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There's nothing at all wrong with crypto if you understand it is a ponzi scheme and nothing more. With that understanding, you now know how to play the game -

There's nothing at all wrong with crypto if you understand it is a ponzi scheme and nothing more. With that understanding, you now know how to play the game - which is to say you MUST get out before the ponzi collapses. Your job as investor/gambler is to get in while the house of cards is starting to be built, and to get out before the Jenga tower collapses - and it definitely will. If however you play crypto and tell yourself how it's changing society, crypto has real value, the blockchain will change the world and all that sort of garbage, then you'll lose because you don't understand the fundamental system at play, which is the ponzi mechanism, with nothing at all underpinning the "investment'. If you truly understand it is a ponzi scheme then it's quite exciting - an open, legal, consensual, highly organised globally distributed ponzi scheme - that's something entirely new.

pcthrowaway 4y ago
Interesting take. I mostly agree, but I do think there is legitimate value in the foundation. Every time the ponzi collapses, the next jenga tower has a slightly higher foundation
- Balgair 4y ago
  I've gotten confused in the metaphors here. Do you think that with the collapse of every ponzi scheme that the next ponzi scheme is somehow less ... scheme-y? I'm not even sure what that really means, but it seems to me that ponzi schemes, by definition, always go to 0 in the long run. There are no foundations, just greed and misery. Can you clarify?
  - pcthrowaway 4y ago
    The ponzis are being built by people on top of slowly evolving layers of useful technology. Of course the actual building isn't tied to the hype cycles, but from the perspective of most people it's just ponzis swelling and bursting. There is real innovation happening though, fuelling the FOMO every time another bubble forms.
- deebosong 4y ago
  Curious, but what's your take on what this foundation is, functionally speaking? Is it indeed a decentralized financial alternative that will address the current woes of tradfi? Or is it something else? Or is it, again in your opinion, sort of a blank canvas, and just SOME foundation that's being emerging, and eventually people will be building on top of it?
  - pcthrowaway 4y ago
    The foundation is a decentralized way to transfer value, without intermediaries. The actual value-additive innovation right now is happening around financial primitives being rebuilt in a decentralized manner, using smart contracts. Everything from the virtual machine to the language capabilities (and restrictions) to the "legos" used to build decentralized applications are constantly evolving. The constant hacks are also a form of hardening that's happening. New kinds of attacks are regularly discovered, and then exploited or responsibly disclosed, and then protocols start to guard against them, and the entities building the "legos" (I'm mainly talking about OpenZeppelin) upgrade any pieces that need to be upgraded.
CTDOCodebases 4y ago
How can Bitcoin be a ponzi scheme if it doesn't generate returns for the investors? I have bought and sold Bitcoin on an exchange and the anonymous person on the other end of the trade did not make any promises of returns. By your definition is Uber stock a ponzi scheme? It too does not provide a return and relies on buying pressure to increase it's price so people can reap the rewards of their so called "investment". I would argue that a better mental model of the crypto space is a decentralised globally distributed digital casino.
- MadeThisToReply 4y ago
  "Ponzi scheme" has become completely divorced from its original meaning. It's supposed to refer to a specific type of scam where you pay "investors" using the money you received from previous investors, but nowadays it's basically just used now to mean "anything crypto-related in which people might lose or have lost their money."
  - CTDOCodebases 4y ago
    When I see people use it in this context I think it just shows a lack of understanding. To be fair I probably wouldn't disagree if someone said UST was a actual Ponzi scheme. Holding UST had no real utility compared to the alternatives. The only incentive to hold UST was the 20% APY. Deliberate or not it was a classic ponzi scheme.
  - 4ggr0 4y ago
    I think people refer to some cryptos as a ponzi scheme in the way that for a lot of coins the only reason that they have a value is that lots of people own them. So the strategy there is to buy low, try to convince or just hope that others will buy it as well, which drives the price up, then sell it when the price is up. In that description the people on the top of the pyramid are just the early buyers or founders, and the later you buy a specific coin, the lower on the pyramid you are. When early whales start selling of their bag, you as a late-joiner will be left holding your own bag. This of course does not necessarily apply to the minority of cryptocurrencies which have an actual use-case other than just existing.

pcthrowaway 4y ago

Interesting take. I mostly agree, but I do think there is legitimate value in the foundation. Every time the ponzi collapses, the next jenga tower has a slightly higher foundation

Balgair 4y ago
I've gotten confused in the metaphors here. Do you think that with the collapse of every ponzi scheme that the next ponzi scheme is somehow less ... scheme-y? I'm not even sure what that really means, but it seems to me that ponzi schemes, by definition, always go to 0 in the long run. There are no foundations, just greed and misery. Can you clarify?
- pcthrowaway 4y ago
  The ponzis are being built by people on top of slowly evolving layers of useful technology. Of course the actual building isn't tied to the hype cycles, but from the perspective of most people it's just ponzis swelling and bursting. There is real innovation happening though, fuelling the FOMO every time another bubble forms.
deebosong 4y ago
Curious, but what's your take on what this foundation is, functionally speaking? Is it indeed a decentralized financial alternative that will address the current woes of tradfi? Or is it something else? Or is it, again in your opinion, sort of a blank canvas, and just SOME foundation that's being emerging, and eventually people will be building on top of it?
- pcthrowaway 4y ago
  The foundation is a decentralized way to transfer value, without intermediaries. The actual value-additive innovation right now is happening around financial primitives being rebuilt in a decentralized manner, using smart contracts. Everything from the virtual machine to the language capabilities (and restrictions) to the "legos" used to build decentralized applications are constantly evolving. The constant hacks are also a form of hardening that's happening. New kinds of attacks are regularly discovered, and then exploited or responsibly disclosed, and then protocols start to guard against them, and the entities building the "legos" (I'm mainly talking about OpenZeppelin) upgrade any pieces that need to be upgraded.

CTDOCodebases 4y ago

How can Bitcoin be a ponzi scheme if it doesn't generate returns for the investors? I have bought and sold Bitcoin on an exchange and the anonymous person on the other end of the trade did not make any promises of returns. By your definition is Uber stock a ponzi scheme? It too does not provide a return and relies on buying pressure to increase it's price so people can reap the rewards of their so called "investment". I would argue that a better mental model of the crypto space is a decentralised globally distributed digital casino.

MadeThisToReply 4y ago
"Ponzi scheme" has become completely divorced from its original meaning. It's supposed to refer to a specific type of scam where you pay "investors" using the money you received from previous investors, but nowadays it's basically just used now to mean "anything crypto-related in which people might lose or have lost their money."
- CTDOCodebases 4y ago
  When I see people use it in this context I think it just shows a lack of understanding. To be fair I probably wouldn't disagree if someone said UST was a actual Ponzi scheme. Holding UST had no real utility compared to the alternatives. The only incentive to hold UST was the 20% APY. Deliberate or not it was a classic ponzi scheme.
- 4ggr0 4y ago
  I think people refer to some cryptos as a ponzi scheme in the way that for a lot of coins the only reason that they have a value is that lots of people own them. So the strategy there is to buy low, try to convince or just hope that others will buy it as well, which drives the price up, then sell it when the price is up. In that description the people on the top of the pyramid are just the early buyers or founders, and the later you buy a specific coin, the lower on the pyramid you are. When early whales start selling of their bag, you as a late-joiner will be left holding your own bag. This of course does not necessarily apply to the minority of cryptocurrencies which have an actual use-case other than just existing.