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The stock trading value of gold is a pyramid scheme, of course. Gold, the metal, is not. Since bitcoin is just the currency, it has no intrinsic value besides

by zanny 9y ago

The stock trading value of gold is a pyramid scheme, of course. Gold, the metal, is not. Since bitcoin is just the currency, it has no intrinsic value besides its pyramid scheme. Fiat money isn't a pyramid scheme. You don't buy in on the assumption of future market growth that will drive up the value of what you have. You expect your fiat to become worth less, not more, over time. And Bitcoin is more "pyramidy" than other things because of how its coin creation algorithm worked. It halves every four years, so 16.5m of 21m bitcoin total ever to be made already exist. Early adopters got huge sums of cheap coin, while later entrants find the coin creation rates are slower and the price is magnitudes higher. Nothing precludes us having "breakout" means to increase the total market supply of things thought scarce right now. We could discover a way to synthesize gold cheaply that crashes the market, or we find space mining is a really lucrative source of gold. Suddenly the world gold supply gets a lot larger, and the price drops a lot in response. Bitcoin would require a major breaking and forking change to the algorithm to change the coin payout algorithm. And that kind of change hurts the people who have the bitcoin now, whose voice is what determines the canonical blockchain. They would never accept it unless the pyramid behavior of the current algorithm crashes the bitcoin economy.

pantaril 9y ago
>Fiat money isn't a pyramid scheme. You don't buy in on the assumption of future market growth that will drive up the value of what you have. You expect your fiat to become worth less, not more, over time. Wow, so if bitcoin is or isn't pyramid scheme depends on your assumption when you buy it? That's a new one. Than i guess I'm safe because i bought it to buy goods with it, never expected that price will soar so much.
- zanny 9y ago
  You buy goods with bitcoin by converting it to usd. Nothing is priced (at least for extended lengths of time) in bitcoin, because of the price voltaility, because of the pyramid scheme. And yes, your perception of the value of something does influence whether or not it is a pyramid scheme. If you buy 10,000 scented soaps because you want a ton of scented soap that isn't a pyramid scheme. If you buy 10,000 scented soaps thinking you can find 1,000 people to buy them off you at more than you paid for them, then you are dealing with a pyramid scheme. Fundamentally, the price growth most bitcoin users (you would be in the minority) want depends on a definitional pyramid scheme of attracting new money to drive up the price of bitcoin. It isn't even debatable - the coin minting model of btc that declines over time directly maps to how to run a pyramid scheme on it, where early adopters get the most return. Most IPOs are pyramid schemes. The stock traded price of gold is a pyramid scheme. Any system where you participate on the assumption of scarcity going up, and thus your piece becoming more valuable on the backs of new entrants to the market is a pyramid scheme.
  - TheSpiceIsLife 9y ago
    > If you buy 10,000 scented soaps thinking you can find 1,000 people to buy them off you at more than you paid for them, then you are dealing with a pyramid scheme. I'd argue that is run-of-the-mill wholesale / retail sales. Expecting to make a profit doesn't cause a thing to be a pyramid scheme.
    - zanny 9y ago
      There is a distinction between pyramid schemes and ponzie / multi-level marketing schemes. Pyramid schemes aren't implicitly bad - they just mean the last "ladder rung" of the pyramid will lose on the promise of the scheme while anyone who got in before the last profit. You expect to make a profit on the foundational principles of pyramid schemes. Someone will eventually, inevitably, have to not make a profit because the market of bitcoin will be fully saturated. At which point the value of bitcoin has to be reconsidered - it no longer would be poised to grow through increasing scarcity, so it would need to derive value through other measures. Whether that happens in a year or a century is the gamble.

by zanny 9y ago

pantaril 9y ago

>Fiat money isn't a pyramid scheme. You don't buy in on the assumption of future market growth that will drive up the value of what you have. You expect your fiat to become worth less, not more, over time. Wow, so if bitcoin is or isn't pyramid scheme depends on your assumption when you buy it? That's a new one. Than i guess I'm safe because i bought it to buy goods with it, never expected that price will soar so much.

zanny 9y ago
You buy goods with bitcoin by converting it to usd. Nothing is priced (at least for extended lengths of time) in bitcoin, because of the price voltaility, because of the pyramid scheme. And yes, your perception of the value of something does influence whether or not it is a pyramid scheme. If you buy 10,000 scented soaps because you want a ton of scented soap that isn't a pyramid scheme. If you buy 10,000 scented soaps thinking you can find 1,000 people to buy them off you at more than you paid for them, then you are dealing with a pyramid scheme. Fundamentally, the price growth most bitcoin users (you would be in the minority) want depends on a definitional pyramid scheme of attracting new money to drive up the price of bitcoin. It isn't even debatable - the coin minting model of btc that declines over time directly maps to how to run a pyramid scheme on it, where early adopters get the most return. Most IPOs are pyramid schemes. The stock traded price of gold is a pyramid scheme. Any system where you participate on the assumption of scarcity going up, and thus your piece becoming more valuable on the backs of new entrants to the market is a pyramid scheme.
- TheSpiceIsLife 9y ago
  > If you buy 10,000 scented soaps thinking you can find 1,000 people to buy them off you at more than you paid for them, then you are dealing with a pyramid scheme. I'd argue that is run-of-the-mill wholesale / retail sales. Expecting to make a profit doesn't cause a thing to be a pyramid scheme.
  - zanny 9y ago
    There is a distinction between pyramid schemes and ponzie / multi-level marketing schemes. Pyramid schemes aren't implicitly bad - they just mean the last "ladder rung" of the pyramid will lose on the promise of the scheme while anyone who got in before the last profit. You expect to make a profit on the foundational principles of pyramid schemes. Someone will eventually, inevitably, have to not make a profit because the market of bitcoin will be fully saturated. At which point the value of bitcoin has to be reconsidered - it no longer would be poised to grow through increasing scarcity, so it would need to derive value through other measures. Whether that happens in a year or a century is the gamble.