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It is a bit of a fraud to claim bitcoin can ever replace fiat currencies, though. Its deflationary, has a fixed coin limit, is incredibly centralized, and its t
by zanny 9y ago
It is a bit of a fraud to claim bitcoin can ever replace fiat currencies, though. Its deflationary, has a fixed coin limit, is incredibly centralized, and its tx rate is awful and costs a ton to move any of it around the chain.
The only value in bitcoin is in how much it exchanges for at this point, and that is definitionally a pyramid scheme, because current buy-ins need more adoption to drive the price up so they profit off their investment.
3% of all addresses control 97% of all coins. 0.01% of all addresses control 21% of all coins. And bitcoins mint rate is slowing every four years and almost 80% of all bitcoin that will ever exist already exists.
Its absolutely a pyramid scheme. Early adopters were incentivized with large quantities of limited coins to persuade them to mine and participate when the value was low. Those really early wallets (circa 09-12) amassed over half of all bitcoin ever and are now worth extreme fortunes. Those fortunes are based on demand for BTC, demand for the tiny amounts actually left circulating.
The real question is how much of that old money is actually dead - lost wallets and lost passwords - and how much is just waiting to cash out for absolute fortunes. All it would take is one early wallet carrying thousands of BTC to liquidate to cause a panic.
- SippinLean 9y agoWhat you said still falls quite short of a literal pyramid scheme, which has a pretty specific definition. There is no central organization to recruit new members. People that buy bitcoin receive a real, usable product. Every person holding bitcoin profits when the price goes up. This is all in stark contrast to a true pyramid. The way specific ICOs are structured, I could see an argument for some kind of pyramid; but "bitcoin is a pyramid scheme" is easily proved false.
- mywittyname 9y agoWell, there are two components to a pyramid scheme: 1. returns to early investors are generated by contributions from new investors. 2. Each new investor attempts to recruit two or more new investors. The "profits" for existing investors are paid with money from new investors. So it checks the first requirement to be a pyramid scheme. Now, this isn't explicit, but people still understand that the more BTC investors, the higher the price. And BTC investors go online and evangelize. They talk about how BTC is a full-proof investment that can only go up-up-UP. Even this thread is full of them. So that checks the second requirement to be a pyramid scheme.
- SippinLean 9y agoThere are many more components to a pyramid scheme, you've purposefully left out the ones that clearly don't apply to bitcoin and gone with a definition that is too broad to fit. Further, your first component leaves out the necessity of a purposefully fraudulent bad actor to redistribute the new investors' "investments" to old investors, instead of investing them. This is clearly impossible with a distributed ledger. Returns (and losses) to all investors, new or old, are equally distributed. Your second part is clearly much too broad, in a pyramid scheme new members are promised a share of the money taken from every additional member that they recruit. Simply saying "hey, this could be a good investment" doesn't make something a pyramid scheme, unless Apple is a pyramid because my financial advisor told me and one more client to buy shares of it.
- mywittyname 9y agoActually, I looked up the literal definition of a pyramid scheme before posting, to ensure I hit all the points. > Returns (and losses) to all investors, new or old, are equally distributed. No, old investors can profit while new investors lose money. Or, the new investors paid the old ones. Original BTC investors got them for free, the next generation paid pennies for them, the next paid dollars, then hundreds, and the current generation is paying thousands each. So should the price collapse, the old generation still stands to make massive profits, at the expense of current investors. > Simply saying "hey, this could be a good investment" doesn't make something a pyramid scheme, unless Apple is a pyramid because my financial advisor told me and one more client to buy shares of it. Apple earns a profit, of which a share is provided to owners. That's why it's a good investment. BTC is a purely speculative investment and literally the only way to earn a profit is to get someone else to buy it for more than you paid. It will never pay you a dividend, it will never generate any revenue.
- SippinLean 9y agoWhy were you throwing the term around before you knew what it was? Again, you left out MANY aspects of pyramid schemes--the ones hardest to twist into fitting bitcoin. And you glossed right over this: the necessity of a purposefully fraudulent bad actor to redistribute the new investors' "investments" to old investors. >So should the price collapse, the old generation still stands to make massive profits, at the expense of current investors. Nope, the old generation suffers the same losses as the new if the price crashes. A pyramid scheme is just that, a scheme with a central organization controlling the flow of income. That is impossible with a distributed ledger. The last part of your answer is a rant about Apple vs Bitcoin, I think you missed my only point: in a pyramid scheme new members are promised a share of the money taken from every additional member that they recruit. "Evangelizing" by itself is not proof of a pyramid scheme. I suggest you continue to look it up and learn what a pyramid scheme is. It's different than speculation, it is different than a Ponzi scheme.
- mrhappyunhappy 9y agoBitcoin is highly divisible so I think your point regarding it being fixed is unjustified.