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Imagine living in a civilized country that can't bring itself to ban a massive distributed Ponzi scheme with huge environmental consequences. Bitcoin alone uses

Imagine living in a civilized country that can't bring itself to ban a massive distributed Ponzi scheme with huge environmental consequences. Bitcoin alone uses about 1/10th as much energy as the entire world's concrete production. Even if it were to transition entirely to renewable energy it also generates as much e-waste as an entire first-world country. These things actually have huge meaningful state security risks. Not too long ago the entire country of Albania got swept up in Ponzi schemes. It go so bad, they imprisoned their finance minister for trying to stop it. Then they had a civil war about it. The IMF had to airdrop in bags of money to bail them out. [1] 1997 Albania is what the maxis are working towards. In this case the PRC not only has the moral high ground, but also is acting out of a real, rational fear of economic collapse. If America had any sense, it would put the ban hammer down on this before it gets any worse. [1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...

gfodor 5y ago
It's going to look a lot less like a Ponzi scheme if/when the dollar collapses.
- arcticbull 5y ago
  No, it won't. It's a negative-sum system that redistributes wealth from new entrants to old entrants and miners. It's a pyramid. And what exact path do you see a 'dollar collapse'?
  - gfodor 5y ago
    Sorry, I'm not going to be dragged into a debate about if/when the collapse will happen. But if it does, your claim bitcoin is a pyramid will look silly, since it will be one of several assets that will be rushed into as a safe haven from inflationary forces. If you want to take the position such a collapse would cause a flight from crypto assets, be my guest.
    - arcticbull 5y ago
      In the mad max future you describe the only currency will be guns and ammo. Crypto requires a functional power grid and internet.
      - gfodor 5y ago
        False - there are plenty of scenarios where you have a power grid and ability to reach the Internet and still need to transact illegally to survive.
    - imtringued 5y ago
      The value of cryptocurrency depends on how much people are willing to provide goods and services in exchange for cryptocurrency. If people are just trading crypto:dollar then a dollar collapse could destroy crypto too.
      - chii 5y ago
        It the dollar collapsed, but the internet & support infrastructure remained, then people might be more willing to accept bitcoin over dollars.
  - olalonde 5y ago
    Gold and the US dollar, to some extent, fit that characterization as well.
- jollybean 5y ago
  In a time of economic calamity, if you think your grocery store will take 'Coolbits', or their employees will take 'WokeCoin' as payment, or suppliers will accept 'TrumpGoldBucks' I think you'd be mistaken. If there were a serious problem with the USD, first, because of it's seigneurage position in the world, it would imply a 'giant crisis'. It would be bad. People would switch to other currencies like Euros, Pounds, Canadian / Australian Dollars and Swiss Franks, RMB and Yen because they are fungible and transactable. Gold and other commodities would increase in value, but only as stores of value, they're not good for transactions.
  - gfodor 5y ago
    Nobody said the grocery store would take crypto. But you'd park your capital in places that are safe havens and convert out as late as possible to the (increasingly worthless) dollars. Arguably we're already at a place where keeping any non-emergency funds in USD is a terrible idea. My point is exactly what you said: that you'd see a flight of capital to hard assets like gold and bitcoin to shield it from inflationary forces and their contagion. In that scenario, bitcoin is no more a "ponzi" than gold.
    - jollybean 5y ago
      Crypto is a delusion. It's a very bad idea to move money into an 'asset' that has no value other than to the degree other people share that delusion. Real-estate is valuable on some level, so are most other assets - even 'currencies', however poorly managed, are valuable because people need them to do stuff. The worst place to go is crypto, it's the bottom of the 'store of value' equation in almost every way - the fact that the government would wipe them out immediately being just one of many risks. Cypto, at least the way they exist today, have no rational place in anything other than for entertainment and intellectual speculation.
      - gfodor 5y ago
        Your opinion is duly noted, my opinion is that your opinion has little bearing on what the price of BTC will be if the purchasing power of a dollar drops quickly. My prediction is that demand for it will surge and so the price will go up somewhat inversely. I'll note that you're not taking the counter position, just stating why that would be a "very bad idea" for people to demand it. I'm guessing you've been saying the same thing as the price has gone up to $50k. At some point you'll either be proven right in a massive collapse or will have to capitulate that the market is not irrational. What is your threshold? (Year/price threshold where you'd capitulate.) If you're on your death bed and BTC is worth $1M, will you change your mind, or just presume you didn't live long enough to see yourself proven right?
- tablespoon 5y ago
  > It's going to look a lot less like a Ponzi scheme if/when the dollar collapses. Even if it does, Bitcoin may very well collapse before the dollar.
nightski 5y ago
It doesn't even meet the basic definition of a ponzi scheme. This is pure FUD. You might not like it, but that doesn't make it something it is not. There are plenty of other things that I would consider a waste of electricity but I am not going to make doing them punishable by hard labor.
- arcticbull 5y ago
  It's a negative sum wealth redistribution scheme the takes money from new entrants and gives it to miners and to old entrants. The miner portion is what makes it negative-sum. It doesn't meet the traditional definition, no, which is why I referred to it as a "distributed Ponzi scheme" - it's closer to an MLM in classical parlance. [edit] Here's the SEC definition: > A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves. > With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse. And here are the red flags that the SEC warns folks to watch for: > High returns with little or no risk. > Unregistered investments. > Unlicensed sellers. > Secretive, complex strategies. [edit2] So with that in mind, it meets many (but not all) of the classic definition elements. 1. All returns are generated by bringing new money into the system. The only way someone can make money on Bitcoin is if a new person invests. That money is then distributed to the earlier participant, net of miner fees. 2. There is no actual business underlying. 3. The constant flow of new money is required to keep the price from collapsing because miners extract something like $50M in welfare from the system per day. 4. The entire space is unregistered investments hawked by unlicensed sellers.
  - nightski 5y ago
    Miner fees are paid from transaction fees (since mining is quite literally verifying transactions). You don't lose value for miners being paid.
gremloni 5y ago
Imagine lumping all cryptocurrency into proof of work.
celticninja 5y ago
Because banning technology works so well.
- arcticbull 5y ago
  We ban all kinds of tech.

