4 ms·

Unrelated, I am curious if anyone knows if anyone is doing or has done a paper on Bitcoin and explored the idea on how it is or isn't similar to a Ponzi scheme?

by loceng 12y ago

kleer001 12y ago
Bitcoin isn't a ponzi scheme because nobody is being promised a gain in wealth.
- loceng 12y ago
  Tell that to all of the investors putting money into the ecosystem (and amassing Bitcoin in hopes that the increased value will increase the value of their own Bitcoin)..
  - stormbrew 12y ago
    More specifically, no one is being guaranteed a specific (large) direct return in a specific amount of time. In a ponzi scheme the person who sells you the investment also gives you the return (from the investments of the next batch). They tell you they'll "triple your money in three months!" and they do. Until they don't. In a ponzi scheme there isn't even a thing, commodity or otherwise, being invested in really. You never own anything except the promise of return. Your money is going nowhere but to the last batch of people to buy in via the person you bought it from, and then when Mr. Ponzi decides its time, into his own pockets as he runs away as fast as he can. It's entirely possible to consider bitcoin a scam, or a bubble, but it really has no similarity to a ponzi scheme. It's a commodity asset that may have no long term value that's been over-zealously sold. [Added Note: It'd possibly be accurate to describe what Mt.Gox specifically was/became as a ponzi scheme]
    - kleer001 12y ago
      > over-zealously sold. Right there. I think the technology is great, but it has been speculated into the stratosphere.
  - gnaritas 12y ago
    You don't know what a Ponzi scheme is, that's clear.
  - omegavesko 12y ago
    If I invested my life savings into a company that hasn't turned a profit in five years, that wouldn't make the company or the exchange a scam, it would simply make me an idiot. Nobody is promising Bitcoin investors a profit because nobody (officially) speaks for Bitcoin to begin with. Anyone investing into BTC and subsequently losing or gaining money is doing it of their own will, not because they were scammed into it.
- javert 12y ago
  No, bitcoin isn't a ponzi scheme because it's not a ponzi scheme. A ponzi scheme is a very particular kind of scam. If I started an altcoin (like bitcoin) and promised people it would increase in value, it still wouldn't be a ponzi scheme because that is not how a ponzi scheme works. It would be a different kind of scheme that I don't think has a name. edit: Well, some people would call it a pump-and-dump, so maybe that.
  - Terr_ 12y ago
    It may be a pyramid scheme, but you're right that the definition of a ponzi-scheme involves lying about how revenue streams and expenses.
  - kleer001 12y ago
    Yes, Bitcoin, like a publicly traded security, is vulnerable to pump-and-dump schemes. Very very vulnerable.
bequanna 12y ago
How is Bitcoin a Ponzi scheme? Who is promising a return?
- lbsnake7 12y ago
  No one is promising a return, but the amount of people in the Bitcoin community that have said that the price could realistically reach into the millions is laughably too many. Bitcoin proponents have a lot in common with pyramid scheme pushers. 'It is a completely new kind of system', 'the powers-that-be are scared of this new technology because this will destroy their old system', 'this will change the world', 'you are just mad that you didn't get in on the ground floor. but don't worry you can still be involved as this will only to go up', 'the price is undervalued right now but once it starts going up there will be no stopping it', 'this isn't a pyramid scheme or a Ponzi scheme or a pump-and-dump, this is legal and everyone hating is a shill for the other side!'. I'm paraphrasing a bit but you get the idea. You should look up some videos of people supporting known pyramid schemes like Vemma and see the similarities between what they say and Bitcoin enthusiasts.
  - bequanna 12y ago
    People promoting their own investments to push up the price!?!?! Gasp! Everything you describe happens in the equity market as well. It's simple speculation, not a Ponzi or Pyramid Scheme. Also I'm not going to go into the details of each, but: Ponzi Scheme != Pyramid Scheme != Speculation
  - gnaritas 12y ago
    > No one is promising a return Then it isn't a Ponzi scheme, period. A Ponzi is a scam where you're lied to about a fake investment that doesn't exist and promised a return in a certain amount of time, your money is then paid to past investors as their return. Bad investments aren't Ponzi's just because people lose money. All that shit you're talking about is called speculation. Just because idiots sound alike doesn't make the thing they're talking about the same. Pyramid schemes and Ponzi schemes are very particular things: fake investments where no commodity or good exists, money machines that fail because people are lied to and tricked and don't have the sense to understand exponential growth. If you aren't tricked into it, it isn't a Ponzi scheme, if there's a real underlying commodity like Bitcoin, it isn't a Ponzi or Pyramid scheme. Stop using words you don't understand.
IkmoIkmo 12y ago
It's like doing a paper on whether buying Facebook stock or buying Gold or buying foreign currency (i.e. the entire, gigantic, Forex market) is a ponzi scheme. It's simply not. No need to do a paper on that. People saying bitcoin is a ponzi scheme is simply ignorance on the topic. That's not a cuss word by the way, just literal ignorance, the lack of knowledge. And hearing from them is like hearing from someone who thought dinosaurs and humans walked the earth simultaneously at one point, just completely wrong and with no basis in evidence. But easy to throw around as a truth in some communities that care not to explore the topic properly and thoroughly. You'll also not find any government or bank reports on bitcoin being a ponzi scheme. And most modern governments have put a task force on it, most regulatory bodies like say the SEC, and most central banks like say the Bank of England. Bitcoin being a ponzi scheme hasn't come up. For example the World Bank released a report last year saying it wasn't a ponzi scheme. Thing is, bitcoin has at various times in its life been a speculative bubble. Just like stock of Internet companies, housing etc. That bubble can pop (it did in 2014, from $1200 or so down to below $200), and it can continue trading at a more sensible price (about $250 today). It's inherent to bitcoin because it had to start at 0 value, publicly, from day 1, when it had 0 owners and 0 users and 0 investors. And that eventually grew to millions of owners, users, investors, meaning that it grew by a few million x in the past 6 years. That drove up the price. And if you see a price momentum, there will always be times that people buy because they predict the price going up, which reinforces the momentum through speculation to beyond its supposed value. That's when you get a bubble, and then the bubble pops. And 1-2 years later it starts all over again. Over time, as bitcoin becomes more used, its growth rate slows down, and these insane bubbles happen less and with less magnitude. So if you want to write a paper on how bitcoin has had several speculative bubbles, it's probably true. Just look at the past few years. But a ponzi? It's simply not, it's a ridiculous claim.

