5 ms·

Bitcoin looks nothing like a pyramid scheme. There is a relationship between the value of a bitcoin and the demand, but that's true for any product.

hugh3 15y ago
Bitcoin looks exactly like a pyramid scheme from a money-transfer point of view. Money gets shifted from gullible suckers to the folks who invent the scheme, until one day you run out of people willing to sign on for the scheme, at which point everything collapses and the late adopters are left holding the bag. It's kinda sad. I think when it happens I'll make like edw519 and self-publish a book "The Best Of Hugh3" in which I publish all my "told you so" comments. And hey, maybe just to be charitable I'll sell copies for a million bitcoins each!
- weavejester 15y ago
  You don't appear to understand how Bitcoin works. Money does not shift from new investors to the creators of Bitcoin. I'm not quite sure what confusion of ideas lead you to believe this.
  - gammarator 15y ago
    0) Bitcoins were easiest to mine at the beginning => the creators & early adopters have a large number of bitcoins 1) New investors demanding a finite supply of bitcoins are increasing the exchange rate of bitcoins/dollar. 2) Early holders of large volumes of bitcoins can therefore cash in their bitcoins for a great deal of real money from new investors desiring to enter the market. ergo, money shifts from new investors to the creators. (If the creators are smart enough to cash out. Which it seems they are, as Satoshi has disappeared. http://en.wikipedia.org/wiki/Satoshi_Nakamoto http://en.wikipedia.org/wiki/Satoshi_Nakamoto)
    - weavejester 15y ago
      What you describe is a free market trading a limited resource; not a pyramid scheme. In a pyramid scheme the wealth always flows up to the creator of the scheme, but the creators of Bitcoin can only make money by selling their own bitcoins - they don't get a cut when anybody else does.
  - sorbus 15y ago
    > Money does not shift from new investors to the creators of Bitcoin. I'm not quite sure what confusion of ideas lead you to believe this. Please explain how new investors obtain bitcoins, if not from the original members of the system (some of the early users have 1% of the total bitcoins, I recall hearing). Yes, there's mining, but that's not an effective way to transform money into bitcoins - I mean, say that I wanted 1000 bitcoins. Building an expensive new computer to mine and waiting for them to magically appear is not how I would go about it.
    - weavejester 15y ago
      People obtain bitcoins by buying them from other people, who are typically miners or people who bought a lot of bitcoins early and want to cash out a proportion of their worth. However, the people responsible for creating the bitcoin protocol only benefit financially if they sell their own bitcoins, or if an increase in demand raises the price bitcoins are trading at. The Bitcoin economy is a free market; people can buy and sell bitcoins and will, and any profits they might make are entirely governed by supply and demand.

hugh3 15y ago

Bitcoin looks exactly like a pyramid scheme from a money-transfer point of view. Money gets shifted from gullible suckers to the folks who invent the scheme, until one day you run out of people willing to sign on for the scheme, at which point everything collapses and the late adopters are left holding the bag. It's kinda sad. I think when it happens I'll make like edw519 and self-publish a book "The Best Of Hugh3" in which I publish all my "told you so" comments. And hey, maybe just to be charitable I'll sell copies for a million bitcoins each!

weavejester 15y ago
You don't appear to understand how Bitcoin works. Money does not shift from new investors to the creators of Bitcoin. I'm not quite sure what confusion of ideas lead you to believe this.
- gammarator 15y ago
  0) Bitcoins were easiest to mine at the beginning => the creators & early adopters have a large number of bitcoins 1) New investors demanding a finite supply of bitcoins are increasing the exchange rate of bitcoins/dollar. 2) Early holders of large volumes of bitcoins can therefore cash in their bitcoins for a great deal of real money from new investors desiring to enter the market. ergo, money shifts from new investors to the creators. (If the creators are smart enough to cash out. Which it seems they are, as Satoshi has disappeared. http://en.wikipedia.org/wiki/Satoshi_Nakamoto http://en.wikipedia.org/wiki/Satoshi_Nakamoto)
  - weavejester 15y ago
    What you describe is a free market trading a limited resource; not a pyramid scheme. In a pyramid scheme the wealth always flows up to the creator of the scheme, but the creators of Bitcoin can only make money by selling their own bitcoins - they don't get a cut when anybody else does.
- sorbus 15y ago
  > Money does not shift from new investors to the creators of Bitcoin. I'm not quite sure what confusion of ideas lead you to believe this. Please explain how new investors obtain bitcoins, if not from the original members of the system (some of the early users have 1% of the total bitcoins, I recall hearing). Yes, there's mining, but that's not an effective way to transform money into bitcoins - I mean, say that I wanted 1000 bitcoins. Building an expensive new computer to mine and waiting for them to magically appear is not how I would go about it.
  - weavejester 15y ago
    People obtain bitcoins by buying them from other people, who are typically miners or people who bought a lot of bitcoins early and want to cash out a proportion of their worth. However, the people responsible for creating the bitcoin protocol only benefit financially if they sell their own bitcoins, or if an increase in demand raises the price bitcoins are trading at. The Bitcoin economy is a free market; people can buy and sell bitcoins and will, and any profits they might make are entirely governed by supply and demand.