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Agreed. Shutting down participation in the planet's largest pyramid scheme doesn't have a lot of downside.

by tbabb 9y ago

isoprophlex 9y ago
Can't agree more. Also I am getting pretty sick of the impact crypto trading is having on office conversations. All I hear these days are inane conversations about getting rich quick. Everyone is an expert in technical analysis these days. At best, trading these currencies is a zero-sum game where you take money from others without providing any intrinsic worth to humanity. At worst is a pyramid scheme plain and simple.
- llamataboot 9y ago
  Naysayers would point out that trading increases liquidity which ostensibly increases the ability of a market to parlay information into value. But I'd be likely to agree with you. While blockchain technology /does/ have a future and will enable forms of socio-economic organization that were previously impossible, it's not there yet, and at the moment we're mostly passing tulips off to the greater fool.
  - BoiledCabbage 9y ago
    > Naysayers would point out that trading increases liquidity which ostensibly increases the ability of a market to parlay information into value. And increasing opioid supplies, increases the ability of the market to efficiently parlay money into an altered mental state. Doesn't mean it's a net positive for society. The "liquidity" argument is such a terrible and simplistic justification for so many things.
    - oxide 9y ago
      Trust me, those opioids would be just as easy to acquire with Amazon Gift Cards, Paypal, Western Union, a bank deposit, you name it pal. If you're trying to stand on some kind of anti-opiate moral ground for why cryptocurrency is evil it's a poor hill to die on.
  - walrus1066 9y ago
    'at the moment we're mostly passing tulips off to the greater fool.' At least tulips have some intrinsic value, I.e. They can be quite pretty!
- baddox 9y ago
  I have no problem with valid criticism of cryptocurrency, and especially of its fanatics, but I’d be curious to hear you back up your claim that at best it’s a zero-sum game. That seems to me to be clearly incorrect.
  - Synaesthesia 9y ago
    Of course it’s a zero sum game, I’d like to hear how it’s not. It’s not creating any value, any gains are at the expense of someone else.
    - baddox 9y ago
      Who are they at the expensive of?
      - Synaesthesia 9y ago
        The people buying the coins when you sell it. It would be impossible for everyone to profit from bitcoin. There would always have to be losers.
  - vec 9y ago
    Person A mines 1 BTC. Since a Bitcoin has no intrinsic value (as distinguished from market value), Person A has not created any value. They have created $0 worth of goods. Person A sells their coin to Person B for $1,000. A is $1,000 richer and B is $1,000 poorer. B sells the bitcoin to C for $2,000. A is still $1k richer, B is $1k richer, and C is $2k in the hole. C sells to D for $3k. A, B, and C are all $1k richer, but D is out $3k. At no point in the chain is any actual value created or destroyed; it merely changes hands. So even though the price keeps going up, the total value across all participants never goes up. The sum of the gains and losses of all participants is $0. (Note that I'm using "$" to represent a generic indicator of value. Feel free to substitute € or ¥ or gold or shares of Facebook stock or whatever.) =============== There are two simplifying assumptions above, both of which make Bitcoin not exactly zero sum. Good news first. Bitcoin can and does create some value in the same way that other currencies do: by facilitating mutually beneficial exchanges of goods and services. Commercial use appears to only be a tiny fraction of all Bitcoin transactions (and an even smaller fraction that wouldn't have been facilitated anyway using some other means of exchange), but it does happen so credit where credit's due. The bad news, though, is that all of the above requires electricity. A lot of electricity, as it turns out. Both the initial mining and every transaction thereafter require someone, somewhere to burn some amount of power in order to generate proof of work. Since proof of work is explicitly designed to be useless, all that spent power is essentially deadweight loss. I haven't seen any good numbers on the first recently (and I would love to have my assumptions proven wrong), but given the ginormous estimates of electricity consumed by the second I have a hard time believing the network as a whole isn't substantially worse than zero sum.
- jv22222 9y ago
  > where you take money from others without providing any intrinsic worth to humanity I beg to differ. Not all crypto projects are like that. For example Omise Go is a promising project that stands to make a difference to many people who have no access to banking services. They have solid financials, already processing over $500m transactions per day with $110m investment. They are making a completely decentralized open value exchange DEX based on the block chain. Any developer/provider will be able to build apps on top of it. Any person with a phone will have instant access to essentially a bank account with no need to hand over social security and ID. So basically giving 2 billion people who have no way to interact with financial systems a way to join in with global commerce. > It’s not creating any value, any gains are at the expense of someone else. Except, not in the case of Omise Go. You may earn a dividend simply by possessing the token. By staking Omise Go tokens you will have the option to validate transactions (proof of stake) for which you will get paid. Also note, with PoS there is no electricity burden on the system like Proof of Work with mining.
