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Bitcoin is a ponzy scheme at the moment, but the block chain and the eCurrencies is the perfect platform for a Universal Income experiment. All we need is a wa

Bitcoin is a ponzy scheme at the moment, but the block chain and the eCurrencies is the perfect platform for a Universal Income experiment. All we need is a way so that the “coins” do not go to the one with the most computing power, or the one who got in first, but distributed equally among the population.

gizmo686 9y ago
Ponzy scheme has a technical meaning, and Bitcoin is not it. Bubble is the word you are looking for. >but distributed equally among the population. I am aware of no blockchain based technology that offers a solution to this problem. Central to the problem that blockchains are intended to solve is that there is no good way of identifying individuals. That is to say, there is nothing to stop me from opening a million accounts in the system and acting as if I was a million different people. The insight behind POW style blockchains is that it does not matter if I claim to be a million people, because that would not give me any more compute power, and so will not allow for an attack on the system. If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems.
- konschubert 9y ago
  > If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems. I've been thinking about this in the past weeks because I find the energy consumption hard to justify. Proof of individuality still would allow people of power to use an army of identity soldiers... but the same people can buy hash rate today, so that would not be a regression.
  - j1vms 9y ago
    > Proof of individuality still would allow people of power to use an army of identity soldiers (...) Which would point toward some form of Proof of (Human Free Will + Random Selection) being the "ideal" mining scheme (at least theoretically). And all other schemes, being practical attempts to approach that as much as possible.
  - gitgud 9y ago
    It could also provide people in power with a reason to control or enslave other individuals to acquire control of the network.
    - konschubert 9y ago
      At the risk of sounding like a teenager: How different is that from powerful people controlling or enslaving individuals to make money which they can then use to acquire control over the network?
- konschubert 9y ago
  > If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems. I wonder how this would work. Let's assume there was a database of public keys for every citizen of the world, and every citizen knew their private key - how could we use that? Could we assign the right to mine the next block according to some deterministic pseudo-random algorithm that selects the next public key from the previous one? I guess that could work, though it would reqire some timeout in case someone is not interested in mining. The next question, how do we define some sort of public-private key pair in a way so a natural person can only create a single public key and can keep their private key secret?
- tptacek 9y ago
  First, it's "Ponzi scheme", not "Ponzy scheme". Second, if you look, I think you'll find that Bitcoin shares a lot of attributes with Ponzi schemes; you could say that it's a Ponzi whose innovation is to be globally distributed on the Internet. Specifically: * Returns to Bitcoin investors are funded by successive waves of future investors; Bitcoin's value will collapse without a steady supply of them. * A significant part of the capitalization of Bitcoin is owned by "hodlers" who accumulate "paper" earnings that don't demand any real-world reckoning. * It's structurally difficult to withdraw funds --- particularly large amounts of funds --- from the Bitcoin network; see, for instance, Tim Bray's experience. * The whole phenomenon is backed by a core group that includes significant "early" or "founder" allocations. Part of the problem with trying to pull apart "Ponzi schemes" and "bubbles" is that many (but not all) previous bubbles were fueled in part by a series of Ponzi schemes; for instance, during the first bubble, IPOs for companies that could not possibly have succeeded under any circumstances, or, during the housing bubble, AAA-rated securities for bundles of distressed mortgages.
  - tlrobinson 9y ago
    Ponzi schemes involve fraud by an operator secretly paying out existing investors with new investors' money. Unless exchanges are artificially inflating the price and running fractional reserves then Bitcoin is not a Ponzi scheme.
    - noncoml 9y ago
      That's not necessary. From wikipedia: "A Ponzi scheme (/ˈpɒn.zi/; also a Ponzi game)[1] is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading." Bitcoin's only real value is that of the chance of being adopted as currency. For it to become a currency people have to start buying bitcoins, as it is the only realistic way get hold of them. So the only way to make value for the current holders(older invenstors) is more people buying into it(revenue paid by new investors)
      - 9y ago
konschubert 9y ago
How do you identify a natural person? Because you'd need to do that to replace the proof of work and assign coins to natural persons. Bitcoin doesn't identify natural persons, it just knows public keys. There might be thousands of them belonging to the same entity.
- sowbug 9y ago
  Allocating among real humans in a distributed, privacy-preserving way would be an even bigger technical innovation than the blockchain.
  - konschubert 9y ago
    It would solve identity theft almost as a corollary.
- beebmam 9y ago
  Ironically, if you want to exchange any significant amount of money for bitcoins online, you need to identify yourself by providing both your ID and a selfie to the exchange.
  - nkkollaw 9y ago
    I never got the exact reason. Scams..? Most retailers don't do it.
    - x3n0ph3n3 9y ago
      FinCEN & Know Your Customer regulations
      - nkkollaw 9y ago
        Got it. Thanks.
partiallypro 9y ago
Bitcoin isn't a Ponzi Scheme, but there are some Ponzi Schemes built around it...the big one being Bitfinex and their worthless Tether currency. And if/when those schemes collapse they could greatly destroy the (market) value of Bitcoin.
- avenoir 9y ago
  Don't forget about BitConnect.
- goldenkey 9y ago
  Bitcoin is a ponzi because current market conditions are hiding the huge amount of potential volatility rested in convertable worthless currencies like Tether AND the gigantic number of "turtled" speculators. By definition, Bitcoin can't provide value without future buyers. With securities, there are dividends and settlements - or the "potential for future dividends." Bitcoins true value might be close to $500 once these hidden potential sellers emerge and transact. The current back and forth market activity does not illuminate the true supply and demand. In fact because the exchanges are unregulated, the market activity is highly manipulated. So even just thinking it's worth a lot because its going up, is falling for a Ponzi. The reason it's going up is precisely because of the greedy pouncers waiting in the grass. When they decide to act it will be equivalent to a bank run. Then we will see the true supply and demand curves. Until then, the charts are as if Madoff is supplying them...

