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there's no question that the author of this article wrote it with linkbait in mind - calling bitcoin a ponzi scheme. having thought about it - the argument tha

by lmg643 13y ago

there's no question that the author of this article wrote it with linkbait in mind - calling bitcoin a ponzi scheme. having thought about it - the argument that bitcoin is going to be worth a lot "because there are only 21 million" - we have to consider that bitcoin is just one of "n" virtual currencies. while bitcoin may be limited, we already have 37 alternatives (at least) and there's no reason another hundred can't be started up within a year. So, i see there will be a lot of virtual currency flying around, all of it as qualified as bitcoin (sharing similar source code) and the idea that it will all be worth 1,000 a unit (or more) forever just doesn't make sense.

kolinko 13y ago
What matters is not only that there's a limited supply of Bitcoins, but that BTC has a network effect behind it. Almost nobody is accepting LTC, and literally nobody is accepting other currencies. Not to mention the safety - it's easier to pull a 51% attack on the other currencies (see the attack performed on Feathercoin)
skriticos2 13y ago
Nobody debates that. In fact, the alternatives are worth mostly jack and very few will take off. It's really not a technical question. Bitcoin came first, it has the traction. Getting traction into another chain is possible, but much more difficult than with Bitcoin. (Which only involved creating the first of a new, disruptive technology). Simply said, why would I want to buy any of the alternate coins? As long as you can't give me a satisfying answer to that, your argument is moot.
- EGreg 13y ago
  Because you'll be an "early adopter" and there may be a good chance they'll go from $3 to $1000 eventually just like bitcoin, if they are subject to the same network effect as bitcoin -- namely that the more merchants accept them, the more valuable they become. It may take longer but you'll make more $, etc. So you'll buy them because of speculation. Hence the proliferation of these various currencies, the latest of which -- QuarkCoin -- is probably going to surge tomorrow on Bter.com and other exchanges :-P
pyalot2 13y ago
> So, i see there will be a lot of virtual currency flying around, all of it as qualified as bitcoin (sharing similar source code) and the idea that it will all be worth 1,000 a unit (or more) forever just doesn't make sense. Do you remember the time when twitter was the new hotness? And like everybody and his aunt where building a twitter clone. I mean, it's so simple, just a list of teensy messages, how hard can it be. And we joked how the operators of twitter had like a couple servers and some louse PHP scripts to glue it all together, it was just so laughable from the outset. And most laughable of all, people where flocking to it like mad. Twitter is the remaining "twitter like" website, all the clones quietly shut their doors again and twitter went public with market cap valuation of $22 billion... I could now ask: Are you kidding me? A website where people can post 140 character messages is now worth $22 billion. Ah but the wonders of the network effect. You see the value isn't in twitter. The value is in who uses twitter. Because everybody uses it, it's valuable, and because nobody used the clones, they're not valuable.
- deleted 13y ago
  [deleted]
- fat0wl 13y ago
  i don't think network effect applies here the way many have been claiming. twitter & the like 1) were not open source 2) kept a significant user base early on while bitcoin does have a big user base, currency is a more personal thing and if people see too much volatility they'll just pick the one that is most stable, meaning without this flawed crazy dispersement scheme i, for one, do think Bitcoin is a ponzi scheme but it's a more complex one with a lot of Game Theory involved. That's whats unique about the scheme -- it guarantees the founder and early adopters a ridiculous amount of wealth, while still having the ability to satiate the greed/hope of new buyers Also people need to stop comparing this to company/stock valuations. Those are more like an estimate of a company's worth whereas in Bitcoin the figures given are always a supposed value of currency unit. Consider this -- when companies sell stock it is to fuel more work and production within the company. When a Bitcoin is sold for $600, it is so some dude can by a Playstation 4. It's not attached to lifestyle in the same way as stock/investment in companies.
deleted 13y ago
[deleted]
AJ007 13y ago
What is the probability that a future cryptocurrency will possess some property that the majority of users want that bitcoin does not have? The source code is open but the processing power is not so quickly reproducible. I think this is the biggest argument for bitcoin's sustained dominance at the moment. There could be many cryptocurrencies. Some issued by commercial entities like Amazon, some for use in a specific online game, others perhaps behave like an ETF and are backed by USD or Gold, may be even a cyptocurrency that magically(?) security-ignorant individuals can use. These currencies could all be subject to market exchanges and futures. Bubbles are fermented in hysteria that if you don't buy now you will never get a chance again. Whenever I start hearing those arguments my interest in speculative investment begins to dissipate. A bubble will not deter me from my optimistic interest in bitcoin because I believe its properties are incredibly productive. As for bitcoin and ponzi schemes, the withdraw caps and illiquid nature of certain exchanges right now make it very possible to conceal a ponzi scheme. Here is my challenge: for those really bullish on bitcoin, build things that use it! When all you do is speculate, then you stand on equal ground as everyone else. Do something to get an advantage.
Lerc 13y ago
There are two major hurdles that all of the altcoins have. The first is that it will be much harder to build a userbase to critical mass in a world where bitcoin does a pretty good job. The other, more difficult problem is building trust in the underlying mechanism. The systems have to be open to take advantage of Linus's Law "given enough eyeballs, all bugs are shallow", but there has been such a proliferation of altcoins that I doubt there are enough skilled eyeballs to go around. There are a lot of people jumping on the altcoin bandwagon hoping to be the next Satoshi. It is almost certain that some of those altcoins will have fundamental flaws. If they fail catastrophically, the reputational damage will, no matter how unfairly, impact upon all of the others. That will make the job more difficult, even for the worthy contenders.
tlrobinson 13y ago
Network effects should keep multiple cryptocurrencies from gaining much traction. The security of Bitcoin is far greater than any other Bitcoin-like cryptocurrency, and almost no merchants accept alt-coins as payment.
kolev 13y ago
Altcoins are a pure speculators world. We've seen many "better" technologically Twitters - yet, the one with the fail whale survived as it had all the mind share. Bitcoin is technologically millennias ahead of cash, yet, cash is still the king. Same with Bitcoin vs Litecoin, let's say. Nobody cares if Litecoin is technologically a bit better - all Google searches have "Bitcoin" in them and it's here to stay unlike Quarkcoin, Junkcoin, BBQCoin, and the ten other wannabes and copycats. The world doesn't need two Bitcoins - it defeats the purpose. The world doesn't care what "cryptocurrency" is - the world knows "Bitcoin". China likes altcoins as they lead mining operations and they need to sell their mined coins expensively, but China's interest and World's interest and not always parallel.