secfirstmd 9y ago
Couldnt agree more. All that wasted energy and carbon for nothing. All that power that could have been used for something useful like gene folding or SETI.
olalonde 9y ago
Here is what a pyramid scheme is: https://en.wikipedia.org/wiki/Pyramid_scheme https://en.wikipedia.org/wiki/Pyramid_scheme Bitcoin is a distributed database that solves the "Two Generals Problem". Please don't spread misinformation on things you do not understand.
- ocb 9y ago
  Could you clarify why those things are mutually exclusive? And to be clear: I don't know how to feel about Bitcoin and the attention it has received lately.
  - olalonde 9y ago
    There's just nothing about the definition of a pyramid scheme that applies to Bitcoin, not even close. There's no organisation, recruiting, directors, membership or promise of payments. It doesn't have to grow forever. It's not illegal. The amount of ignorant Bitcoin comments on HN is just baffling.
    - aaron-lebo 9y ago
      It's a very uncharitable definition, sure. There's no organisation, recruiting, directors, membership or promise of payments. But those definitely exist, just not via any singular organization. There very much is organization and organizations, recruiting, would be directors, unofficial membership in the club of ownership, and lots of promises of payments. When people make that comparison, what they're really saying is Bitcoin is mostly funny money which above all else has enriched early adopters and will probably lose a lot of late adopters lots of money. It's ceased to even be a useful currency. You don't have to squint very hard to see the comparison, even if it isn't flattering or technically the same thing as a pyramid scheme. This is from your link: In a pyramid scheme [Bitcoin], an organization compels individuals who wish to join to make a payment [purchase Bitcoin]. In exchange, the organization promises its new members a share of the money taken from every additional member that they recruit [to the moon]. The directors of the organization (those at the top of the pyramid) also receive a share of these payments. For the directors, the scheme is potentially lucrative—whether or not they do any work, the organization's membership has a strong incentive to continue recruiting and funneling money to the top of the pyramid. Such organizations seldom involve sales of products or services with value. Without creating any goods or services, the only revenue streams for the scheme are recruiting more members or soliciting more money from current members. The behavior of pyramid schemes follows the mathematics concerning exponential growth quite closely. Each level of the pyramid is much larger than the one before it. For a pyramid scheme to make money for everyone who enrolls in it, it would have to expand indefinitely. This is not possible because the population of Earth is finite. When the scheme inevitably runs out of new recruits, lacking other sources of revenue, it collapses. Because in a geometric series, the biggest terms are at the end, most people will be in the lower levels of the pyramid (and indeed the bottom level is always the biggest single layer). In a pyramid scheme, people in the upper layers typically profit while people in the lower layers typically lose money. Since at any given time, most of the members in the scheme are at the bottom, most participants in a pyramid scheme will not make any money. In particular, when the scheme collapses, most members will be in the bottom layers and thus will not have any opportunity to profit from the scheme, yet they will have paid to join the scheme. Therefore, a pyramid scheme is characterized by a few people (including the creators of the scheme) making large amounts of money, while most who join the scheme lose money. For this reason, they are considered scams.[2] Sounds like many cryptocurrencies and Bitcoin is approaching that if it hasn't hit it already.
lifeisunfair 9y ago
I just feel sorry about all the people that lost or will lose money on it. It is our(techies) job to protect them, and we are failing miserably.
dang 9y ago
You started a flamewar with this low-quality dismissal. Although I'm sure you didn't mean to, in effect this is vandalism. Please post more thoughtfully to HN. Here is a relevant site guideline: * Comments should get more civil and substantive, not less, as a topic gets more divisive.* https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

Agreed. Shutting down participation in the planet's largest pyramid scheme doesn't have a lot of downside.

by tbabb 9y ago

Agreed. Shutting down participation in the planet's largest pyramid scheme doesn't have a lot of downside.

