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Bitcoin is a Ponzi

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Re: Bitcoin is a Ponzi

#401

Post by scottyp21 »

jspaetzel wrote: post #388
scottyp21 wrote: post #326

> Nevertheless, investing in gold at the current price seems unwise, since its price is many times its "natural" price as commodity and so it is more likely to go down than up. This is a misconception and a fundamental misunderstanding of gold's primary utility for thousands of years. While it is true that gold's price reflects a significant premium beyond the "natural" market price, this has been the case for millen…

Take away the Bitcoin miners and speculators and see how much a Bitcoin is worth.

You are correct that bitcoin is heavily dependent on miners. That said, I don't think you can simply "take away the Bitcoin miners". An excellent example of this is China's recent ban on bitcoin mining, which quickly dropped the network hash rate by >50%. Today, only a few months later, the hash rate has returned[1], and those miners are back online on the other side of the world. Don't underestimate the power of incentives.

[1] https://www.blockchain.com/charts/hash-rate

Re: Bitcoin is a Ponzi

#402

Post by mongol »

chemmail wrote: post #271
justapassenger wrote: post #129

Earlier quoted context omitted.

I find it very manipulative to use people suffering as an excuse to pump speculative assets. Sure, there’s very tiny amount of people who use Bitcoin as you described. But so there’re people who get benefits from smoking.

Bitcoin is merely a technology. Calling it a Ponzi is the same as calling the Internet a Ponzi. They are merely tools. How one uses ultimately determines the coarse.

People say "they buy bitcoin", and they don't mean they buy technology.

Re: Bitcoin is a Ponzi

#403

Post by qez »

arcticbull wrote: post #346
srge wrote: post #344

Earlier quoted context omitted.

Exactly. And the argument crypto = ponzi is so wrong. What about other investment vehicles? Gold? Real estate? Stock market. Come on!

The article literally covers each of those cases and explains exactly why those are not Ponzi schemes while Bitcoin is ([edit] under "Common Objections" - which should really read "Common Whataboutisms"). > By that definition, stocks too are ponzis. No. Stocks have an external source of revenue, namely the profit that the company makes by selling its products and services to customers (not investors); and these profi…

As per gold: I agree with that common objection. If bitcoin is a ponzi, so is gold.

> First, few if any gold investors have expectations of profits. They generally invest in gold as a hedge -- a "store of value" -- that they hope will retain its value in case other assets go sour.

First, this does not negate the comparison. Bitcoin could also be like that, and therefore not a ponzi. Second, I know a long of gold investors who would disagree with this opinion. Third, the market cap of gold is over 4x bitcoin, indicating that gold has already reached saturation, whereas bitcoin has space to grow.

> Second, as a commodity, gold HAS a source of revenue besides the investors; namely, the purchases by consumers like jewelers and industry,

This is a point that always gets brought up in discussions of gold. It is wrong and practically dishonest. Gold as jewelry does NOT drive the value of gold, by and large. And even if it DOES, the valuing of gold as jewelry material over any other similar-colored material is itself non-intrinsic/socially constructed. People like to own gold jewelry for the same reason people like to own bitcoin.

Re: Bitcoin is a Ponzi

#404

Post by amin »

bluecalm wrote: post #279
amin wrote: post #17

Earlier quoted context omitted.

The payoffs in FX trades do not come from "new investment money", so it fails an important Ponzi scheme criteria. Having said that, speculating on FX is a zero-sum game, which I'm not generally in favor of.

Well, insurance industry is a negative sum game (zero sum minus costs of running it) in which all the buyers expect to lose money and all the sellers make it. Still, it's a good idea to buy insurance in some circumstances as utility of money curve is different different for the insurance buyer and insurance company. Such transactions are good for both sides (as they maximize their utility even though the buyer losses…

There is intrinsic value to being insured, even if one doesn't end up making a claim, the peace of mind is gives is a rendered benefit.

Re: Bitcoin is a Ponzi

#405

Post by fnord77 »

reidjs wrote: post #393
pishpash wrote: post #323

Earlier quoted context omitted.

