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A Ponzi scheme based on a Ponzi scheme. It’s turtles all the way down.

mrtksn 5y ago
Wouldn't you agree that if enough people choose to stay in Bitcoin instead of simply buying for cheap and selling at higher price, the structure will stop resembling a ponzi scheme? The Bitcoin network does actually function as advertised and there's no technical reason for it not to be a decentralised network of value exchange. I understand that at HN even considering blockchain technologies yields a strong pushback but at some point you need to admit that the crypto people are onto something. Bitcoin denies to die even after the rush of speculative investors and get rich quick folks dies off.
- ChuckNorris89 5y ago
  >Wouldn't you agree that if enough people choose to stay in Bitcoin instead of simply buying for cheap and selling at higher price, the structure will stop resembling a ponzi scheme? Why would people give up the opportunity to cash out the winnings of investments/gambles? People do the same with some stocks.
  - deleted 5y ago
    [deleted]
  - mrtksn 5y ago
    It's a cash out opportunity for some but for others it's a medium of exchange. There are also quite a lot of ideological people. If you believe that Bitcoin has a bright future and even may become a global currency, it's a bad investment move to sell your bitcoins at any time. Sure, you can argue that you can sell high and later buy more for less but that's timing the market and no one can actually reliably do that and as a result if someone believes that BTC will be huge in the future will never sell. When the mission is accomplished, they will use it as money to purchase goods and services.
    - ChuckNorris89 5y ago
      >It's a cash out opportunity for some but for others it's a medium of exchange. Here's a thought, if your medium of exchange is someone else's cash-out, pump-and-dump opportunity, then maybe it's not a good medium of exchange.
      - mrtksn 5y ago
        Maybe. But maybe it offers some value that is not found in the classical systems and for many people that's good enough. Also don't forget that if it happens that BTC replaces the government controlled currencies as some pundits claim, there won't be pump and dumps etc. No one pumps and dumps USD in the USA but they do it in other countries. A quick example is Turkey where the USD gained against the Turkish lira a lot and lost over %30 value overnight but USD is still good.
        ChuckNorris89 5y ago
        >A quick example is Turkey where the USD gained against the Turkish lira a lot and lost over %30 value overnight but USD is still good. Your comment serves to make a point for strong and stable fiat like USD, not for Bitcoin which also just lost around 40% of its value in a month.
        mrtksn 5y ago
        Only small part of the worlds population lives in a western democracy(about %10). People around the globe(the %90) pump and dump all kind of currencies all the time, including USD. Don't forget that sudden value increase and decrease cuts both ways. BTC is just like USD for a lot of people, just easier to trade. BTW I don't hold any crypto, I simply find it fascinating and I think there's some merit in its ideas and technologies.
      - disruptalot 5y ago
        You make it sound like this is somehow a unique property Bitcoin. In truth, every asset and even medium of exchange can and has been manipulated for gain. JP Morgan spoofed the precious metals market and got caught. In the medium of exchange category, the forex market has been manipulated for decades. You are more at risk of volatility and manipulation in crypto markets because they are immature. Bitcoin is still in the discovery stage.
- ffggvv 5y ago
  yes it’s just that no one has any use for the network other than as a ponzi/speculative investment. not store of wealth or currency
  - anf0 5y ago
    I use it for remittances
  - razemio 5y ago
    I use it to prove that my legal / important documents aren't faked / altered and existed at a given time. Only Bitcoin (Blockchain Tech) can do that if I am not mistaken.
    - cookingrobot 5y ago
      Why don’t you put multiple versions of your important documents on the blockchain, and then later you can pick and choose which version you want to “prove” are real?
      - razemio 5y ago
        I do not put any document on the chain just a hash. I do only need proof that a certain version of the document existed at a certain time to proof that it wasn't altered after. Multiple revisions are ofc also possible. If you upload the same multiple times the first timestamp is enough, everything after can be ignored.
- dandanua 5y ago
  1. It's not an exchange, it's a transfer. Irreversible. 2. It's not a value, it's a numerical record. 3. What do you mean by "as advertised"? It's "advertised" that bitcoin can solve world's hunger... 4. There are numerous technical reasons not to use it
- skybrian 5y ago
