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Dunno whether I'm having more fun watching the Musk bonfire, or the FTX collapse. My digital timestamping paper is cited by the original bitcoin paper, so peop

Dunno whether I'm having more fun watching the Musk bonfire, or the FTX collapse. My digital timestamping paper is cited by the original bitcoin paper, so people assume I appreciate cryptocurrencies. They're an environmental crime and a Ponzi scheme. Many people have tried to explain to me why cryptocurrencies aren't a Ponzi scheme. The poker player / oral examiner in me kicks in: They may not realize they don't understand or believe what they're saying, but they don't make sense. Denial is powerful. People want to believe this is their moment.

ChrisMarshallNY 4y ago
I was always told, "If your feet are wet, and you can see pyramids, you're in de Nile (or a fountain, in Vegas)."
- watwut 4y ago
  What does that mean?
  - ChrisMarshallNY 4y ago
    "de nile" is a play on words. "In denial" is basically a pop psychology term, meaning that we are not admitting something that is true and obvious[0]. Like, if our spouse is cheating on us, and they come home at 1AM, smelling of booze and perfume, with lipstick all over their collar, but we say "I'm sure he was just working late." The "Vegas Fountain" bit is a joke, as they have a pyramid-shaped building, for the Luxor casino[1]. [0] https://en.wikipedia.org/wiki/Denial_(Freud) https://en.wikipedia.org/wiki/Denial_(Freud) [1] https://luxor.mgmresorts.com/en.html https://luxor.mgmresorts.com/en.html
    - watwut 4y ago
      Thank you!
chinabot 4y ago
Twitter is a controlled burn not a bonfire, but I'm sure Musk will be back to eating more babies for your delight and edification soon.
scottiebarnes 4y ago
> Many people have tried to explain to me why cryptocurrencies aren't a Ponzi scheme. Any currency or "thing", be it fiat, crypto, or commodity, is given value by people who trust and believe in it. If you get more people to adopt and have faith in it, its value goes up. Once people stop believing in it and seek to escape it, its value goes down. This is why oil is priced in US Dollars; this creates demand for dollars and gives the US government power. This is also why the Brtish pound tanked recently; people didn't like the direction of the newly elected British government, and sought to sell their GBP denominated assets. So if your definition of ponzi scheme is "people trying to get more people to adopt it because it enriches them", then yes, all currency systems are "ponzis", they compete and have incentive to take value from other currencies.
- crote 4y ago
  Surely you are not trying to claim that anything which has any value is a viable currency? The US dollar holds value because the US demands you pay taxes in it. It also helps that you can actually use it to buy stuff - from an ice cream cone at a street vendor to an oil platform. And it is backed by a massive government, worldwide banking system, and not-too-shabby military. Meanwhile, crypto is proving to be woefully ill-suited for any kind of payment, contract, or loan. The vast majority of its use is either speculation or crime. Crypto seemed promising in 2012, but a decade down the line nothing convincing has come out. It is still a solution looking for a problem, and at this point I highly doubt one will come out of the woodwork any time soon.
  - scottiebarnes 4y ago
    > Surely you are not trying to claim that anything which has any value is a viable currency? Obviously you're not going around trading ramen and cigarettes, but if you live in a some closed system like a prison, then yes, anything of value can be used as a currency. History shows many societies have used many different things as money. Eventually gold out-competed those monies and became the de facto standard for money. You forget that US dollars were originally promissory notes for redeeming gold at a bank; this is what gave US notes value (trust that you could get gold for the notes), and the de-pegging of gold gave birth to the experiment that is modern day banking.
robcohen 4y ago
I'm not convinced that cryptocurrency is a ponzi scheme. Crypto is an asset, not a market. Decentralized digital assets cannot inherently be ponzi schemes. The level of transparency and trust in the market on which they trade is what determines if it's a ponzi scheme. I am convinced that many cryptocurrency markets/exchanges are ponzi schemes and need to be significantly regulated so that market manipulation is reduced significantly, especially when non-accredited investors are involved. However the fact that these markets trade crypto is not relevant. Every time crypto implodes (what are we, on the sixth extinction?) people love to stand by the sidelines and say "see I told you so!". All that's really happening, as someone else on HN aptly put it, is we're speed-running the history of finance out again in crypto-land. It is a shame that self-regulatory efforts that Gemini and Circle tried essentially failed, but it's not really surprising. Power corrupts, and there's almost no regulation in the industry. The industry has clearly shown it needs regulation, so the time to claim that it doesn't is completely gone. I for one, am extremely optimistic about what cryptocurrency means for the human race. I honestly believe it will do for the human economy what the internet has done for knowledge. I hope I am not wrong, and I'm certain that there will be dark periods full of bad actors, just as there was/is for the evolution of the internet. I should state that I own no cryptocurrency at the moment, even while being optimistic about the future of cryptocurrency.
- diab0lic 4y ago