Wouldn't that only work if you had places (like your landlord) taking Bitcoin off the blockchain directly for payment? Otherwise, transacting still requires the cooperation of intermediaries subject to sanctions. Maybe you can launder through a friend, but... it doesn't seem any easier.

With localbitcoin and similar exchanges you can convert the btc to usd peer to peer with strangers.

I tried out localbitcoin a bit before the pandemic. Absolute shit show. Nobody wanted to actually trade. Seemed like most participants were phishing for personal information, probably for identity theft.

Re: Bitcoin is a Ponzi

#406

Post by arcticbull »

nightski wrote: post #183

People do not invest in USD because they expect a gain? Anyone holding cash is doing exactly this. Because the only rational reason to hold USD instead of spending it or converting it to some other asset/investment is because you think it's value is going to either hold or grow more than other options. If people expected no gain in USD (or inflation) then they would not hold USD and instead choose assets or other inv…

Nope, people do not hold USD because they expect a gain.

They are willing to pay the inflation penalty because holding the dollars in question provides them something. Generally that means either a sense of security or liquidity on short notice.

Holding dollars is paying a fee for liquidity.

Re: Bitcoin is a Ponzi

#407

Post by louloulou »

lalaland1125 wrote: post #249
glenvdb wrote: post #51

A lot of the "Common Objections" relate to the REASONS people choose to own Bitcoin and how those cases make it a Ponzi. There are many different reasons to own Bitcoin, however the author seems to only view it through the lens of someone living in a wealthy and developed country with financial stability. The properties of it being difficult/impossible to confiscate and its privacy make it valuable in oppressive regi…

The fees for Bitcoin are way too high to make sense for citizens in poor authoritarian counties. The average transaction fee during slow periods is about $5 and it jumps to $20 whenever there is load on the network. And the lightning network is a poor solution to this because the LN requires a lot of capital to fund channels, something poor people explicitly don't have. Finally, the fact that Bitcoin proponents have…

Inflation protection for long-term savings is a huge use case.

Re: Bitcoin is a Ponzi

#408

Post by theurbandragon »

If we go by this logic some could claim that the "Dollar" is a Ponzi scheme

1. People invest thier time/effort for "Dollars" 2. When someone "buys" something they are effectively cashing out the worth of the "Dollar" through trade (someone else's time/effort) 3. "Dollars" do not nessarily create more labor (time/effort) 4. "Dollars" are just effectively pieces of paper or digital bits if people stop actually working. It is worth something because people are willing to work, invest time/effort, for "Dollars". 5. Printing money effectly dilutes the existing pool of labor, etc. "taking away money".

Re: Bitcoin is a Ponzi

#409

Post by melomal »

Currency evolved from barter > to bartering with set mediums of exchange > to coins representing exchangeable goods > to coins stamped in precious metal > to paper representing coins > to notes representing gold or silver > to being redeemable exclusively for gold > to the end of the gold standard.

Money’s value has been dictated by how much of something a currency can buy – which is dependent on inflation and economic performance.

I would love to have seen/heard the conversations that were had around the changes that people had to go through and if the conversations were similar to this day. Because I would imagine that back then, considering that money is just an agreed upon invisible force a la Bitcoin, people probably hard a very hard time understanding the intrinsic value of this metal coin/paper money.

Re: Bitcoin is a Ponzi

#410

Post by graeme »

G3rn0ti wrote: post #289

In a Ponzi scheme, a fraudulent perpetrator takes your money (and the money of many others), gives some of that to early dropouts but takes the rest for himself . Ponzi schemers profit from lying to you where your money goes. With a decentralized digital asset there is no sole person or company that profits from just lying to you about where your Dollar goes in exchange for digitals. Sure, miners and exchanges make p…

> They do not pretend making your money work for you by some magical scheme.

No. They instead take your money, buy coal, and burn it. Nothing is left.

As you say, Ponzi schemers take money for themselves and keep it. Most of what Madoff stole was recovered, for instance.

Whereas virtually 100% of all money invested into crypto has been burned by miners. This is pretty easy to model.

So there’s nothing left to recover if new money collapses. Bitcoin is worse than a typical ponzi in this respect.

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