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People use BTC/ETH/etc. in exchange for goods. I mean, I'm not a fan of cryptocurrency, but calling it a Ponzi scheme is just wrong. There are plenty of shitco

by dvt 5y ago

People use BTC/ETH/etc. in exchange for goods. I mean, I'm not a fan of cryptocurrency, but calling it a Ponzi scheme is just wrong. There are plenty of shitcoins out there that are purely pump and dumps, but it seems like BTC is here to stay.

rmetzler 5y ago
I think bitcoin is a ponzi scheme, but the article (and so far I haven't seen it mentioned in the discussion) doesn't mention the following reasons which capture value in bitcoin: As long as you don't steal the electricity you need to pay for it in fiat. And you not only need electricity to mine new coins, but also for transactions Ransomware creates demand in bitcoin and this demand keeps the value up.
muglug 5y ago
A very very minute percentage of bitcoin is used in transactions. The vast bulk of it is seen by its users as an investment. And historically there have been Ponzi schemes that allowed people to cash out before the scheme fell apart — but it was always a small minority cashing out.
- hanniabu 5y ago
  So no different than gold?
  - chowchowchow 5y ago
    It’s clearly argued that since a majority of demand for gold is from non-investors it doesn’t fit the definition..
    - sb057 5y ago
      Roughly 50% of gold's demand comes from private investors and central banks, with another 40% of demand being driven by (para-investment) jewelry. https://www.gold.org/goldhub/data/gold-supply-and-demand-statistics https://www.gold.org/goldhub/data/gold-supply-and-demand-sta...
      - adolph 5y ago
        Reminds me of US $100 bills: As of June 30, 2012, the $100 bill comprised 77% of all US currency in circulation. Federal Reserve data from 2017 showed that the number of $100 bills exceeded the number of $1 bills. However, a 2018 research paper by the Federal Reserve Bank of Chicago estimated that 80 percent of $100 bills were in other countries. Possible reasons included economic instability that affected other currencies, and use of the bills for criminal activities. https://en.wikipedia.org/wiki/United_States_one-hundred-dollar_bill https://en.wikipedia.org/wiki/United_States_one-hundred-doll...
      - chowchowchow 5y ago
        Seems to fluctuate quarterly and I was saying the article addresses the point and makes an argument that BTC is not “like gold” in this way because the majority of demand for gold comes from non-investors (which appears to be the case in I think most quarters but perhaps not most recently). Jewelry is its own category but it does have “utility” if viewed through the lens of human behavior across civilizations over time.
        sb057 5y ago
        >the majority of demand for gold comes from non-investors (which appears to be the case in I think most quarters but perhaps not most recently) There's actually been far more industrial usage proportionally recently than any prior year. Prior to 2020, the highest industrial usage year was 2016, at ~7%. The article is wrong; the VAST majority of the demand for gold does indeed come from investors. This is ignoring gold's historical status, of course. Before the advent of modern computing, there was extraordinarily little "practical" use for gold beyond use as tooth fillings. And yet, it is during this time that gold was most coveted. Why is this? Economists have been debating that for a century! :o) >Jewelry is its own category but it does have “utility” if viewed through the lens of human behavior across civilizations over time. Jewelry does have utility yes, but gold jewelry has no marginal utility over, say, brass jewelry, other than the material composition. And yet, gold jewelry commands a far higher price, and despite even this, it is still in higher demand. This is because buyers place a premium on the metal itself, hence why I referred to it as a para-investment.
  - oingodoingo 5y ago
    yeah but i’m not going to create a new element on the period table
  - dybber 5y ago
    https://www.usfunds.com/slideshows/the-many-uses-of-gold/ https://www.usfunds.com/slideshows/the-many-uses-of-gold/ Go to Coinbase and try to figure out how to use Bitcoin to buy something with. All they talk about is Bitcoin as an investment. A currency can’t be an investment as the expectation that it will rise in value undermines the main quality of a currency, which is to maintain a stable value, so it can be used as intermediary.
    - hanniabu 5y ago
      Go to a gold exchange and try to figure out how to use it for microchips. Coinbase has a focus on trading. However, you can use bitcoin to buy things through Coinbase Commerce.
      - ohbleek 5y ago
