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Bitcoin is a Ponzi

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Re: Bitcoin is a Ponzi

#451

Post by scottyp21 »

joe_the_user wrote: post #428
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…

I'm curious for those that still truly believe Bitcoin is a ponzi scheme or a bubble - at what price point and time would you start to consider that you may be tragically wrong? What price would tulips have had to have attained for them to be proved "not a mania"? [1] "At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled artisan." Which is to…

Curious, what other noxious problems?

Re: Bitcoin is a Ponzi

#452

Post by larsiusprime »

> By that definition, real estate too is a ponzi. No. Like stocks, real estate creates value while it is being owned, namely the sheltering service it provides to those who live in it. That value returns to the investor (owner) either by him living in the property, or by renting it to others.

Actually holding land out of use so you can speculate on its increased value, which comes from the activity of the community around you (and not any actual hard work or investment you yourself did), is an unproductive speculative activity that is a drag on the whole economy and the cause of our housing crises. I'm not sure if I'd call it a ponzi specifically, but it's bad and we shouldn't encourage it.

Re: Bitcoin is a Ponzi

#453

Post by arcticbull »

naruvimama wrote: post #435
graeme wrote: post #410

Earlier quoted context omitted.

> 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…

Where people choose to throw their own money should be left to them. However, I wish governments would ban regulated institutions from throwing peoples real money into non-governmental/undemocratic cryptocurrency. If banks/govts want to get in on the action, they should perhaps start their own cryptocurrency/blockchain.

> ... Where people choose to throw their own money should be left to them.

Yes, unless it causes harm to the broader economy.

I explained this in a different reply lower down, but when enough people participate it can destabilize the entire financial system in the country. And if it takes down the USD, globally. Pardon the pasta, but in 1997, the entire economy of Albania collapsed because everyone started participating in Ponzi schemes. They even jailed their finance minister for trying to stop it, and it led to a civil war. The IMF had to air drop in big bags of money to bail the country out. [1] This is what is at stake.

[edit] > At their peak, the nominal value of the pyramid schemes' liabilities amounted to almost half of the country's GDP. Many Albanians—about two-thirds of the population—invested in them. When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed. [1]

[1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...

Re: Bitcoin is a Ponzi

#454

Post by jliptzin »

amin wrote: post #187
BrianHenryIE wrote: post #173

Earlier quoted context omitted.

Commerce.

What percentage of people who bought bitcoin today, bought it with the intent of making normal commerce-related transactions?

Just because there are a large number of market participants involved purely for speculation does not mean we can just ignore those who are there for genuine commercial transactions. What percent of people who buy oil futures contracts intend to take delivery of thousands of gallons of oil?

Re: Bitcoin is a Ponzi

#455

Post by ipaddr »

bb88 wrote: post #293
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…

> 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 the digitals. Ponzi schemes don't have to run by single individuals, but perhaps by multi-person organizations like the mafia. The mob was the reason the RICO laws came to be. And undoubtedly, the mafia organizations would collaborate to break up their crime into reg…

The mob isn't running bitcoin as a Ponzi scheme. People who buy bitcoin are not mobsters.

There are different waves of investors from the true believers who mined because the idea was powerful to the mt gox crowd, coinbase newbies, wall street / hedge fund crowd. Each group has a different reason. The latest groups are looking to make money and the earlier adopters have moved to a less popular more ideological coins with advantages over bitcoin.

Mafia no.. something else yes.

Re: Bitcoin is a Ponzi

#456

Post by ur-whale »

jliptzin wrote: post #147

Bitcoin is a lot of different things to a lot of different people. The fact that it satisfies a certain set of conditions of a Ponzi scheme does not invalidate the myriad current and future applications of crypto. The social security administration could also be considered a Ponzi scheme, but it still provides tremendous value to a lot of people.

>The social security administration could also be considered a Ponzi scheme

It's far worse than a ponzi: ponzi's aren't usually compulsory.

Re: Bitcoin is a Ponzi

#457

Post by [deleted] »

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…

[deleted]

Re: Bitcoin is a Ponzi

#458

Post by kirillzubovsky »

dhsysusbsjsi wrote: post #9

I think this is simplistic. It’s viewing Bitcoin through a lens of a traditional Ponzi scheme assuming people that trade their fiat currency for Bitcoin are investing, with a view to one day take profits back into dollars. What if people are seeing discussion of minting a trillion dollar coin, trillions in QE, 25% of all dollars created in the last 12 months…and concluding that fiat currency is in an endgame and they…

> One of a finite number of digital assets that will ever be created.

That would have been a plausible explanation, if not for the abundance of digital currencies. There are now many more times crypto assets than there are actual currencies in the world, and new ones seem to be created every day. There is absolutely nothing "finite" about crypto anymore.

Re: Bitcoin is a Ponzi

#459

Post by graeme »

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…

> at what price point and time would you start to consider that you may be tragically wrong?

In theory Bitcoin can keep growing as long as people believe in it.

It has a strictly negative EV though.

* it returns no revenue

* At current mining levels, it burns about 1.8% of its market cap annually. By burns I mean literally burns energy and ASICs. (About $18 billion at current market prices)

* That’s just for mining costs. There are other costs associated with bitcoin such as costs associated with running exchanges, etc. won’t venture to guess here but it’s all in the billions. Coinbase alone had costs of about $1.1 billion in Q1

No market price changes this fundamental math. People could bid up the price to $1 million per coin and burn $360 billion per year on mining and the dynamics would be the same.

Now, what would change my mind would be some kind of use case. Currently we have money laundering, avoiding governments, etc. thin gruel

There is some interesting stuff happening with Ethereum. I don’t know if it will take off, but I at least see ways in which it could (Chainlink etc)

If bitcoin develops some kind of use case, then I’d change my view.

Right now bitcoin in economic is more akin to tourism or a church or something. It takes a bunch of economic resources to run it, but it also makes people happy, and that’s the benefit.

But don’t be mistaken: money goes in to bitcoin to be burnt (like tourism). It doesn’t generate money. That there is a number going up doesn’t change any of the dynamics laid out above. That’s just shuffling around between participants, not revenue or a use case.

Re: Bitcoin is a Ponzi

#460

Post by CheezeIt »

sillysaurusx wrote: post #443
reidjs wrote: post #384

Earlier quoted context omitted.

I’ve thought of doing this, but how would it work if you have a normal day job? Can you have your job pay you through the LLC?

That’s sadly the catch. I’m sorry — I completely forgot to mention that this works for me because I’m consulting, so businesses pay my LLC rather than me. However, I will say that one business wanted to hire me full time, and I refused and asked for a higher consulting rate, which they agreed to. So it’s not impossible for your next job to end up similarly. But then you don’t get benefits (my wife’s health insurance…

> . If you try to maintain a $20k balance for a year, for example, you’ll discover that this balance counts against your deductions for that tax year (effectively a negative $20k deduction). Or at least that’s my understanding so far.

You don’t get taxed on having a balance; you do get taxed on the income that generated it. (Or am I missing something crazy?)

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