Unrelated, I am curious if anyone knows if anyone is doing or has done a paper on Bitcoin and explored the idea on how it is or isn't similar to a Ponzi scheme?

by loceng 12y ago

Unrelated, I am curious if anyone knows if anyone is doing or has done a paper on Bitcoin and explored the idea on how it is or isn't similar to a Ponzi scheme?

kleer001 12y ago

Bitcoin isn't a ponzi scheme because nobody is being promised a gain in wealth.

loceng 12y ago
Tell that to all of the investors putting money into the ecosystem (and amassing Bitcoin in hopes that the increased value will increase the value of their own Bitcoin)..
- stormbrew 12y ago
  More specifically, no one is being guaranteed a specific (large) direct return in a specific amount of time. In a ponzi scheme the person who sells you the investment also gives you the return (from the investments of the next batch). They tell you they'll "triple your money in three months!" and they do. Until they don't. In a ponzi scheme there isn't even a thing, commodity or otherwise, being invested in really. You never own anything except the promise of return. Your money is going nowhere but to the last batch of people to buy in via the person you bought it from, and then when Mr. Ponzi decides its time, into his own pockets as he runs away as fast as he can. It's entirely possible to consider bitcoin a scam, or a bubble, but it really has no similarity to a ponzi scheme. It's a commodity asset that may have no long term value that's been over-zealously sold. [Added Note: It'd possibly be accurate to describe what Mt.Gox specifically was/became as a ponzi scheme]
  - kleer001 12y ago
    > over-zealously sold. Right there. I think the technology is great, but it has been speculated into the stratosphere.
- gnaritas 12y ago
  You don't know what a Ponzi scheme is, that's clear.
- omegavesko 12y ago
  If I invested my life savings into a company that hasn't turned a profit in five years, that wouldn't make the company or the exchange a scam, it would simply make me an idiot. Nobody is promising Bitcoin investors a profit because nobody (officially) speaks for Bitcoin to begin with. Anyone investing into BTC and subsequently losing or gaining money is doing it of their own will, not because they were scammed into it.
javert 12y ago
No, bitcoin isn't a ponzi scheme because it's not a ponzi scheme. A ponzi scheme is a very particular kind of scam. If I started an altcoin (like bitcoin) and promised people it would increase in value, it still wouldn't be a ponzi scheme because that is not how a ponzi scheme works. It would be a different kind of scheme that I don't think has a name. edit: Well, some people would call it a pump-and-dump, so maybe that.
- Terr_ 12y ago
  It may be a pyramid scheme, but you're right that the definition of a ponzi-scheme involves lying about how revenue streams and expenses.
- kleer001 12y ago
  Yes, Bitcoin, like a publicly traded security, is vulnerable to pump-and-dump schemes. Very very vulnerable.