        >Go to a gold exchange and try to figure out how to use it for microchips. The idea that gold is useful as a store of value is ridiculous. You have painted the picture perfectly with your comment. It is not easily moved. It is not easily utilized. It is worthless to the average person and it’s price is heavily inflated.
    - thinkmassive 5y ago
      A casino’s business is getting people to gamble more. Why would you go there seeking info on how to buy things?
    - panarky 5y ago
      Most Ponzis and pyramid schemes are built on something that has a legitimate use. After all, the eponymous scheme by Charles Ponzi was built on legitimate postal reply coupons. So a list of non-monetary uses for gold is not evidence that its monetary uses are not Ponzis. Most financial instruments are at least Ponzi-adjacent in that their value is derived from the expectation that other market participants will pay more for them than you did. Whether it's real estate or equities, precious metals or cryptocurrency, profit requires an infinite cycle of growth that must collapse at some point.
    - 5y ago
yunohn 5y ago
> in exchange for goods Generally speaking, the people who provide the goods, use fiat for production of the good, and convert the crypto back into fiat to realize profits.
- baby 5y ago
  We don’t have data and what if they convert back into fiat? Would you say that foreign workers who get paid in USD and send money back home only use USD as a ponzi?
  - yunohn 5y ago
    You don’t need data to see plainly that the vast majority of goods are obtained with fiat. As such, someone selling goods for crypto has no choice but to use fiat as well.
    - baby 5y ago
      I really don’t get your distinction between fiat and crypto
      - drdeca 5y ago
        fiat here means (roughly) government issued, I think
        baby 5y ago
        that's the correct distinction, but the poster I was replying to was trying to make some arbitrary distinction.
        drdeca 5y ago
        I don't follow? They are saying that in order to run a business in which one sells goods or services for cryptocoins, that in order to pay for one's business costs, one must spend fiat, and that therefore, someone selling goods for cryptocoins, must, in addition to using cryptocoins, also use fiat currencies (because most of their business expenses can only be paid in fiat currencies).
Zamicol 5y ago
This year Ethereum has so far settled over $6 trillion in value on chain. And the system has revenues. Ethereum did around $35 million daily in fees this last week. Uniswap did around $3 million. https://cryptofees.info/ https://cryptofees.info/ No doubt there's something to it.
- jtbayly 5y ago
  That’s like saying that because people are actually selling shovels and pickaxes there is something to the gold rush.
  - oingodoingo 5y ago
    hmm… you mean the people who sold the tools made most of the profit …and the vast majority of miners destroyed the environment to lose a gamble…
  - ButtSpark69 5y ago
    yeah, it's a reasonable probabilistic inference, not a guarantee
  - deleted 5y ago
    [deleted]
wpietri 5y ago
People don't use cryptocurrency "in exchange for goods" to any significant extent. Major merchant adoption of Bitcoin peaked years ago. And at least in my area, the same goes for local merchants; Bitcoin here is extinct. Bitcoin is doing what, 100m transactions per year? Most of which are not for physical goods. Venmo, which started around the same time, does over 2 billion. M-Pesa, a "digital money" solution the same age does 15 billion. US credit transactions? 45 billion. Debit? 75 billion per year. And unlike Bitcoin, most of those are what people would call real transactions. Bitcoin's real use is a rounding error. Cryptocurrency can be here to stay and also be driven by scams. Set up a Google News alert for "Ponzi scheme". Ponzi was active 100 years ago, but his approach is more popular than ever. As they say, there's a sucker born every minute.
- bb88 5y ago
  I tend to like "The Greater Fool." Edit: Not sure why the downvotes, but this is a common phrase used to denote ponzi schemes.
- m3nu 5y ago
  Can confirm this. I offer some crypto options to pay for my service online. Not BTC because the transaction costs are too high, but Bitcoin Cash and the like. After about a year, only about 0.3% of checkouts were done with crypto. Even manual bank transfer is used magnitudes more often.
  - wpietri 5y ago
    Thanks, that's good to know. Another confirmation: thanks to the Epik leak, we know the same is true there. Their Bitcoin transactions table is much, much smaller than their other ones.
aeternum 5y ago
The author also fails to realize that #3 of his own definition is not true for bitcoin. Revenues are collected by miners via the transaction fees. Or is the author going to try to argue that txn fees don't count, and then Visa is also a Ponzi?
jspaetzel 5y ago
Every Ponzi scheme seems like it's here to stay, right up until it's not.

