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Bitcoins: The Second Biggest Ponzi Scheme in History

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Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#111

Post by avaku »

mike_esspe wrote: post #79
dgregd wrote: post #66

Earlier quoted context omitted.

> It should be called a bubble, not a ponzi scheme. This is a first bubble which is popular mainly among tech geeks :) What is strange, nobody is asking what problem Bitcoin really solves. As far I know it failed as a protection for silk road types. Silk road was compromised and Bitcoin didn't helped them.

It solves 2% credit card fee. It's enough for success at the level of at least Visa & MC. (And as a bonus it solves a lot of other problems too).

Eventually, not everyone will want to pay "cash" (irreversible transfer) for everything. Additional security and services layer will be added to Bitcoin ecosystem, and the fee for making indirect transfers through these intermediaries will go up to the same level. The majority of the economy will then make transactions using these services because they provide additional benefits that regular people need. So in the end, the only benefit of bitcoin will be that you can still transfer the "cash" coins by yourself through the system. I'm just wondering how valuable is that actual difference?

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#112

Post by bmelton »

girvo wrote: post #13

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 so…

I agree that BTC is not, but I thought it was fairly well understood that social security was a mandatory Ponzi scheme.

From Wikipedia: "A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from existing capital or new capital paid by new investors, rather than from profit earned by the individual or organization running the operation."

Social security does exactly that, and its recent failure predictions by the CBO are caused by the population failing to grow at rates that could sustain it. If more people aren't paying into it than those withdrawing from it, and it fails as a result, does that not match the definition of a Ponzi scheme?

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#113

Post by jseliger »

pyalot2 wrote: post #42

> In this sense, Bitcoins is not a Ponzi scheme. It is simply a supermoney scheme. Admits that bitcoin is not a ponzi scheme in his own article. > The money was siphoned off from the beginning. Somebody owned a good percentage of the original digits. Implies that most bitcoins are owned by satoshi nakamoto, without substantiating this claim by any number to quantify the impact. The estimated stash of satoshi is about…

Money develops out of market exchanges. Money was not used for its own sake initially, but it becomes widely used as money as a result of innumerable transactions within the economy

This also doesn't appear to be true: see David Graeber's book Debt: The First Five Thousand Years for his descriptions of how money actually emerges from religious ceremonies and temples, not barter (as most econ books have it) or "market exchanges."

(Incidentally, I don't agree with Debt's main implications about debt, but its anthropological work on money is fascinating! (https://jseliger.wordpress.com/2013/04/28/thoughts-on-debt-t...)

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#114

Post by ramchip »

Aqueous wrote: post #107
pyalot2 wrote: post #55

Earlier quoted context omitted.

Yes, but the volatility nobody is debating is that it was below $1 in 2011 before it shot up above $33 and then came down to $2 at the bottom again. A similar development could be observed earlier 2013 where it started the year around $10, then shot up to $266 and came down again to $80. It should clear to everybody who holds bitcoin, that there is massive volatility, and that you might buy your coins at a time, whic…

The more people who use BitCoin the less volatile it will be, the more BitCoin tokens will be spread across a large number of individual actors, the less a single actor can dictate price fluctuations.

What makes you think that? I'm not convinced of either of your suppositions, i.e. that 1) current fluctuations are caused by large bitcoin owners who dictate the price, and 2) that having many small investors would lower volatility (think about crowd behavior...)

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#115

Post by bmelton »

parasubvert wrote: post #69
mschuster91 wrote: post #21

The author completely omits the two main advantages of Bitcoin over traditional currencies/banking: 1) it's blazing fast. Ten minutes and someone deep in African desert can wire money to a researcher on one of those scientific outposts. Try to do that with a bank. 2) If done right, Bitcoins are anonymous like cash. In light of the recent NSA scandal, I don't believe a second that the NSA/other governments will reduce…

1) With a telephone and a banker, all it takes is 10 minutes to do the same wire transfer. At worst, it would require a fax machine to sign the paperwork. 2) This is wishful thinking. Large currency transfers by law need to be reported by most states, whether Bitcoin or not. A thousand dollars is not large ($10k is typical). Your scenario here is effectively saying it's easier to break the law with bitcoin. All you a…

I think that casts the action in an unnecessarily negative light.

Is BTC considered 'currency' by the US government? Do its transfers necessitate reporting to the government? If I sent a thousand dog biscuits to my home land, does the government need to be involved? Under what law?

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#116

Post by notahacker »

netcan wrote: post #59
berberous wrote: post #47

Earlier quoted context omitted.

