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Bitcoin is not a ponzi scheme. It's a technology with actual useful properties. The code is out there to see. If you don't understand why these properties are

by snitko 13y ago

Bitcoin is not a ponzi scheme. It's a technology with actual useful properties. The code is out there to see. If you don't understand why these properties are useful to so many people, I welcome you to the third world countries where you can't start selling your product to the rest of the world (even if it's a great one), because PayPal doesn't work with your country and cc processors won't let you accept cards from other countries (fraud risk). It's not just that. It's also that you don't have to report to anyone and go through all the tedious paperwork to incorporate BEFORE you actually made a cent on your product. When you compare the ease with which you can start selling your product with Bitcoin, it's just amazing. Government regulations stifle innovation and entrepreneurship, Bitcoin let's you break free.

jbooth 13y ago
It can't be both? The declining rate of bitcoin generation certainly has ponzi-like properties. It seems like the primary motivation to mine is assuming that the value will go up as mining becomes more difficult.
- snitko 13y ago
  So? Is Gold a ponzi scheme too? I don't see a problem with the declining rate of generation because you can divide Bitcoin up to some pretty small fractions. You have to really wrap your head around deflation, you know. It's a beautiful and healthy thing, it's just that we've been told it's not.
  - jbooth 13y ago
    So you're saying it has ponzi-ish properties? Or not? If you're always incentivized to hold something and never incentivized to spend it, it becomes more of an asset than a currency. Gold is an asset, too, but it has much broader market participation in addition to being "special" as a value store due to 6,000 years of tradition. If you've got an asset with a lot of hype that's supposed to always increase in value, so you better get on board now unless you want to be a sucker, that looks a lot like a ponzi scheme to me. You can still make money on it, don't let me stop you. You're probably not going to refactor capitalism with it. Additionally, (I'm assuming you're a little young and naive here, apologies if that's not the case), additionally I'd really suggest decoupling your personal political beliefs from investment decisions with real money. It never ends well.
    - snitko 13y ago
      No, I don't believe Bitcoin is a ponzi scheme at all. And I really don't think my age is relevant, you either have arguments or you don't. But let's come back to that notion of yours > If you're always incentivized to hold something and never incentivized to spend it, it becomes more of an asset than a currency." Let's say all you got is 10btc and $0 in your bank account. And you need some food. You're probably gonna decide not to starve yourself to death because being alive tomorrow is more valuable to you than having more money and being dead. Thus you are going to spend your bitcoins (either directly or by exchanging them into fiat). Now, what you probably wouldn't do is buy something you don't really need or want at the moment. And that's fine, in this case Bitcoin encourages responsible spending. Now, of course, you should understand why a deflationary currency grows long term - not speculation, but new products and services in the economy. If no one spends, then no new products and services appear, currency is not gaining in value. If it's not gaining in value anymore you have your incentives to spend back. The major differences with a deflationary currency are this: 1. No one forces you to spend (like governments inflating your money), so you make decisions on your own. 2. Deflation is an ultimate tax that rich cannot avoid. If you make money, you will inevitably share it with the rest (their money gaining in value).
      - jbooth 13y ago
        When it comes to thinking "this time is different" and "I have an idea to refactor the world economy", your age is VERY relevant. Everyone thinks they have a simple way to fix everything when they're 22. By the time you're 30-40 it's amazing how much smarter the rest of the world got. You can take my word for it as regards politics and investment, or not, it's your money. On the argument, you're implicitly admitting that you wouldn't spend bitcoins until you were completely out of dollars, because bitcoins will 'always appreciate'. That's kinda conceding my point as far as asset vs currency. You can sell stock for dollars if you're short on cash as well. It seems that we agree on the effects of deflationary currency incentivizing not spending money. There's a few examples of that phenomenon happening in the real world, and none of them were really great for GDP growth (severe understatement). You know that spending by a lot of people is what adds up to that 14T GDP number, right?
  - mugenx86 13y ago
    >So? Is Gold a ponzi scheme too? No, gold is used in almost every electronic device because of its conductive properties.
- snitko 13y ago
  As for the miners, yes, they pursue their own self interest, of course. But what they are really doing is helping the network process transactions. So it's very similar to how Adam Smith described businessmen in a free market: they don't need to believe in higher ideals or something, they can be greedy and such, but they inevitably will do good.
- Tichy 13y ago
  You might want to read up on Ponzi schemes again. I don't see a connection with declining production rates of a product.

