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Since all of these systems are negative-sum, in almost all cases, the majority lose more than they put in. That's how these scams work. I would discourage ever

Since all of these systems are negative-sum, in almost all cases, the majority lose more than they put in. That's how these scams work. I would discourage everyone from developing the apetite for "free money" in these cases, because it isnt free. You were just lucky enough to be early in the pyramid scheme which ends with the vast majority losing everything. It was their cash you withdrew, that's the source of your "free" money. If people want to know why these scams are so common, its because they work. People early-in, early-out extract money from the rest. Nevertheless, in almost all cases, by the time you hear about the opportunity, you're too late to scam people. If nothing else, at least presume this. (which is the anti-dote to FOMO: by the time you feel FOMO it's too late, you'll be the dupe)

lordgrenville 4y ago
Yes, or more bluntly: if you identify something as a Ponzi but are able to get in and out fast enough to profit, that is stolen money and you are as culpable as the original founders.
- themihai 4y ago
  Ha ha ha! Nice try!
  - ceejayoz 4y ago
    Even if you don't know it's a fraud, you can wind up losing the profit. This famously happened in the Madoff ponzi: https://news.bloomberglaw.com/bankruptcy-law/madoff-investors-must-return-profits-in-clawback-2d-cir-rules https://news.bloomberglaw.com/bankruptcy-law/madoff-investor... > Investors who profited in good faith from Bernie Madoff’s Ponzi scheme must return millions they received in excess of their principal, the Second Circuit ruled, affirming judgments allowing the firm’s liquidating trustee to claw back the funds. > Net winners of Madoff’s infamous Ponzi scheme don’t have property or contract rights to profits earned over and above what they invested, even though they were unaware of Madoff’s fraud, the U.S. Court of Appeals for the Second Circuit ruled Thursday.
    - themihai 4y ago
      Wow, that's pretty bad. Not only you take the risk but you are doomed to loose either way.
roenxi 4y ago
> Since all of these systems are negative-sum, in almost all cases, the majority lose more than they put in. This is a solid argument and I'd have made it once. But given how the situation is shaping up it is difficult to avoid the comparison to gold which is also a net-negative system, has been waddling on for several thousand years now and has proven irrepressible as an asset (despite many credible efforts to stamp it out). The argument about whether crypto as a system can create value has been settled in the affirmative. We've never seen these sort of reliable transaction guarantees before in a monetary system and some people are willing to pay for that. Value is being created. The only question still open is what cost is appropriate. So far the market has been consistently saying "more" but maybe that is an aberration.
- leereeves 4y ago
  Gold has kept its value for thousands of years because it's not net-negative. People happily buy gold and "lose" money on the deal, because they value the gold more than the money. So investors can gain money, buyers can gain gold, and everyone can come out ahead. Unlike crypto, where one investor's gains come at the expense of another investor who loses, because few people buy crypto for its own sake.
- d4rti 4y ago
  Gold is different to Bitcoin/Cryptocurrency in a few keys ways, not least of which: - it's a physical object - it has use value in jewelry - it has use value in electronics and other industrial applications Gold storage in itself doesn't create value, but jewelry, electronics etc do.
  - roenxi 4y ago
    I anticipate these being common points so here is my quick rebuttal to each: > it's a physical object That isn't an argument for or against crypto. Crypto is a virtual object and that is desirable, makes it easier to get past a border. I can't easily get my gold out of the country - this is one of my considerations when I started buying in to Monero. There'd be a lot less interest from inside China if crypto was a physical object. > it has use value in jewelry Yep. Think about that deeply. One of its primary functions is looking good, and it isn't do so well at that job compared to coloured glass. The point of gold jewellery is to show off - politely - that someone can afford to own gold. There is nothing happening there that Bitcoin can't do except Bitcoin is even more public about how much someone owns. > it has use value in electronics and other industrial applications And they'd be able to afford a lot more of it if the investors would go away. Gold's value has been a thing for literal centuries and electronics have only existed for decades. This isn't driving the value of gold as an investment, gold's corrosion resistance is. Crypto has arguably better, arguably worse properties over long periods of time. Really we are still to find this out, it hasn't been around long enough to know what a decade in crypto looks like (at equilibrium).
tim333 4y ago
>these systems are negative-sum that kind of assumes the tokens produced have no value which in the case of stuff like bitcoin seems empirically not to be true. Even after all the crashes etc. you can sell them for >$10k each And if you say the people paying $10k+ for bitcoins are just mugs, it's all 0s and 1s, it is hard to differentiate from regular currency which is also just bits of paper or 0s or 1s. Both have value because in practice you can exchange them for real stuff.
- readthenotes1 4y ago
  The whataboutism kinda falls flat since both can be true: fiat currency from a govt and crypto can both have zero real value, propped up only by shared delusions. However, govt currency is propped up some by it's taxing authority (the govts ability to take value from its residents)

lordgrenville 4y ago

Yes, or more bluntly: if you identify something as a Ponzi but are able to get in and out fast enough to profit, that is stolen money and you are as culpable as the original founders.