bequanna 12y ago

How is Bitcoin a Ponzi scheme? Who is promising a return?

lbsnake7 12y ago
No one is promising a return, but the amount of people in the Bitcoin community that have said that the price could realistically reach into the millions is laughably too many. Bitcoin proponents have a lot in common with pyramid scheme pushers. 'It is a completely new kind of system', 'the powers-that-be are scared of this new technology because this will destroy their old system', 'this will change the world', 'you are just mad that you didn't get in on the ground floor. but don't worry you can still be involved as this will only to go up', 'the price is undervalued right now but once it starts going up there will be no stopping it', 'this isn't a pyramid scheme or a Ponzi scheme or a pump-and-dump, this is legal and everyone hating is a shill for the other side!'. I'm paraphrasing a bit but you get the idea. You should look up some videos of people supporting known pyramid schemes like Vemma and see the similarities between what they say and Bitcoin enthusiasts.
- bequanna 12y ago
  People promoting their own investments to push up the price!?!?! Gasp! Everything you describe happens in the equity market as well. It's simple speculation, not a Ponzi or Pyramid Scheme. Also I'm not going to go into the details of each, but: Ponzi Scheme != Pyramid Scheme != Speculation
- gnaritas 12y ago
  > No one is promising a return Then it isn't a Ponzi scheme, period. A Ponzi is a scam where you're lied to about a fake investment that doesn't exist and promised a return in a certain amount of time, your money is then paid to past investors as their return. Bad investments aren't Ponzi's just because people lose money. All that shit you're talking about is called speculation. Just because idiots sound alike doesn't make the thing they're talking about the same. Pyramid schemes and Ponzi schemes are very particular things: fake investments where no commodity or good exists, money machines that fail because people are lied to and tricked and don't have the sense to understand exponential growth. If you aren't tricked into it, it isn't a Ponzi scheme, if there's a real underlying commodity like Bitcoin, it isn't a Ponzi or Pyramid scheme. Stop using words you don't understand.

IkmoIkmo 12y ago

It's like doing a paper on whether buying Facebook stock or buying Gold or buying foreign currency (i.e. the entire, gigantic, Forex market) is a ponzi scheme. It's simply not. No need to do a paper on that. People saying bitcoin is a ponzi scheme is simply ignorance on the topic. That's not a cuss word by the way, just literal ignorance, the lack of knowledge. And hearing from them is like hearing from someone who thought dinosaurs and humans walked the earth simultaneously at one point, just completely wrong and with no basis in evidence. But easy to throw around as a truth in some communities that care not to explore the topic properly and thoroughly. You'll also not find any government or bank reports on bitcoin being a ponzi scheme. And most modern governments have put a task force on it, most regulatory bodies like say the SEC, and most central banks like say the Bank of England. Bitcoin being a ponzi scheme hasn't come up. For example the World Bank released a report last year saying it wasn't a ponzi scheme. Thing is, bitcoin has at various times in its life been a speculative bubble. Just like stock of Internet companies, housing etc. That bubble can pop (it did in 2014, from $1200 or so down to below $200), and it can continue trading at a more sensible price (about $250 today). It's inherent to bitcoin because it had to start at 0 value, publicly, from day 1, when it had 0 owners and 0 users and 0 investors. And that eventually grew to millions of owners, users, investors, meaning that it grew by a few million x in the past 6 years. That drove up the price. And if you see a price momentum, there will always be times that people buy because they predict the price going up, which reinforces the momentum through speculation to beyond its supposed value. That's when you get a bubble, and then the bubble pops. And 1-2 years later it starts all over again. Over time, as bitcoin becomes more used, its growth rate slows down, and these insane bubbles happen less and with less magnitude. So if you want to write a paper on how bitcoin has had several speculative bubbles, it's probably true. Just look at the past few years. But a ponzi? It's simply not, it's a ridiculous claim.