15 ms·

India Says Bitcoin as Risky as Ponzi Schemes

49 points by elkali 9y ago

jstanley 9y ago
At least your Bitcoin isn't going to be yanked out from underneath you overnight by the government: For example, https://www.theguardian.com/world/2016/nov/08/india-withdraws-500-1000-rupee-notes-fight-corruption https://www.theguardian.com/world/2016/nov/08/india-withdraw...
- cynicaldevil 9y ago
  You're really twisting what happened here. It wasn't so much "yanked" as it was "replaced". I was initially against the idea, but soon got around to it. It was a very risky and daring move by the government, but it was a good one.
  - shbm 9y ago
    How do you even measure it. What's the metric. How do you classify it as good or bad. It was clearly short-sighted and the government even failed to account the size of the new currency notes and the inconvenience caused by it. All that was achieved was dip in the GDP and the loss of lives. Contrary to the popular belief that BTC purports money laundering, it can actually mitigate the problem of black money and money laundering. The governments all around the world should try to keep up and they should themselves establish a separate think tank/research arm/department for blockchain and cryptocurrency space.
- QAPereo 9y ago
  That same government is perfectly capable of throwing you into a deep dark hole until you comply with their demands or die of old age. I understand you have a particular ideological viewpoint, but that shouldn’t prevent you from understanding how the world actually works. There is no end run to your dream of how society should be, and pretending that there is simply divorces you from that reality. To be clear I’m not saying that things can’t change, but I am saying the change has to take place in reality and not your imagination.
- thevardanian 9y ago
  Not yet. You bet your ass that if Bitcoin gets large enough State actors will use coercion to regulate it, track it, tax it, and do what bureaucracies do best. Nothing escapes the Leviathan. The USA uses Eminent Domain to steal land, and uses laws to deny gold as a currency, what's stopping congress from doing the same with cryptocurrencies. I mean people are acting as if governments in past haven't faced similar problems. The only real value of currency is if a STATE actor accepts it as payment. Otherwise international trade, commerce, taxes, etc. would all be moot. So Bitcoin can never be a large scale, nationwide, let alone international currency. Even though currently it is large, and getting recognition from State actors, but it's not large enough to enter the domain of legislation.
blunte 9y ago
Aside from the fact that there are a steady stream of actual ponzis centered around bitcoin, many new coins and tokens are almost certainly hollow schemes designed to transfer wealth from the naive to the ICO creators. Then you have the "mining" companies selling shares of mining power, but those sometimes turn out to be pure frauds - no mining nor equipment. Those behave just like ponzis. It is probably in the average person's best interest to avoid it all.
- chroem- 9y ago
  It's been amusing to watch HN's overwhelmingly negative reaction to cryptocurrencies. Yes, there are absolutely some shady things going on with cryptocoins, but the response to them here seems pretty overblown. What I suspect is that many startup types have sour grapes over how they could have made nearly as much money speculating on digital tokens as they did building their web or app business. It's too bad, since there actually are some interesting technologies beginning to come out of the cryptocurrency sphere. These opportunities will get overlooked by everyone in SV apparently, though.
  - anonymous5133 9y ago
    the investors who don't know what they're doing will overlook it and miss out. The skilled investor will always have an open mind and always be willing to at least review interesting projects even if it is cryptocurrency or token based project.
    - QAPereo 9y ago
      And by skilled investors, you mean people with enough capital to manage the insane risk. So skillfull... Besides, let’s wait to heap laurels on investors until after the music stops.
  - jacksproit 9y ago
    It’s also amusing to see this straw man argument and rebuttal get posted in almost every single discussion about cryptocurrencies.
hendzen 9y ago
It's not a Ponzi scheme - it's worse. At this point it only makes sense to call it a Nakamoto Scheme. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/
- SimbaOnSteroids 9y ago
  I think South Sea Bubble is more appropriate.
- juicyfroot 9y ago
  You and the author are cunts. Read the original Nakamoto paper
- trophycase 9y ago
