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The current business model of ICOs is functionally as a pyramid scheme due to the deflationary nature of most cryptocurrencies. The idea is you buy, then you ho

The current business model of ICOs is functionally as a pyramid scheme due to the deflationary nature of most cryptocurrencies. The idea is you buy, then you hold & evangelize, then you sell at 10x/100x. Look at the dropping transaction volume across the board even during the mainstream attention on cryptocurrency. If these cryptocurrencies or tokens were inflationary and meant to promote commerce/trading rather than holding and speculation then I don't think anyone would have a problem (like more easily traded microsoft points or MMO gold). This also doesn't change the fact that most online currencies are functioning as unregulated securities and are facilitating illegal transactions and money laundering. If more thought was put into creating decentralized, inflationary currencies that followed current financial regulations I would not have a problem with cryptocurrencies. But the predatory nature of the community that has developed around cryptocurrency and the focus on get rich quick schemes rather than online commerce is what worries me about cryptocurrency. Sorry for the rant.

21 9y ago
> focus on get rich quick schemes Sorry, but the whole finance (and VC) world is about getting rich quickly. Cryptos, while being more scammy due to newness and lack of regulations, are not fundamentally special in this regard.
- cryptonector 9y ago
  Sure they are. They are specifically trying to evade national control. Yes, banks create money, but they are regulated, and they are not working to undermine the state (even if they occasionally accidentally cause crises that do undermine the state).
- JumpCrisscross 9y ago
  > Cryptos, while being more scammy due to newness and lack of regulations, are not fundamentally special in this regard I disagree. Cryptocurrencies are unusually scammy. (Past tech cycles, both those which realized their fruits and which failed, had lots of vaporware. And there were some scams. But the latter are more prevalent in this domain.) My hypothesis for this is in the original sin of Bitcoin: choosing currency as its use case. This primed the space to think of tokens as securities on which the average Joe could get rich quickly, the underlying business be damned. (It also seeded the culture with black market operators.) > the whole finance (and VC) world is about getting rich quickly Which makes the author of this article's efforts to exempt their investments from financial regulation [1] questionable. [1] https://www.wsj.com/articles/cryptocurrency-firms-investors-seek-exemption-from-sec-oversight-1524130200 https://www.wsj.com/articles/cryptocurrency-firms-investors-...
  - tylersmith 9y ago
    > My hypothesis for this is in the original sin of Bitcoin: choosing currency as its use case. Maybe I'm misunderstanding you but Bitcoin's entire purpose was to be p2p cash. What other use case would you have suggested if you were advising Satoshi in 2008?
    - JumpCrisscross 9y ago
      > Bitcoin's entire purpose was to be p2p cash Put another way, the blockchain's original sin was Bitcoin. It started the conversation in a scummy way.
      - Erlich_Bachman 9y ago
        Bitcoin is the least scammy of all cryptocurrencies. Clear design, clear values, clear future (in terms of money minted), clear rules. Where is the scam??
      - beaner 9y ago
        There's nothing inherently scummy about money itself. It's just a tool for human organization.
        Retra 9y ago
        There's nothing inherently scummy about a market, either. But black markets can get pretty scummy. What's the difference? The Clientele?
      - tylersmith 9y ago
        Bitcoin seems to me to be the least scummy of all these new distributed ledger ideas. What kind of use cases for a blockchain do you see as better/more useful/less scummy than currencies?
    - snowwrestler 9y ago
      If p2p cash was the purpose of Bitcoin, it was spectacularly poorly designed for that purpose. I don't mean the cryptographic properties which enabled distributed trust--that's cool. I mean the deflationary combination of a fixed total number of bitcoins, and ever-increasing amounts of energy and time to create new bitcoin. This creates tremendous incentive to create or buy bitcoins and then hold, hold, hold, hold. That's the opposite of what you want for a currency! You want people to spend a currency, and hold assets. Bitcoin today works like an asset, not currency. I don't know if this was the actual idea, and early adopters essentially lied about the currency aspects to prime the bubble; or if the early adopters actually did think it would be a great currency and just got hugely lucky.
icebraining 9y ago
Bitcoin is inflationary, and will remain so until 2140. It's just that the increase in demand is even bigger than the increase in supply. What you're actually asking for is not an inflationary currency, but one that automatically adjusts its inflation rate to the demand. But that's not easy to achieve technically, and even if you could, it comes with its own issues, as the Swiss central bank can tell you.
- JumpCrisscross 9y ago
  > Bitcoin is inflationary, and will remain so until 2140. It's just that the increase in demand is even bigger than the increase in supply Inflation is a measure of prices, not the money supply. Since our economy prices in U.S. dollars and Bitcoin has, for the most part, gone up vis-à-vis the dollar, Bitcoin itself has mostly been deflationary.
  - icebraining 9y ago
    This is quite besides my main point, but in any case, it's your economy, not ours; I don't see why the USD should be the measuring stick. The reality is that the amount of Bitcoin is being inflated every ten minutes.
    - JumpCrisscross 9y ago
      > I don't see why the USD should be the measuring stick For inflation, it's not. A basket of real goods and services is. There are few practical baskets whose price, in Bitcoin, isn't falling.
    - jtmcmc 9y ago
      that is not what inflation means in an economic sense.
    - coralreef 9y ago
      Well, all nation state currencies get printed out of thin air. I don't see the downside to block rewards / BTC creation every X minutes, especially with a fixed supply limit.