  > All that's really happening, as someone else on HN aptly put it, is we're speed-running the history of finance out again in crypto-land. I’d be surprised if the person who said this meant it was a good thing. The sentence literally acknowledges a similarity between crypto and traditional finance. Yet instead of taking those lessons and implementing the solutions the crypto space insists on making the mistakes over again and maybe learning the lessons. The cognitive dissonance in this space is intense.
  - robcohen 4y ago
    Yes, the space is making the same mistakes but that has more to do with the nature of humanity and its tendency toward corruption. It does feel like a missed opportunity, but intellectually I am pretty convinced the corruption was inevitable. That said, this is all growing pains. It’ll pass. The price of crypto does not need to stay high for the benefits to be present. It just needs to stay above the price level where an adversary can simply buy a significant percentage of the network. I still believe in the promises of crypto.
blep_ 4y ago
> Many people have tried to explain to me why cryptocurrencies aren't a Ponzi scheme. I love how many people will read this sentence, and then respond by trying to explain to you why cryptocurrencies aren't a Ponzi scheme.
- themihai 4y ago
  cryptocurrencies don't have to be ponzi schemes but most of them are because the crypto "investors" want to get into ponzi schemes. They don't "believe" in shitcoin's "white paper" but they believe there are more ponzi buyers. To be fair most retailers do the same with stocks so it's not that different. I don't even mention CFDs where the vast majority lose. Even "analysts" score various instruments based on "demand"/market sentiment not value.
  - mlazos 4y ago
    Stocks are different because there’s actually an underlying business beyond “waiting for the next guy”. For example in a non-ponzi security there is long term value as a business grows. No such thing for shitcoins. Nobody is saying sentiment doesn’t matter in the actual economy, it’s made up of humans, of course sentiment matters. It’s “is sentiment the only thing that matters?”, and in the case of crypto the answer is yes.
    - sschueller 4y ago
      A year or two ago there were actual business ideas behind some coins like file coin for example but now it's not even that anymore.
      - themihai 4y ago
        Indeed but then people found out they don't care about what's behind the ticker (i.e underlying value) as long as its price goes up. You can find the same behaviour on many stocks as well(i.e $AMC more recently).
    - themihai 4y ago
Ekaros 4y ago
I keep explaining that on average crypto currencies are not Ponzi schemes. As Ponzi scheme is rather specific system. That however does not mean some of the currencies/tokens are not such, or that such schemes are not run with or advertising currencies. Or that they aren't pure crap anyway as concept.
john_alan 4y ago
Cryptocurrency is by definition, an open transparent market and as such not a Ponzi scheme. Quite literally by definition. Also many of the current cryptocurrencies run on tiny amounts of energy (Algorand, Cardano). Some of the brightest minds in applied mathematics and cryptography are working on this stuff. Maybe you should be a little more open minded. Edit: downvoted without any discourse. This site is so strangely anti crypto, stay smug, let’s see how it works out for you.
- tromp 4y ago
  > Also many of the current cryptocurrencies run on tiny amounts of energy (Algorand, Cardano). That's easy to do if you don't care about fair distribution of coins. One company initially holding the entire coin supply is not very decentralized.
- matkoniecz 4y ago
  > This site is so strangely anti crypto, stay smug, let’s see how it works out for you. Well, for example losses of this people in FTX collapse are limited. Unlike fraud sector of Bahamas economy described in the article.
omginternets 4y ago
Would you share a link to your paper?
- googlryas 4y ago
  "Improving the efficiency and reliability of digital time-stamping," In Sequences II: Methods in Communication, Security and Computer Science, pages 329-334, 1993.
  - jancsika 4y ago
    I love how the discussion is about the efficacy of cryptography/blockchain, yet I confirmed this was the correct paper merely by reading the plaintext posting history of "Syzygies" and seeing him call himself "Dave" in one of them.
    - googlryas 4y ago
      I figured it out from a post of his where he links to an article and says that Simon singh said that I introduced him to something.. and then the article quotes Simon as saying David Hayes did that thing. It's easy to find these things, especially with somebody who's been in computing for so long and probably has a huge digital trail and no desire to hide their identity. If I didn't see anything in 30 seconds of browsing his post history, next step would be to look up the authors of the papers quoted in the Bitcoin paper(not many) and see if any are still living and interested in astronomy, based on his username.
zoklet-enjoyer 4y ago
Imagine being cited in the Bitcoin white paper but not understanding the value of Bitcoin:(
- scottLobster 4y ago
  The economic value of Bitcoin is extremely low after any substantial, good faith critical analysis. At least that's the bottom I've reached with every deep dive. Of course the typical experience is I get called a "hater" once I ask a question the Bitcoin enthusiasts can't answer off the top of their heads. Or the perennial "this has already been answered" and yet no one ever offers a reference to said answer. Fundamentally the crypto community is populated by doomers/nihilists who think that crypto is somehow be immune to economic and political shocks, and scammers. Smart contracts might be thing some day, but that's it so far
  - zoklet-enjoyer 4y ago
    I got into Bitcoin in 2012 after getting locked out of my PayPal account multiple times with money still in it. It blew my mind how a stranger could send me digital money that nobody could lock up or chargeback
boomchinolo78 4y ago
About as good as fiat, just based on shared faith