  Ridiculous. Pyramid and Ponzi schemes do absolutely nothing other than redistribute wealth. Bitcoin obviously has some value and if you can't see that you're willfully ignorant. The article suggests that Bitcoin "promises insane returns" but Bitcoin doesn't do that at all. Speculators want you to buy so the price goes up, just like a stock.
  - hendzen 9y ago
    Do you honestly believe that most people buying bitcoin are buying it for any reason other than the hope that the price will increase?
    - trophycase 9y ago
      How does that make Bitcoin a Ponzi scheme? A ponzi scheme is an organizational structure, not the people that exist in that organization. Bitcoin is a piece of software, and some people using that software are trying to profit. There is nothing inherent in the structure of Bitcoin that makes it a Ponzi
      - hendzen 9y ago
        This comment makes me think you didn't read the article in my parent comment. Bitcoin is not a Ponzi scheme, it is a Nakamoto scheme.
down 9y ago
ponzi schemes have no utility, bitcoin is a hedge against inflation, against corupt goverment, is bitcoin is a ponzi scheme, same is gold, and yes, i know about industrial utility of gold, but that's just 5% of its value, everyone that buys gold in india buys it as store of value due to inflation, corruption, etc.
superasn 9y ago
On the other hand you have Estonia preparing to launch its own crypto currency[1] called estcoin. [1] https://www.cnbc.com/2017/08/23/estonia-cryptocurrency-called-estcoin.html https://www.cnbc.com/2017/08/23/estonia-cryptocurrency-calle...
waytogo 9y ago
How often was Bitcoin called a Ponzi scheme? When it was at 50, at 100 or at 1,000? Always. If I look at my stock portfolio there are so many strange stocks and funds I once invested in. They feel much more like Ponzi schemes or pump and dump, especially the riskier funds. If I look at my angel tickets into early stage ventures (done with FIAT) even worse. And if I look at the countless ICOs based on Ethereum, this is the real pump and dump Ponzi Disney Land. But Bitcoin? Seriously? I highly doubt that Bitcoin's founder or its early adopters intended Bitcoin as a Ponzi scheme.
- lawn 9y ago
  To be fair the developers of Bitcoin seem to have abandoned the original vision of Bitcoin, peer-to-peer digital cash, and has moved towards being purely a store of value. As transaction costs increase and Bitcoin's usefulness diminish it is becoming more and more like a ponzi scheme, a pyramid scheme or a game of greater fools. For what is the use of Bitcoin when other cryptocurrencies can be a store of value and peer-to-peer digital cash? I see none thus I see no value with Bitcoin.
  - waytogo 9y ago
    > Bitcoin's usefulness diminish No, you mentioned it yourself: Bitcoin is a store of value. Moreover, it's one with a high liquidity, strong brand, limited supply, available in 180 countries, without banks involved and super reliable (gold doesn't have that features and please show me any other asset that has these features). So, it has a use and value. That it has evolved to this is no one's fault and btw this might change (the cash part) with the lightning network again. > more like a Ponzi scheme That would mean that all operators of Bitcoin, so everybody who is just investing or running local wallets with full nodes deliberately intend Bitcoin as a Ponzi scheme?? This is utter nonsense. If I launch an ICO tomorrow. Just a landing page and a BS white paper, you could allege that I deliberately plan my ICO/coin/token to be a Ponzi scheme. But you can't allege millions of BTC investors that they intend a Ponzi scheme eight years after this things started. Maybe you should check the definition of a Ponzi scheme again. However, do you own or did you ever own any BTC?
qwerty456127 9y ago
What I can't understand is why do people demonize Ponzi Schemes so much while lotteries and bookies of all kinds are legally available on every corner. I know quite a number of people who have consciously taken the risk of investing in an open (so I can't logically agree it being scam/fraud/etc although legal authorities can insist it is) Ponzi Scheme and have quit it with rather serious profit some time later. And I don't know anybody who has ever won more than a couple of bucks in a lottery. In my opinion a Ponzi Scheme (unless the potential investors are actually told a false claim that it is not a Ponzi Scheme but a low-risk high-profit enterprise) is not a scam but a game, similar to fishing, and even much more nice to people than classic chance games played in casinos. Why not just teach people basics of risk management, warn them 3 times and let them play if they want to?
- walshemj 9y ago
  Lotteries don't relay on adding more marks to grow and you can actually work out the pot odds where it makes sense to play the lottery - just as poker players do.
