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You’ve used the term zero-sum incorrectly. Zero-sum games result in gains equal to losses. Let’s say we all invested in Bitcoin today and only bought from peop

You’ve used the term zero-sum incorrectly. Zero-sum games result in gains equal to losses. Let’s say we all invested in Bitcoin today and only bought from people who had purchased at $10000. Then, in two years, if we sell our Bitcoin for $100000, we all make money. That’s not a zero-sum game because no one lost money.

the_gastropod 5y ago
What you’re describing is precisely a Ponzi scheme. Run the game long enough, the net expected value is 0.
- jkhdigital 5y ago
  What you’re describing is a hand-wavy caricature of the actual definition of Ponzi scheme. Let’s be precise in our language here, please.
  - the_gastropod 5y ago
    From Wikipedia [1] > A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.[1] The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds Do you see a distinction between this and the system theli0nheart described? [1] https://en.wikipedia.org/wiki/Ponzi_scheme https://en.wikipedia.org/wiki/Ponzi_scheme
  - shkkmo 5y ago
    > Let’s be precise in our language here, please. It is pretty silly when people who are calling bitcoin a "currency" and autonomous blockchain agents "smart contracts" complain anytime the term "ponzi scheme" is used for a zero sum speculative asset that only pays out gains to existing holders by bringing in new "investors".
  - jkepler 5y ago
    If you look at the classic definition of a ponzi scheme, bitcoin doesn't fit, though central bank fiat currencies do. See macro economist Lyn Alden's excellent article for the full explanation: https://www.lynalden.com/bitcoin-ponzi-scheme/ https://www.lynalden.com/bitcoin-ponzi-scheme/
ac29 5y ago
Whoever gave you the $100000 lost that money unless they can sell it later for a higher price. Eventually someone will be left holding an empty bag.
- theli0nheart 5y ago
  You’re not describing a zero-sum game. Someone “holding the bag” means nothing—from your understanding, investing in the $SPY would be a zero-sum game as well. Well, it’s not. Unless you think the entire value of our entire world economy will become zero. Merely predicting that the value of something will become zero doesn’t automatically make it zero-sum. In order for a game to be zero-sum, that requirement must be built into the rules of the game. That isn’t true in either of these cases (Bitcoin nor $SPY). From https://en.wikipedia.org/wiki/Zero-sum_game https://en.wikipedia.org/wiki/Zero-sum_game (emphasis added): > Zero-sum games are a specific example of constant sum games where the sum of each outcome is always zero. Such games are distributive, not integrative; the pie cannot be enlarged by good negotiation.
  - onethought 5y ago
    Investing in the $SPY would not at all be a zero sum, because the value invested would be converted ultimately into something of real experiential value (in the form of the goods and services produced by the underlying companies), rather than Bitcoin which by definition is only ever an exchange of value. It is precisely that difference which (I think) makes it zero-sum
    - theli0nheart 5y ago
      > … Bitcoin which by definition is only ever an exchange of value. Even if this was true (it is not) this still does not make an exchange of Bitcoin a zero-sum game. I’ll prove it. Let’s first denominate value in BTC to simplify this. I then mine one Bitcoin with less than 1 BTC-worth of energy (I wouldn’t mine it, otherwise). I now have 1 - (cost of energy) BTC, I then give my BTC to someone else in exchange for a Widget. I now have a Widget, and they have a non-zero amount of BTC. At no point are the sum of our two assets equal to zero, and they never could be. This could never be a zero-sum game, either by definition or in practice. There is always a non-zero net value after adding up all assets and debts between all of the players. My background: I studied Applied Math in college, with a focus in finance, game theory, and computer science. I studied games and game theory extensively.

the_gastropod 5y ago

What you’re describing is precisely a Ponzi scheme. Run the game long enough, the net expected value is 0.

jkhdigital 5y ago
What you’re describing is a hand-wavy caricature of the actual definition of Ponzi scheme. Let’s be precise in our language here, please.
- the_gastropod 5y ago
  From Wikipedia [1] > A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.[1] The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds Do you see a distinction between this and the system theli0nheart described? [1] https://en.wikipedia.org/wiki/Ponzi_scheme https://en.wikipedia.org/wiki/Ponzi_scheme
- shkkmo 5y ago
  > Let’s be precise in our language here, please. It is pretty silly when people who are calling bitcoin a "currency" and autonomous blockchain agents "smart contracts" complain anytime the term "ponzi scheme" is used for a zero sum speculative asset that only pays out gains to existing holders by bringing in new "investors".
- jkepler 5y ago
  If you look at the classic definition of a ponzi scheme, bitcoin doesn't fit, though central bank fiat currencies do. See macro economist Lyn Alden's excellent article for the full explanation: https://www.lynalden.com/bitcoin-ponzi-scheme/ https://www.lynalden.com/bitcoin-ponzi-scheme/

ac29 5y ago

Whoever gave you the $100000 lost that money unless they can sell it later for a higher price. Eventually someone will be left holding an empty bag.

theli0nheart 5y ago
You’re not describing a zero-sum game. Someone “holding the bag” means nothing—from your understanding, investing in the $SPY would be a zero-sum game as well. Well, it’s not. Unless you think the entire value of our entire world economy will become zero. Merely predicting that the value of something will become zero doesn’t automatically make it zero-sum. In order for a game to be zero-sum, that requirement must be built into the rules of the game. That isn’t true in either of these cases (Bitcoin nor $SPY). From https://en.wikipedia.org/wiki/Zero-sum_game https://en.wikipedia.org/wiki/Zero-sum_game (emphasis added): > Zero-sum games are a specific example of constant sum games where the sum of each outcome is always zero. Such games are distributive, not integrative; the pie cannot be enlarged by good negotiation.
- onethought 5y ago
  Investing in the $SPY would not at all be a zero sum, because the value invested would be converted ultimately into something of real experiential value (in the form of the goods and services produced by the underlying companies), rather than Bitcoin which by definition is only ever an exchange of value. It is precisely that difference which (I think) makes it zero-sum
  - theli0nheart 5y ago
    > … Bitcoin which by definition is only ever an exchange of value. Even if this was true (it is not) this still does not make an exchange of Bitcoin a zero-sum game. I’ll prove it. Let’s first denominate value in BTC to simplify this. I then mine one Bitcoin with less than 1 BTC-worth of energy (I wouldn’t mine it, otherwise). I now have 1 - (cost of energy) BTC, I then give my BTC to someone else in exchange for a Widget. I now have a Widget, and they have a non-zero amount of BTC. At no point are the sum of our two assets equal to zero, and they never could be. This could never be a zero-sum game, either by definition or in practice. There is always a non-zero net value after adding up all assets and debts between all of the players. My background: I studied Applied Math in college, with a focus in finance, game theory, and computer science. I studied games and game theory extensively.