ChrisMarshallNY 4y ago

I was always told, "If your feet are wet, and you can see pyramids, you're in de Nile (or a fountain, in Vegas)."

watwut 4y ago
What does that mean?
- ChrisMarshallNY 4y ago
  "de nile" is a play on words. "In denial" is basically a pop psychology term, meaning that we are not admitting something that is true and obvious[0]. Like, if our spouse is cheating on us, and they come home at 1AM, smelling of booze and perfume, with lipstick all over their collar, but we say "I'm sure he was just working late." The "Vegas Fountain" bit is a joke, as they have a pyramid-shaped building, for the Luxor casino[1]. [0] https://en.wikipedia.org/wiki/Denial_(Freud) https://en.wikipedia.org/wiki/Denial_(Freud) [1] https://luxor.mgmresorts.com/en.html https://luxor.mgmresorts.com/en.html
  - watwut 4y ago
    Thank you!

chinabot 4y ago

Twitter is a controlled burn not a bonfire, but I'm sure Musk will be back to eating more babies for your delight and edification soon.

scottiebarnes 4y ago

> Many people have tried to explain to me why cryptocurrencies aren't a Ponzi scheme. Any currency or "thing", be it fiat, crypto, or commodity, is given value by people who trust and believe in it. If you get more people to adopt and have faith in it, its value goes up. Once people stop believing in it and seek to escape it, its value goes down. This is why oil is priced in US Dollars; this creates demand for dollars and gives the US government power. This is also why the Brtish pound tanked recently; people didn't like the direction of the newly elected British government, and sought to sell their GBP denominated assets. So if your definition of ponzi scheme is "people trying to get more people to adopt it because it enriches them", then yes, all currency systems are "ponzis", they compete and have incentive to take value from other currencies.

