5 ms·

So a Ponzi scheme...

anm89 5y ago
Stop calling everything a ponzi scheme. This does not resemble a ponzi scheme in almost any way. There is more than one type of scheme in the world. This is much closer to a pyramid scheme or just a contained economy with really bad incentives For example the Ponzi scheme version of this would be if you told people you were going to make a game with crypto as currency and told people that if they give you money to invest you will make them money in the in game currency. You would never actually make the game or the currency, you would just keep selling the promise of making the game to more and more people and then paying out the first people with the later people's money if they decide they want out. That would be a real Ponzi scheme. Pure cycling of investor funds with no underlying product. If mid way through you actually decide to make the game and attempt to sell real gameplay, it's no longer a Ponzi scheme, just a shitty company. (although based on the length of the preceeding time period, it's likely what you did was still classified as a Ponzi scheme at a certain point and you still have probably broken securities laws and have liability) Unlike Axie in which people are creating revenue in the system by buying stuff and is at least hypothetically possible to be solvent, the true Ponzi scheme by definition can never be solvent.
- sodality2 5y ago
  For those confused about the difference: A Ponzi scheme "pays profits to earlier investors with funds from more recent investors" A pyramid scheme "recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products"
  - golemotron 5y ago
    That isn't much difference. If there is a promise of payments for enrolling others, that is still a subsidy from later to earlier investors.
    - jcfrei 5y ago
      So any SaaS startup that offers referral fees is now a pyramid scheme?
      - DanHulton 5y ago
        If a SaaS provides services it doesn't fit the definition of a pyramid scheme, no.
        dvt 5y ago
        And Axie provides the service of "fun," no? I fail to see how there's any difference here.
      - roywiggins 5y ago
        If you can earn referral fees for your referred people's referrals, then it starts to get into pyramid territory.
    - IanCal 5y ago
      There's a big difference between "If you join, you can try to sign up others" and "Pay me $X and get a return of Y%".
  - JohnJamesRambo 5y ago
    Can anyone outline how either of those are different than pre-IPO investors in WeWork etc cashing out on the retail masses? Or pretty much any non-dividend stock that exists?
    - 4512124672456 5y ago
      https://en.wikipedia.org/wiki/Stock https://en.wikipedia.org/wiki/Stock
    - IanCal 5y ago
      If wework took the money from new investors and used it to pay dividends to previous ones, that would be much more like a ponzi scheme. Using the money to try and grow a business and a share of that business being deemed to be worth more is very different.
    - anm89 5y ago
      You just conceptually don't like markets. If you think the whole concept is a scam then just don't put your money in financial markets. According to history this is not a wise move.
    - lima 5y ago
      With an IPO, there's the expectation of eventually paying dividends from real revenue.
    - hogFeast 5y ago
      Saying that a non-dividend stock is a Ponzi is like saying a private business that doesn't pay dividends is a Ponzi...it misunderstands how a company works at a fundamental level.
    - ivalm 5y ago
      Buybacks are examples of return of money to investors without dividend. In fact, this is a more tax-efficient way to return money. But return to investors is not even the important thing, it is that normal businesses should get outside money by providing some kind of goods or services. The problem with axies is that they claim everything is exchangeable back into money so there is essentially no “outside” money.
  - Animats 5y ago
    This seems to be a Ponzi, in that payouts come from the pay-in of later users. Axie itself does not seem to be paying users to recruit more users. There's nothing like the "downline" of a multi-level marketing scheme. Users are independent players.
- elliekelly 5y ago
  According to the article the in-game economy relies on recruiting new investors/players in order to use the new investor/player funds to pay out returns/rewards to current players. How is that not a Ponzi scheme?
  - deleted 5y ago
    [deleted]
  - LargeWu 5y ago
    This seems like it's somehow both a pyramid scheme and a Ponzi scheme. AFAIK, there's nothing inherently illegal about pyramid schemes, but they are often marketed in a fraudulent way.
    - rzzzt 5y ago
      Pyronzi scheme it is, then.
  - rvnx 5y ago
    Is it different from Bitcoin or Dogecoin ?