gfodor 5y ago

It's going to look a lot less like a Ponzi scheme if/when the dollar collapses.

arcticbull 5y ago
No, it won't. It's a negative-sum system that redistributes wealth from new entrants to old entrants and miners. It's a pyramid. And what exact path do you see a 'dollar collapse'?
- gfodor 5y ago
  Sorry, I'm not going to be dragged into a debate about if/when the collapse will happen. But if it does, your claim bitcoin is a pyramid will look silly, since it will be one of several assets that will be rushed into as a safe haven from inflationary forces. If you want to take the position such a collapse would cause a flight from crypto assets, be my guest.
  - arcticbull 5y ago
    In the mad max future you describe the only currency will be guns and ammo. Crypto requires a functional power grid and internet.
    - gfodor 5y ago
      False - there are plenty of scenarios where you have a power grid and ability to reach the Internet and still need to transact illegally to survive.
  - imtringued 5y ago
    The value of cryptocurrency depends on how much people are willing to provide goods and services in exchange for cryptocurrency. If people are just trading crypto:dollar then a dollar collapse could destroy crypto too.
    - chii 5y ago
      It the dollar collapsed, but the internet & support infrastructure remained, then people might be more willing to accept bitcoin over dollars.
- olalonde 5y ago
  Gold and the US dollar, to some extent, fit that characterization as well.
jollybean 5y ago
In a time of economic calamity, if you think your grocery store will take 'Coolbits', or their employees will take 'WokeCoin' as payment, or suppliers will accept 'TrumpGoldBucks' I think you'd be mistaken. If there were a serious problem with the USD, first, because of it's seigneurage position in the world, it would imply a 'giant crisis'. It would be bad. People would switch to other currencies like Euros, Pounds, Canadian / Australian Dollars and Swiss Franks, RMB and Yen because they are fungible and transactable. Gold and other commodities would increase in value, but only as stores of value, they're not good for transactions.
- gfodor 5y ago
  Nobody said the grocery store would take crypto. But you'd park your capital in places that are safe havens and convert out as late as possible to the (increasingly worthless) dollars. Arguably we're already at a place where keeping any non-emergency funds in USD is a terrible idea. My point is exactly what you said: that you'd see a flight of capital to hard assets like gold and bitcoin to shield it from inflationary forces and their contagion. In that scenario, bitcoin is no more a "ponzi" than gold.
  - jollybean 5y ago
    Crypto is a delusion. It's a very bad idea to move money into an 'asset' that has no value other than to the degree other people share that delusion. Real-estate is valuable on some level, so are most other assets - even 'currencies', however poorly managed, are valuable because people need them to do stuff. The worst place to go is crypto, it's the bottom of the 'store of value' equation in almost every way - the fact that the government would wipe them out immediately being just one of many risks. Cypto, at least the way they exist today, have no rational place in anything other than for entertainment and intellectual speculation.
    - gfodor 5y ago
      Your opinion is duly noted, my opinion is that your opinion has little bearing on what the price of BTC will be if the purchasing power of a dollar drops quickly. My prediction is that demand for it will surge and so the price will go up somewhat inversely. I'll note that you're not taking the counter position, just stating why that would be a "very bad idea" for people to demand it. I'm guessing you've been saying the same thing as the price has gone up to $50k. At some point you'll either be proven right in a massive collapse or will have to capitulate that the market is not irrational. What is your threshold? (Year/price threshold where you'd capitulate.) If you're on your death bed and BTC is worth $1M, will you change your mind, or just presume you didn't live long enough to see yourself proven right?
tablespoon 5y ago
> It's going to look a lot less like a Ponzi scheme if/when the dollar collapses. Even if it does, Bitcoin may very well collapse before the dollar.

nightski 5y ago

It doesn't even meet the basic definition of a ponzi scheme. This is pure FUD. You might not like it, but that doesn't make it something it is not. There are plenty of other things that I would consider a waste of electricity but I am not going to make doing them punishable by hard labor.

arcticbull 5y ago
It's a negative sum wealth redistribution scheme the takes money from new entrants and gives it to miners and to old entrants. The miner portion is what makes it negative-sum. It doesn't meet the traditional definition, no, which is why I referred to it as a "distributed Ponzi scheme" - it's closer to an MLM in classical parlance. [edit] Here's the SEC definition: > A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves. > With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse. And here are the red flags that the SEC warns folks to watch for: > High returns with little or no risk. > Unregistered investments. > Unlicensed sellers. > Secretive, complex strategies. [edit2] So with that in mind, it meets many (but not all) of the classic definition elements. 1. All returns are generated by bringing new money into the system. The only way someone can make money on Bitcoin is if a new person invests. That money is then distributed to the earlier participant, net of miner fees. 2. There is no actual business underlying. 3. The constant flow of new money is required to keep the price from collapsing because miners extract something like $50M in welfare from the system per day. 4. The entire space is unregistered investments hawked by unlicensed sellers.
- nightski 5y ago
  Miner fees are paid from transaction fees (since mining is quite literally verifying transactions). You don't lose value for miners being paid.

gremloni 5y ago

Imagine lumping all cryptocurrency into proof of work.

celticninja 5y ago

Because banning technology works so well.

arcticbull 5y ago
We ban all kinds of tech.