by lmg643 13y ago

kolinko 13y ago

What matters is not only that there's a limited supply of Bitcoins, but that BTC has a network effect behind it. Almost nobody is accepting LTC, and literally nobody is accepting other currencies. Not to mention the safety - it's easier to pull a 51% attack on the other currencies (see the attack performed on Feathercoin)

skriticos2 13y ago

Nobody debates that. In fact, the alternatives are worth mostly jack and very few will take off. It's really not a technical question. Bitcoin came first, it has the traction. Getting traction into another chain is possible, but much more difficult than with Bitcoin. (Which only involved creating the first of a new, disruptive technology). Simply said, why would I want to buy any of the alternate coins? As long as you can't give me a satisfying answer to that, your argument is moot.

EGreg 13y ago
Because you'll be an "early adopter" and there may be a good chance they'll go from $3 to $1000 eventually just like bitcoin, if they are subject to the same network effect as bitcoin -- namely that the more merchants accept them, the more valuable they become. It may take longer but you'll make more $, etc. So you'll buy them because of speculation. Hence the proliferation of these various currencies, the latest of which -- QuarkCoin -- is probably going to surge tomorrow on Bter.com and other exchanges :-P

pyalot2 13y ago

> So, i see there will be a lot of virtual currency flying around, all of it as qualified as bitcoin (sharing similar source code) and the idea that it will all be worth 1,000 a unit (or more) forever just doesn't make sense. Do you remember the time when twitter was the new hotness? And like everybody and his aunt where building a twitter clone. I mean, it's so simple, just a list of teensy messages, how hard can it be. And we joked how the operators of twitter had like a couple servers and some louse PHP scripts to glue it all together, it was just so laughable from the outset. And most laughable of all, people where flocking to it like mad. Twitter is the remaining "twitter like" website, all the clones quietly shut their doors again and twitter went public with market cap valuation of $22 billion... I could now ask: Are you kidding me? A website where people can post 140 character messages is now worth $22 billion. Ah but the wonders of the network effect. You see the value isn't in twitter. The value is in who uses twitter. Because everybody uses it, it's valuable, and because nobody used the clones, they're not valuable.