- scribu 9y ago
  One difference between ponzi schemes and games of chance has to do with impartiality. Even if casino games are tweaked to give better odds to the house, once you roll the dice, neither you nor the dealer can influence the outcome in any way. Another difference is that there’s no requirement to bring more and more people into the game, so there’s no risk of widespread adverse effects.
- blunte 9y ago
  Agreed, a ponzi is just another scheme (where scheme doesn't have to be a negative word). The gamble with a ponzi is whether the person entering the scheme is the last person or not. If not last, they make make money. If to far at the bottom (too near the end, when not enough new people join to continue funding the process), then they lose. There are people who make a living "playing ponzis", estimating which ponzis will be big, how long they'll last, and when to enter and exit. What does make ponzis particularly bad is that they are almost always promoted as something else - some kind of magical investment (and now using tech terms that are either nonsensical or will otherwise confuse their potential investors). That is the fraud aspect, and is no different than promoting some investment fund as being typical while privately just deciding who to pay dividends to. If you bought a McDonalds franchise, and the next day the world decided that fast food made them fat and ceased buying it, you would experience the same outcome as if you had joined a very expensive ponzi. But you know that going into it, and you believe that is not a likely outcome. With a ponzi, unless you know who's operating it and how good the promotion is, you're going to have a much harder time determining entry and exit timings. (I don't recommend playing at all!)
anonymous5133 9y ago
Not surprising they say that since many Indians are taking interest in cryptocurrencies due to the Indian central bank being unable to control inflation. It was at 10% just a few years ago! Also it isn't like something that has the potential of ever going up by any significant amount. Every year it drops 3-10%. Who wants to hold on to that to save their money? No wonder the Indians have so much interest in crypto. I don't blame them. Their government has failed them. At least with crypto it has the potential to go up.
- wmf 9y ago
  Cool story. Have Indians heard of investments?
  - trophycase 9y ago
    Feed the capitalist machine or lose all your money. Great.
- halamadrid 9y ago
  Or crash down to nothing and lose it all in a hack. By the way can you please cite sources for your stats around inflation? Last I read a Bloomberg article quoted Indian economy to be no. 3 behind China and US by 2030.
Theodores 9y ago
The two motivators in this story: fear and greed. The people have the motivation of greed, the government has the motivation of fear. Fear that the greed will lead to fear of losses and everyone exiting at the same time. It is a bit sad really as the governments should just let the people wanting to get burned in this harmless bubble lose all of their money.
- harigov 9y ago
  Yeah, when the population is educated and has general awareness of technology, betting on ponzi schemes is up to them. When you have large, uneducated and poor population, letting people know of the risks is a decent thing to expect from a government.
crypticlizard 9y ago
Well is this Orwellian double talk? To some extent, I think that's wildly accurate. Buy stocks that are sort of a scam, but don't buy into a new technology like BTC which has imo by now proven itself to be powerful and legit, unlike the next crappy IPO. Honestly it's hard to take articles like this seriously when what's going on is a lot of misdirection. Just my 2c.
noncoml 9y ago
At the moment 50% of all Bitcoins are controlled by less than 2,000 people(assuming 1 wallet per person). It is becoming exponentially more difficult to mine them, and there is only a finite number of bitcoins in that can be mined. Buying bitcoins is making these 2000 people richer. I really don't understand people who put money into Bitcoin. Actually I don't understand anyone that puts money in a cryptocurrency that is supposed to have "intrinsic value".
- trophycase 9y ago
  It isn't making them richer unless they sell, at which point the wealth is further distributed. Also exchanges and custodial wallets skew the distribution numbers.
  - noncoml 9y ago
    > It isn't making them richer unless they sell, Jeff Bezos is not the richest person in earth unless he sells. > at which point the wealth is further distributed. They basically exchange Monopoly money for real money. If that’s what you mean by wealth being distributed, then you are right.
- waytogo 9y ago