crote 4y ago
Surely you are not trying to claim that anything which has any value is a viable currency? The US dollar holds value because the US demands you pay taxes in it. It also helps that you can actually use it to buy stuff - from an ice cream cone at a street vendor to an oil platform. And it is backed by a massive government, worldwide banking system, and not-too-shabby military. Meanwhile, crypto is proving to be woefully ill-suited for any kind of payment, contract, or loan. The vast majority of its use is either speculation or crime. Crypto seemed promising in 2012, but a decade down the line nothing convincing has come out. It is still a solution looking for a problem, and at this point I highly doubt one will come out of the woodwork any time soon.
- scottiebarnes 4y ago
  > Surely you are not trying to claim that anything which has any value is a viable currency? Obviously you're not going around trading ramen and cigarettes, but if you live in a some closed system like a prison, then yes, anything of value can be used as a currency. History shows many societies have used many different things as money. Eventually gold out-competed those monies and became the de facto standard for money. You forget that US dollars were originally promissory notes for redeeming gold at a bank; this is what gave US notes value (trust that you could get gold for the notes), and the de-pegging of gold gave birth to the experiment that is modern day banking.

robcohen 4y ago

I'm not convinced that cryptocurrency is a ponzi scheme. Crypto is an asset, not a market. Decentralized digital assets cannot inherently be ponzi schemes. The level of transparency and trust in the market on which they trade is what determines if it's a ponzi scheme. I am convinced that many cryptocurrency markets/exchanges are ponzi schemes and need to be significantly regulated so that market manipulation is reduced significantly, especially when non-accredited investors are involved. However the fact that these markets trade crypto is not relevant. Every time crypto implodes (what are we, on the sixth extinction?) people love to stand by the sidelines and say "see I told you so!". All that's really happening, as someone else on HN aptly put it, is we're speed-running the history of finance out again in crypto-land. It is a shame that self-regulatory efforts that Gemini and Circle tried essentially failed, but it's not really surprising. Power corrupts, and there's almost no regulation in the industry. The industry has clearly shown it needs regulation, so the time to claim that it doesn't is completely gone. I for one, am extremely optimistic about what cryptocurrency means for the human race. I honestly believe it will do for the human economy what the internet has done for knowledge. I hope I am not wrong, and I'm certain that there will be dark periods full of bad actors, just as there was/is for the evolution of the internet. I should state that I own no cryptocurrency at the moment, even while being optimistic about the future of cryptocurrency.

diab0lic 4y ago
> All that's really happening, as someone else on HN aptly put it, is we're speed-running the history of finance out again in crypto-land. I’d be surprised if the person who said this meant it was a good thing. The sentence literally acknowledges a similarity between crypto and traditional finance. Yet instead of taking those lessons and implementing the solutions the crypto space insists on making the mistakes over again and maybe learning the lessons. The cognitive dissonance in this space is intense.
- robcohen 4y ago
  Yes, the space is making the same mistakes but that has more to do with the nature of humanity and its tendency toward corruption. It does feel like a missed opportunity, but intellectually I am pretty convinced the corruption was inevitable. That said, this is all growing pains. It’ll pass. The price of crypto does not need to stay high for the benefits to be present. It just needs to stay above the price level where an adversary can simply buy a significant percentage of the network. I still believe in the promises of crypto.

blep_ 4y ago

> Many people have tried to explain to me why cryptocurrencies aren't a Ponzi scheme. I love how many people will read this sentence, and then respond by trying to explain to you why cryptocurrencies aren't a Ponzi scheme.

