7 ms·

How is it a ponzi scheme?

by TDL 13y ago

volaski 13y ago
Bitcoin ecosystem by design rewards the early adopters, since the more people use Bitcoin, the higher the value will go up. I also got the feeling that if Bitcoin does fail, it will go down in history as another Ponzi scheme. Which made me rethink about Ponzi scheme. Everyone in Bitcoin community genuinely believes that Bitcoin will succeed. I am sure it was like that with Ponzi scheme too. Theoretically Bitcoin can succeed, but there are many variables in the world. Maybe it was like that with Ponzi scheme too, you never know what will happen in the future. Lastly, I think it's unfair to label bitcoin as "just another ponzi scheme" as it is not intended for any bad will and theoretically could work (however with so many chances of failing)
- tlrobinson 13y ago
  If Bitcoin is a Ponzi scheme it's the most transparent Ponzi scheme in history.
- drivebyacct2 13y ago
  "Investing in a successful company by design rewards the early adopters, since the more people buy that stock the higher the value will go up." Other than that, the only thing you mentioned is that "people want it to succeed". There are far more important pieces that are needed for something to be a Ponzi scheme and you haven't described how Bitcoin suffers from those attributes.
- lectrick 13y ago
  So basically, every currency ever invented was a Ponzi scheme? When the government of a country prints money for itself, is it engaging in Ponzi? Gold mining (which is quite analogous to Bitcoin mining) is also a ponzi scheme, then?
  - volaski 13y ago
    I am using the term "Ponzi scheme" with no judgment attached. I've met many entrepreneurs and people who are working on Bitcoin related businesses and that was the impression I had, which made me rethink this whole "Everyone who was tricked into Ponzi scheme was a gullible idiot" idea that the society has--when something is uncertain and looks like a great opportunity, the ones who jump in are the people who believe in their intellect. The real dumb ones don't do that. Secondly, you and I both know government issued currency and Bitcoins are very different things. Government issued currency is centralized and is driven by very different factors than a completely decentralized currency such as Bitcoin. Lastly, gold mining has nothing to do with the point I was trying to make.
    - gnaritas 13y ago
      > I am using the term "Ponzi scheme" with no judgment attached. You're using the term incorrectly, a Ponzi scheme isn't what you seem to think it is.
      - volaski 13y ago
        Please read my original comment. I never said what you seem to think I said.
    - lectrick 13y ago
      From https://en.bitcoin.it/wiki/FAQ#Is_Bitcoin_a_Ponzi_scheme.3F https://en.bitcoin.it/wiki/FAQ#Is_Bitcoin_a_Ponzi_scheme.3F : Is Bitcoin a Ponzi scheme? In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy. A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency. The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.
      - 13y ago
- pixie_ 13y ago
  You think it's a ponzi scheme because you think early adopters have all the bitcoins. I would argue Bitcoins are much more spread out than you realize. Mining pools started in 2010 - that's when a large number of people work together to mine coins - each person only earns a fraction of a coin as a result. In 2010 when this started there were only 2 million coins - and not just in one guys wallet, but many - and many many people lost their wallets in the old days as well. Today there are almost 12 million coins - and I assure you those 10 million new coins are even more evenly distributed.
  - volaski 13y ago
    I was talking more in terms of unit value of Bitcoins. I think a lot of people invest in Bitcoins like they invest in stocks. As of today Bitcoin price is $122.10 but it used to be much lower. The more people start using Bitcoins the more valuable it will be, and the early adopters will benefit from it, which incentivizes them to hold onto their Bitcoins instead of letting them go once they have benefited short-term. It's important that the early adopters see the long term value otherwise it will be like a draining bucket.
    - gnaritas 13y ago
      That's not a description of a Ponzi scheme.
      - volaski 13y ago
        I did not imply that in any of my comments
- TDL 13y ago
  Early adopters being rewarded is not sufficient to make something a ponzi scheme. In fact early adopters of many trends and technologies are often rewarded. There is nothing about Bitcoin that is similar to a ponzi scheme. I recommend you take the time to read up on what ponzi schemes are: http://en.wikipedia.org/wiki/Ponzi_scheme http://en.wikipedia.org/wiki/Ponzi_scheme
simonebrunozzi 13y ago
Same question here.
gnaritas 13y ago
It's not. Rewarding early adopters is not enough to consider something a Ponzi scheme but it's enough to make people who don't know what a Ponzi scheme is to call it one.

