3 ms·

One reason may be that bitcoin is a Ponzi scheme.

by sfk 13y ago

hendzen 13y ago
I wouldn't say it fits the technical definition of a Ponzi scheme. Now, the technology (the opensource daemon, and the network of nodes running it to create a peer to peer ledger and all that jazz) is really an quite interesting experiment in distributed systems. The culture around Bitcoin the 'currency' at the moment (and forseeable future) is more complicated. At worst its a pyramid scheme, and at best its an asset bubble. In practice I would say it most resembles a sophisticated, decentralized Multi-Level-Marketing scheme (MLM) of a particularly novel and insidious variety (Note that MLMs such as Amway & Herbalife have plodded along for years). This can be said not just of bitcoin, but of the entire ecosystem of cryptocurrencies. Ironically, the fact that it has value derives from its perverse incentivizes of its "investors" to create a cycle of pump and dump bubbles, that bring more people into the fold each time. These speculators provide a liquidity pool that makes bitcoin useful to those who actually use it because they are shut out of the traditional payment system. Alarmingly, it seems at the moment that this group deriving actual utility (over credit cards) consists primarily of hackers, drug dealers, gamblers, arms dealers, pornographers, and other participants of the grey/black market economy. Yes, there is a big pool of legitimate merchants accepting bitcoin because of low transaction fees & no chargebacks, but adoption by non-speculator 'legitimate consumers' is far beyond merchant adoption. The end game is uncertain. If the liquidity pool eventually grows large enough (resulting in a stable, high value) such that people feel confident to start settling contracts denominated in bitcoin (see mpex.co for a particularly sophisticated example), this will represent a massive challenge to the power of the state to control commerce and enforce taxation. In other words, an crypto-anarchists wet dream. Perhaps bitcoin will stay somewhere around the size it is now or perhaps an order of magnitude larger in which case it may stay a fringe payment technology with a shady reputation, much like Liberty Reserve and egold before it. It is also possible that governments will regulate it away by requiring all addresses be registered (see: http://blog.gardeviance.org/2014/03/how-to-fix-bitcoin.html http://blog.gardeviance.org/2014/03/how-to-fix-bitcoin.html). Or maybe they will just get fed up and attack it by targeting it at its primary point of centralization: all mining ASICs are currently fabbed at TSMC. TSMC could perhaps could be coerced into adding some kind of backdoor or kill switch into the next generation of mining chips. Note that other cryptocurrencies have and will adopt ASIC resistant PoW schemes that limit this at a risk of allowing a 51% attack by a large botnet (or entity with massive computing resources like Google or the NSA). Either way, Pandora's Box has been opened. Future cryptocurrencies are in the works that use cutting edge advances in zero-knowledge proving techniques to completely eliminate the need for a public transaction history. With regards to bitcoin (and other Nakamoto-chain based cryptocurrencies) specifically, the widely noted scaling problems will be solved by ongoing work on 2-way pegging to side chains, tree-chains, and other ways of 'sharding' the blockchain, while maintaining bitcoin's enforced scarcity. ----------------------- So really, the reason why I want to know who Satoshi is, is because bitcoin is an incredible hack. Not just of computers and networks, but also of minds. To secure the network, mining has to be incentivized by giving the coins value, which means Satoshi anticipated not just the technical aspects of enforcing concensus in the ledger of coins, but also the economic & psychological aspects of getting people to think the coins are valuable (and that their value would increase). I'd personally like to know what motivated he/she/they to build & design Bitcoin, and what his/her/their thoughts were as it took off, and what he/she/they think of the current ecosystem.
- deleted 13y ago
  [deleted]

One reason may be that bitcoin is a Ponzi scheme.

by sfk 13y ago

One reason may be that bitcoin is a Ponzi scheme.

I wouldn't say it fits the technical definition of a Ponzi scheme. Now, the technology (the opensource daemon, and the network of nodes running it to create a peer to peer ledger and all that jazz) is really an quite interesting experiment in distributed systems. The culture around Bitcoin the 'currency' at the moment (and forseeable future) is more complicated. At worst its a pyramid scheme, and at best its an asset bubble. In practice I would say it most resembles a sophisticated, decentralized Multi-Level-Marketing scheme (MLM) of a particularly novel and insidious variety (Note that MLMs such as Amway & Herbalife have plodded along for years). This can be said not just of bitcoin, but of the entire ecosystem of cryptocurrencies. Ironically, the fact that it has value derives from its perverse incentivizes of its "investors" to create a cycle of pump and dump bubbles, that bring more people into the fold each time. These speculators provide a liquidity pool that makes bitcoin useful to those who actually use it because they are shut out of the traditional payment system. Alarmingly, it seems at the moment that this group deriving actual utility (over credit cards) consists primarily of hackers, drug dealers, gamblers, arms dealers, pornographers, and other participants of the grey/black market economy. Yes, there is a big pool of legitimate merchants accepting bitcoin because of low transaction fees & no chargebacks, but adoption by non-speculator 'legitimate consumers' is far beyond merchant adoption. The end game is uncertain. If the liquidity pool eventually grows large enough (resulting in a stable, high value) such that people feel confident to start settling contracts denominated in bitcoin (see mpex.co for a particularly sophisticated example), this will represent a massive challenge to the power of the state to control commerce and enforce taxation. In other words, an crypto-anarchists wet dream. Perhaps bitcoin will stay somewhere around the size it is now or perhaps an order of magnitude larger in which case it may stay a fringe payment technology with a shady reputation, much like Liberty Reserve and egold before it. It is also possible that governments will regulate it away by requiring all addresses be registered (see: http://blog.gardeviance.org/2014/03/how-to-fix-bitcoin.html http://blog.gardeviance.org/2014/03/how-to-fix-bitcoin.html). Or maybe they will just get fed up and attack it by targeting it at its primary point of centralization: all mining ASICs are currently fabbed at TSMC. TSMC could perhaps could be coerced into adding some kind of backdoor or kill switch into the next generation of mining chips. Note that other cryptocurrencies have and will adopt ASIC resistant PoW schemes that limit this at a risk of allowing a 51% attack by a large botnet (or entity with massive computing resources like Google or the NSA). Either way, Pandora's Box has been opened. Future cryptocurrencies are in the works that use cutting edge advances in zero-knowledge proving techniques to completely eliminate the need for a public transaction history. With regards to bitcoin (and other Nakamoto-chain based cryptocurrencies) specifically, the widely noted scaling problems will be solved by ongoing work on 2-way pegging to side chains, tree-chains, and other ways of 'sharding' the blockchain, while maintaining bitcoin's enforced scarcity. ----------------------- So really, the reason why I want to know who Satoshi is, is because bitcoin is an incredible hack. Not just of computers and networks, but also of minds. To secure the network, mining has to be incentivized by giving the coins value, which means Satoshi anticipated not just the technical aspects of enforcing concensus in the ledger of coins, but also the economic & psychological aspects of getting people to think the coins are valuable (and that their value would increase). I'd personally like to know what motivated he/she/they to build & design Bitcoin, and what his/her/their thoughts were as it took off, and what he/she/they think of the current ecosystem.

deleted 13y ago
[deleted]