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The one thing that bothers me the most about bitcoin is it's similarity to a ponzi scheme. Get in early, mine the low-hanging fruit, wait for the exchange rate

by beloch 13y ago

The one thing that bothers me the most about bitcoin is it's similarity to a ponzi scheme. Get in early, mine the low-hanging fruit, wait for the exchange rate to spike, and you're set for life! If you were to buy in right this moment, what would be the benefit?

oleganza 13y ago
Many people misunderstand what the Ponzi scheme is. In Ponzi scheme you get a dividend without selling off your shares. The fraud here is to tell you that the dividends are taken from real profits while they are paid from extra recently sold shares. You get both cash and keep your stock. Bitcoin is like a dividend-free stock or commodity: you have to sell your share to get some cash. Of course, those who come earlier get easier access to more shares, but they are exposed to a higher risk. Zuckerberg had 100% of Facebook initially and was selling it partially to get more cash to keep it going. When he started anyone could do the same, but not many succeeded. Later investors were willing to pay higher amounts of money when the value of the company became more certain in their eyes. But in each case, the owners of stock had to lose some part of it to enjoy extra cash. Also, consider this approach: http://auroracoin.org http://auroracoin.org These guys intend to distribute coins "fairly" to each individual in Iceland. Sounds like a fair distribution? Well, once some individuals get this weird coin, they will decide if they want to keep it. And some of them will sell them to collectors for cheap. This will make the price go down noticeably and cause more folks to get rid of such coins. So they will end up for very cheap in the hands of a very few "early adopters". Whether it will start growing organically from there or not - is another question, but you can see that you cannot force "equality and fairness" on the market. It will reconfigure itself according to everyone's personal preferences. And in case of a weird new tech it will always mean little number of early believers vs. big number of mainstream doubters.
- asdkl234890 13y ago
  Bitcoin is like a dividend-free stock or commodity Yes, it is an asset. A very easy to trade purely electronic asset. Due to its easy tradeability it is similar to a currency, but much like stocks, it is not a currency.
Sammi 13y ago
If Bitcoin is a ponzi scheme then all stocks are ponzi schemes. I would be a billionaire several times over if I knew to invest in Apple, Google, Netflix, Amazon, Microsoft, Dropbox, etc at the right time. At one point, it was common to be skeptical of these companies, and many of their peers did not make it. Who was to say at the time, that exactly these would? You bought Bitcoin in 2011 if you believed it was a sound technology, that would inevitably get popular, and you still buy Bitcoin today if this is your conviction. It might not pan out, as there might be a severe flaw in the protocol, or something better might come along, so don't invest anything you can't watch burn. But if Bitcoin fulfills its promise, then there is still significant growth to be seen.

by beloch 13y ago

oleganza 13y ago

Many people misunderstand what the Ponzi scheme is. In Ponzi scheme you get a dividend without selling off your shares. The fraud here is to tell you that the dividends are taken from real profits while they are paid from extra recently sold shares. You get both cash and keep your stock. Bitcoin is like a dividend-free stock or commodity: you have to sell your share to get some cash. Of course, those who come earlier get easier access to more shares, but they are exposed to a higher risk. Zuckerberg had 100% of Facebook initially and was selling it partially to get more cash to keep it going. When he started anyone could do the same, but not many succeeded. Later investors were willing to pay higher amounts of money when the value of the company became more certain in their eyes. But in each case, the owners of stock had to lose some part of it to enjoy extra cash. Also, consider this approach: http://auroracoin.org http://auroracoin.org These guys intend to distribute coins "fairly" to each individual in Iceland. Sounds like a fair distribution? Well, once some individuals get this weird coin, they will decide if they want to keep it. And some of them will sell them to collectors for cheap. This will make the price go down noticeably and cause more folks to get rid of such coins. So they will end up for very cheap in the hands of a very few "early adopters". Whether it will start growing organically from there or not - is another question, but you can see that you cannot force "equality and fairness" on the market. It will reconfigure itself according to everyone's personal preferences. And in case of a weird new tech it will always mean little number of early believers vs. big number of mainstream doubters.

asdkl234890 13y ago
Bitcoin is like a dividend-free stock or commodity Yes, it is an asset. A very easy to trade purely electronic asset. Due to its easy tradeability it is similar to a currency, but much like stocks, it is not a currency.

Sammi 13y ago

If Bitcoin is a ponzi scheme then all stocks are ponzi schemes. I would be a billionaire several times over if I knew to invest in Apple, Google, Netflix, Amazon, Microsoft, Dropbox, etc at the right time. At one point, it was common to be skeptical of these companies, and many of their peers did not make it. Who was to say at the time, that exactly these would? You bought Bitcoin in 2011 if you believed it was a sound technology, that would inevitably get popular, and you still buy Bitcoin today if this is your conviction. It might not pan out, as there might be a severe flaw in the protocol, or something better might come along, so don't invest anything you can't watch burn. But if Bitcoin fulfills its promise, then there is still significant growth to be seen.