Can't agree more. Also I am getting pretty sick of the impact crypto trading is having on office conversations. All I hear these days are inane conversations about getting rich quick. Everyone is an expert in technical analysis these days. At best, trading these currencies is a zero-sum game where you take money from others without providing any intrinsic worth to humanity. At worst is a pyramid scheme plain and simple.

llamataboot 9y ago
Naysayers would point out that trading increases liquidity which ostensibly increases the ability of a market to parlay information into value. But I'd be likely to agree with you. While blockchain technology /does/ have a future and will enable forms of socio-economic organization that were previously impossible, it's not there yet, and at the moment we're mostly passing tulips off to the greater fool.
- BoiledCabbage 9y ago
  > Naysayers would point out that trading increases liquidity which ostensibly increases the ability of a market to parlay information into value. And increasing opioid supplies, increases the ability of the market to efficiently parlay money into an altered mental state. Doesn't mean it's a net positive for society. The "liquidity" argument is such a terrible and simplistic justification for so many things.
  - oxide 9y ago
    Trust me, those opioids would be just as easy to acquire with Amazon Gift Cards, Paypal, Western Union, a bank deposit, you name it pal. If you're trying to stand on some kind of anti-opiate moral ground for why cryptocurrency is evil it's a poor hill to die on.
- walrus1066 9y ago
  'at the moment we're mostly passing tulips off to the greater fool.' At least tulips have some intrinsic value, I.e. They can be quite pretty!
baddox 9y ago
I have no problem with valid criticism of cryptocurrency, and especially of its fanatics, but I’d be curious to hear you back up your claim that at best it’s a zero-sum game. That seems to me to be clearly incorrect.
- Synaesthesia 9y ago
  Of course it’s a zero sum game, I’d like to hear how it’s not. It’s not creating any value, any gains are at the expense of someone else.
  - baddox 9y ago
    Who are they at the expensive of?
    - Synaesthesia 9y ago
      The people buying the coins when you sell it. It would be impossible for everyone to profit from bitcoin. There would always have to be losers.
- vec 9y ago
  Person A mines 1 BTC. Since a Bitcoin has no intrinsic value (as distinguished from market value), Person A has not created any value. They have created $0 worth of goods. Person A sells their coin to Person B for $1,000. A is $1,000 richer and B is $1,000 poorer. B sells the bitcoin to C for $2,000. A is still $1k richer, B is $1k richer, and C is $2k in the hole. C sells to D for $3k. A, B, and C are all $1k richer, but D is out $3k. At no point in the chain is any actual value created or destroyed; it merely changes hands. So even though the price keeps going up, the total value across all participants never goes up. The sum of the gains and losses of all participants is $0. (Note that I'm using "$" to represent a generic indicator of value. Feel free to substitute € or ¥ or gold or shares of Facebook stock or whatever.) =============== There are two simplifying assumptions above, both of which make Bitcoin not exactly zero sum. Good news first. Bitcoin can and does create some value in the same way that other currencies do: by facilitating mutually beneficial exchanges of goods and services. Commercial use appears to only be a tiny fraction of all Bitcoin transactions (and an even smaller fraction that wouldn't have been facilitated anyway using some other means of exchange), but it does happen so credit where credit's due. The bad news, though, is that all of the above requires electricity. A lot of electricity, as it turns out. Both the initial mining and every transaction thereafter require someone, somewhere to burn some amount of power in order to generate proof of work. Since proof of work is explicitly designed to be useless, all that spent power is essentially deadweight loss. I haven't seen any good numbers on the first recently (and I would love to have my assumptions proven wrong), but given the ginormous estimates of electricity consumed by the second I have a hard time believing the network as a whole isn't substantially worse than zero sum.
jv22222 9y ago
> where you take money from others without providing any intrinsic worth to humanity I beg to differ. Not all crypto projects are like that. For example Omise Go is a promising project that stands to make a difference to many people who have no access to banking services. They have solid financials, already processing over $500m transactions per day with $110m investment. They are making a completely decentralized open value exchange DEX based on the block chain. Any developer/provider will be able to build apps on top of it. Any person with a phone will have instant access to essentially a bank account with no need to hand over social security and ID. So basically giving 2 billion people who have no way to interact with financial systems a way to join in with global commerce. > It’s not creating any value, any gains are at the expense of someone else. Except, not in the case of Omise Go. You may earn a dividend simply by possessing the token. By staking Omise Go tokens you will have the option to validate transactions (proof of stake) for which you will get paid. Also note, with PoS there is no electricity burden on the system like Proof of Work with mining.

