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Bitcoins: The Second Biggest Ponzi Scheme in History

garynorth.com

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Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#11

Post by nwh »

CJefferson wrote: post #6

This is as good a place as any to ask this question. Do we actually know how many large mining groups we need to make up 51% of the processing power of the block chain (hopefully that make sense, from my understanding of bitcoin). There has been a number of changes to the bitcoin protocol, which have been made in a short amount of time and unanimously, from what I can see. That implies to me that bitcoin is in practi…

> Do we actually know how many large mining groups we need to make up 51% of the processing power of the block chain

Two. GHash.io and BTCguild make up 27% each, for a total of 54%.

https://blockchain.info/pools

GHash.io had actually been acting maliciously according to some users on Bitcointalk, but the operator claims that was a rogue actor inside that has been dealt with. Double spends against betting sites in particular were involved with this one.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#12

Post by a_bonobo »

braum wrote: post #3

Something hit me while I was reading this article. Anytime you have seen a bitcoin article, usually on HN, but also elsewhere, it almost always shows a US Dollar figure for the amount and never the bitcoin amount. Why, because as this article suggests. Bitcoins are a commodity and not a currency and when we want to try and relate to bitcoins we use what we know which is Dollars. Good luck to all of you techies who re…

>relate to bitcoins we use what we know which is Dollars.

I don't think this says anything about Bitcoins as a currency. When the Euro was introduced in Germany, most restaurants, newspapers, politicians etc. kept on listing the Mark price alongside with the Euro price as a point of reference. After a few years this practice stopped when people got used to estimating the worth in Euros (my parents still translate everything into Mark).

I think that if Bitcoins ever become stable (who knows when - maybe once all coins are mined?) people might stop comparing USD to Bitcoins once they're used to the Bitcoin "worth", who knows.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#13

Post by girvo »

I truly don't get this "BTC is a Ponzi scheme" thing. And "Social Security is a Ponzi Scheme" in the third sentence really doesn't endear me to this writer...

I don't buy it. Yeah, Satoshi owns a stack. But if he sold out, the price would drop so hard it'd make your head spin... and I doubt Satoshi would be able to be rid of all of them in time before they bottom out. The market isn't large enough yet to pull that sort of scheme off.

Now, Bitcoin still seems like a good idea, with an implementation that seems to have some issues, and rampant speculation is going to stop the better ideas that it could embody from happening for a while. But a "Ponzi scheme"? Done deliberately for that reason? You're telling me that Satoshi knew it'd hit $1k per BTC? Pfft.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#14

Post by gokhan »

The individual who sells the Ponzi scheme makes money by siphoning off a large share of the money coming in. In other words, he does not make the investment. But Bitcoins are unique. The money was siphoned off from the beginning.

Only true if we see Satoshi spending his Bitcoins.

We have an online store selling baby products and really want to accept Bitcoins but we can't at the moment since Bitcoin is not widespread and price fluctuates madly. Once everybody got some and price is predictable in the short run, we'll show the finger to the bank, the real one siphoning from our pocket as commissions without actually providing any reasonable service.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#15

Post by VLM »

braum wrote: post #3

Something hit me while I was reading this article. Anytime you have seen a bitcoin article, usually on HN, but also elsewhere, it almost always shows a US Dollar figure for the amount and never the bitcoin amount. Why, because as this article suggests. Bitcoins are a commodity and not a currency and when we want to try and relate to bitcoins we use what we know which is Dollars. Good luck to all of you techies who re…

In that context, you might want to think about metrification, and how USA-localized articles always convert "about xyz hundred kilometers" into miles, usually upgrading the number of sig figs from perhaps 2, to however many digits the calculator has. Or somewhat less common, but more hilarious, inadvertently defining pi to be 4, or whatever.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#16

Post by simbolit »

I might have read too quickly but from what I get the argument boils down too: too much volatility is bad, so it won't be used as money, so it isn't money. I don't think that is a good argument. There are many examples were currencies are highly volatile yet still function as money. On the oder side, after the 2011 crash, bitcoin hovered around 2-3dollar for months.

I don't know if bitcoin will succeed. I don't know if it will be used as everyday money. I know quite a few people who use it to buy drugs or takeout food. I know vast amounts of people who have never heard of it.

I don't think you can say anything about bitcoins future as money at the moment. Just that (as I explained in an earlier post) national governments might at some point have an incentive to restrict bitcoin, if it gets so successful it might make their financial policy ineffective. But this point (if it ever comes) is still far in the future.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#17

Post by paulgb »

gokhan wrote: post #14

The individual who sells the Ponzi scheme makes money by siphoning off a large share of the money coming in. In other words, he does not make the investment. But Bitcoins are unique. The money was siphoned off from the beginning. Only true if we see Satoshi spending his Bitcoins. We have an online store selling baby products and really want to accept Bitcoins but we can't at the moment since Bitcoin is not widespread…

Don't services like bitpay absorb the price fluctuations for you and pay out USD?

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#18

Post by berberous »

This article is unfortunately mostly right. Bitcoin's are 95% a ponzi scheme investment, and will at some point crash spectacularly. The question remains, however, whether from the ashes of that crash a useful product can remain, that can still succeed as a currency, or whether the psychological damage will prove to be too much to move past. If it can survive, it may even eventually return to the same high prices, but this time, based on its frequent use as a currency, and not based on rampant speculation.

Right now, the truth is that a negligible percentage of Bitcoin users care about its use as a currency (with the biggest exception being silk road type illegal uses). Almost everyone is focused on the price appreciation, and when that finally falters, it will collapse.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#19

Post by Alex3917 »

CJefferson wrote: post #6

This is as good a place as any to ask this question. Do we actually know how many large mining groups we need to make up 51% of the processing power of the block chain (hopefully that make sense, from my understanding of bitcoin). There has been a number of changes to the bitcoin protocol, which have been made in a short amount of time and unanimously, from what I can see. That implies to me that bitcoin is in practi…

Right now the largest pool is 29%. And you actually only need 33% to trigger the 51% problem if the controlling pool withholds blocks for a couple seconds after solving them to give themselves a headstart on the next block. So in theory the currency is only days or weeks away from collapsing.

I do think bitcoin solves a legitimate problem. But I don't think bitcoin itself will become the winner. Litecoin is vastly better than bitcoin because it solves the 51% problem and several other issues, but odds are litecoin will eventually be replaced by something better also.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#20

Post by nwh »

paulgb wrote: post #17
gokhan wrote: post #14

The individual who sells the Ponzi scheme makes money by siphoning off a large share of the money coming in. In other words, he does not make the investment. But Bitcoins are unique. The money was siphoned off from the beginning. Only true if we see Satoshi spending his Bitcoins. We have an online store selling baby products and really want to accept Bitcoins but we can't at the moment since Bitcoin is not widespread…

Don't services like bitpay absorb the price fluctuations for you and pay out USD?

Yep. There's absolutely no risk for a vendor setting prices like this.
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