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The commonality with the Ponzi Scheme is that returns are solely based on others continued investment and that the value collapses if they stop doing this conti

The commonality with the Ponzi Scheme is that returns are solely based on others continued investment and that the value collapses if they stop doing this continuously. That we managed to make this happen without a central entity that can run off with the money, with lots of people invested in the middle of the pyramid (the author, presumably) also doing the evalgalizing makes it technically different, but not practically. Collapse is always coming, to various degrees of severity. If not to Bitcoin at one time, then to the planet. And GPU availability.

PragmaticPulp 5y ago
> The commonality with the Ponzi Scheme is that returns are solely based on others continued investment and that the value collapses if they stop doing this continuously. And before anyone tries to make a stock market comparison: No, this isn’t the same as stocks. Stocks are, literally, partial ownership of a company. A shareholder owns part of the underlying company, including everything from their bank balances to their brand. Bitcoin would be like subtracting out all of the valuable parts of a company and leaving nothing but the shares behind. You get an entry in a database (the blockchain) and nothinf else. Literally the only thing that gives this database entry any value is the ability to convince someone else to give you money in exchange for it.
- awb 5y ago
  Except not all stocks are like that. Non-voting right stocks are illegal in some countries but legal in the US. https://en.m.wikipedia.org/wiki/Non-voting_stock https://en.m.wikipedia.org/wiki/Non-voting_stock
- boringg 5y ago
  So common stocks do not have any claims on the bank balances of a company. I'm not defending crypto but your assertion is not wholly correct. Ostensibly you are the very last in line of creditors to claim any assets if the company goes bankrupt but you will get very little to nothing .. pennies on the dollar if anything. Stocks give you voting rights at the AGM and a claim on future profits through stock appreciation or dividends if the company decides to issue dividends.
  - rojeee 5y ago
    Common units _do_ have a claim on the bank balance of a company in the case it winds up. It’s just that employees, bond holders and preference share holders get paid first.
- scottiebarnes 5y ago
  Any kind of money only has value if there is willing social acceptance for that money, aka, people who want it. That's the point of money. Its value comes from being in a secure, immutable database, accessible from any point on the planet with an internet connection, censorship resistant, and more private.
- saalweachter 5y ago
  The S&P 500 paid out something like $0.8T in dividends last year, profits from the economically productive activities of the companies to which shareholders had a claim.
awb 5y ago
> The commonality with the Ponzi Scheme is that returns are solely based on others continued investment and that the value collapses if they stop doing this continuously. You could say that about lots of investments: * art * non-voting stock shares * coins/stamps * etc. Anything with limited/finite supply can increase in value provided there is demand. Who’s to say that someone’s enjoyment of a piece of modern art is somehow more real or valuable than someone’s enjoyment of holding Bitcoin? Bitcoin also has some utility as a transaction medium. The debate is wether or not it’s a smart investment, but as far as investments go it’s characteristics are not unlike many other forms that have provided sustained returns for decades, centuries or more.
- arcticbull 5y ago
  > * non-voting stock shares No. Share value isn't determined by voting rights alone. It's determined by your ownership stake in a productive enterprise. You own a share of assets and future cash flows whether you vote or not. At some point every business will make a distribution - either share buybacks, dividends or at dissolution. Your share entitles you to a fraction of that. Shares have value regardless of whether someone else will buy them from you. It may be less than you paid, but that's not the same thing. > Art, coins stamps. These are much closer to NFTs than they are crypto. Each is unique. Due to their uniqueness there isn't a party constantly extracting value from your existing unique items (as miners do, by constantly producing more Bitcoin and selling it to pay their electric bills). > Bitcoin also has some utility as a transaction medium. It really doesn't.
  - deweller 5y ago
    >> Bitcoin also has some utility as a transaction medium. > It really doesn't. It is pretty difficult to support an argument that Bitcoin has zero value as a transaction medium.
    - sascha_sl 5y ago
      No really. The one use, buying things on black markets, is much better served by Monero.
randomhodler84 5y ago
GPU ain’t mined BTC since 2011. I think you mean eth. Ultimately everything is a ponzi, for some definition of a ponzi. Likewise securities fraud.
- arcticbull 5y ago
  > GPU ain’t mined BTC since 2011. I think you mean eth. Shortages are still produced as everyone competes for the same limited silicon. > Ultimately everything is a ponzi, for some definition of a ponzi. Likewise securities fraud. No, it most certainly is not lol.
andrewla 5y ago
A Ponzi Scheme is a very particular type of scam. A Ponzi Scheme is where the sum of all investor's reported account values exceed the total value of assets held by the institution. It is totally valid to claim that Bitcoin is a scam, or that scammers are targeting Bitcoin, or scammers are using Bitcoin to scam people. You can say that the price is a pump-and-dump (but that's a factor of the price and promotion, not of Bitcoin), you can say that it is a low-liquidity market-manipulation scam (more a function of allowing leverage on exchanges). You can even call it a pyramid scheme, although, once again, you have to be careful because a pyramid scheme is a particular type of scam, which, on closer inspection, this is obviously not. Please stop saying Ponzi. You're besmirching the good name of a perfectly cromulent scam.

