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This discussion has no value if you were the only one participating. Facebook has no value if there are no "friends" to interact with. My point is, the same ki

by vekker 5y ago

This discussion has no value if you were the only one participating. Facebook has no value if there are no "friends" to interact with. My point is, the same kind of network effects that make social media valuable, are also inherent to cryptocurrencies like BTC. Metcalfe's law applies. Just like fiat currencies, actually. So yes, new entrants are obviously important to achieve an increase in value (and therefore, price). But does that necessarily make it a Ponzi scheme? I don't think so, because a Ponzi is fraud, a scam, by definition. It needs to be done with the malicious intent of stealing the money of new entrants. That's not the case here. Of course new entrants might be convinced by speculators seeking profit to buy in when BTC is actually highly overvalued, but, the same applies to any other investment really (look at what's happening to TSLA).

notahacker 5y ago
It's not the "same kind of network effects" though. It'd be the same kind of network effects if the only reason people had Facebook (or telecoms) accounts is because they thought someone else might buy their account off them for more money. And if a social network came along with that value proposition - "sure, it doesn't actually do anything but the fact I sold some to this other sucker at a higher price than I bought it proves it's a store of value" - nobody would hesitate to call it a pyramid scheme.
- vekker 5y ago
  But it does do something and network effects have a tremendous positive impact on that utility: cryptocurrencies provide us platforms for decentralized finance. Make of that what you will; payments, providing liquidity, lending, storing value, whatever ... These trustless systems are what give cryptocurrency some intrinsic value which increases logarithmically with the number of participants in the network. I don't think this will disappear any time soon, on the contrary. Usage will increase as the technology develops and the world becomes ever more interconnected.

by vekker 5y ago

notahacker 5y ago

It's not the "same kind of network effects" though. It'd be the same kind of network effects if the only reason people had Facebook (or telecoms) accounts is because they thought someone else might buy their account off them for more money. And if a social network came along with that value proposition - "sure, it doesn't actually do anything but the fact I sold some to this other sucker at a higher price than I bought it proves it's a store of value" - nobody would hesitate to call it a pyramid scheme.

vekker 5y ago
But it does do something and network effects have a tremendous positive impact on that utility: cryptocurrencies provide us platforms for decentralized finance. Make of that what you will; payments, providing liquidity, lending, storing value, whatever ... These trustless systems are what give cryptocurrency some intrinsic value which increases logarithmically with the number of participants in the network. I don't think this will disappear any time soon, on the contrary. Usage will increase as the technology develops and the world becomes ever more interconnected.