Just because something works does not automatically means it's not a ponzi scheme. The original Ponzi was buying and selling real stamps. He didn't necessarily set out to defraud people. I personally don't think bitcoins are a ponzi scheme, but the fact that somebody once paid for lunch with them is not much evidence of that.
I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
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Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#62The most important by far rule for currency is stability. With stability comes acceptance of the currency. You don't have that - the owner first looked up the exchange rate to US dollars. What you have is a medium of exchange, but you don't have a currency. A medium of exchange is useful, and can eventually become a currency. But bitcoins are not yet a currency. Perhaps someone can make a bank, where you store US dol…
The most important by far rule for currency is stability. With stability comes acceptance of the currency.
You don't have that - the owner first looked up the exchange rate to US dollars.
Maybe he looked up the exchange rate rate because he wants to be fair: he wants to charge the same price for a lunch regardless of whether people pay with Bitcoins or dollars.
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#63The most important by far rule for currency is stability. With stability comes acceptance of the currency. You don't have that - the owner first looked up the exchange rate to US dollars. What you have is a medium of exchange, but you don't have a currency. A medium of exchange is useful, and can eventually become a currency. But bitcoins are not yet a currency. Perhaps someone can make a bank, where you store US dol…
How do you distinguish between currency and a medium of exchange?
From the sound of it, you defined currency as "a stable medium of exchange" which by definition prevents any unstable currency from being a currency.
Is there a definitive reason why a less stable medium of exchange cannot be a substitute for a stable one? Especially with today's technology when increasingly many things are being done in "real time".
I'm not an expert on currency and I'd appreciate further education. To me, it seems that knowing (and potentially being able to predict) the variable forces that are affecting the volatility of a medium of exchange is, in the long run, more valuable to its users than artificial relative stability provided by a governing body.
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#64Bitcoin isn't a scam because it's "imaginary" (i.e. fiat) but because of how the currency is distributed: a proof-of-work system that is skewed heavily in favor of early adopters.
There are a lot of good ideas in Bitcoin, but the truth is that its raison d'etre is to enrich early adopters-- the definition of a pyramid scheme. (It's not a Ponzi scheme; that has a technical definition and Bitcoin doesn't qualify.)
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#65Bitcoin isn't a scam because it's "imaginary" (i.e. fiat) but because of how the currency is distributed: a proof-of-work system that is skewed heavily in favor of early adopters. There are a lot of good ideas in Bitcoin, but the truth is that its raison d'etre is to enrich early adopters-- the definition of a pyramid scheme. (It's not a Ponzi scheme; that has a technical definition and Bitcoin doesn't qualify.)
Interestingly, that may be an advantage of the system. It encourages early adoption and encourages early adopters to nurture the system.
Maybe it's unfair, I don't know. But, I don't see any perverse incentives.
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#66Bitcoin isn't a scam because it's "imaginary" (i.e. fiat) but because of how the currency is distributed: a proof-of-work system that is skewed heavily in favor of early adopters. There are a lot of good ideas in Bitcoin, but the truth is that its raison d'etre is to enrich early adopters-- the definition of a pyramid scheme. (It's not a Ponzi scheme; that has a technical definition and Bitcoin doesn't qualify.)
When you are born, you have no dollars. The early adopter have them all. Does that make the dollar economy a pyramid scheme?
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#67Earlier quoted context omitted.
I'm curious. Where exactly do you see a security flaw in Bitcoin? Exchanges run by former magic the gathering admins don't count. What flaw is there is there in the security of the currency, I'm curious.
Exchanges run by former magic the gathering admins don't count. Not sure what's meant by that dig, but worth pointing out that a lot of former (and some current) Magic pros do quite well in financial work. In fact, an eerie number of them seem to graduate from Magic, to poker, to finance.
Seems like an obvious selection bias, IMO - much like chess or RTSs or first person shooters. The kind of geeky person who plays Magic and has the brains to do very well even against fellow geeks - is it such a surprise that a good fraction of them might do well when they turn their efforts to poker or finance?
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#68Earlier quoted context omitted.
This is why people say Bitcoin is pseudonymous: the entire transaction history of every Bitcoin is public knowledge. To achieve actual anonymity, receivers need to use a one-time-address for each sender, and senders need to not leak information about which addresses they own. https://en.bitcoin.it/wiki/Anonymity
Imagine all the money exchange and circulation of the world economy. 7 billion people. If hypothetically Bitcoin would be the "world currency" how much data (which is never deleted) would that generate per day? What data will amassed in 10 years? I wonder how that will hard limit the system...? I have no clue about Bitcoin but a quick google search seems to imply that the global history of all transactions is locally…
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#69Bitcoin isn't a scam because it's "imaginary" (i.e. fiat) but because of how the currency is distributed: a proof-of-work system that is skewed heavily in favor of early adopters. There are a lot of good ideas in Bitcoin, but the truth is that its raison d'etre is to enrich early adopters-- the definition of a pyramid scheme. (It's not a Ponzi scheme; that has a technical definition and Bitcoin doesn't qualify.)
It's not a scam. You have to distribute the coins somehow. Proof-of-work is a method to ensure no cheating. You can be sure the early miners did in fact perform computational effort to get their coins.
Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins
#70The most important by far rule for currency is stability. With stability comes acceptance of the currency. You don't have that - the owner first looked up the exchange rate to US dollars. What you have is a medium of exchange, but you don't have a currency. A medium of exchange is useful, and can eventually become a currency. But bitcoins are not yet a currency. Perhaps someone can make a bank, where you store US dol…
How do you distinguish between currency and a medium of exchange? From the sound of it, you defined currency as "a stable medium of exchange" which by definition prevents any unstable currency from being a currency. Is there a definitive reason why a less stable medium of exchange cannot be a substitute for a stable one? Especially with today's technology when increasingly many things are being done in "real time". I…
ars obviously wasn't thinking critically in that comment. You're absolutely right: his proposed definition of "currency" isn't useful at all, because it would preclude talking about "the stability of a currency."
A currency is simply a medium of exchange that is widely recognized, where "widely" is subjective. Most modern currency also is notable because it has no intrinsic value (gold coins, for example, have intrinsic value). I think bitcoin certainly qualifies as a currency, albeit an unstable one.