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Bitcoin is less like a Ponzi scheme and more like, as one journalist once described it, "math beanie babies".

deleted 6y ago
[deleted]
Jeff_Brown 6y ago
In that sense they're not much different. Beanie babies formed a speculative bubble too. One might quibble that the phrase "Ponzi scheme" suggests conscious intent to deceive. That's a hard thing to prove, and largely economically immaterial. Putting questions of intent aside, every speculative bubble is a Ponzi scheme: buyers plan to sell for more money, and eventually can't.
- Udik 6y ago
  > buyers plan to sell for more money, and eventually can't. This also holds for all those shares that don't pay dividends: Alphabet, Amazon, etc.
  - Jeff_Brown 6y ago
    Sometimes -- it depends on the investor. Other investors want non-paying stocks today because they will presumably start paying dividends someday. And in a perfectly rational world, the only reason the first kind of investor would have for believing they could sell at a profit would be because they anticipate the second kind of investor's beliefs.
- smnrchrds 6y ago
  I think you are mixing up Ponzi scheme and pyramid scheme.
  - Jeff_Brown 6y ago
    You're right, thanks. (For anyone else unaware of the difference, Ponzi schemes are financial fraud and always illegal; pyramid schemes form a more inclusive set.)
Sammi 6y ago
No. Beanie Babies can be mass produced at will. And so can Tulips for that matter. That's why those are bubbles that will burst. The whole thing that makes Bitcoin special is that you can't just ramp up the supply of it. The supply of Bitcoin is even better known than that of gold. It's also easier to store and transport. So Bitcoin is a better store of value than gold.
- Dylan16807 6y ago
  They already did strongly limit the supply of beanie babies to increase hype, at least for many variants. The problem wasn't the supply, it was that the value was entirely based on speculation. And bitcoin won't be a better store of value until we can be sure the demand for it will last a very long time.
  - Sammi 6y ago
    The supply of Beanie Babies isn't guaranteed to be limited. You are trusting the behavior of one company. The demand of Bitcoin has only ever increased in the long term. It has already gone further up after three huge temporary bubbles. You really feel comfortable to bet against this long term trend?
    - Dylan16807 6y ago
      The supply of "first run X" is guaranteed to be limited, though. > The demand of Bitcoin has only ever increased in the long term. It has already gone further up after three huge temporary bubbles. You really feel comfortable to bet against this long term trend? I'm talking about multiple lifetimes to truly be long term, not fives of years. Bitcoin won't be a good store of value until it calms down. The demand can't go up forever, and even if it's guaranteed to stay very very very high, what if you buy in when it's very very very very high?
      - Sammi 6y ago
        > The supply of "first run X" is guaranteed to be limited, though. Yeah like art and first edition books, sure. > Bitcoin won't be a good store of value until it calms down. It is at a trillion dollar market cap already. Only one single 10x away from gold. The long term regression on the Bitcoin price says that it will flip gold in less than 5 years. > what if you buy in when it's very very very very high? You hold. Or hodl as the memers say. Bitcoin is a black hole and it will swallow everything else, because it is better than everything else on every metric. Yes it even uses less power than fiat or gold.

deleted 6y ago

[deleted]

In that sense they're not much different. Beanie babies formed a speculative bubble too. One might quibble that the phrase "Ponzi scheme" suggests conscious intent to deceive. That's a hard thing to prove, and largely economically immaterial. Putting questions of intent aside, every speculative bubble is a Ponzi scheme: buyers plan to sell for more money, and eventually can't.

Udik 6y ago
> buyers plan to sell for more money, and eventually can't. This also holds for all those shares that don't pay dividends: Alphabet, Amazon, etc.
- Jeff_Brown 6y ago
  Sometimes -- it depends on the investor. Other investors want non-paying stocks today because they will presumably start paying dividends someday. And in a perfectly rational world, the only reason the first kind of investor would have for believing they could sell at a profit would be because they anticipate the second kind of investor's beliefs.
smnrchrds 6y ago
I think you are mixing up Ponzi scheme and pyramid scheme.
- Jeff_Brown 6y ago
  You're right, thanks. (For anyone else unaware of the difference, Ponzi schemes are financial fraud and always illegal; pyramid schemes form a more inclusive set.)

Sammi 6y ago

No. Beanie Babies can be mass produced at will. And so can Tulips for that matter. That's why those are bubbles that will burst. The whole thing that makes Bitcoin special is that you can't just ramp up the supply of it. The supply of Bitcoin is even better known than that of gold. It's also easier to store and transport. So Bitcoin is a better store of value than gold.

Dylan16807 6y ago
They already did strongly limit the supply of beanie babies to increase hype, at least for many variants. The problem wasn't the supply, it was that the value was entirely based on speculation. And bitcoin won't be a better store of value until we can be sure the demand for it will last a very long time.
- Sammi 6y ago
  The supply of Beanie Babies isn't guaranteed to be limited. You are trusting the behavior of one company. The demand of Bitcoin has only ever increased in the long term. It has already gone further up after three huge temporary bubbles. You really feel comfortable to bet against this long term trend?
  - Dylan16807 6y ago
    The supply of "first run X" is guaranteed to be limited, though. > The demand of Bitcoin has only ever increased in the long term. It has already gone further up after three huge temporary bubbles. You really feel comfortable to bet against this long term trend? I'm talking about multiple lifetimes to truly be long term, not fives of years. Bitcoin won't be a good store of value until it calms down. The demand can't go up forever, and even if it's guaranteed to stay very very very high, what if you buy in when it's very very very very high?
    - Sammi 6y ago
      > The supply of "first run X" is guaranteed to be limited, though. Yeah like art and first edition books, sure. > Bitcoin won't be a good store of value until it calms down. It is at a trillion dollar market cap already. Only one single 10x away from gold. The long term regression on the Bitcoin price says that it will flip gold in less than 5 years. > what if you buy in when it's very very very very high? You hold. Or hodl as the memers say. Bitcoin is a black hole and it will swallow everything else, because it is better than everything else on every metric. Yes it even uses less power than fiat or gold.