You are correct. I was using the article's language, which I agree is not right. It should be called a bubble, not a ponzi scheme. They are similar in that the price rise is being sustained by many new speculators/investors, and at some point, that will inevitably collapse. I am reminded of the story that Joseph Kennedy predicted the 1920's stock market crash after receiving stock tips from his shoe-shine boy. He rea…

All money is a bubble, IMO. >> price rise is being sustained by many new speculators/investors, and at some point, that will inevitably collapse It may but I don't think its inevitable. Many speculators/investors are buying bitcoins because they believe bitcoins will be used in the future as an important currency. If that happens, there will be even more demand for bitcoin and the price will be high forever. Its spec…

All money isn't a bubble. If people are known to need certain quantities of an asset to disburse debt and tax obligations they know they will incur in future, then that asset's value isn't driven purely by speculation, especially not if people accept it even as its value is known to diminish over time.

My belief that people and corporations will still have a broadly similar demand for dollars next year isn't based on a graph with a rising value trend line that's known to be driven by amateur speculators, unlike "bubble" type assets.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#117

Post by nightpool »

ashray wrote: post #52
zanny wrote: post #40

Earlier quoted context omitted.

> Sure, bitcoin has several terrible characteristics that have been exposed over the past few weeks (volatility, tons of speculation, new users don't understand wallet security, etc.) None of these are new, bitcoin has been volatile, has had a large speculative market, and a problem with new users understanding it since 2009.

Thanks for adding that, I am of course personally aware that these discussions have taken place time and again on bitcointalk. I meant to say that these problems have been exposed more by the general press, etc. lately. There are other issues that the recent spike in value/volume have introduced: - bitcoin clients, usage, security are too complex for the average consumer - minimum miners fee is now too high ($0.10) -…

From what I understand, isn't "some miners are cherry picking transactions with higher fees so some transactions are taking longer to confirm" part of the design of the Bitcoin network? From what I understand, as mining gets harder, transaction fees are supposed become the larger economic incentive for miners.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#118

Post by Aqueous »

ramchip wrote: post #114
Aqueous wrote: post #107

Earlier quoted context omitted.

The more people who use BitCoin the less volatile it will be, the more BitCoin tokens will be spread across a large number of individual actors, the less a single actor can dictate price fluctuations.

What makes you think that? I'm not convinced of either of your suppositions, i.e. that 1) current fluctuations are caused by large bitcoin owners who dictate the price, and 2) that having many small investors would lower volatility (think about crowd behavior...)

Yes, I believe if someone sells a large quantity of BitCoins at once it can trigger a big sell-off.

Certainly groups of two or three who all sell fairly large quantities of BitCoins around the same time, even just by coincidence, can trigger a panic sell-off.

The more BitCoins are distributed are among more people the less a few people selling can snowball into a price collapse.

BitCoin already seems to be much less volatile than it was even a few months ago. The up-and-down fluctuations are a much smaller percentage of the price. In the last few days it's been hovering around $1200, without falling below $1100 or rising above $1300. A year ago it was routine for BitCoin to lose half its price and then recover and then lose half again.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#119

Post by cynicalkane »

jseliger wrote: post #113
pyalot2 wrote: post #42

> In this sense, Bitcoins is not a Ponzi scheme. It is simply a supermoney scheme. Admits that bitcoin is not a ponzi scheme in his own article. > The money was siphoned off from the beginning. Somebody owned a good percentage of the original digits. Implies that most bitcoins are owned by satoshi nakamoto, without substantiating this claim by any number to quantify the impact. The estimated stash of satoshi is about…

Money develops out of market exchanges. Money was not used for its own sake initially, but it becomes widely used as money as a result of innumerable transactions within the economy This also doesn't appear to be true: see David Graeber's book Debt: The First Five Thousand Years for his descriptions of how money actually emerges from religious ceremonies and temples, not barter (as most econ books have it) or "market…

I wouldn't trust Graeber, as he is frequently wrong about easily verifiable facts in such a way that it supports his world view. There's no reason to trust a liar when he tries to tell you something you don't know about. My favorite Graeberism is when he describes the founding of Apple:

> Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other's garages

but there are plenty others, an exhaustive list of which would be inappropriately long for a HN reply. This isn't one of those things where people don't understand computers, this is one of those things where someone just completely makes shit up. He's also a somewhat unhinged and deeply horrible person. Discussed here by Brad Delong who is about as far left as real economists come: http://delong.typepad.com/sdj/2013/04/david-graeber-april-fo...

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