  > It is becoming exponentially more difficult to mine them, and there is only a finite number of bitcoins in that can be mined. This was planned and one of the greatest features (for a store of value): Limited supply. With limited supply you won't have inflation but deflation which is good for storing value but not good if you want to use it as a cash system. But for p2p cash use cases newer system like Stellar/XLM which integrate controlled inflation (1%/yr) are better. > Buying bitcoins is making these 2000 people richer. Guess you are confusing matters. Running a local wallet as a full node doesn't mean you make tons of money. You can run 20 nodes but your friend who is BTC trader could still have 100 times more BTC than you (so, running a node != holding a shitload of BTC). > Actually I don't understand anyone that puts money in a cryptocurrency that is supposed to have "intrinsic value". From another post: Bitcoin is a store of value. Moreover, it's one with a high liquidity, strong brand, limited supply, available in 180 countries, without banks involved and super reliable (gold doesn't have that features and please show me any other asset that has these features). So, it has a use and value.
acd 9y ago
The government want to be able to control the currency minting new money in cooperation with private banks. With bitcoin governments does not have that control. What says government central banks with zero interest rate creating new credit money out of thin air is not also a Ponzi scheme?
wslh 9y ago
Ponzi or not, there is a new phenomenon where the ecosystem has created more individual millionaires than the ones created by startups in the last few years. Many people are reinvesting their funds in new ventures, spending more money than angels or VCs in the typical startup world. It is obvious that this is connected to the high exchange rate of cryptoassets but it can have good historical consequences: there are good projects that the general community is not hearing about because they don't follow the typical ICO marketing route.
thisisit 9y ago
Well this was a long time coming. It is not reflection on bitcoin per se rather the use of the coin. Let me try and explain why this is happening. In India, people don't warm up to "internet" only companies easily. What this meant is while bitcoin and cryptocurrency FOMO has caught on, people don't go and buy coins online. There are exchanges but none of them are household name like Coinbase. So, a new industry has mushroomed - people offering "investment" opportunity in bitcoin "funds". These guys are not authorized investment professionals. They collect any where between 25-50k and promise a fixed return. No investment opportunity can claim fixed returns unless it is a Ponzi scheme. Hence, this announcement. My personal take on these opportunities is that, if these "funds" are in trouble - prices increase or decrease lot - they can simply claim that they have hacked. So, it is not even a ponzi scheme rather outright fraud. Even though I have tried convincing otherwise couple of colleagues have invested in such opportunities. They find the whole bitcoin process - wallets, keys, pass phrases etc very cumbersome but can't miss out on the supposed gains. And these guys are software engineers. Lastly, if a person with above average technology experience finds it difficult to use bitcoin, I think it shows how true cryptocurrency's dream of banking the underbanked in 3rd world country is going to be.
- runeks 9y ago
  > So, a new industry has mushroomed - people offering "investment" opportunity in bitcoin "funds". These guys are not authorized investment professionals. They collect any where between 25-50k and promise a fixed return. So scammers are using the Bitcoin brand to attract customers? Sounds exactly like what ICOs are doing here in the West. Except they use the word “blockchain” instead.
qwerty456127 9y ago
IMHO the one and only thing a government is to do to protect the people from Ponzi and other schemes is to make sure everybody leaves school with conscious knowledge of the following: 1. Every investment is a risk, you may win or you may loose. 2. The chance of loss is usually proportional to the potential profitability estimated. 3. Never invest what you can't afford to loose easily. 4. Don't be mad on the friend who has introduced you to the business if he didn't explicitly guarantee you will win - that was your choice. 5. Whoever says there is no risk and the success is guaranteed - lies, don't believe them and don't rely on them. Actually, if a person doesn't know this by the time they finish the school the time they've spent there has probably been wasted. As for me I've learnt about Ponzi scheme from a Khan Academy lecture (and yes, my time at school was a waste mostly, that's a pity there was no Khan Academy back in those years).

