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That's still not a Ponzi scheme unless you are also lying to investors by telling them that the returns are coming from some kind of business venture or somethi

by shawnz 6y ago

That's still not a Ponzi scheme unless you are also lying to investors by telling them that the returns are coming from some kind of business venture or something. Investors willingly speculating on commodities because they think they will rise isn't a Ponzi scheme.

graeme 6y ago
The possible ponzi is people claiming Bitcoin will replace the existing financial system due to its intrinsic superior qualities and will go to $1 million and beyond. The HODLers don’t believe they are merely speculating. Of course that could be true, and people saying it may well believe it. Ponzi believed his international reply coupon scheme would actually pay out. So to some extent it will only be proveable in hindsight.
- shawnz 6y ago
  That's not a Ponzi scheme. Misleading investors about the potential of a technology isn't a Ponzi scheme. You have to mislead them about the origin of the returns they are getting.
  - graeme 6y ago
    If the technology in fact has no such potential I fail to see the distinction. Particularly when the actual mechanism of raising value for early investors is convincing more to come in based on that narrative, but old investors can only cash out from new ones.
    - shawnz 6y ago
      The distinction is that any investor can form their own opinion about the technology equally well. We don't, and can't dictate to investors what technologies they ought to consider worth investing in. The mechanism you are describing is the mechanism by which every speculative investment works. That's not what identifies a Ponzi scheme. In fact it specifically can't be a Ponzi scheme if the old investors are aware that the returns are coming from new investors.
      - graeme 6y ago
        > The mechanism you are describing is the mechanism by which every speculative investment works. That’s not true. Most speculative investment promise revenues if they succeed. For your last sentence, why would that be true? In the case of bitcoin, the early investors have been led to believe that later investors will need to invest. But this can easily be false.
        shawnz 6y ago
        > That’s not true. Most speculative investment promise revenues if they succeed. That wouldn't be speculative then (at least not completely) > For your last sentence, why would that be true? Because it's not a Ponzi scheme unless you are lying about the origin of the returns which you are giving to investors.
        graeme 6y ago
        > That wouldn't be speculative then (at least not completely) Can you give an example of non crypto speculative investments which are not expected to produce revenues? That’s how 100% of business promise to eventually provide returns. Even real estate is rents. Collectibles such as sports cards and art are the one exception category I can think of. > Because it's not a Ponzi scheme unless you are lying about the origin of the returns which you are giving to investors. Yes that was my point. Bitcoin could be a distributed Ponzi, where people make representations about bitcoin’s eventual value through network value, but it turns out there is nothing to it. There’s no single agent telling a lie but it has the same effect. To make the limit argument: if bitcoin was run by a single person selling coins and claiming their value would go up because of network value, but this claim was not true, this would be a ponzi correct? Assuming the proferred proof was reported coin value appreciation to date. (I.e. the returns)
        shawnz 6y ago
        > Can you give an example of non crypto speculative investments which are not expected to produce revenues? How about any commodity or foreign currency? Gold, oil, etc. > That’s how 100% of business promise to eventually provide returns. Exactly. Since Bitcoin obviously isn't a business, it couldn't be a Ponzi scheme (because investors in Bitcoin aren't being mislead into believing that the returns are coming from a business activity). > To make the limit argument: if bitcoin was run by a single person selling coins and claiming their value would go up because of network value, but this claim was not true, this would be a ponzi correct? Assuming the proferred proof was reported coin value appreciation to date. (I.e. the returns) No, that couldn't be a Ponzi scheme because the person isn't lying about the origin of the returns. They really do come from other investors. That might be considered a pyramid scheme, though.
user-the-name 6y ago
The lie is that your bitcoins are worth, today, 62000 USD each. Again, this is not an organised Ponzi scheme, but it is functionality identical anyway.
- shawnz 6y ago
  That isn't a lie, I think you are just misunderstanding what you are looking at. When Coinbase (or whoever) shows a bitcoin price of 62000, what they are saying is that in their order book they have customers waiting to buy and sell bitcoins at that price right now. It is not just a made up number, it is actually the place where the demand between buyers and sellers is being met right now. If you think that price is too high, then sell some for cheaper and you will take some of the high-price buyers off the market, therefore lowering the actual fair price of bitcoin. > this is not an organised Ponzi scheme, but it is functionality identical anyway. Functionally, a Ponzi scheme requires that investors are being deceived about the origins of their returns. What you are describing just isn't anything like a Ponzi scheme at all and it is a misunderstanding of what they are.

