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I am 100% a crypto skeptic and don't own any coins, but it is incorrect to call them a Ponzi scheme[1], which is an investment fraud that uses funds from new in
by ch4s3 4y ago
I am 100% a crypto skeptic and don't own any coins, but it is incorrect to call them a Ponzi scheme[1], which is an investment fraud that uses funds from new investors to pay existing investors. You can make a very credible case that many coins were designed for pump and dump scams, but that is not a Ponzi scheme.
The crux of Bitcoins is that its value is derived from people's belief in its value. Lot's of assets and to an extent fiat moneys work this way. The "magic" of bitcoin et.al. is that they are finite, have clear chain of custody, and can be traded peer to peer. Those features can and do inspire confidence, but at the end of the day these coins have limited real world utility outside of money transfers and holding wealth. Those uses are directly tied to the faith of the market for those coins.
If someone asked me if they should buy and hold these coins, I would say no. However, speculation is somewhat in the eye of the beholder and turns on the risk of losing the investment. It's nearly impossible to predict future changes in asset prices, especially when an asset has been steadily increasing in value for years, but has a limited history.
TL;DR you're misusing the phrase "Ponzi scheme" which means something else.
[1] https://en.wikipedia.org/wiki/Ponzi_scheme https://en.wikipedia.org/wiki/Ponzi_scheme
- mistrial9 4y ago> crux of Bitcoins is that its value is derived from people's belief in its value brave, but .. fail. The crux of BTC is that it is secure to attacks while moving assets that are represented digitally. In order to succeed in that, the integrity of the chain is required. Popularism is a "nice to have."
- FPGAhacker 4y agogp > “belief in its value” p > “assets that are represented digitally” Those seem equivalent to me.
- ch4s3 4y agoYeah, that's kind of what I'm saying.
- mlyle 4y ago> crux of Bitcoins is that its value is derived from people's belief in its value brave, but .. fail. The crux of BTC is that it is secure to attacks while moving assets that are represented digitally. Assets whose value is derived from peoples' belief in their future value. A perfectly secure chain moving around assets that no one values isn't very interesting.
- amelius 4y agoYou're technically correct. But I think the label Ponzi scheme is colloquially used for a broader concept where initial players gain and later buyers lose. Buying stuff and investing in stuff is semantically very close. But you're right. Yes, most people (even kids!) now use cryptocurrencies for speculation. Which is just a lottery in disguise, except now it funds criminal activity and harms the climate. And the winners somehow have bragging rights which means more advertising. This is a very sad development.
- ch4s3 4y ago> But I think the label Ponzi scheme is colloquially used for a broader concept Yes, incorrectly. It does nothing to clarify the topic and obscures the risks of actual Ponzi schemes. > harms the climate This seems dubious at best. It seems like a lot of mining is happening on hydro and solar power, and only shifts to carbon intensive electricity when the price is booming.
- amelius 4y ago> This seems dubious at best. It seems like a lot of mining is happening on hydro and solar power, and only shifts to carbon intensive electricity when the price is booming. You're still warming the planet. And total energy use is so large that even carbon intensive part is significant.
- landemva 4y agoWhat is the comparison of BTC energy use v. top-5 global militaries? And military engines delete emission controls.
- FabHK 4y agoI disagree. You are right that the characteristic of a ponzi is that funds from new investors are used to pay existing investors. But that is also a characteristic of crypto. You cannot buy anything for crypto without exchanging it for fiat, and for that you need a new investor to give you fiat for your cryptos. If all exchanges (incl. informal ones) close tomorrow, any crypto you hold is worthless. Now, you could say that the same holds true for shares or real estate. But that is wrong. You can hold shares you bought ad infinitum, even if all stock exchanges close tomorrow, and would still receive your money's worth (approximately) in the form of dividends of the underlying company, or proceeds from the sale of said company, without ever selling those shares. You can live in a house or rent it out, and get your money's worth, without ever selling the house to someone else. I don't see how you can get your money's worth with crypto without ever selling it to someone else.
- mlyle 4y ago> I don't see how you can get your money's worth with crypto without ever selling it to someone else. Which is a characteristic it shares with fiat currency. Of course, fiat currency has people with guns making you accept it as payments for debts.
- FabHK 4y agoYes, and everyone must pay their taxes in fiat, which renders it valuable. Unlike crypto.
- landemva 4y ago>> everyone must pay their taxes in fiat Colorado is different. https://thehill.com/changing-america/resilience/smart-cities/596526-colorado-will-start-accepting-cryptocurrency-for-tax/ https://thehill.com/changing-america/resilience/smart-cities...
- tomputer 4y agoBitcoin is more like holding a piece of gold. If all gold exchanges are closed you can still trade your gold with someone in person. You don’t get your money without ever selling your piece of gold to someone else.