21 9y ago

> focus on get rich quick schemes Sorry, but the whole finance (and VC) world is about getting rich quickly. Cryptos, while being more scammy due to newness and lack of regulations, are not fundamentally special in this regard.

cryptonector 9y ago
Sure they are. They are specifically trying to evade national control. Yes, banks create money, but they are regulated, and they are not working to undermine the state (even if they occasionally accidentally cause crises that do undermine the state).
JumpCrisscross 9y ago
> Cryptos, while being more scammy due to newness and lack of regulations, are not fundamentally special in this regard I disagree. Cryptocurrencies are unusually scammy. (Past tech cycles, both those which realized their fruits and which failed, had lots of vaporware. And there were some scams. But the latter are more prevalent in this domain.) My hypothesis for this is in the original sin of Bitcoin: choosing currency as its use case. This primed the space to think of tokens as securities on which the average Joe could get rich quickly, the underlying business be damned. (It also seeded the culture with black market operators.) > the whole finance (and VC) world is about getting rich quickly Which makes the author of this article's efforts to exempt their investments from financial regulation [1] questionable. [1] https://www.wsj.com/articles/cryptocurrency-firms-investors-seek-exemption-from-sec-oversight-1524130200 https://www.wsj.com/articles/cryptocurrency-firms-investors-...
- tylersmith 9y ago
  > My hypothesis for this is in the original sin of Bitcoin: choosing currency as its use case. Maybe I'm misunderstanding you but Bitcoin's entire purpose was to be p2p cash. What other use case would you have suggested if you were advising Satoshi in 2008?
  - JumpCrisscross 9y ago
    > Bitcoin's entire purpose was to be p2p cash Put another way, the blockchain's original sin was Bitcoin. It started the conversation in a scummy way.
    - Erlich_Bachman 9y ago
      Bitcoin is the least scammy of all cryptocurrencies. Clear design, clear values, clear future (in terms of money minted), clear rules. Where is the scam??
    - beaner 9y ago
      There's nothing inherently scummy about money itself. It's just a tool for human organization.
      - Retra 9y ago
        There's nothing inherently scummy about a market, either. But black markets can get pretty scummy. What's the difference? The Clientele?
    - tylersmith 9y ago
      Bitcoin seems to me to be the least scummy of all these new distributed ledger ideas. What kind of use cases for a blockchain do you see as better/more useful/less scummy than currencies?
  - snowwrestler 9y ago
    If p2p cash was the purpose of Bitcoin, it was spectacularly poorly designed for that purpose. I don't mean the cryptographic properties which enabled distributed trust--that's cool. I mean the deflationary combination of a fixed total number of bitcoins, and ever-increasing amounts of energy and time to create new bitcoin. This creates tremendous incentive to create or buy bitcoins and then hold, hold, hold, hold. That's the opposite of what you want for a currency! You want people to spend a currency, and hold assets. Bitcoin today works like an asset, not currency. I don't know if this was the actual idea, and early adopters essentially lied about the currency aspects to prime the bubble; or if the early adopters actually did think it would be a great currency and just got hugely lucky.

icebraining 9y ago

Bitcoin is inflationary, and will remain so until 2140. It's just that the increase in demand is even bigger than the increase in supply. What you're actually asking for is not an inflationary currency, but one that automatically adjusts its inflation rate to the demand. But that's not easy to achieve technically, and even if you could, it comes with its own issues, as the Swiss central bank can tell you.

JumpCrisscross 9y ago
> Bitcoin is inflationary, and will remain so until 2140. It's just that the increase in demand is even bigger than the increase in supply Inflation is a measure of prices, not the money supply. Since our economy prices in U.S. dollars and Bitcoin has, for the most part, gone up vis-à-vis the dollar, Bitcoin itself has mostly been deflationary.
- icebraining 9y ago
  This is quite besides my main point, but in any case, it's your economy, not ours; I don't see why the USD should be the measuring stick. The reality is that the amount of Bitcoin is being inflated every ten minutes.
  - JumpCrisscross 9y ago
    > I don't see why the USD should be the measuring stick For inflation, it's not. A basket of real goods and services is. There are few practical baskets whose price, in Bitcoin, isn't falling.
  - jtmcmc 9y ago
    that is not what inflation means in an economic sense.
  - coralreef 9y ago
    Well, all nation state currencies get printed out of thin air. I don't see the downside to block rewards / BTC creation every X minutes, especially with a fixed supply limit.