by shawnz 6y ago

graeme 6y ago

The possible ponzi is people claiming Bitcoin will replace the existing financial system due to its intrinsic superior qualities and will go to $1 million and beyond. The HODLers don’t believe they are merely speculating. Of course that could be true, and people saying it may well believe it. Ponzi believed his international reply coupon scheme would actually pay out. So to some extent it will only be proveable in hindsight.

shawnz 6y ago
That's not a Ponzi scheme. Misleading investors about the potential of a technology isn't a Ponzi scheme. You have to mislead them about the origin of the returns they are getting.
- graeme 6y ago
  If the technology in fact has no such potential I fail to see the distinction. Particularly when the actual mechanism of raising value for early investors is convincing more to come in based on that narrative, but old investors can only cash out from new ones.
  - shawnz 6y ago
    The distinction is that any investor can form their own opinion about the technology equally well. We don't, and can't dictate to investors what technologies they ought to consider worth investing in. The mechanism you are describing is the mechanism by which every speculative investment works. That's not what identifies a Ponzi scheme. In fact it specifically can't be a Ponzi scheme if the old investors are aware that the returns are coming from new investors.
    - graeme 6y ago
      > The mechanism you are describing is the mechanism by which every speculative investment works. That’s not true. Most speculative investment promise revenues if they succeed. For your last sentence, why would that be true? In the case of bitcoin, the early investors have been led to believe that later investors will need to invest. But this can easily be false.
      - shawnz 6y ago
        > That’s not true. Most speculative investment promise revenues if they succeed. That wouldn't be speculative then (at least not completely) > For your last sentence, why would that be true? Because it's not a Ponzi scheme unless you are lying about the origin of the returns which you are giving to investors.
        graeme 6y ago
        > That wouldn't be speculative then (at least not completely) Can you give an example of non crypto speculative investments which are not expected to produce revenues? That’s how 100% of business promise to eventually provide returns. Even real estate is rents. Collectibles such as sports cards and art are the one exception category I can think of. > Because it's not a Ponzi scheme unless you are lying about the origin of the returns which you are giving to investors. Yes that was my point. Bitcoin could be a distributed Ponzi, where people make representations about bitcoin’s eventual value through network value, but it turns out there is nothing to it. There’s no single agent telling a lie but it has the same effect. To make the limit argument: if bitcoin was run by a single person selling coins and claiming their value would go up because of network value, but this claim was not true, this would be a ponzi correct? Assuming the proferred proof was reported coin value appreciation to date. (I.e. the returns)
        shawnz 6y ago
        > Can you give an example of non crypto speculative investments which are not expected to produce revenues? How about any commodity or foreign currency? Gold, oil, etc. > That’s how 100% of business promise to eventually provide returns. Exactly. Since Bitcoin obviously isn't a business, it couldn't be a Ponzi scheme (because investors in Bitcoin aren't being mislead into believing that the returns are coming from a business activity). > To make the limit argument: if bitcoin was run by a single person selling coins and claiming their value would go up because of network value, but this claim was not true, this would be a ponzi correct? Assuming the proferred proof was reported coin value appreciation to date. (I.e. the returns) No, that couldn't be a Ponzi scheme because the person isn't lying about the origin of the returns. They really do come from other investors. That might be considered a pyramid scheme, though.

user-the-name 6y ago

The lie is that your bitcoins are worth, today, 62000 USD each. Again, this is not an organised Ponzi scheme, but it is functionality identical anyway.

shawnz 6y ago
That isn't a lie, I think you are just misunderstanding what you are looking at. When Coinbase (or whoever) shows a bitcoin price of 62000, what they are saying is that in their order book they have customers waiting to buy and sell bitcoins at that price right now. It is not just a made up number, it is actually the place where the demand between buyers and sellers is being met right now. If you think that price is too high, then sell some for cheaper and you will take some of the high-price buyers off the market, therefore lowering the actual fair price of bitcoin. > this is not an organised Ponzi scheme, but it is functionality identical anyway. Functionally, a Ponzi scheme requires that investors are being deceived about the origins of their returns. What you are describing just isn't anything like a Ponzi scheme at all and it is a misunderstanding of what they are.