5 ms·

> By that definition, gold too is a ponzi. The explanation for why gold is not a Ponzi holds true for Bitcoin itself too. At the very end, Bitcoin has a (tiny

by tinco 5y ago

> By that definition, gold too is a ponzi. The explanation for why gold is not a Ponzi holds true for Bitcoin itself too. At the very end, Bitcoin has a (tiny bit of) value as a means to establish the global ledger. Just like with gold that value is just the smallest fraction of its market value. I think if the author would have included gold and stocks in their definition of a Ponzi scheme their argument would actually be sound. Of course they would be branded a lunatic then so they wouldn't. I guess that's where the power of the Ponzi scheme lies. How do you argue against the thundering horde if people making money hand over fist?

TylerE 5y ago
That is vastly underselling they ultility of gold. The electronics industry alone uses billions of dollars a year of the stuff.
- eloeffler 5y ago
  No Bitcoin without gold :)
- tinco 5y ago
  Yet it is valued in the trillions. Likewise, our society uses billions worth of services from financial institutions. Bitcoin and more strongly Ethereum compete for that same utility. Sure they have some utility. The current block reward of Bitcoin is 6, with a market value of 60000 that means every 10 minutes of ledger is valued at 360000 dollars worth of utility, or 52 million per day.
qeternity 5y ago
I really don’t get why people keep calling the stock market a ponzi. Companies (successful companies) generate cash flow in a way that gold and bitcoin do not. Absent any other buyers or new money flowing into equities, those businesses will still have to return capital to shareholders either through dividends or buybacks. So the equity market can still appreciate without any new capital as companies buyback their own stock.
- tinco 5y ago
  That argument only makes sense when you don't mention any numbers. We try to see this as a black and white, Ponzi or not Ponzi. 1 or 0. You look at the original Ponzi scheme, earnings over market value is clearly zero. For a regular stock earnings over market value might be some small but reasonable number like 1/10 of even 1/20. Then you look at TSLA and it's under 1/300, and that's not even an accounting trick where they're underreporting their earnings, they're literally are posting their best earnings ever. So yeah, it's not 0 like the original Ponzi, but it's approaching a limit of 0 and no one knows how close it's supposed to get.
risyachka 5y ago
The author conveniently misses all the important points that easily break his argument. >> A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors Early investors in bitcoin were people who never expected it to cost anything at all. They mined or bought it solely for the idea. Also if it wasn't created with purpose of fraud it is not a Ponzi scheme. Someone makes something - people like it - prices goes up. Ponzi scheme? Nope.
- tinco 5y ago
  Your argument is cleanly refuted by the article under the header "The operator must lie to investors about the source of profits.". No one is saying anything that goes up in value is a Ponzi scheme, that's an absurd statement. You're not making a good case for your cause. Maybe mention some more important points that the author misses?
- Ekaros 5y ago
  Two things which in addition makes me oppose calling bitcoin a ponzi: No central actor. There is no profits paid. Only increase The later would mean that pretty much anything going up in price is ponzi. Were beanie babies ponzi? Arguably they were cuddly so they offered some value...

by tinco 5y ago

TylerE 5y ago

That is vastly underselling they ultility of gold. The electronics industry alone uses billions of dollars a year of the stuff.

eloeffler 5y ago
No Bitcoin without gold :)
tinco 5y ago
Yet it is valued in the trillions. Likewise, our society uses billions worth of services from financial institutions. Bitcoin and more strongly Ethereum compete for that same utility. Sure they have some utility. The current block reward of Bitcoin is 6, with a market value of 60000 that means every 10 minutes of ledger is valued at 360000 dollars worth of utility, or 52 million per day.

qeternity 5y ago

I really don’t get why people keep calling the stock market a ponzi. Companies (successful companies) generate cash flow in a way that gold and bitcoin do not. Absent any other buyers or new money flowing into equities, those businesses will still have to return capital to shareholders either through dividends or buybacks. So the equity market can still appreciate without any new capital as companies buyback their own stock.

tinco 5y ago
That argument only makes sense when you don't mention any numbers. We try to see this as a black and white, Ponzi or not Ponzi. 1 or 0. You look at the original Ponzi scheme, earnings over market value is clearly zero. For a regular stock earnings over market value might be some small but reasonable number like 1/10 of even 1/20. Then you look at TSLA and it's under 1/300, and that's not even an accounting trick where they're underreporting their earnings, they're literally are posting their best earnings ever. So yeah, it's not 0 like the original Ponzi, but it's approaching a limit of 0 and no one knows how close it's supposed to get.

risyachka 5y ago

The author conveniently misses all the important points that easily break his argument. >> A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors Early investors in bitcoin were people who never expected it to cost anything at all. They mined or bought it solely for the idea. Also if it wasn't created with purpose of fraud it is not a Ponzi scheme. Someone makes something - people like it - prices goes up. Ponzi scheme? Nope.

tinco 5y ago
Your argument is cleanly refuted by the article under the header "The operator must lie to investors about the source of profits.". No one is saying anything that goes up in value is a Ponzi scheme, that's an absurd statement. You're not making a good case for your cause. Maybe mention some more important points that the author misses?
Ekaros 5y ago
Two things which in addition makes me oppose calling bitcoin a ponzi: No central actor. There is no profits paid. Only increase The later would mean that pretty much anything going up in price is ponzi. Were beanie babies ponzi? Arguably they were cuddly so they offered some value...