PragmaticPulp 5y ago

> The commonality with the Ponzi Scheme is that returns are solely based on others continued investment and that the value collapses if they stop doing this continuously. And before anyone tries to make a stock market comparison: No, this isn’t the same as stocks. Stocks are, literally, partial ownership of a company. A shareholder owns part of the underlying company, including everything from their bank balances to their brand. Bitcoin would be like subtracting out all of the valuable parts of a company and leaving nothing but the shares behind. You get an entry in a database (the blockchain) and nothinf else. Literally the only thing that gives this database entry any value is the ability to convince someone else to give you money in exchange for it.

awb 5y ago
Except not all stocks are like that. Non-voting right stocks are illegal in some countries but legal in the US. https://en.m.wikipedia.org/wiki/Non-voting_stock https://en.m.wikipedia.org/wiki/Non-voting_stock
boringg 5y ago
So common stocks do not have any claims on the bank balances of a company. I'm not defending crypto but your assertion is not wholly correct. Ostensibly you are the very last in line of creditors to claim any assets if the company goes bankrupt but you will get very little to nothing .. pennies on the dollar if anything. Stocks give you voting rights at the AGM and a claim on future profits through stock appreciation or dividends if the company decides to issue dividends.
- rojeee 5y ago
  Common units _do_ have a claim on the bank balance of a company in the case it winds up. It’s just that employees, bond holders and preference share holders get paid first.
scottiebarnes 5y ago
Any kind of money only has value if there is willing social acceptance for that money, aka, people who want it. That's the point of money. Its value comes from being in a secure, immutable database, accessible from any point on the planet with an internet connection, censorship resistant, and more private.
saalweachter 5y ago
The S&P 500 paid out something like $0.8T in dividends last year, profits from the economically productive activities of the companies to which shareholders had a claim.

awb 5y ago

> The commonality with the Ponzi Scheme is that returns are solely based on others continued investment and that the value collapses if they stop doing this continuously. You could say that about lots of investments: * art * non-voting stock shares * coins/stamps * etc. Anything with limited/finite supply can increase in value provided there is demand. Who’s to say that someone’s enjoyment of a piece of modern art is somehow more real or valuable than someone’s enjoyment of holding Bitcoin? Bitcoin also has some utility as a transaction medium. The debate is wether or not it’s a smart investment, but as far as investments go it’s characteristics are not unlike many other forms that have provided sustained returns for decades, centuries or more.

arcticbull 5y ago
> * non-voting stock shares No. Share value isn't determined by voting rights alone. It's determined by your ownership stake in a productive enterprise. You own a share of assets and future cash flows whether you vote or not. At some point every business will make a distribution - either share buybacks, dividends or at dissolution. Your share entitles you to a fraction of that. Shares have value regardless of whether someone else will buy them from you. It may be less than you paid, but that's not the same thing. > Art, coins stamps. These are much closer to NFTs than they are crypto. Each is unique. Due to their uniqueness there isn't a party constantly extracting value from your existing unique items (as miners do, by constantly producing more Bitcoin and selling it to pay their electric bills). > Bitcoin also has some utility as a transaction medium. It really doesn't.
- deweller 5y ago
  >> Bitcoin also has some utility as a transaction medium. > It really doesn't. It is pretty difficult to support an argument that Bitcoin has zero value as a transaction medium.
  - sascha_sl 5y ago
    No really. The one use, buying things on black markets, is much better served by Monero.

randomhodler84 5y ago

GPU ain’t mined BTC since 2011. I think you mean eth. Ultimately everything is a ponzi, for some definition of a ponzi. Likewise securities fraud.

arcticbull 5y ago
> GPU ain’t mined BTC since 2011. I think you mean eth. Shortages are still produced as everyone competes for the same limited silicon. > Ultimately everything is a ponzi, for some definition of a ponzi. Likewise securities fraud. No, it most certainly is not lol.

andrewla 5y ago

A Ponzi Scheme is a very particular type of scam. A Ponzi Scheme is where the sum of all investor's reported account values exceed the total value of assets held by the institution. It is totally valid to claim that Bitcoin is a scam, or that scammers are targeting Bitcoin, or scammers are using Bitcoin to scam people. You can say that the price is a pump-and-dump (but that's a factor of the price and promotion, not of Bitcoin), you can say that it is a low-liquidity market-manipulation scam (more a function of allowing leverage on exchanges). You can even call it a pyramid scheme, although, once again, you have to be careful because a pyramid scheme is a particular type of scam, which, on closer inspection, this is obviously not. Please stop saying Ponzi. You're besmirching the good name of a perfectly cromulent scam.