secfirstmd 9y ago

Couldnt agree more. All that wasted energy and carbon for nothing. All that power that could have been used for something useful like gene folding or SETI.

olalonde 9y ago

Here is what a pyramid scheme is: https://en.wikipedia.org/wiki/Pyramid_scheme https://en.wikipedia.org/wiki/Pyramid_scheme Bitcoin is a distributed database that solves the "Two Generals Problem". Please don't spread misinformation on things you do not understand.

ocb 9y ago
Could you clarify why those things are mutually exclusive? And to be clear: I don't know how to feel about Bitcoin and the attention it has received lately.
- olalonde 9y ago
  There's just nothing about the definition of a pyramid scheme that applies to Bitcoin, not even close. There's no organisation, recruiting, directors, membership or promise of payments. It doesn't have to grow forever. It's not illegal. The amount of ignorant Bitcoin comments on HN is just baffling.
  - aaron-lebo 9y ago
    It's a very uncharitable definition, sure. There's no organisation, recruiting, directors, membership or promise of payments. But those definitely exist, just not via any singular organization. There very much is organization and organizations, recruiting, would be directors, unofficial membership in the club of ownership, and lots of promises of payments. When people make that comparison, what they're really saying is Bitcoin is mostly funny money which above all else has enriched early adopters and will probably lose a lot of late adopters lots of money. It's ceased to even be a useful currency. You don't have to squint very hard to see the comparison, even if it isn't flattering or technically the same thing as a pyramid scheme. This is from your link: In a pyramid scheme [Bitcoin], an organization compels individuals who wish to join to make a payment [purchase Bitcoin]. In exchange, the organization promises its new members a share of the money taken from every additional member that they recruit [to the moon]. The directors of the organization (those at the top of the pyramid) also receive a share of these payments. For the directors, the scheme is potentially lucrative—whether or not they do any work, the organization's membership has a strong incentive to continue recruiting and funneling money to the top of the pyramid. Such organizations seldom involve sales of products or services with value. Without creating any goods or services, the only revenue streams for the scheme are recruiting more members or soliciting more money from current members. The behavior of pyramid schemes follows the mathematics concerning exponential growth quite closely. Each level of the pyramid is much larger than the one before it. For a pyramid scheme to make money for everyone who enrolls in it, it would have to expand indefinitely. This is not possible because the population of Earth is finite. When the scheme inevitably runs out of new recruits, lacking other sources of revenue, it collapses. Because in a geometric series, the biggest terms are at the end, most people will be in the lower levels of the pyramid (and indeed the bottom level is always the biggest single layer). In a pyramid scheme, people in the upper layers typically profit while people in the lower layers typically lose money. Since at any given time, most of the members in the scheme are at the bottom, most participants in a pyramid scheme will not make any money. In particular, when the scheme collapses, most members will be in the bottom layers and thus will not have any opportunity to profit from the scheme, yet they will have paid to join the scheme. Therefore, a pyramid scheme is characterized by a few people (including the creators of the scheme) making large amounts of money, while most who join the scheme lose money. For this reason, they are considered scams.[2] Sounds like many cryptocurrencies and Bitcoin is approaching that if it hasn't hit it already.

lifeisunfair 9y ago

I just feel sorry about all the people that lost or will lose money on it. It is our(techies) job to protect them, and we are failing miserably.

dang 9y ago

You started a flamewar with this low-quality dismissal. Although I'm sure you didn't mean to, in effect this is vandalism. Please post more thoughtfully to HN. Here is a relevant site guideline: * Comments should get more civil and substantive, not less, as a topic gets more divisive.* https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html