily the fact that original owners and early adopters make money off of new investors. I think the latter property is present in almost all financial markets -- the "smart money" phenomenon. I agree that the entire cryptocurrency market is in a bit of a bubble, but to write it all off as a pyramid scheme seems a bit of stretch to me. edit: also, "pyramid scheme" to me is a very loaded term with a specific legal meaning to it as it applies to one single entity, i.e. the person or company operating at the "top" of the pyramid. There isn't really such an entity at the top of the entire cryptocurrency market, so I think it's much more apt to call it an asset or asset class bubble rather than toss around such contentious terms.
• Joeboy 9y ago
  I'm OK with pseudo-Ponzi scheme, but if you just call it a Ponzi scheme them people will assume you just haven't understood the tech. The tech is novel and interesting and even somewhat useful.
• dlwdlw 9y ago
  A Ponzi scheme can provide necessary initial energy though. Many social networks for example gained initial energy by being something entirely different before pivoting. With cryptocurrencies this is driven by excess trust for the leaders in the space and for each coin. Probably driven a lot by "technology eating the world" and "young genius" mythologies. Anything that is grown organically rather than designed top down (like USD) needs some sort of bootstrapped energy source to amass energy/capital for maneuvers. The USD uses proof of military power to arbitrarily generate capital but many altcoins only stake the reputation of their creators which many people would willingly give up for millions. So while ponzi schemes definitely have their downsides due to lack of sufficient proof of stake, the structure is very similar to many organic methods of amassing energy. Startup funding is similar though safer because there is supposed vetting by smart people (angels/VCs) So I actually think that ponzi structures are rather important as an organic energy source. However they need to be vetted by asking questions look like "what are you going to do with this energy?" and "what is your proof if stake?" What strikes be about altcoins is that it's unclear how the energy will be used. It reminds me of throwing money at the TSA for ridiculous theater because too many people think throwing money at problems solves them. (an extension of military minded brute force IMO) Once the technical fundamentals start becoming solid I'd place a bet on the coin that has the strongest marketing as the increased mind share would directly increase the stability and trust in the coin. Btc/eth may be sacrificial lanbs like pets.com as this new space is explored. (or may be Amazon/Google, who knows. )
• hello_marmalade 9y ago
  I don't think you know what a Ponzi scheme is.