by dvt 5y ago

rmetzler 5y ago

I think bitcoin is a ponzi scheme, but the article (and so far I haven't seen it mentioned in the discussion) doesn't mention the following reasons which capture value in bitcoin: As long as you don't steal the electricity you need to pay for it in fiat. And you not only need electricity to mine new coins, but also for transactions Ransomware creates demand in bitcoin and this demand keeps the value up.

muglug 5y ago

A very very minute percentage of bitcoin is used in transactions. The vast bulk of it is seen by its users as an investment. And historically there have been Ponzi schemes that allowed people to cash out before the scheme fell apart — but it was always a small minority cashing out.

hanniabu 5y ago
So no different than gold?
- chowchowchow 5y ago
  It’s clearly argued that since a majority of demand for gold is from non-investors it doesn’t fit the definition..
  - sb057 5y ago
    Roughly 50% of gold's demand comes from private investors and central banks, with another 40% of demand being driven by (para-investment) jewelry. https://www.gold.org/goldhub/data/gold-supply-and-demand-statistics https://www.gold.org/goldhub/data/gold-supply-and-demand-sta...
    - adolph 5y ago
      Reminds me of US $100 bills: As of June 30, 2012, the $100 bill comprised 77% of all US currency in circulation. Federal Reserve data from 2017 showed that the number of $100 bills exceeded the number of $1 bills. However, a 2018 research paper by the Federal Reserve Bank of Chicago estimated that 80 percent of $100 bills were in other countries. Possible reasons included economic instability that affected other currencies, and use of the bills for criminal activities. https://en.wikipedia.org/wiki/United_States_one-hundred-dollar_bill https://en.wikipedia.org/wiki/United_States_one-hundred-doll...
    - chowchowchow 5y ago
      Seems to fluctuate quarterly and I was saying the article addresses the point and makes an argument that BTC is not “like gold” in this way because the majority of demand for gold comes from non-investors (which appears to be the case in I think most quarters but perhaps not most recently). Jewelry is its own category but it does have “utility” if viewed through the lens of human behavior across civilizations over time.
      - sb057 5y ago
        >the majority of demand for gold comes from non-investors (which appears to be the case in I think most quarters but perhaps not most recently) There's actually been far more industrial usage proportionally recently than any prior year. Prior to 2020, the highest industrial usage year was 2016, at ~7%. The article is wrong; the VAST majority of the demand for gold does indeed come from investors. This is ignoring gold's historical status, of course. Before the advent of modern computing, there was extraordinarily little "practical" use for gold beyond use as tooth fillings. And yet, it is during this time that gold was most coveted. Why is this? Economists have been debating that for a century! :o) >Jewelry is its own category but it does have “utility” if viewed through the lens of human behavior across civilizations over time. Jewelry does have utility yes, but gold jewelry has no marginal utility over, say, brass jewelry, other than the material composition. And yet, gold jewelry commands a far higher price, and despite even this, it is still in higher demand. This is because buyers place a premium on the metal itself, hence why I referred to it as a para-investment.
- oingodoingo 5y ago
  yeah but i’m not going to create a new element on the period table
- dybber 5y ago
  https://www.usfunds.com/slideshows/the-many-uses-of-gold/ https://www.usfunds.com/slideshows/the-many-uses-of-gold/ Go to Coinbase and try to figure out how to use Bitcoin to buy something with. All they talk about is Bitcoin as an investment. A currency can’t be an investment as the expectation that it will rise in value undermines the main quality of a currency, which is to maintain a stable value, so it can be used as intermediary.
  - hanniabu 5y ago
    Go to a gold exchange and try to figure out how to use it for microchips. Coinbase has a focus on trading. However, you can use bitcoin to buy things through Coinbase Commerce.
    - ohbleek 5y ago
      >Go to a gold exchange and try to figure out how to use it for microchips. The idea that gold is useful as a store of value is ridiculous. You have painted the picture perfectly with your comment. It is not easily moved. It is not easily utilized. It is worthless to the average person and it’s price is heavily inflated.
  - thinkmassive 5y ago
    A casino’s business is getting people to gamble more. Why would you go there seeking info on how to buy things?
  - panarky 5y ago
    Most Ponzis and pyramid schemes are built on something that has a legitimate use. After all, the eponymous scheme by Charles Ponzi was built on legitimate postal reply coupons. So a list of non-monetary uses for gold is not evidence that its monetary uses are not Ponzis. Most financial instruments are at least Ponzi-adjacent in that their value is derived from the expectation that other market participants will pay more for them than you did. Whether it's real estate or equities, precious metals or cryptocurrency, profit requires an infinite cycle of growth that must collapse at some point.
  - 5y ago