49 points by elkali 9y ago

At least your Bitcoin isn't going to be yanked out from underneath you overnight by the government: For example, https://www.theguardian.com/world/2016/nov/08/india-withdraws-500-1000-rupee-notes-fight-corruption https://www.theguardian.com/world/2016/nov/08/india-withdraw...

cynicaldevil 9y ago
You're really twisting what happened here. It wasn't so much "yanked" as it was "replaced". I was initially against the idea, but soon got around to it. It was a very risky and daring move by the government, but it was a good one.
- shbm 9y ago
  How do you even measure it. What's the metric. How do you classify it as good or bad. It was clearly short-sighted and the government even failed to account the size of the new currency notes and the inconvenience caused by it. All that was achieved was dip in the GDP and the loss of lives. Contrary to the popular belief that BTC purports money laundering, it can actually mitigate the problem of black money and money laundering. The governments all around the world should try to keep up and they should themselves establish a separate think tank/research arm/department for blockchain and cryptocurrency space.
QAPereo 9y ago
That same government is perfectly capable of throwing you into a deep dark hole until you comply with their demands or die of old age. I understand you have a particular ideological viewpoint, but that shouldn’t prevent you from understanding how the world actually works. There is no end run to your dream of how society should be, and pretending that there is simply divorces you from that reality. To be clear I’m not saying that things can’t change, but I am saying the change has to take place in reality and not your imagination.
thevardanian 9y ago
Not yet. You bet your ass that if Bitcoin gets large enough State actors will use coercion to regulate it, track it, tax it, and do what bureaucracies do best. Nothing escapes the Leviathan. The USA uses Eminent Domain to steal land, and uses laws to deny gold as a currency, what's stopping congress from doing the same with cryptocurrencies. I mean people are acting as if governments in past haven't faced similar problems. The only real value of currency is if a STATE actor accepts it as payment. Otherwise international trade, commerce, taxes, etc. would all be moot. So Bitcoin can never be a large scale, nationwide, let alone international currency. Even though currently it is large, and getting recognition from State actors, but it's not large enough to enter the domain of legislation.

blunte 9y ago

Aside from the fact that there are a steady stream of actual ponzis centered around bitcoin, many new coins and tokens are almost certainly hollow schemes designed to transfer wealth from the naive to the ICO creators. Then you have the "mining" companies selling shares of mining power, but those sometimes turn out to be pure frauds - no mining nor equipment. Those behave just like ponzis. It is probably in the average person's best interest to avoid it all.

chroem- 9y ago
It's been amusing to watch HN's overwhelmingly negative reaction to cryptocurrencies. Yes, there are absolutely some shady things going on with cryptocoins, but the response to them here seems pretty overblown. What I suspect is that many startup types have sour grapes over how they could have made nearly as much money speculating on digital tokens as they did building their web or app business. It's too bad, since there actually are some interesting technologies beginning to come out of the cryptocurrency sphere. These opportunities will get overlooked by everyone in SV apparently, though.
- anonymous5133 9y ago
  the investors who don't know what they're doing will overlook it and miss out. The skilled investor will always have an open mind and always be willing to at least review interesting projects even if it is cryptocurrency or token based project.
  - QAPereo 9y ago
    And by skilled investors, you mean people with enough capital to manage the insane risk. So skillfull... Besides, let’s wait to heap laurels on investors until after the music stops.
- jacksproit 9y ago
  It’s also amusing to see this straw man argument and rebuttal get posted in almost every single discussion about cryptocurrencies.

hendzen 9y ago

It's not a Ponzi scheme - it's worse. At this point it only makes sense to call it a Nakamoto Scheme. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

