3 ms·

Calling crypto a pyramid scheme is much more accurate than Ponzi. These two concepts are quite different.

by 127 4y ago

CPLX 4y ago
A ponzi happens when a return is promised, and then is provided to early investors from funds provided by later investors, rather from productive enterprise. That’s an almost exact description of most crypto “projects” including the one referenced here, Axie Infinity.
- 127 4y ago
  Sure, it works for some. But for most the return is not (officially) promised and if you want to actually access the money, you have to sell the asset on a market. With Ponzi, you can just collect dollars and run away. Some Ethereum scam coins do work like this, ETH in place of USD, but Ponzi as a generalization for the entire crypto space is simply incorrect.
  - CPLX 4y ago
    Disagree. I think it's almost an exact description. For the most part pyramid schemes have some sort of productive enterprise in there somewhere. Like Avon actually does send people makeup, LuLaRoe or whatever did actually send people leggings that were at least somewhat popular and useful as clothing. There's at least some actual business going on where a product or service is being delivered. Like at least some of the money going into the system is people who just want the leggings. There are a small handful of crypto projects that sort of fit that description but not really. For the most part all of the money that's going into the schemes is coming from people who want more money returned to them. A lot of time there's some kind of sheen of a "product" to try to make it look less scammy but there's nobody who actually wants to just consume that product. Literally everyone is hoping that at the end of their engagement with the system they'll have more actual money than when they started. That's the literal definition of a Ponzi scheme. There's no actual way for people to profit without getting the money from other people who themselves were hoping to profit.

Calling crypto a pyramid scheme is much more accurate than Ponzi. These two concepts are quite different.

by 127 4y ago

Calling crypto a pyramid scheme is much more accurate than Ponzi. These two concepts are quite different.

CPLX 4y ago

A ponzi happens when a return is promised, and then is provided to early investors from funds provided by later investors, rather from productive enterprise. That’s an almost exact description of most crypto “projects” including the one referenced here, Axie Infinity.

127 4y ago
Sure, it works for some. But for most the return is not (officially) promised and if you want to actually access the money, you have to sell the asset on a market. With Ponzi, you can just collect dollars and run away. Some Ethereum scam coins do work like this, ETH in place of USD, but Ponzi as a generalization for the entire crypto space is simply incorrect.
- CPLX 4y ago
  Disagree. I think it's almost an exact description. For the most part pyramid schemes have some sort of productive enterprise in there somewhere. Like Avon actually does send people makeup, LuLaRoe or whatever did actually send people leggings that were at least somewhat popular and useful as clothing. There's at least some actual business going on where a product or service is being delivered. Like at least some of the money going into the system is people who just want the leggings. There are a small handful of crypto projects that sort of fit that description but not really. For the most part all of the money that's going into the schemes is coming from people who want more money returned to them. A lot of time there's some kind of sheen of a "product" to try to make it look less scammy but there's nobody who actually wants to just consume that product. Literally everyone is hoping that at the end of their engagement with the system they'll have more actual money than when they started. That's the literal definition of a Ponzi scheme. There's no actual way for people to profit without getting the money from other people who themselves were hoping to profit.