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Jeez louise. I guess I give up on my stop misusing the term Ponzi scheme rant. Doge is all sorts of terrible things but it does not meet the traditional technic
by anm89 5y ago
Jeez louise. I guess I give up on my stop misusing the term Ponzi scheme rant. Doge is all sorts of terrible things but it does not meet the traditional technical definition of a ponzi scheme when all of the gains to investors are generated via sale of assets on the open market and they have been totally honest about the nature of the asset from day one (it's a joke, it's a toy, don't take it seriously), and there is no structure of payouts that ensures that money from specific investors gets funneled to other specific investors based on seniority. It literally meets none of the criteria except for the sole fact that people that bought early made money(which is true of literally any asset that has gained in value over a time period).
But I guess Ponzi has been officially redefined to "speculative asset that is in a bubble" at this point if that's what the regulators are going with.
Except what do you call the thing Bernie Madoff did now? Because that had nothing to do with "speculative asset in a bubble".
- paulpauper 5y agoAt this point the term is thrown around so loosely as to be meaningless
- dmingod666 5y agoKind of like 'hacker' now can apply to someone learning html.
- lupire 5y agoIt's also a scheme in which early investors are paid by later investors, not by any form of value creation. The missing part is just the central administrator. A actual ponzi scheme could be called "classical ponzi scheme"
- Sammi 5y agoDoge is a joke that you can own, just like a Weird Al Yankovic CD. It has the same value.
- canadianfella 5y agoHow does it have the same value?
- reidjs 5y agoI never thought of it that way. I might start collecting these shitcoins for their artistic merit.
- plank_time 5y agoExcept Elon musk changed the equation. He legitimized it even though it’s knowingly a joke.
- dcow 5y agoAre you legitimizing Elon?
- Ekaros 5y agoIsn't that what any investment is? Okay, maybe not debt issuance, but secondary market maybe?
- ffggvv 5y agono buying amazon stock pre profit wasn’t a ponzi. because actual value was being created and there is even physical assets backing the value. and presumably some future cash flow to justify the current price. (which it has more than justified) crypto has none of this
- thebean11 5y ago> crypto has none of this It's pretty easy to think of a counterexample to this.. Cross border payments, collateralized loans, drugs, gambling, prediction markets, inflation/instability hedge. Whether or not you disagree that crypto is a good solution for any of these, it's pretty wild to claim "zero utility" in 2021.
- jeltz 5y agoI feel the EU did a much better job at solving cross border payments than crypto has. So I would say crypto is really only interesting for illegal stuff in places with working banks. As long as I do transactions within the EU they are easy and cheap. Which is s good thing the EU forced the banks to do.
- thebean11 5y agoI guess technically that's cross border, but not really what I meant.
- ImprobableTruth 5y agoIf there was a stock that advertised it self as never going to pay dividends/buybacks, I'd totally call it a ponzi scheme.
- riffraff 5y ago> early investors are paid by later investors but they don't, if you bought doge at multiple points in its history you wouldn't have gotten anything and would have lost money. This is just _speculation_, if you call it a Ponzi scheme then buying any precious metal is a Ponzi scheme.
- koonsolo 5y agoExactly. When the price of gold goes up, also no extra value is created.
- dpe82 5y agoSo like the great Beanie Baby ponzi scheme of the mid-90s, then? Or baseball cards? Or art investment?
- hanniabu 5y agoJust like IPOs
- JumpCrisscross 5y ago> like the great Beanie Baby ponzi scheme of the mid-90s, then? Or baseball cards? Or art investment? The quantity of paid promotion for cryptocurrencies is unrivaled by each of those examples save, perhaps, for art.
- Taek 5y agoIs art a Ponzi scheme?
- vultour 5y agoArt is a vehicle for money laundering
- kergonath 5y agoThat’s completely irrelevant. Real estate is a vehicle for money laundering, yet nobody is calling that a Ponzi scheme.
- tolbish 5y agohttps://www.strongtowns.org/the-growth-ponzi-scheme https://www.strongtowns.org/the-growth-ponzi-scheme https://theweek.com/business/1001518/homes-should-not-be-a-store-of-wealth https://theweek.com/business/1001518/homes-should-not-be-a-s... https://www.counterpunch.org/2021/06/11/the-coming-crash/ https://www.counterpunch.org/2021/06/11/the-coming-crash/ You may be in a bubble.
- ffggvv 5y agoyeah it’s just an “open” or decentralized ponzi in which every participant knows it’s a ponzi without the need for a central administrator
- kergonath 5y agoIf every participant knows what’s going on and participates willingly, how is it a fraud? Where is the scam?
