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If you own cryptocurrency, and its all gone down, you're invested and can do two things. You can keep hold of your assets, or you can sell. If you sell, you can
by Fnoord 5y ago
If you own cryptocurrency, and its all gone down, you're invested and can do two things. You can keep hold of your assets, or you can sell. If you sell, you can decide to share such or not, but since you are no longer invested, there's no incentive to share such (and if you're part of a pump and dump scheme, you don't want people to lose trust so your incentive is to say HODL while doing otherwise). So it makes sense we see a lot of HODL posts; these are people who are invested and don't want an implosion. There's also no way to verify whether the people who claim HODL actually do as they say. Thinking about it, seems awfully close to game theory like prisoner's dilemma.
- podgaj 5y agoBitcoin is probably the first Ponzi scheme where everyone in it knows it is a Ponzi scheme. So I agree with your take here.
- sschueller 5y agoPlease explain to me how Bitcoin is a Ponzi scheme while USD after 1971 (going away from the gold standard) is not. More so explain to me how the USD is less of a Ponzi scheme when it is the super wealthy banks/institutions that are getting zero interest loans allowing them to make even more money while at the same time devaluating the currency.
- dtech 5y agoBitcoin and other cryptocurrencies have ~zero inherent value, due to their non-speculation use-cases like payment being very limited or still early development (smart contracts). Unless you count BTC in black market I guess. USD has inherent value, it's the only currency where you can pay taxes in, and if you want to do business with government or government employees - who are ever only paid in USD - you must accept USD.
- sschueller 5y agoBut it's not a Ponzi scheme. It's a currency with small adoption like that of a third world nation.
- dtech 5y agoI'd say Ponzi-scheme is a justified classification, since returns are funded by new entrants or additional purchases, instead of the asset producing value itself like a company stock or a house. Even something like gold with no value production - whose price is quite stable because of that by the way - has value because people want it for jewellery and industry.
- sschueller 5y agoYou could say the same for overvalued stock like TSLA but I don't think anyone would call Tesla a Ponzi scheme. Most of it's value is speculation not actual profits or sales.
- acdha 5y ago> Most of it's value is speculation not actual profits or sales. “Most” is the key difference: a share of Tesla is fractional ownership in a real business which has proven capable of selling real products which people want. Some fraction of that is definitely speculative but far from all of it, and there's no reason to think that the value would decline to zero under any feasible economic situation. A Bitcoin, in contrast, has no value other than what you can convince someone else to buy it for. Nobody needs it to conduct business, it's trivial to set up competing blockchains, and the deflationary model is designed to make you profitfrom everyone who starts buying later despite not having created any new value.
- lupire 5y agoIt's not a currency for anyone who is holding it long term, by definition.
- khuey 5y agoThe USD is backed by the power to tax 330 million people. Bitcoin is not.
- ethanbond 5y agoAnd, ultimately, the power to invade the other few billion people who can’t be taxed
- sschueller 5y agoSwitzerland's currency is quite strong and considered a safe heaven. Do you think Switzerland has the capability or would invade another country to collected tax from a few billion people?
- jrochkind1 5y agoI am not an expert in how currencies work, but it's worth nothing that Switzerland, like most countries, keeps most of it's own reserves in USD (presumably treasury bills), and has around 1 trillion in USD in reserve. Which is not unrelated to the value of it's own currency and their ability to stabilize it. But I am not claiming to be able to explain the details myself. https://www.ceicdata.com/en/switzerland/official-reserve-assets/official-reserve-assets-usd https://www.ceicdata.com/en/switzerland/official-reserve-ass...
- khuey 5y agoThat number you're looking at is "total Swiss foreign currency reserves in units of USD" not "Swiss foreign currency reserves that are USD". Switzerland, for reasons that are fairly obvious, holds large Euro reserves. At the end of 2020 USD was only ~35% of that total amount.
- jrochkind1 5y agoGood correction, thanks! Still 35% of reserves is plenty! I hadn't considered how many reserves have probably shifted to euros since the euro, that's actually a big deal for the US. Anyway...
- johnebgd 5y agoUSA has natural resources, advanced technologies, and a standing armed forces that are stationed all over the world. These extract value and serve as utility. Bitcoin is better at laundering money than many fiat currencies but otherwise it’s only wide scale utility is a speculative investment asset that only increases in value if more people create demand for its limited supply.
- tim333 5y agoAs an occasional bitcoin holder, I don't think it's a Ponzi scheme. Who's the Ponzi schemer? How come every time it collapses it comes back bigger in a year or two?
- podgaj 5y agoYou are the Ponzi schemer. It is a combination of Pump and Dump and Ponzi. That's why it "comes back bigger".
- tim333 5y agoI think it comes back bigger each time because more people get involved. From a handful of tech geeks at the start to maybe 100m people this time around.
- cuteboy19 5y ago70% of Bitcoin holders bought in last year. A continuous stream of greater fools is necessary for its price to even remain at the current level Also, every ponzi scheme gives amazing returns, before it inevitably collapses. For example Madoff was able to give decent returns to his investors for 17 years! 'Number go up' is not a refutation of a ponzi scheme.
- tim333 5y agoYeah but with a Madoff/Ponzi scheme the thing collapses, Madoff goes to jail, it ends. Bitcoin seems more like other assets that don't make things, stuff like fiat money, gold, fine art and so on.
- DarylZero 5y agoIt literally is just fiat currency. Bitcoin is a way to make fiat currency independent of government.
- hypertele-Xii 5y ago
- DSMan195276 5y agoI don't think it really qualifies as a Ponzi scheme, functionally it's not all that different from any other speculative asset. You're not giving your money to the 'blockchain' expecting it to give back X amount of dollars, you're trading your money for bitcoins and that's the end of it. Whether you want to keep your bitcoins forever, or attempt to find someone else to sell them to is up to you.