Stop calling everything a ponzi scheme. This does not resemble a ponzi scheme in almost any way. There is more than one type of scheme in the world. This is much closer to a pyramid scheme or just a contained economy with really bad incentives For example the Ponzi scheme version of this would be if you told people you were going to make a game with crypto as currency and told people that if they give you money to invest you will make them money in the in game currency. You would never actually make the game or the currency, you would just keep selling the promise of making the game to more and more people and then paying out the first people with the later people's money if they decide they want out. That would be a real Ponzi scheme. Pure cycling of investor funds with no underlying product. If mid way through you actually decide to make the game and attempt to sell real gameplay, it's no longer a Ponzi scheme, just a shitty company. (although based on the length of the preceeding time period, it's likely what you did was still classified as a Ponzi scheme at a certain point and you still have probably broken securities laws and have liability) Unlike Axie in which people are creating revenue in the system by buying stuff and is at least hypothetically possible to be solvent, the true Ponzi scheme by definition can never be solvent.

sodality2 5y ago
For those confused about the difference: A Ponzi scheme "pays profits to earlier investors with funds from more recent investors" A pyramid scheme "recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products"
- golemotron 5y ago
  That isn't much difference. If there is a promise of payments for enrolling others, that is still a subsidy from later to earlier investors.
  - jcfrei 5y ago
    So any SaaS startup that offers referral fees is now a pyramid scheme?
    - DanHulton 5y ago
      If a SaaS provides services it doesn't fit the definition of a pyramid scheme, no.
      - dvt 5y ago
        And Axie provides the service of "fun," no? I fail to see how there's any difference here.
    - roywiggins 5y ago
      If you can earn referral fees for your referred people's referrals, then it starts to get into pyramid territory.
  - IanCal 5y ago
    There's a big difference between "If you join, you can try to sign up others" and "Pay me $X and get a return of Y%".
- JohnJamesRambo 5y ago
  Can anyone outline how either of those are different than pre-IPO investors in WeWork etc cashing out on the retail masses? Or pretty much any non-dividend stock that exists?
  - 4512124672456 5y ago
    https://en.wikipedia.org/wiki/Stock https://en.wikipedia.org/wiki/Stock
  - IanCal 5y ago
    If wework took the money from new investors and used it to pay dividends to previous ones, that would be much more like a ponzi scheme. Using the money to try and grow a business and a share of that business being deemed to be worth more is very different.
  - anm89 5y ago
    You just conceptually don't like markets. If you think the whole concept is a scam then just don't put your money in financial markets. According to history this is not a wise move.
  - lima 5y ago
    With an IPO, there's the expectation of eventually paying dividends from real revenue.
  - hogFeast 5y ago
    Saying that a non-dividend stock is a Ponzi is like saying a private business that doesn't pay dividends is a Ponzi...it misunderstands how a company works at a fundamental level.
  - ivalm 5y ago
    Buybacks are examples of return of money to investors without dividend. In fact, this is a more tax-efficient way to return money. But return to investors is not even the important thing, it is that normal businesses should get outside money by providing some kind of goods or services. The problem with axies is that they claim everything is exchangeable back into money so there is essentially no “outside” money.
- Animats 5y ago
  This seems to be a Ponzi, in that payouts come from the pay-in of later users. Axie itself does not seem to be paying users to recruit more users. There's nothing like the "downline" of a multi-level marketing scheme. Users are independent players.
elliekelly 5y ago
According to the article the in-game economy relies on recruiting new investors/players in order to use the new investor/player funds to pay out returns/rewards to current players. How is that not a Ponzi scheme?
- deleted 5y ago
  [deleted]
- LargeWu 5y ago
  This seems like it's somehow both a pyramid scheme and a Ponzi scheme. AFAIK, there's nothing inherently illegal about pyramid schemes, but they are often marketed in a fraudulent way.
  - rzzzt 5y ago
    Pyronzi scheme it is, then.
- rvnx 5y ago
  Is it different from Bitcoin or Dogecoin ?