  Yes, "ponzi scheme" is over-used, though it seems to apply to the schemes in Brazil. Bitcoin is more like infrastructure that people can use to play pump-and-dump games. We've seen with meme stocks (and previously, penny stocks) that just about any financial asset can be used for these games. It doesn't need to be intentionally set up for that. It's structural in having a limited supply, a volatile price, and continuous trading. Just add hype, which serves as coordination among the players about which financial asset to use to play the game. One difference is that a cryptocurrency's value can come primarily though not exclusively from its usefulness for playing pump-and-dump games. High fees and volatility deter most usage for payments, and there is no income stream other than new investors buying in.
  - pnutjam 5y ago
    Here's a good documentary that explains how something like bitcoin works. =D https://www.imdb.com/title/tt3105306/ https://www.imdb.com/title/tt3105306/
- rzwitserloot 5y ago
  > Wouldn't you agree that if enough people choose to stay in Bitcoin instead of simply buying for cheap and selling at higher price, the structure will stop resembling a ponzi scheme? Wouldn't you agree that if enough people keep their flower bulbs instead of simply buying for cheap and selling at a higher price, the structure will stop resembling a ponzi scheme? Your statement boils down to: Yes, but.. what if... we don't TREAT it as a ponzi scheme? See! Now it isn't a ponzi scheme! Yes. And IF only the moon was made of cheese, then the moon would be made of cheese.
  - mrtksn 5y ago
    > Wouldn't you agree that if enough people keep their flower bulbs instead of simply buying for cheap and selling at a higher price, the structure will stop resembling a ponzi scheme? I agree, that's how we have gold as a value store. However flower bulbs are not durable like gold and can grow exponentially on supply through farming - no surprise we don't store value in flower bulbs today. Bitcoin doesn't suffer from these issues.
    - bshipp 5y ago
      if there was only one possible cryptocurrency then I'd agree that supply can't be grown exponentially. However, there are new cryptos coming online every week it seems. Almost like growing different colored tulips.
    - ChuckNorris89 5y ago
      >that's how we have gold as a value store. Except for one, not anymore, and two, the value of gold doesn't only come from speculation like in BTC, but from supply and demand from real world applications of gold, like semiconductors, electronics, aerospace, automotive, medical, etc. since it's one of the best electrical conductors and heat reflecting materials we have. Without gold, we'd be screwed royally, making the current supply chain disruptions seem like a walk in the park. Without BTC, we could fork 1000 other crypto-coins onto which people can speculate on and nothing would be lost.
      - 5y ago
bogota 5y ago
cinntaile 5y ago
12 years and counting, is that some sort of record for a ponzi scheme where people have been saying it's a ponzi scheme from the beginning? I wonder when they'll realize it might be something else.
- Macha 5y ago
  https://www.therichest.com/nation/10-of-the-biggest-ponzi-schemes-in-history/ https://www.therichest.com/nation/10-of-the-biggest-ponzi-sc... 15 years for number 2. Madoff was first investigated in 1992 and shut down in 2008 for 16 years: https://en.wikipedia.org/wiki/Madoff_investment_scandal https://en.wikipedia.org/wiki/Madoff_investment_scandal
  - inter_netuser 5y ago
    Ponzi and pyramid schemes are materially different. Madoff was paying cashflows to his clients. Bitcoin pays nobody. What are the longest running pyramid schemes? Gold sees to be running for nearly 5000 years, seems like plenty of runway here.
- Barrin92 5y ago
  nope. You might be interested in Gregor MacGregor who sold many people land to the non-existent country of Poyais for billions in today's dollars, and even when people started to die after arriving in the middle of nowhere the few who made it back to the UK defended him. And he even managed to pull that con off more than once. https://www.bbc.com/future/article/20160127-the-conman-who-pulled-off-historys-most-audacious-scam https://www.bbc.com/future/article/20160127-the-conman-who-p...
  - cinntaile 5y ago
    Someone managed to con people by selling them land that doesn't exist. I don't see the relevance? If you buy bitcoins they may be useless in the future. There is no promise whatsoever that they will be worth something in the future and that is the big difference. Nobody gets conned. During the past 12 years it has gone up and it has gone down, a ponzi doesn't tend to revive itself after it gets discovered and they're forbidden by law. Whichever way bitcoin goes in the future nobody knows. There are definitely ponzi schemes within the crypto sphere but bitcoin isn't one of them. BitConnect was such an example and so was OneCoin, there are probably more recent ones as well but it's not something I keep track of.