- blowski 5y agoExactly, it’s disingenuous to pretend we don’t know what people are talking about when they call it a Ponzi scheme. If on end of the value-creation spectrum we have a local, family-owned shoe factory and at the other we have Ponzi’s scheme itself where would you place Dogecoin? It’s not at the extreme, but it’s definitely closer to the latter. The question is how close it needs to be for it to be illegal.
- thebean11 5y agoI guess, where would you place a publicly traded stock that doesn't pay dividends or do buybacks? Old investors are literally being paid by newer investors, but it doesn't indicate any fraud.
- iforgetti 5y agoA growth stock is engaged in an ongoing value creation process. In your scenario, it is also subject to all of the public disclosure requirements consistent with being a publicly traded company.
- thebean11 5y agoOk, but now you're moving the goalpost. Does "new investors paying old investors" make something a Ponzi scheme or not? The legal definition is much more specific.
- ianai 5y agoStocks actually are piece wise ownership of an operating business.
- stickfigure 5y ago> A growth stock is engaged in an ongoing value creation process. It's popular on HN to complain that companies like Facebook or Amazon destroy value. Or do you mean, create value for shareholders? Facebook and Amazon have never paid a dividend. If you buy stock and hold it all the way to bankruptcy (all companies die, eventually), you will have received no value. > public disclosure requirements Dogecoin, stupid as it is, is far more transparent than the machinations of any corporation.
- reedjosh 5y ago> The missing part is just the central administrator. No, the missing part is the actual fraud. Bernie Madoff for example literally lied about assets under management. Dogecoin is just a digitally scarce ledger, with all there is to know about it publicly and clearly available. It's not fraudulent, just silly--it was built as a joke after all.
- arcticbull 5y agoIt's a decentralized Ponzi scheme. That's the real magic of the blockchain: diffusion of responsibility. Nobody's guilty if everyone is. The overwhelming majority of the liquidity and price action is driven by Tether which of course is backed by thin air. This fake money is used to pump up the price to drive in real money which can then be used to pay off the earlier investors. Taken in isolation no part of the system individually forms a classical Ponzi scheme. However, put the pieces together and it start to look awfully suspicious.
- reedjosh 5y agoThe stock market is pumped up by dollar printing, but nobody calls the S&P a Ponzi scheme, because again, nobody lied. > The overwhelming majority of the liquidity and price action is driven by Tether which of course is backed by thin air. Would you please elaborate on the connection between Doge and Tether? I can get Doge without ever using Tether. Not that I have any Doge.
- arcticbull 5y ago> The stock market is pumped up by dollar printing, but nobody calls the S&P a Ponzi scheme, because again, nobody lied. That's not really how the financial system works. Money enters circulation when someone takes out a loan. It leaves circulation when that loan is repaid. It is low interest rates that cause an increase in asset values. > Would you please elaborate on the connection between Doge and Tether? Tether is 65% of the liquidity in the entire crypto space. Check out the chart for Bitcoin, I think it's even higher for alts but the DOGE coinlib chart isn't right today. [1] > I can get Doge without ever using Tether. Not that I have any Doge. That's my point, USDT is printed - unbacked - pushing the price of Doge up, which drives retail enthusiasm, and retailers then purchase Doge with real dollars. There's other schemes too, I mean, at one point in 2017 99% of all of the world's Litecoin trading volume was two bots at Coinbase trading back and forth between eachother. [2] [1] https://coinlib.io/coin/BTC/Bitcoin https://coinlib.io/coin/BTC/Bitcoin [2] https://www.complianceweek.com/regulatory-enforcement/cftc-fines-coinbase-65m-for-inaccurate-reporting-wash-trading/30184.article https://www.complianceweek.com/regulatory-enforcement/cftc-f...
- LegitShady 5y ago> It's also a scheme in which early investors are paid by later investors, not by any form of value creation. All crypto >The missing part is just the central administrator. tether, including the pre-mining debacle
- deleted 5y ago[deleted]
- shawnz 5y agoNo, any kind of purely speculative investment meets that definition. That is exactly what the other poster is saying. It is a misunderstanding to say that such an asset is a Ponzi scheme.
- frumper 5y agoIf you're an early investor in Facebook and sell, then a later investor is paying for your profits. That isn't a ponzi scheme. It's missing the fraud part where the money isn't really there. Investors may own doge coins that are in a speculative bubble, but they actually have the doge coins they bought. Bernie Maddof's clients didn't have the shares he said they did because he never bought the shares with their money.