gizmo686 9y ago

Ponzy scheme has a technical meaning, and Bitcoin is not it. Bubble is the word you are looking for. >but distributed equally among the population. I am aware of no blockchain based technology that offers a solution to this problem. Central to the problem that blockchains are intended to solve is that there is no good way of identifying individuals. That is to say, there is nothing to stop me from opening a million accounts in the system and acting as if I was a million different people. The insight behind POW style blockchains is that it does not matter if I claim to be a million people, because that would not give me any more compute power, and so will not allow for an attack on the system. If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems.

konschubert 9y ago
> If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems. I've been thinking about this in the past weeks because I find the energy consumption hard to justify. Proof of individuality still would allow people of power to use an army of identity soldiers... but the same people can buy hash rate today, so that would not be a regression.
- j1vms 9y ago
  > Proof of individuality still would allow people of power to use an army of identity soldiers (...) Which would point toward some form of Proof of (Human Free Will + Random Selection) being the "ideal" mining scheme (at least theoretically). And all other schemes, being practical attempts to approach that as much as possible.
- gitgud 9y ago
  It could also provide people in power with a reason to control or enslave other individuals to acquire control of the network.
  - konschubert 9y ago
    At the risk of sounding like a teenager: How different is that from powerful people controlling or enslaving individuals to make money which they can then use to acquire control over the network?
konschubert 9y ago
> If we could come up with a way of providing some sort of proof of individuality we would solve alot of problems. I wonder how this would work. Let's assume there was a database of public keys for every citizen of the world, and every citizen knew their private key - how could we use that? Could we assign the right to mine the next block according to some deterministic pseudo-random algorithm that selects the next public key from the previous one? I guess that could work, though it would reqire some timeout in case someone is not interested in mining. The next question, how do we define some sort of public-private key pair in a way so a natural person can only create a single public key and can keep their private key secret?
tptacek 9y ago
First, it's "Ponzi scheme", not "Ponzy scheme". Second, if you look, I think you'll find that Bitcoin shares a lot of attributes with Ponzi schemes; you could say that it's a Ponzi whose innovation is to be globally distributed on the Internet. Specifically: * Returns to Bitcoin investors are funded by successive waves of future investors; Bitcoin's value will collapse without a steady supply of them. * A significant part of the capitalization of Bitcoin is owned by "hodlers" who accumulate "paper" earnings that don't demand any real-world reckoning. * It's structurally difficult to withdraw funds --- particularly large amounts of funds --- from the Bitcoin network; see, for instance, Tim Bray's experience. * The whole phenomenon is backed by a core group that includes significant "early" or "founder" allocations. Part of the problem with trying to pull apart "Ponzi schemes" and "bubbles" is that many (but not all) previous bubbles were fueled in part by a series of Ponzi schemes; for instance, during the first bubble, IPOs for companies that could not possibly have succeeded under any circumstances, or, during the housing bubble, AAA-rated securities for bundles of distressed mortgages.
- tlrobinson 9y ago
  Ponzi schemes involve fraud by an operator secretly paying out existing investors with new investors' money. Unless exchanges are artificially inflating the price and running fractional reserves then Bitcoin is not a Ponzi scheme.
  - noncoml 9y ago
    That's not necessary. From wikipedia: "A Ponzi scheme (/ˈpɒn.zi/; also a Ponzi game)[1] is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading." Bitcoin's only real value is that of the chance of being adopted as currency. For it to become a currency people have to start buying bitcoins, as it is the only realistic way get hold of them. So the only way to make value for the current holders(older invenstors) is more people buying into it(revenue paid by new investors)
    - 9y ago

konschubert 9y ago

How do you identify a natural person? Because you'd need to do that to replace the proof of work and assign coins to natural persons. Bitcoin doesn't identify natural persons, it just knows public keys. There might be thousands of them belonging to the same entity.

sowbug 9y ago
Allocating among real humans in a distributed, privacy-preserving way would be an even bigger technical innovation than the blockchain.
- konschubert 9y ago
  It would solve identity theft almost as a corollary.
beebmam 9y ago
Ironically, if you want to exchange any significant amount of money for bitcoins online, you need to identify yourself by providing both your ID and a selfie to the exchange.
- nkkollaw 9y ago
  I never got the exact reason. Scams..? Most retailers don't do it.
  - x3n0ph3n3 9y ago
    FinCEN & Know Your Customer regulations
    - nkkollaw 9y ago
      Got it. Thanks.

partiallypro 9y ago

Bitcoin isn't a Ponzi Scheme, but there are some Ponzi Schemes built around it...the big one being Bitfinex and their worthless Tether currency. And if/when those schemes collapse they could greatly destroy the (market) value of Bitcoin.

avenoir 9y ago
Don't forget about BitConnect.
goldenkey 9y ago
Bitcoin is a ponzi because current market conditions are hiding the huge amount of potential volatility rested in convertable worthless currencies like Tether AND the gigantic number of "turtled" speculators. By definition, Bitcoin can't provide value without future buyers. With securities, there are dividends and settlements - or the "potential for future dividends." Bitcoins true value might be close to $500 once these hidden potential sellers emerge and transact. The current back and forth market activity does not illuminate the true supply and demand. In fact because the exchanges are unregulated, the market activity is highly manipulated. So even just thinking it's worth a lot because its going up, is falling for a Ponzi. The reason it's going up is precisely because of the greedy pouncers waiting in the grass. When they decide to act it will be equivalent to a bank run. Then we will see the true supply and demand curves. Until then, the charts are as if Madoff is supplying them...