Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Bitcoins: The Second Biggest Ponzi Scheme in History

garynorth.com

Post reply on HN
Print view View original

181–190 of 306 posts

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#181

Post by mmcnickle »

Aqueous wrote: post #108

From the BitCoin FAQ ( http://en.bitcoin.it/wiki/FAQ#Is_Bitcoin_a_Ponzi_scheme.3F ): Is Bitcoin a Ponzi scheme? In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy. A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win ou…

"The first thing to say is this is definitely not pyramid selling, OK"

Toni - trying to sell Jeremy on a pyramid scheme -- Peep Show, Season 1, Episode 2; "The Interview"

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#182

Post by gnaritas »

oznathan wrote: post #158

A very emotional article IMO. Volatility is not permanent characteristic of bitcoin. It's like saying that a newborn child will never be able to walk, because now it's only crawling. At a certain point Bitcoin will stabilize. Whether that will be at 0 or 1 million, no one knows. Not the haters nor the fanboys.

Bitcoin can't stabilize, the economy is not fixed in size and neither can a currency that represents it be and remain stable in value. Every time demand for liquidity spikes due to a growing economy bitcoin will deflate.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#183

Post by trekky1700 »

corresation wrote: post #163
ashray wrote: post #7

The analysis in this article is so flawed that it's hard to take it seriously. A more balanced analysis might have helped. 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.) But to insinuate with absolutely zero understanding that the creators of bitcoin did this to get rich is just plain…

But to insinuate with absolutely zero understanding that the creators of bitcoin did this to get rich is just plain nasty. Maybe they did want to get rich (in dollar terms) but there is nothing obvious on the block chain that proves that they cashed out. Why is that "nasty"? Why even debate or get so defensive about this point? For very strong reasons it does absolutely seem that the creator of Bitcoins did an early…

I agree with this. People are concerned with wealth distribution in the physical world, while in the bitcoin world one man owns nearly 10% of all money. The fact that this man is its creator is even more dubious.

This is the equivalent of one American, someone like the head of the federal reserve owning 1.05 trillion US dollars. Even if one day we'll have 21 million Bitcoins out there, that's still around 5% of all wealth being owned by one man, the currencies creator. Sounds crazy to me.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#184

Post by nmarley »

hendzen wrote: post #98
berrypicker wrote: post #89

Earlier quoted context omitted.

I checked out the comments before reading the article since it had a 'sensational' headline which usually follows up with a crappy article, glad I didn't waste my time. I'm wondering where all the up votes came from though.

The article itself is not badly written. Keep in mind many people on this forum have a significant financial incentive to ensure that people don't think this way about BTC.

> ...many people on this forum have a significant financial incentive to ensure that people don't think this way about BTC.

How can you make an assertion like that with no facts? Do you know that for sure? Do you have data to back that up?

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#185

Post by jnbiche »

nimblegorilla wrote: post #177
jervisfm wrote: post #139

Earlier quoted context omitted.

> There will be an eventual cap at 21 million bitcoins. At the increasingly slow rate that coins are produced, this won't happen for some. But assuming that bitcoins are still around and in use at the point in time in the future when this happens, what will be the effect of this? The supply is fixed and no more can be produced; and since it's still around, chances are there is demand / usage that would likely grow. T…

Honest question: why are bitcoins scarce? I understand that the supply of real bitcoins is limited, but what is preventing all of the other cryptocurrencies from taking off?

>what is preventing all of the other cryptocurrencies from taking off?

Nothing at all. There have been dozens of "competing" digital currencies for several years now. Litecoin came along in early 2011. And it's extraordinarily easy to change Bitcoin to other digital currencies (much easier than USD digital currencies).

So obviously being first counts for a lot here. The network effect is strong.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#186

Post by dictum »

akjetma wrote: post #176
ubernostrum wrote: post #153

Earlier quoted context omitted.

I hate to say this, but at this point when I see someone use the words "fiat currency" unironically, I also expect to hear an argument about gold fringe on a flag, and other similar easily-repeated cargo-cult phrases/arguments against whatever the person doesn't like. One of the real dangers to Bitcoin is precisely that sort of public image.

a fiat currency is just a currency without intrinsic value. it's not a derisive term, you'll find it in any introductory economics textbook.

What is the intrinsic value of Bitcoin, aside from its scarcity?

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#188

Post by shawnz »

mathattack wrote: post #136
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…

His core point is still true - when the price is so volatile, it's now not a means of exchange, it's a speculative investment where the last buyer will get 0. It's kind of like the Palm/3com mispricing in 2000 when the subsidiary was worth more than the parent.

I don't understand this point of view. Is there some expectation that once bitcoin goes down it will never go up again? Why is there going to be a "last buyer"? We have already seen a couple of significant drops in the value of bitcoin and it has not deterred people from using it.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#189

Post by akjetma »

bushido wrote: post #137
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.

This is among the most ridiculous statements I have heard about how the markets work. Its actually the exact opposite, the lesser the people the lesser the fluctuations/volatility. And this is not just about the markets, it applies to most things. ex: 1. Single drug company selling the life changing drug = High near-fixed-global price | As soon as more drug companies can sell increase price competition, higher varian…

The transition from an oligopoly/monopoly to a market where price is dictated by competition is different than the transition from few competitors to more competitors.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#190

Post by bushido »

berberous wrote: post #18

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, bu…

I agree 100%; quoting myself from a previous comment on a different post:

Bitcoin is revolutionary. THAT is most likely true. Is it doomed to fail? Perhaps it is, but things are not quite as grim.

Here is what is likely to happen as a result of bitcoin: 1. The future of banking transaction fees is bleak - The current financial systems will get threatened and adapt. Here bitcoin will succeed. 2. Bitcoin is used as proof of concept and paves the way for a world currency, think euro but global.

The two points above are definitely wins. If you have any problems with those playing out, its likely you have the same concerns about bitcoin and just haven't realized it yet.

Here is what would likely happen to bitcoin v1, it will fail to become a real currency.

Its currently morphing into a speculative store of value. I'd like to say its like tulips, but I'd be wrong, as it is definitely more useful than tulips. On the speculation front it may play out like the tulip mania/bubble, but I hope I'm wrong about that.

The reason for it to fail as a currency is the very reason for the spike in interest at the moment. Exchange rates seem to be soaring and may continue to soar which would make people vary of buying some thing worth $1000 USD for 1btc if there is a possibility that deferring a purchase by a couple of days could offer a notion discount of x% from the hope of the value of btc increasing. If you could wait a few days for the purchase and buy the $1000 item for 0.8btc, who wouldn't wait?

On the flip-side, if you bought 1btc for $1000 to buy something but the value of btc suffered a temporary squeeze to the effect that 1btc = $800, hence the same item now costs you 1.25btc or 25% premium to what you were willing to pay. Hence who would be willing to pay extra if you were sure the value of btc would rise?

This applies to all commercial transactions. In 90%+ of cases people will likely defer spending btc unless the value was at the same level +/- 5% as their purchase price.

Bitcoin as a currency/for commerce will leave every consumer in a constant state of buyers remorse and THAT will be the real reason for its failure.

Post reply on HN