SimbaOnSteroids 9y ago
I think South Sea Bubble is more appropriate.
juicyfroot 9y ago
You and the author are cunts. Read the original Nakamoto paper
trophycase 9y ago
Ridiculous. Pyramid and Ponzi schemes do absolutely nothing other than redistribute wealth. Bitcoin obviously has some value and if you can't see that you're willfully ignorant. The article suggests that Bitcoin "promises insane returns" but Bitcoin doesn't do that at all. Speculators want you to buy so the price goes up, just like a stock.
- hendzen 9y ago
  Do you honestly believe that most people buying bitcoin are buying it for any reason other than the hope that the price will increase?
  - trophycase 9y ago
    How does that make Bitcoin a Ponzi scheme? A ponzi scheme is an organizational structure, not the people that exist in that organization. Bitcoin is a piece of software, and some people using that software are trying to profit. There is nothing inherent in the structure of Bitcoin that makes it a Ponzi
    - hendzen 9y ago
      This comment makes me think you didn't read the article in my parent comment. Bitcoin is not a Ponzi scheme, it is a Nakamoto scheme.

down 9y ago

ponzi schemes have no utility, bitcoin is a hedge against inflation, against corupt goverment, is bitcoin is a ponzi scheme, same is gold, and yes, i know about industrial utility of gold, but that's just 5% of its value, everyone that buys gold in india buys it as store of value due to inflation, corruption, etc.

superasn 9y ago

On the other hand you have Estonia preparing to launch its own crypto currency[1] called estcoin. [1] https://www.cnbc.com/2017/08/23/estonia-cryptocurrency-called-estcoin.html https://www.cnbc.com/2017/08/23/estonia-cryptocurrency-calle...

waytogo 9y ago

How often was Bitcoin called a Ponzi scheme? When it was at 50, at 100 or at 1,000? Always. If I look at my stock portfolio there are so many strange stocks and funds I once invested in. They feel much more like Ponzi schemes or pump and dump, especially the riskier funds. If I look at my angel tickets into early stage ventures (done with FIAT) even worse. And if I look at the countless ICOs based on Ethereum, this is the real pump and dump Ponzi Disney Land. But Bitcoin? Seriously? I highly doubt that Bitcoin's founder or its early adopters intended Bitcoin as a Ponzi scheme.

lawn 9y ago
To be fair the developers of Bitcoin seem to have abandoned the original vision of Bitcoin, peer-to-peer digital cash, and has moved towards being purely a store of value. As transaction costs increase and Bitcoin's usefulness diminish it is becoming more and more like a ponzi scheme, a pyramid scheme or a game of greater fools. For what is the use of Bitcoin when other cryptocurrencies can be a store of value and peer-to-peer digital cash? I see none thus I see no value with Bitcoin.
- waytogo 9y ago
  > Bitcoin's usefulness diminish No, you mentioned it yourself: Bitcoin is a store of value. Moreover, it's one with a high liquidity, strong brand, limited supply, available in 180 countries, without banks involved and super reliable (gold doesn't have that features and please show me any other asset that has these features). So, it has a use and value. That it has evolved to this is no one's fault and btw this might change (the cash part) with the lightning network again. > more like a Ponzi scheme That would mean that all operators of Bitcoin, so everybody who is just investing or running local wallets with full nodes deliberately intend Bitcoin as a Ponzi scheme?? This is utter nonsense. If I launch an ICO tomorrow. Just a landing page and a BS white paper, you could allege that I deliberately plan my ICO/coin/token to be a Ponzi scheme. But you can't allege millions of BTC investors that they intend a Ponzi scheme eight years after this things started. Maybe you should check the definition of a Ponzi scheme again. However, do you own or did you ever own any BTC?

qwerty456127 9y ago

What I can't understand is why do people demonize Ponzi Schemes so much while lotteries and bookies of all kinds are legally available on every corner. I know quite a number of people who have consciously taken the risk of investing in an open (so I can't logically agree it being scam/fraud/etc although legal authorities can insist it is) Ponzi Scheme and have quit it with rather serious profit some time later. And I don't know anybody who has ever won more than a couple of bucks in a lottery. In my opinion a Ponzi Scheme (unless the potential investors are actually told a false claim that it is not a Ponzi Scheme but a low-risk high-profit enterprise) is not a scam but a game, similar to fishing, and even much more nice to people than classic chance games played in casinos. Why not just teach people basics of risk management, warn them 3 times and let them play if they want to?