- deleted 5y ago[deleted]
- whatshisface 5y agoI think this comment thread is a Ponzi scheme because it is shaped like a pyramid and the highest comments accrue the most upvotes.
- kergonath 5y agoDamn, now I want to make a statistical study. Well, that or have a beer. Priorities…
- anm89 5y agoGold is a ponzi scheme according to your definition. The only way to argue that it isn't but Doge is is based on your subjective opinion of "creating value" but if you take your subjective opinion out of it, they fit the exact same criteria you listed.
- haskellandchill 5y agoI've always thought the way our society views gold is idiotic. Not sure how pointing to gold means anything. Our ancestors were silly people.
- dnautics 5y agoyou're viewing it through a modern (and historically wrong) perspective. I would say our ancestors were incredibly SMART. Imagine yourself in the 15th century. Sorry. 15th century, BC. You want to transact with someone else, but you don't know whether or not to trust them. You need some sort of THING that you can minimally destructively validate is what it is to establish trust in an intersubjective fashion. Well, hey, there is this material that is soft (so you can nondestructively rub off a bit of it) that has a unique color (due to some wierd relativistic quantum mechanics), so that you can have a series of standards that you can test against to evaluate the purity of the material and verify how much of it you have: https://en.wikipedia.org/wiki/Touchstone_(assaying_tool) https://en.wikipedia.org/wiki/Touchstone_(assaying_tool) you can verify the quality of the THING, you don't need a mass spectrometer, you don't need analytical chemistry, you don't need a blockchain or GPU computations. And that's why gold was smart.
- haskellandchill 5y agoTransact? I think you mean stab them.
- dnautics 5y ago> The touchstone was used during the Harappah period of the Indus Valley Civilization ca. 2600–1900 BC So, no, not necessarily stabby.
- Geee 5y agoNo. The important distinction is that in a Ponzi scheme, the central administrator lies about the underlying product. Like all scams, it's based on maximizing information asymmetry between the seller and buyers. Cryptocurrencies are open-source and 100% verifiable, and thus no one is lying about them. Because of this, it's on the buyer if they don't understand what they are buying.
- koonsolo 5y ago> It's also a scheme in which early investors are paid by later investors, not by any form of value creation. This is not correct, since a lot of people hodl. This is 100% buying something that might increase or decrease in value. If it decreases, is it then a "reverse ponzi scheme"? Actually, we could create a real ponzi cryptocurrency, where older wallets get interest from newer wallets. Or that part of the value regularly gets transferred back to the previous transacted wallet. Now THAT would be a ponzi scheme!
- klyrs 5y ago> It's also a scheme in which early investors are paid by later investors, not by any form of value creation. If I'm reading this right, then land ownership is a ponzi scheme?
- HWR_14 5y agoIt seems like a pyramid scheme, not a ponzi scheme. I thought one of the hallmarks of a ponzi scheme was faked financials and/or dividends being paid fraudulently.
- eloff 5y ago> Except what do you call an actual ponzi scheme now? Yeah, that's the problem with bandying words around without care to their meaning. This is happening with fascists/ Nazis more often lately in society. I feel that's a bad thing because there are still torch carrying Nazis out there, they're dangerous, and now we don't have a word for them that carries the same weight. It gets watered down when you use it to refer to anyone center or right of center politically. Jordan Peterson is a Canadian, mostly liberal, left of center academic and the press frequently refers to him as fascist. That just doesn't work.
- isoprophlex 5y ago"Extreme right activists/terrorists with Nazi sympathies"?
- ghufran_syed 5y agoWhat evidence is there for widespread “nazi sympathies”? As opposed to tiny numbers of idiots? https://www.rollingstone.com/politics/politics-news/all-american-nazis-628023/ https://www.rollingstone.com/politics/politics-news/all-amer... https://en.m.wikipedia.org/wiki/Neo-Nazism https://en.m.wikipedia.org/wiki/Neo-Nazism
- eloff 5y agoThe OP did not use the word widespread. You're right there's no evidence it is widespread in the US. Maybe in some other counties.
- LatteLazy 5y agoI wouldn't call him a fascist. That said, there are a lot of fascists in the mainstream right now. And the number of swastikas (of a non-religious nature) is the highest its been since about 1945...