yunohn 5y ago

> in exchange for goods Generally speaking, the people who provide the goods, use fiat for production of the good, and convert the crypto back into fiat to realize profits.

baby 5y ago
We don’t have data and what if they convert back into fiat? Would you say that foreign workers who get paid in USD and send money back home only use USD as a ponzi?
- yunohn 5y ago
  You don’t need data to see plainly that the vast majority of goods are obtained with fiat. As such, someone selling goods for crypto has no choice but to use fiat as well.
  - baby 5y ago
    I really don’t get your distinction between fiat and crypto
    - drdeca 5y ago
      fiat here means (roughly) government issued, I think
      - baby 5y ago
        that's the correct distinction, but the poster I was replying to was trying to make some arbitrary distinction.
        drdeca 5y ago
        I don't follow? They are saying that in order to run a business in which one sells goods or services for cryptocoins, that in order to pay for one's business costs, one must spend fiat, and that therefore, someone selling goods for cryptocoins, must, in addition to using cryptocoins, also use fiat currencies (because most of their business expenses can only be paid in fiat currencies).

Zamicol 5y ago

This year Ethereum has so far settled over $6 trillion in value on chain. And the system has revenues. Ethereum did around $35 million daily in fees this last week. Uniswap did around $3 million. https://cryptofees.info/ https://cryptofees.info/ No doubt there's something to it.

jtbayly 5y ago
That’s like saying that because people are actually selling shovels and pickaxes there is something to the gold rush.
- oingodoingo 5y ago
  hmm… you mean the people who sold the tools made most of the profit …and the vast majority of miners destroyed the environment to lose a gamble…
- ButtSpark69 5y ago
  yeah, it's a reasonable probabilistic inference, not a guarantee
- deleted 5y ago
  [deleted]

wpietri 5y ago

People don't use cryptocurrency "in exchange for goods" to any significant extent. Major merchant adoption of Bitcoin peaked years ago. And at least in my area, the same goes for local merchants; Bitcoin here is extinct. Bitcoin is doing what, 100m transactions per year? Most of which are not for physical goods. Venmo, which started around the same time, does over 2 billion. M-Pesa, a "digital money" solution the same age does 15 billion. US credit transactions? 45 billion. Debit? 75 billion per year. And unlike Bitcoin, most of those are what people would call real transactions. Bitcoin's real use is a rounding error. Cryptocurrency can be here to stay and also be driven by scams. Set up a Google News alert for "Ponzi scheme". Ponzi was active 100 years ago, but his approach is more popular than ever. As they say, there's a sucker born every minute.

bb88 5y ago
I tend to like "The Greater Fool." Edit: Not sure why the downvotes, but this is a common phrase used to denote ponzi schemes.
m3nu 5y ago
Can confirm this. I offer some crypto options to pay for my service online. Not BTC because the transaction costs are too high, but Bitcoin Cash and the like. After about a year, only about 0.3% of checkouts were done with crypto. Even manual bank transfer is used magnitudes more often.
- wpietri 5y ago
  Thanks, that's good to know. Another confirmation: thanks to the Epik leak, we know the same is true there. Their Bitcoin transactions table is much, much smaller than their other ones.

aeternum 5y ago

The author also fails to realize that #3 of his own definition is not true for bitcoin. Revenues are collected by miners via the transaction fees. Or is the author going to try to argue that txn fees don't count, and then Visa is also a Ponzi?

jspaetzel 5y ago

Every Ponzi scheme seems like it's here to stay, right up until it's not.