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Was the railroad bubble of the 1840's [1] a Ponzi scheme? Was the dot-com bubble of the late 1990's [2] a Ponzi scheme? Were the electricity, automobile, avia

by cs702 9y ago

Was the railroad bubble of the 1840's [1] a Ponzi scheme? Was the dot-com bubble of the late 1990's [2] a Ponzi scheme? Were the electricity, automobile, aviation, radio, and television bubbles of the "Roaring 20's" [3] Ponzi schemes? Just because something is in an asset-price bubble doesn't necessarily mean it's a Ponzi scheme. Yes, many if not most investors ultimately lost money in the electricity, automobile, aviation, radio, television, railroad, and dot-com bubbles, but those bubbles left behind an enormous amount of investment in infrastructure from which we are benefiting to this day.[4] [1] https://en.wikipedia.org/wiki/Railway_Mania https://en.wikipedia.org/wiki/Railway_Mania [2] https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble [3] https://en.wikipedia.org/wiki/Roaring_Twenties#Economy https://en.wikipedia.org/wiki/Roaring_Twenties#Economy [4] Buffett wrote a great article touching on this in 1999, at the peak of the dot-com bubble: http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm http://archive.fortune.com/magazines/fortune/fortune_archive...

Luc 9y ago
Could you have invested in any of those at the time without losing your shirt along the way? Possibly, maybe, with a lot of luck. Likewise, I don't doubt digital currencies will end up being bigger than they are today, I just don't see a way of investing in them at the moment that will survive the likely implosion of the bubble.
optimuspaul 9y ago
You are comparing cryptocurrencies to highly regulated securities markets. I don't think that is a fair comparison yet. From the average person cryptocurrencies look exactly like a Ponzi Scheme. People who got in early are most likely to make money. Many other could as well. But the majority will not and if a majority tried to get out we'd find that there is not enough liquidity in the market to back it. Maybe someday it will be fair to compare cryptocurrencies to securities, but for now it's is closer to junk bonds or a ponzi scheme. And I don't think a marketing and branding campaign is what it needs, it's structure and security.
- gruez 9y ago
  >You are comparing cryptocurrencies to highly regulated securities markets but SEC wasn't even founded til 1934, which makes that point only apply to the dotcom bubble.
NicoJuicy 9y ago
Also, if it's a ponzi scheme. Who's the guy on top? Sathoshi who hasn't used any money of it. If you're doing a Ponzi scheme, don't use a platform where you can track every transaction.
- optimuspaul 9y ago
  First off, we don't know that he/she hasn't used any of the money. We only know that this "person" hasn't used any of the coin we know to belong to them. We don't know how much other coin they have mined and subsequently spent. I don't think you at point to those first blocks as evidence it's not ponzi in nature. I don't think it is a ponzi scheme or at least I hope it's not. But I do think that it looks an awful lot like one.
  - rothbardrand 9y ago
    It can't be a ponzi scheme by definition, because you can see all the transactions. People aren't holding fake "bitcoin accounts" whose value is reported by a central controlling entity who is misrepresenting the value of the total system. "people bought early and profited" is not the definition of a ponzi scheme, or Picassos are a ponzi scheme as is anything where the value has gone up over time.
  - NicoJuicy 9y ago
    Perhaps you missed https://news.ycombinator.com/item?id=15299849 https://news.ycombinator.com/item?id=15299849

by cs702 9y ago

Luc 9y ago

Could you have invested in any of those at the time without losing your shirt along the way? Possibly, maybe, with a lot of luck. Likewise, I don't doubt digital currencies will end up being bigger than they are today, I just don't see a way of investing in them at the moment that will survive the likely implosion of the bubble.

optimuspaul 9y ago

You are comparing cryptocurrencies to highly regulated securities markets. I don't think that is a fair comparison yet. From the average person cryptocurrencies look exactly like a Ponzi Scheme. People who got in early are most likely to make money. Many other could as well. But the majority will not and if a majority tried to get out we'd find that there is not enough liquidity in the market to back it. Maybe someday it will be fair to compare cryptocurrencies to securities, but for now it's is closer to junk bonds or a ponzi scheme. And I don't think a marketing and branding campaign is what it needs, it's structure and security.

gruez 9y ago
>You are comparing cryptocurrencies to highly regulated securities markets but SEC wasn't even founded til 1934, which makes that point only apply to the dotcom bubble.

NicoJuicy 9y ago

Also, if it's a ponzi scheme. Who's the guy on top? Sathoshi who hasn't used any money of it. If you're doing a Ponzi scheme, don't use a platform where you can track every transaction.

optimuspaul 9y ago
First off, we don't know that he/she hasn't used any of the money. We only know that this "person" hasn't used any of the coin we know to belong to them. We don't know how much other coin they have mined and subsequently spent. I don't think you at point to those first blocks as evidence it's not ponzi in nature. I don't think it is a ponzi scheme or at least I hope it's not. But I do think that it looks an awful lot like one.
- rothbardrand 9y ago
  It can't be a ponzi scheme by definition, because you can see all the transactions. People aren't holding fake "bitcoin accounts" whose value is reported by a central controlling entity who is misrepresenting the value of the total system. "people bought early and profited" is not the definition of a ponzi scheme, or Picassos are a ponzi scheme as is anything where the value has gone up over time.
- NicoJuicy 9y ago
  Perhaps you missed https://news.ycombinator.com/item?id=15299849 https://news.ycombinator.com/item?id=15299849