themihai 4y ago
cryptocurrencies don't have to be ponzi schemes but most of them are because the crypto "investors" want to get into ponzi schemes. They don't "believe" in shitcoin's "white paper" but they believe there are more ponzi buyers. To be fair most retailers do the same with stocks so it's not that different. I don't even mention CFDs where the vast majority lose. Even "analysts" score various instruments based on "demand"/market sentiment not value.
- mlazos 4y ago
  Stocks are different because there’s actually an underlying business beyond “waiting for the next guy”. For example in a non-ponzi security there is long term value as a business grows. No such thing for shitcoins. Nobody is saying sentiment doesn’t matter in the actual economy, it’s made up of humans, of course sentiment matters. It’s “is sentiment the only thing that matters?”, and in the case of crypto the answer is yes.
  - sschueller 4y ago
    A year or two ago there were actual business ideas behind some coins like file coin for example but now it's not even that anymore.
    - themihai 4y ago
      Indeed but then people found out they don't care about what's behind the ticker (i.e underlying value) as long as its price goes up. You can find the same behaviour on many stocks as well(i.e $AMC more recently).
  - themihai 4y ago

Ekaros 4y ago

I keep explaining that on average crypto currencies are not Ponzi schemes. As Ponzi scheme is rather specific system. That however does not mean some of the currencies/tokens are not such, or that such schemes are not run with or advertising currencies. Or that they aren't pure crap anyway as concept.

john_alan 4y ago

Cryptocurrency is by definition, an open transparent market and as such not a Ponzi scheme. Quite literally by definition. Also many of the current cryptocurrencies run on tiny amounts of energy (Algorand, Cardano). Some of the brightest minds in applied mathematics and cryptography are working on this stuff. Maybe you should be a little more open minded. Edit: downvoted without any discourse. This site is so strangely anti crypto, stay smug, let’s see how it works out for you.

tromp 4y ago
> Also many of the current cryptocurrencies run on tiny amounts of energy (Algorand, Cardano). That's easy to do if you don't care about fair distribution of coins. One company initially holding the entire coin supply is not very decentralized.
matkoniecz 4y ago
> This site is so strangely anti crypto, stay smug, let’s see how it works out for you. Well, for example losses of this people in FTX collapse are limited. Unlike fraud sector of Bahamas economy described in the article.

omginternets 4y ago

Would you share a link to your paper?

googlryas 4y ago
"Improving the efficiency and reliability of digital time-stamping," In Sequences II: Methods in Communication, Security and Computer Science, pages 329-334, 1993.
- jancsika 4y ago
  I love how the discussion is about the efficacy of cryptography/blockchain, yet I confirmed this was the correct paper merely by reading the plaintext posting history of "Syzygies" and seeing him call himself "Dave" in one of them.
  - googlryas 4y ago
    I figured it out from a post of his where he links to an article and says that Simon singh said that I introduced him to something.. and then the article quotes Simon as saying David Hayes did that thing. It's easy to find these things, especially with somebody who's been in computing for so long and probably has a huge digital trail and no desire to hide their identity. If I didn't see anything in 30 seconds of browsing his post history, next step would be to look up the authors of the papers quoted in the Bitcoin paper(not many) and see if any are still living and interested in astronomy, based on his username.

zoklet-enjoyer 4y ago

Imagine being cited in the Bitcoin white paper but not understanding the value of Bitcoin:(

scottLobster 4y ago
The economic value of Bitcoin is extremely low after any substantial, good faith critical analysis. At least that's the bottom I've reached with every deep dive. Of course the typical experience is I get called a "hater" once I ask a question the Bitcoin enthusiasts can't answer off the top of their heads. Or the perennial "this has already been answered" and yet no one ever offers a reference to said answer. Fundamentally the crypto community is populated by doomers/nihilists who think that crypto is somehow be immune to economic and political shocks, and scammers. Smart contracts might be thing some day, but that's it so far
- zoklet-enjoyer 4y ago
  I got into Bitcoin in 2012 after getting locked out of my PayPal account multiple times with money still in it. It blew my mind how a stranger could send me digital money that nobody could lock up or chargeback

boomchinolo78 4y ago

About as good as fiat, just based on shared faith