Wouldn't you agree that if enough people choose to stay in Bitcoin instead of simply buying for cheap and selling at higher price, the structure will stop resembling a ponzi scheme? The Bitcoin network does actually function as advertised and there's no technical reason for it not to be a decentralised network of value exchange. I understand that at HN even considering blockchain technologies yields a strong pushback but at some point you need to admit that the crypto people are onto something. Bitcoin denies to die even after the rush of speculative investors and get rich quick folks dies off.

ChuckNorris89 5y ago
>Wouldn't you agree that if enough people choose to stay in Bitcoin instead of simply buying for cheap and selling at higher price, the structure will stop resembling a ponzi scheme? Why would people give up the opportunity to cash out the winnings of investments/gambles? People do the same with some stocks.
- deleted 5y ago
  [deleted]
- mrtksn 5y ago
  It's a cash out opportunity for some but for others it's a medium of exchange. There are also quite a lot of ideological people. If you believe that Bitcoin has a bright future and even may become a global currency, it's a bad investment move to sell your bitcoins at any time. Sure, you can argue that you can sell high and later buy more for less but that's timing the market and no one can actually reliably do that and as a result if someone believes that BTC will be huge in the future will never sell. When the mission is accomplished, they will use it as money to purchase goods and services.
  - ChuckNorris89 5y ago
    >It's a cash out opportunity for some but for others it's a medium of exchange. Here's a thought, if your medium of exchange is someone else's cash-out, pump-and-dump opportunity, then maybe it's not a good medium of exchange.
    - mrtksn 5y ago
      Maybe. But maybe it offers some value that is not found in the classical systems and for many people that's good enough. Also don't forget that if it happens that BTC replaces the government controlled currencies as some pundits claim, there won't be pump and dumps etc. No one pumps and dumps USD in the USA but they do it in other countries. A quick example is Turkey where the USD gained against the Turkish lira a lot and lost over %30 value overnight but USD is still good.
      - ChuckNorris89 5y ago
        >A quick example is Turkey where the USD gained against the Turkish lira a lot and lost over %30 value overnight but USD is still good. Your comment serves to make a point for strong and stable fiat like USD, not for Bitcoin which also just lost around 40% of its value in a month.
        mrtksn 5y ago
        Only small part of the worlds population lives in a western democracy(about %10). People around the globe(the %90) pump and dump all kind of currencies all the time, including USD. Don't forget that sudden value increase and decrease cuts both ways. BTC is just like USD for a lot of people, just easier to trade. BTW I don't hold any crypto, I simply find it fascinating and I think there's some merit in its ideas and technologies.
    - disruptalot 5y ago
      You make it sound like this is somehow a unique property Bitcoin. In truth, every asset and even medium of exchange can and has been manipulated for gain. JP Morgan spoofed the precious metals market and got caught. In the medium of exchange category, the forex market has been manipulated for decades. You are more at risk of volatility and manipulation in crypto markets because they are immature. Bitcoin is still in the discovery stage.
ffggvv 5y ago
yes it’s just that no one has any use for the network other than as a ponzi/speculative investment. not store of wealth or currency
- anf0 5y ago
  I use it for remittances
- razemio 5y ago
  I use it to prove that my legal / important documents aren't faked / altered and existed at a given time. Only Bitcoin (Blockchain Tech) can do that if I am not mistaken.
  - cookingrobot 5y ago
    Why don’t you put multiple versions of your important documents on the blockchain, and then later you can pick and choose which version you want to “prove” are real?
    - razemio 5y ago
      I do not put any document on the chain just a hash. I do only need proof that a certain version of the document existed at a certain time to proof that it wasn't altered after. Multiple revisions are ofc also possible. If you upload the same multiple times the first timestamp is enough, everything after can be ignored.
dandanua 5y ago
1. It's not an exchange, it's a transfer. Irreversible. 2. It's not a value, it's a numerical record. 3. What do you mean by "as advertised"? It's "advertised" that bitcoin can solve world's hunger... 4. There are numerous technical reasons not to use it
skybrian 5y ago
Yes, "ponzi scheme" is over-used, though it seems to apply to the schemes in Brazil. Bitcoin is more like infrastructure that people can use to play pump-and-dump games. We've seen with meme stocks (and previously, penny stocks) that just about any financial asset can be used for these games. It doesn't need to be intentionally set up for that. It's structural in having a limited supply, a volatile price, and continuous trading. Just add hype, which serves as coordination among the players about which financial asset to use to play the game. One difference is that a cryptocurrency's value can come primarily though not exclusively from its usefulness for playing pump-and-dump games. High fees and volatility deter most usage for payments, and there is no income stream other than new investors buying in.
- pnutjam 5y ago
  Here's a good documentary that explains how something like bitcoin works. =D https://www.imdb.com/title/tt3105306/ https://www.imdb.com/title/tt3105306/
rzwitserloot 5y ago
> Wouldn't you agree that if enough people choose to stay in Bitcoin instead of simply buying for cheap and selling at higher price, the structure will stop resembling a ponzi scheme? Wouldn't you agree that if enough people keep their flower bulbs instead of simply buying for cheap and selling at a higher price, the structure will stop resembling a ponzi scheme? Your statement boils down to: Yes, but.. what if... we don't TREAT it as a ponzi scheme? See! Now it isn't a ponzi scheme! Yes. And IF only the moon was made of cheese, then the moon would be made of cheese.
- mrtksn 5y ago
  > Wouldn't you agree that if enough people keep their flower bulbs instead of simply buying for cheap and selling at a higher price, the structure will stop resembling a ponzi scheme? I agree, that's how we have gold as a value store. However flower bulbs are not durable like gold and can grow exponentially on supply through farming - no surprise we don't store value in flower bulbs today. Bitcoin doesn't suffer from these issues.
  - bshipp 5y ago
    if there was only one possible cryptocurrency then I'd agree that supply can't be grown exponentially. However, there are new cryptos coming online every week it seems. Almost like growing different colored tulips.
  - ChuckNorris89 5y ago
    >that's how we have gold as a value store. Except for one, not anymore, and two, the value of gold doesn't only come from speculation like in BTC, but from supply and demand from real world applications of gold, like semiconductors, electronics, aerospace, automotive, medical, etc. since it's one of the best electrical conductors and heat reflecting materials we have. Without gold, we'd be screwed royally, making the current supply chain disruptions seem like a walk in the park. Without BTC, we could fork 1000 other crypto-coins onto which people can speculate on and nothing would be lost.
    - 5y ago