themihai 4y ago
Ha ha ha! Nice try!
- ceejayoz 4y ago
  Even if you don't know it's a fraud, you can wind up losing the profit. This famously happened in the Madoff ponzi: https://news.bloomberglaw.com/bankruptcy-law/madoff-investors-must-return-profits-in-clawback-2d-cir-rules https://news.bloomberglaw.com/bankruptcy-law/madoff-investor... > Investors who profited in good faith from Bernie Madoff’s Ponzi scheme must return millions they received in excess of their principal, the Second Circuit ruled, affirming judgments allowing the firm’s liquidating trustee to claw back the funds. > Net winners of Madoff’s infamous Ponzi scheme don’t have property or contract rights to profits earned over and above what they invested, even though they were unaware of Madoff’s fraud, the U.S. Court of Appeals for the Second Circuit ruled Thursday.
  - themihai 4y ago
    Wow, that's pretty bad. Not only you take the risk but you are doomed to loose either way.

roenxi 4y ago

> Since all of these systems are negative-sum, in almost all cases, the majority lose more than they put in. This is a solid argument and I'd have made it once. But given how the situation is shaping up it is difficult to avoid the comparison to gold which is also a net-negative system, has been waddling on for several thousand years now and has proven irrepressible as an asset (despite many credible efforts to stamp it out). The argument about whether crypto as a system can create value has been settled in the affirmative. We've never seen these sort of reliable transaction guarantees before in a monetary system and some people are willing to pay for that. Value is being created. The only question still open is what cost is appropriate. So far the market has been consistently saying "more" but maybe that is an aberration.

leereeves 4y ago
Gold has kept its value for thousands of years because it's not net-negative. People happily buy gold and "lose" money on the deal, because they value the gold more than the money. So investors can gain money, buyers can gain gold, and everyone can come out ahead. Unlike crypto, where one investor's gains come at the expense of another investor who loses, because few people buy crypto for its own sake.
d4rti 4y ago
Gold is different to Bitcoin/Cryptocurrency in a few keys ways, not least of which: - it's a physical object - it has use value in jewelry - it has use value in electronics and other industrial applications Gold storage in itself doesn't create value, but jewelry, electronics etc do.
- roenxi 4y ago
  I anticipate these being common points so here is my quick rebuttal to each: > it's a physical object That isn't an argument for or against crypto. Crypto is a virtual object and that is desirable, makes it easier to get past a border. I can't easily get my gold out of the country - this is one of my considerations when I started buying in to Monero. There'd be a lot less interest from inside China if crypto was a physical object. > it has use value in jewelry Yep. Think about that deeply. One of its primary functions is looking good, and it isn't do so well at that job compared to coloured glass. The point of gold jewellery is to show off - politely - that someone can afford to own gold. There is nothing happening there that Bitcoin can't do except Bitcoin is even more public about how much someone owns. > it has use value in electronics and other industrial applications And they'd be able to afford a lot more of it if the investors would go away. Gold's value has been a thing for literal centuries and electronics have only existed for decades. This isn't driving the value of gold as an investment, gold's corrosion resistance is. Crypto has arguably better, arguably worse properties over long periods of time. Really we are still to find this out, it hasn't been around long enough to know what a decade in crypto looks like (at equilibrium).

tim333 4y ago

>these systems are negative-sum that kind of assumes the tokens produced have no value which in the case of stuff like bitcoin seems empirically not to be true. Even after all the crashes etc. you can sell them for >$10k each And if you say the people paying $10k+ for bitcoins are just mugs, it's all 0s and 1s, it is hard to differentiate from regular currency which is also just bits of paper or 0s or 1s. Both have value because in practice you can exchange them for real stuff.

readthenotes1 4y ago
The whataboutism kinda falls flat since both can be true: fiat currency from a govt and crypto can both have zero real value, propped up only by shared delusions. However, govt currency is propped up some by it's taxing authority (the govts ability to take value from its residents)