- CalChris 5y agoSpeaking of bandying words, when Peterson refers to himself as a classical British liberal, he means free market and not progressive. The NYTimes rates him as conservative leaning. https://en.wikipedia.org/wiki/Jordan_Peterson#Political_views https://en.wikipedia.org/wiki/Jordan_Peterson#Political_view...
- deleted 5y ago[deleted]
- ssully 5y agoThe traditional definition doesn't fit; I prefer to think of it as a distributed con.
- dundermuffl1n 5y agoSeems like a narrow understanding of a ponzi scheme based on a particular execution of the concept. I think Doge could still be correctly branded a ponzi scheme, since the returns for an investor is essentially tied to the number of suckers that buy into it after them. An early investor can take a "structured payout" by selling off the asset once the hype-cycle is creating more and more suckers who buy into the idea. The fact that it was a joke has been diluted from the mass media, mostly due to irresponsible messaging by idiots like Elon.
- gruez 5y ago>I think Doge could still be correctly branded a ponzi scheme, since the returns for an investor is essentially tied to the number of suckers that buy into it after them Is social security a ponzi scheme?
- prionassembly 5y agoIn the same exact sense the death penalty is murder. Kind of, but excused by state power.
- gruez 5y agoLooks like dictionary writers have that covered. "murder" only covers unlawful killings by definition. https://en.wiktionary.org/wiki/murder https://en.wiktionary.org/wiki/murder https://www.merriam-webster.com/dictionary/murder https://www.merriam-webster.com/dictionary/murder
- topspin 5y ago"I think Doge could still be correctly branded a ponzi scheme" No, the essential element of deception is absent. A Ponzi scheme involves deceiving investors. Doge isn't deceiving anyone. It's upsetting people, especially celebrity establishment types looking to make headlines, but that's not deception. Naturally when the bubble pops the losers will claim they were deceived. They'll be fools and their claims will be specious but in a world where most 'problems' are self-inflicted they'll find an ample number of said celebrity establishment types to indulge that narrative and invent new regulators and criminalize more things... Dreary is the word that comes to mind.
- rdiddly 5y agoIt's worth noting that the quote from Kashkari isn't even included, so without looking at some other source we don't know whether he even used the word Ponzi. Or for that matter, whether he illiterately said "a Ponzi" like this article does, or please-for-the-love-of-god included the word "scheme." This article is kind of crap in other ways too, and I have branded it a shitty (sic). On Twitter so-and-so said this and then so-and-so said this (not quoted), and a year ago he also said this!
- jetrink 5y agoSomeone on Twitter started a poll on how to pronounce Doge and Kashkari replied, "The right pronunciation is pon-zi." It's probably just an ill-considered joke and not intended to be taken literally. Someone in his position should be less careless though. 1. https://www.linkedin.com/posts/paul-grewal-288978b4_grabbing-a-taco-at-lunch-today-i-was-in-activity-6809628094991880192-jlky/ https://www.linkedin.com/posts/paul-grewal-288978b4_grabbing...
- bestcoder69 5y agoIf the currency itself is a joke it seems fair game for anyone to make fun of it.
- rdiddly 5y agoAha, thank you for your service.
- skybrian 5y ago"Ponzi scheme" was never particularly well defined. Paying off early investors with new fundraising is pretty common. It's all in the intent, which is sometimes hard to prove, but easier when it involves lots of lying.
- CogitoCogito 5y agoMaybe we need to consider the "scheme" part as fundamentally important to the concept.
- pyrrhotech 5y agoDid you know terms evolve in English and often come to mean similar though not exactly the same thing after some decades or centuries? Of course it doesn't exactly match the original scheme of Charles Ponzi (even Madoff didn't), but there are enough similarities for it to be an apt comparison
- kerng 5y agoBad article. Probably worth highlighting that I could not find a single direct reference to Neel Kashkar (the person who apparently said that, actually saying that it's a Ponzi scheme. He used "dumpster fire" in past, which is quite different. He knows that it's not a Ponzi scheme, because there is no fraud. It's like the dollae, stocks, interest, money printing and some VC investments, etc. which aren't usually Ponzi scheme either because it's not illegal.
- lalaland1125 5y agoThe raw source is LinkedIn. It's one of the comments on the following post: https://www.linkedin.com/posts/paul-grewal-288978b4_grabbing-a-taco-at-lunch-today-i-was-in-activity-6809628094991880192-jlky https://www.linkedin.com/posts/paul-grewal-288978b4_grabbing... Neel Kashkari: The right pronunciation is pon-zi. Note that you will need to log in in order to see all the comments.
- kerng 5y agoThanks for sharing.