bogota 5y ago

cinntaile 5y ago

12 years and counting, is that some sort of record for a ponzi scheme where people have been saying it's a ponzi scheme from the beginning? I wonder when they'll realize it might be something else.

Macha 5y ago
https://www.therichest.com/nation/10-of-the-biggest-ponzi-schemes-in-history/ https://www.therichest.com/nation/10-of-the-biggest-ponzi-sc... 15 years for number 2. Madoff was first investigated in 1992 and shut down in 2008 for 16 years: https://en.wikipedia.org/wiki/Madoff_investment_scandal https://en.wikipedia.org/wiki/Madoff_investment_scandal
- inter_netuser 5y ago
  Ponzi and pyramid schemes are materially different. Madoff was paying cashflows to his clients. Bitcoin pays nobody. What are the longest running pyramid schemes? Gold sees to be running for nearly 5000 years, seems like plenty of runway here.
Barrin92 5y ago
nope. You might be interested in Gregor MacGregor who sold many people land to the non-existent country of Poyais for billions in today's dollars, and even when people started to die after arriving in the middle of nowhere the few who made it back to the UK defended him. And he even managed to pull that con off more than once. https://www.bbc.com/future/article/20160127-the-conman-who-pulled-off-historys-most-audacious-scam https://www.bbc.com/future/article/20160127-the-conman-who-p...
- cinntaile 5y ago
  Someone managed to con people by selling them land that doesn't exist. I don't see the relevance? If you buy bitcoins they may be useless in the future. There is no promise whatsoever that they will be worth something in the future and that is the big difference. Nobody gets conned. During the past 12 years it has gone up and it has gone down, a ponzi doesn't tend to revive itself after it gets discovered and they're forbidden by law. Whichever way bitcoin goes in the future nobody knows. There are definitely ponzi schemes within the crypto sphere but bitcoin isn't one of them. BitConnect was such an example and so was OneCoin, there are probably more recent ones as well but it's not something I keep track of.