How is it a ponzi scheme?

by TDL 13y ago

How is it a ponzi scheme?

Bitcoin ecosystem by design rewards the early adopters, since the more people use Bitcoin, the higher the value will go up. I also got the feeling that if Bitcoin does fail, it will go down in history as another Ponzi scheme. Which made me rethink about Ponzi scheme. Everyone in Bitcoin community genuinely believes that Bitcoin will succeed. I am sure it was like that with Ponzi scheme too. Theoretically Bitcoin can succeed, but there are many variables in the world. Maybe it was like that with Ponzi scheme too, you never know what will happen in the future. Lastly, I think it's unfair to label bitcoin as "just another ponzi scheme" as it is not intended for any bad will and theoretically could work (however with so many chances of failing)

tlrobinson 13y ago
If Bitcoin is a Ponzi scheme it's the most transparent Ponzi scheme in history.
drivebyacct2 13y ago
"Investing in a successful company by design rewards the early adopters, since the more people buy that stock the higher the value will go up." Other than that, the only thing you mentioned is that "people want it to succeed". There are far more important pieces that are needed for something to be a Ponzi scheme and you haven't described how Bitcoin suffers from those attributes.
lectrick 13y ago
So basically, every currency ever invented was a Ponzi scheme? When the government of a country prints money for itself, is it engaging in Ponzi? Gold mining (which is quite analogous to Bitcoin mining) is also a ponzi scheme, then?
- volaski 13y ago
  I am using the term "Ponzi scheme" with no judgment attached. I've met many entrepreneurs and people who are working on Bitcoin related businesses and that was the impression I had, which made me rethink this whole "Everyone who was tricked into Ponzi scheme was a gullible idiot" idea that the society has--when something is uncertain and looks like a great opportunity, the ones who jump in are the people who believe in their intellect. The real dumb ones don't do that. Secondly, you and I both know government issued currency and Bitcoins are very different things. Government issued currency is centralized and is driven by very different factors than a completely decentralized currency such as Bitcoin. Lastly, gold mining has nothing to do with the point I was trying to make.
  - gnaritas 13y ago
    > I am using the term "Ponzi scheme" with no judgment attached. You're using the term incorrectly, a Ponzi scheme isn't what you seem to think it is.
    - volaski 13y ago
      Please read my original comment. I never said what you seem to think I said.
  - lectrick 13y ago
    From https://en.bitcoin.it/wiki/FAQ#Is_Bitcoin_a_Ponzi_scheme.3F https://en.bitcoin.it/wiki/FAQ#Is_Bitcoin_a_Ponzi_scheme.3F : Is Bitcoin a Ponzi scheme? In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy. A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency. The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.
    - 13y ago
pixie_ 13y ago
You think it's a ponzi scheme because you think early adopters have all the bitcoins. I would argue Bitcoins are much more spread out than you realize. Mining pools started in 2010 - that's when a large number of people work together to mine coins - each person only earns a fraction of a coin as a result. In 2010 when this started there were only 2 million coins - and not just in one guys wallet, but many - and many many people lost their wallets in the old days as well. Today there are almost 12 million coins - and I assure you those 10 million new coins are even more evenly distributed.
- volaski 13y ago
  I was talking more in terms of unit value of Bitcoins. I think a lot of people invest in Bitcoins like they invest in stocks. As of today Bitcoin price is $122.10 but it used to be much lower. The more people start using Bitcoins the more valuable it will be, and the early adopters will benefit from it, which incentivizes them to hold onto their Bitcoins instead of letting them go once they have benefited short-term. It's important that the early adopters see the long term value otherwise it will be like a draining bucket.
  - gnaritas 13y ago
    That's not a description of a Ponzi scheme.
    - volaski 13y ago
      I did not imply that in any of my comments
TDL 13y ago
Early adopters being rewarded is not sufficient to make something a ponzi scheme. In fact early adopters of many trends and technologies are often rewarded. There is nothing about Bitcoin that is similar to a ponzi scheme. I recommend you take the time to read up on what ponzi schemes are: http://en.wikipedia.org/wiki/Ponzi_scheme http://en.wikipedia.org/wiki/Ponzi_scheme

simonebrunozzi 13y ago

Same question here.

gnaritas 13y ago

It's not. Rewarding early adopters is not enough to consider something a Ponzi scheme but it's enough to make people who don't know what a Ponzi scheme is to call it one.