walshemj 9y ago
Lotteries don't relay on adding more marks to grow and you can actually work out the pot odds where it makes sense to play the lottery - just as poker players do.
scribu 9y ago
One difference between ponzi schemes and games of chance has to do with impartiality. Even if casino games are tweaked to give better odds to the house, once you roll the dice, neither you nor the dealer can influence the outcome in any way. Another difference is that there’s no requirement to bring more and more people into the game, so there’s no risk of widespread adverse effects.
blunte 9y ago
Agreed, a ponzi is just another scheme (where scheme doesn't have to be a negative word). The gamble with a ponzi is whether the person entering the scheme is the last person or not. If not last, they make make money. If to far at the bottom (too near the end, when not enough new people join to continue funding the process), then they lose. There are people who make a living "playing ponzis", estimating which ponzis will be big, how long they'll last, and when to enter and exit. What does make ponzis particularly bad is that they are almost always promoted as something else - some kind of magical investment (and now using tech terms that are either nonsensical or will otherwise confuse their potential investors). That is the fraud aspect, and is no different than promoting some investment fund as being typical while privately just deciding who to pay dividends to. If you bought a McDonalds franchise, and the next day the world decided that fast food made them fat and ceased buying it, you would experience the same outcome as if you had joined a very expensive ponzi. But you know that going into it, and you believe that is not a likely outcome. With a ponzi, unless you know who's operating it and how good the promotion is, you're going to have a much harder time determining entry and exit timings. (I don't recommend playing at all!)

anonymous5133 9y ago

Not surprising they say that since many Indians are taking interest in cryptocurrencies due to the Indian central bank being unable to control inflation. It was at 10% just a few years ago! Also it isn't like something that has the potential of ever going up by any significant amount. Every year it drops 3-10%. Who wants to hold on to that to save their money? No wonder the Indians have so much interest in crypto. I don't blame them. Their government has failed them. At least with crypto it has the potential to go up.

wmf 9y ago
Cool story. Have Indians heard of investments?
- trophycase 9y ago
  Feed the capitalist machine or lose all your money. Great.
halamadrid 9y ago
Or crash down to nothing and lose it all in a hack. By the way can you please cite sources for your stats around inflation? Last I read a Bloomberg article quoted Indian economy to be no. 3 behind China and US by 2030.

Theodores 9y ago

The two motivators in this story: fear and greed. The people have the motivation of greed, the government has the motivation of fear. Fear that the greed will lead to fear of losses and everyone exiting at the same time. It is a bit sad really as the governments should just let the people wanting to get burned in this harmless bubble lose all of their money.

harigov 9y ago
Yeah, when the population is educated and has general awareness of technology, betting on ponzi schemes is up to them. When you have large, uneducated and poor population, letting people know of the risks is a decent thing to expect from a government.

crypticlizard 9y ago

Well is this Orwellian double talk? To some extent, I think that's wildly accurate. Buy stocks that are sort of a scam, but don't buy into a new technology like BTC which has imo by now proven itself to be powerful and legit, unlike the next crappy IPO. Honestly it's hard to take articles like this seriously when what's going on is a lot of misdirection. Just my 2c.

noncoml 9y ago

At the moment 50% of all Bitcoins are controlled by less than 2,000 people(assuming 1 wallet per person). It is becoming exponentially more difficult to mine them, and there is only a finite number of bitcoins in that can be mined. Buying bitcoins is making these 2000 people richer. I really don't understand people who put money into Bitcoin. Actually I don't understand anyone that puts money in a cryptocurrency that is supposed to have "intrinsic value".