deleted 13y ago
[deleted]
fat0wl 13y ago
i don't think network effect applies here the way many have been claiming. twitter & the like 1) were not open source 2) kept a significant user base early on while bitcoin does have a big user base, currency is a more personal thing and if people see too much volatility they'll just pick the one that is most stable, meaning without this flawed crazy dispersement scheme i, for one, do think Bitcoin is a ponzi scheme but it's a more complex one with a lot of Game Theory involved. That's whats unique about the scheme -- it guarantees the founder and early adopters a ridiculous amount of wealth, while still having the ability to satiate the greed/hope of new buyers Also people need to stop comparing this to company/stock valuations. Those are more like an estimate of a company's worth whereas in Bitcoin the figures given are always a supposed value of currency unit. Consider this -- when companies sell stock it is to fuel more work and production within the company. When a Bitcoin is sold for $600, it is so some dude can by a Playstation 4. It's not attached to lifestyle in the same way as stock/investment in companies.

deleted 13y ago

[deleted]

AJ007 13y ago

What is the probability that a future cryptocurrency will possess some property that the majority of users want that bitcoin does not have? The source code is open but the processing power is not so quickly reproducible. I think this is the biggest argument for bitcoin's sustained dominance at the moment. There could be many cryptocurrencies. Some issued by commercial entities like Amazon, some for use in a specific online game, others perhaps behave like an ETF and are backed by USD or Gold, may be even a cyptocurrency that magically(?) security-ignorant individuals can use. These currencies could all be subject to market exchanges and futures. Bubbles are fermented in hysteria that if you don't buy now you will never get a chance again. Whenever I start hearing those arguments my interest in speculative investment begins to dissipate. A bubble will not deter me from my optimistic interest in bitcoin because I believe its properties are incredibly productive. As for bitcoin and ponzi schemes, the withdraw caps and illiquid nature of certain exchanges right now make it very possible to conceal a ponzi scheme. Here is my challenge: for those really bullish on bitcoin, build things that use it! When all you do is speculate, then you stand on equal ground as everyone else. Do something to get an advantage.

Lerc 13y ago

There are two major hurdles that all of the altcoins have. The first is that it will be much harder to build a userbase to critical mass in a world where bitcoin does a pretty good job. The other, more difficult problem is building trust in the underlying mechanism. The systems have to be open to take advantage of Linus's Law "given enough eyeballs, all bugs are shallow", but there has been such a proliferation of altcoins that I doubt there are enough skilled eyeballs to go around. There are a lot of people jumping on the altcoin bandwagon hoping to be the next Satoshi. It is almost certain that some of those altcoins will have fundamental flaws. If they fail catastrophically, the reputational damage will, no matter how unfairly, impact upon all of the others. That will make the job more difficult, even for the worthy contenders.

tlrobinson 13y ago

Network effects should keep multiple cryptocurrencies from gaining much traction. The security of Bitcoin is far greater than any other Bitcoin-like cryptocurrency, and almost no merchants accept alt-coins as payment.

kolev 13y ago

Altcoins are a pure speculators world. We've seen many "better" technologically Twitters - yet, the one with the fail whale survived as it had all the mind share. Bitcoin is technologically millennias ahead of cash, yet, cash is still the king. Same with Bitcoin vs Litecoin, let's say. Nobody cares if Litecoin is technologically a bit better - all Google searches have "Bitcoin" in them and it's here to stay unlike Quarkcoin, Junkcoin, BBQCoin, and the ten other wannabes and copycats. The world doesn't need two Bitcoins - it defeats the purpose. The world doesn't care what "cryptocurrency" is - the world knows "Bitcoin". China likes altcoins as they lead mining operations and they need to sell their mined coins expensively, but China's interest and World's interest and not always parallel.