by snitko 13y ago

jbooth 13y ago

It can't be both? The declining rate of bitcoin generation certainly has ponzi-like properties. It seems like the primary motivation to mine is assuming that the value will go up as mining becomes more difficult.

snitko 13y ago
So? Is Gold a ponzi scheme too? I don't see a problem with the declining rate of generation because you can divide Bitcoin up to some pretty small fractions. You have to really wrap your head around deflation, you know. It's a beautiful and healthy thing, it's just that we've been told it's not.
- jbooth 13y ago
  So you're saying it has ponzi-ish properties? Or not? If you're always incentivized to hold something and never incentivized to spend it, it becomes more of an asset than a currency. Gold is an asset, too, but it has much broader market participation in addition to being "special" as a value store due to 6,000 years of tradition. If you've got an asset with a lot of hype that's supposed to always increase in value, so you better get on board now unless you want to be a sucker, that looks a lot like a ponzi scheme to me. You can still make money on it, don't let me stop you. You're probably not going to refactor capitalism with it. Additionally, (I'm assuming you're a little young and naive here, apologies if that's not the case), additionally I'd really suggest decoupling your personal political beliefs from investment decisions with real money. It never ends well.
  - snitko 13y ago
    No, I don't believe Bitcoin is a ponzi scheme at all. And I really don't think my age is relevant, you either have arguments or you don't. But let's come back to that notion of yours > If you're always incentivized to hold something and never incentivized to spend it, it becomes more of an asset than a currency." Let's say all you got is 10btc and $0 in your bank account. And you need some food. You're probably gonna decide not to starve yourself to death because being alive tomorrow is more valuable to you than having more money and being dead. Thus you are going to spend your bitcoins (either directly or by exchanging them into fiat). Now, what you probably wouldn't do is buy something you don't really need or want at the moment. And that's fine, in this case Bitcoin encourages responsible spending. Now, of course, you should understand why a deflationary currency grows long term - not speculation, but new products and services in the economy. If no one spends, then no new products and services appear, currency is not gaining in value. If it's not gaining in value anymore you have your incentives to spend back. The major differences with a deflationary currency are this: 1. No one forces you to spend (like governments inflating your money), so you make decisions on your own. 2. Deflation is an ultimate tax that rich cannot avoid. If you make money, you will inevitably share it with the rest (their money gaining in value).
    - jbooth 13y ago
      When it comes to thinking "this time is different" and "I have an idea to refactor the world economy", your age is VERY relevant. Everyone thinks they have a simple way to fix everything when they're 22. By the time you're 30-40 it's amazing how much smarter the rest of the world got. You can take my word for it as regards politics and investment, or not, it's your money. On the argument, you're implicitly admitting that you wouldn't spend bitcoins until you were completely out of dollars, because bitcoins will 'always appreciate'. That's kinda conceding my point as far as asset vs currency. You can sell stock for dollars if you're short on cash as well. It seems that we agree on the effects of deflationary currency incentivizing not spending money. There's a few examples of that phenomenon happening in the real world, and none of them were really great for GDP growth (severe understatement). You know that spending by a lot of people is what adds up to that 14T GDP number, right?
- mugenx86 13y ago
  >So? Is Gold a ponzi scheme too? No, gold is used in almost every electronic device because of its conductive properties.
snitko 13y ago
As for the miners, yes, they pursue their own self interest, of course. But what they are really doing is helping the network process transactions. So it's very similar to how Adam Smith described businessmen in a free market: they don't need to believe in higher ideals or something, they can be greedy and such, but they inevitably will do good.
Tichy 13y ago
You might want to read up on Ponzi schemes again. I don't see a connection with declining production rates of a product.