trophycase 9y ago
It isn't making them richer unless they sell, at which point the wealth is further distributed. Also exchanges and custodial wallets skew the distribution numbers.
- noncoml 9y ago
  > It isn't making them richer unless they sell, Jeff Bezos is not the richest person in earth unless he sells. > at which point the wealth is further distributed. They basically exchange Monopoly money for real money. If that’s what you mean by wealth being distributed, then you are right.
waytogo 9y ago
> It is becoming exponentially more difficult to mine them, and there is only a finite number of bitcoins in that can be mined. This was planned and one of the greatest features (for a store of value): Limited supply. With limited supply you won't have inflation but deflation which is good for storing value but not good if you want to use it as a cash system. But for p2p cash use cases newer system like Stellar/XLM which integrate controlled inflation (1%/yr) are better. > Buying bitcoins is making these 2000 people richer. Guess you are confusing matters. Running a local wallet as a full node doesn't mean you make tons of money. You can run 20 nodes but your friend who is BTC trader could still have 100 times more BTC than you (so, running a node != holding a shitload of BTC). > Actually I don't understand anyone that puts money in a cryptocurrency that is supposed to have "intrinsic value". From another post: Bitcoin is a store of value. Moreover, it's one with a high liquidity, strong brand, limited supply, available in 180 countries, without banks involved and super reliable (gold doesn't have that features and please show me any other asset that has these features). So, it has a use and value.

acd 9y ago

The government want to be able to control the currency minting new money in cooperation with private banks. With bitcoin governments does not have that control. What says government central banks with zero interest rate creating new credit money out of thin air is not also a Ponzi scheme?

wslh 9y ago

Ponzi or not, there is a new phenomenon where the ecosystem has created more individual millionaires than the ones created by startups in the last few years. Many people are reinvesting their funds in new ventures, spending more money than angels or VCs in the typical startup world. It is obvious that this is connected to the high exchange rate of cryptoassets but it can have good historical consequences: there are good projects that the general community is not hearing about because they don't follow the typical ICO marketing route.

thisisit 9y ago

Well this was a long time coming. It is not reflection on bitcoin per se rather the use of the coin. Let me try and explain why this is happening. In India, people don't warm up to "internet" only companies easily. What this meant is while bitcoin and cryptocurrency FOMO has caught on, people don't go and buy coins online. There are exchanges but none of them are household name like Coinbase. So, a new industry has mushroomed - people offering "investment" opportunity in bitcoin "funds". These guys are not authorized investment professionals. They collect any where between 25-50k and promise a fixed return. No investment opportunity can claim fixed returns unless it is a Ponzi scheme. Hence, this announcement. My personal take on these opportunities is that, if these "funds" are in trouble - prices increase or decrease lot - they can simply claim that they have hacked. So, it is not even a ponzi scheme rather outright fraud. Even though I have tried convincing otherwise couple of colleagues have invested in such opportunities. They find the whole bitcoin process - wallets, keys, pass phrases etc very cumbersome but can't miss out on the supposed gains. And these guys are software engineers. Lastly, if a person with above average technology experience finds it difficult to use bitcoin, I think it shows how true cryptocurrency's dream of banking the underbanked in 3rd world country is going to be.

runeks 9y ago
> So, a new industry has mushroomed - people offering "investment" opportunity in bitcoin "funds". These guys are not authorized investment professionals. They collect any where between 25-50k and promise a fixed return. So scammers are using the Bitcoin brand to attract customers? Sounds exactly like what ICOs are doing here in the West. Except they use the word “blockchain” instead.

qwerty456127 9y ago

IMHO the one and only thing a government is to do to protect the people from Ponzi and other schemes is to make sure everybody leaves school with conscious knowledge of the following: 1. Every investment is a risk, you may win or you may loose. 2. The chance of loss is usually proportional to the potential profitability estimated. 3. Never invest what you can't afford to loose easily. 4. Don't be mad on the friend who has introduced you to the business if he didn't explicitly guarantee you will win - that was your choice. 5. Whoever says there is no risk and the success is guaranteed - lies, don't believe them and don't rely on them. Actually, if a person doesn't know this by the time they finish the school the time they've spent there has probably been wasted. As for me I've learnt about Ponzi scheme from a Khan Academy lecture (and yes, my time at school was a waste mostly, that's a pity there was no Khan Academy back in those years).