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It's grossly untrue to say it's a Ponzi scheme "like stocks" which are part ownership in companies that actually sell things in the real world and are valued by

It's grossly untrue to say it's a Ponzi scheme "like stocks" which are part ownership in companies that actually sell things in the real world and are valued by the present value of their future expected cash flows, rather than cryptocurrencies which have no such relationship to the real world, and some would argue are valued entirely on the premise of returns that can only be sustained by finding the next sucker.

gjvc 5y ago
I think we are in violent agreement. Two things can share a characteristic and yet be completely different, but people focus on the similarity (which is easily understood and explainable) and ignore the differences (which can be more difficult to understand and explain).
datadata 5y ago
There are stocks which are fraudulent, e.g Theranos, Enron, or ZZZZ Best. The fact that a company might have expected cash flows does not make them impervious to defrauding investors. Similarly, something issued without any claims of future cash flows does not imply that it must be a fraud.
everfree 5y ago
Some stocks have no expected cash flows, some cryptocurrencies have expected cash flows. You can't generalize entire asset classes like that.
- cuteboy19 5y ago
  Why would anyone buy something with no positive expected cash flow? That's the same as buying into a greater fools scheme
  - everfree 5y ago
    Read my comment more closely. > some cryptocurrencies have expected cash flows Ethereum has cash flow which is expected to go positive after they switch their consensus model from mining to staking this year. At this point, I wouldn't buy any crypto that doesn't at least have a credible roadmap towards positive cash flow.
    - cuteboy19 5y ago
      No, you mentioned stocks not having future expected cash flows. I just don't see the difference between that and Ponzi schemes, even if there are some real examples of this
      - everfree 5y ago
        Many popular stocks (all stocks without dividends or buybacks) are like a Ponzi scheme in that all of the money used to pay early investors (through sale of the security) comes from later investors (buying into the security). However, they are different from a Ponzi scheme in that there is a real business behind them, and no deception/fraud.
throw_nbvc1234 5y ago
Blockchains (like eth and its alternatives) sell blocks (compute with a ledger). Those blocks "have value" to the people who build things on them like NFT's, defi, ponzi schemes, etc... One can argue that those applications don't have value, are scams, are unethical but people are paying a lot of money for those blocks on a daily basis; and holders of those L1 tokens benefit from that value. If you think of eth as a niche cloud provider providing compute with a ledger, then it looks like a stock who's long-term value will depend on useful and legal it's niche becomes after people (do or don't) come up with products and regulation is implemented. > cryptocurrencies which have no such relationship to the real world This is a key point unless the concept of the metaverse takes off; you're starting to see this change though. Look at the Coachella NFT as an example. People will pay to have guaranteed weekend 1 tickets for multiple years; there are years where this is basically sold out before public ticket sales but there's a status element to be able to go W1. These people (like young adults) will probably go for a few years, get bored (or have a change in lifestyle/priorities), then probably resell those NFT's to someone who's a few years earlier in their lives and wants guaranteed W1. This sounds like a ponzi scheme by the description many commenters here are using; the only value is getting some sucker down the road to waste their money for a guaranteed W1 ticket. There's a non-zero chance that coachella doesn't even exist 5 years from now. There's a bigger chance that it's not as popular and the value of any NFT is worth less then it is today. Yet it doesn't feel as scammy because of the real world event that's involved.
- CPLX 5y ago
  But the product being sold in this example is a season ticket, not an NFT. The NFT part of the product has no relevance to why it’s valuable. The valuable part is the promise by the event organizer to save a spot for you. Every major sports team has had this product for decades. It’s literally the same thing as having season tickets to the White Sox or something. The blockchain has added no value to the transaction.
  - leeoniya 5y ago
    > The blockchain has added no value to the transaction. it does make it impossible to make and sell fakes?

gjvc 5y ago

I think we are in violent agreement. Two things can share a characteristic and yet be completely different, but people focus on the similarity (which is easily understood and explainable) and ignore the differences (which can be more difficult to understand and explain).

datadata 5y ago

There are stocks which are fraudulent, e.g Theranos, Enron, or ZZZZ Best. The fact that a company might have expected cash flows does not make them impervious to defrauding investors. Similarly, something issued without any claims of future cash flows does not imply that it must be a fraud.

everfree 5y ago

Some stocks have no expected cash flows, some cryptocurrencies have expected cash flows. You can't generalize entire asset classes like that.

cuteboy19 5y ago
Why would anyone buy something with no positive expected cash flow? That's the same as buying into a greater fools scheme
- everfree 5y ago
  Read my comment more closely. > some cryptocurrencies have expected cash flows Ethereum has cash flow which is expected to go positive after they switch their consensus model from mining to staking this year. At this point, I wouldn't buy any crypto that doesn't at least have a credible roadmap towards positive cash flow.
  - cuteboy19 5y ago
    No, you mentioned stocks not having future expected cash flows. I just don't see the difference between that and Ponzi schemes, even if there are some real examples of this
    - everfree 5y ago
      Many popular stocks (all stocks without dividends or buybacks) are like a Ponzi scheme in that all of the money used to pay early investors (through sale of the security) comes from later investors (buying into the security). However, they are different from a Ponzi scheme in that there is a real business behind them, and no deception/fraud.

throw_nbvc1234 5y ago

Blockchains (like eth and its alternatives) sell blocks (compute with a ledger). Those blocks "have value" to the people who build things on them like NFT's, defi, ponzi schemes, etc... One can argue that those applications don't have value, are scams, are unethical but people are paying a lot of money for those blocks on a daily basis; and holders of those L1 tokens benefit from that value. If you think of eth as a niche cloud provider providing compute with a ledger, then it looks like a stock who's long-term value will depend on useful and legal it's niche becomes after people (do or don't) come up with products and regulation is implemented. > cryptocurrencies which have no such relationship to the real world This is a key point unless the concept of the metaverse takes off; you're starting to see this change though. Look at the Coachella NFT as an example. People will pay to have guaranteed weekend 1 tickets for multiple years; there are years where this is basically sold out before public ticket sales but there's a status element to be able to go W1. These people (like young adults) will probably go for a few years, get bored (or have a change in lifestyle/priorities), then probably resell those NFT's to someone who's a few years earlier in their lives and wants guaranteed W1. This sounds like a ponzi scheme by the description many commenters here are using; the only value is getting some sucker down the road to waste their money for a guaranteed W1 ticket. There's a non-zero chance that coachella doesn't even exist 5 years from now. There's a bigger chance that it's not as popular and the value of any NFT is worth less then it is today. Yet it doesn't feel as scammy because of the real world event that's involved.

CPLX 5y ago
But the product being sold in this example is a season ticket, not an NFT. The NFT part of the product has no relevance to why it’s valuable. The valuable part is the promise by the event organizer to save a spot for you. Every major sports team has had this product for decades. It’s literally the same thing as having season tickets to the White Sox or something. The blockchain has added no value to the transaction.
- leeoniya 5y ago
  > The blockchain has added no value to the transaction. it does make it impossible to make and sell fakes?