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

251–260 of 306 posts

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#251

Post by NikolaTesla »

cheald wrote: post #232
NikolaTesla wrote: post #180

Earlier quoted context omitted.

Agreed on your first point. (no sarcasm intended) Are you saying that a currency that cannot be controlled (e.g. the money supply controlled by something like a federal reserve) is more dangerous than one that is?

that's the Keynesian viewpoint. The prevailing wisdom right now is that policy-controlled inflation helps prevent a wide range of issues. Bitcoin is inherently deflationary, which scares the crap out of people with their stake in the Keynesian camp.

When you say prevailing wisdom, are you referring to the prevailing wisdom from the Keynesian viewpoint?

What would be an example of the "wide range of issues" that policy-controlled inflation helps prevent?

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#252

Post by mrosseel »

dgregd wrote: post #152
aestra wrote: post #128

Earlier quoted context omitted.

Transferring money quickly and easily and cheaply across boarders. Universal currency.

The total number of Bitcoins is capped at 21 million. So how it can handle GDP growth? The amount of currency should reflect GDP size. Otherwise there will be deflation. Gold worked well as currency. Its yearly production increased total amount of mined gold by about 3%. Which was on GDP increase level.

if GDP grows such that the smallest subdivision of one bitcoin (called 1 satoshi) becomes too expensive, extra decimals are added. So instead of making new coins, the existing coins will be subdivided in smaller pieces.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#253

Post by Perseids »

pyalot2 wrote: post #200
Perseids wrote: post #132

Earlier quoted context omitted.

> There will be an eventual cap at 21 million bitcoins, so satoshis stash is somewhere between 9% to 4% of all bitcoins. Btw: As the rules and mechanics of the Bitcoin network are enforced by the majority of clients it would be pretty simple to invalidate these bitcoins if the majority of the Bitcoin software authors would agree to do so. Just ignore any transaction regarding these old addresses.

Of course if a majority agreed to a blacklist, redlist, whitelist or any other exclusionary mechanism, then some coins become less usable than others. However I think you will find that really nobody wants to participate in such a scheme for a pretty simple reason. Fungability is an important concept for money in order to work. A landmark case in scottland around 1750 (Crawfurd v. The Royal Bank) recognized that fung…

Whether this works or not lies largely in the way the Bitcoin software developers pitch their change. For example this cut would be much less directed if you invalidate bitcoins that are older than 3 years. Independent of the Satoshi coins I would favor something like that to clean up lost bitcoin accounts and to shorten the block chain that needs to be cached by all clients. I think Bitcoin is still young enough for such adjustments to work.

The difference between cutting the Satoshi stack and the Crawfurd v. The Royal Bank case IMO is that in the latter invalidating money in active use greatly threatened the viability of the currency whereas in the former the money is just lying around anyway and its existence is a threat to the stability of the currency itself.

For real fungibility with bitcoin we need to add real anonymity, something like zerocoin or some bank like structures that provides huge scale money laundering (in the way this currently works with established money). At the moment bitcoins leave behind such a huge paper trail you can hardly describe any coin as equal to any other, except those freshly minted.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#254

Post by gnaritas »

NikolaTesla wrote: post #242
gnaritas wrote: post #203

Earlier quoted context omitted.

Bitcoin is a fiat currency.

If mining additional Bitcoins at present is not economically viable than Bitcoins are not (currently) a fiat currency. The cost for the fed to increase the money supply is $0, the cost to produce a Bitcoin is equal to the cost of the hardware and electricity to produce it. I'm not sure if the definition would change once the maximum limit of Bitcoins is reached.

> If mining additional Bitcoins at present is not economically viable than Bitcoins are not (currently) a fiat currency.

Whether Bitcoin can be mined or not has absolutely nothing to do with whether it's a fiat currency or not, so your logic does not follow. Fiat doesn't mean "can easily manipulate". Any currency that isn't backed by (value derived from) a hard asset is a fiat currency. Burning electricity to create bitcoin's is not "backed by", that electricity is gone, used up, wasted. Other crypto currencies like peercoin or primecoin address bitcoins wasted energy, but they are all fiat currencies. Their value derives from confidence, not assets.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#256

Post by Perseids »

tlrobinson wrote: post #226
Perseids wrote: post #132

Earlier quoted context omitted.

> There will be an eventual cap at 21 million bitcoins, so satoshis stash is somewhere between 9% to 4% of all bitcoins. Btw: As the rules and mechanics of the Bitcoin network are enforced by the majority of clients it would be pretty simple to invalidate these bitcoins if the majority of the Bitcoin software authors would agree to do so. Just ignore any transaction regarding these old addresses.

> majority of the Bitcoin software authors would agree to do so The majority of miners would need to adopt the new software, and in theory the "economic majority" would too: https://en.bitcoin.it/wiki/Economic_majority

I didn't differentiate between them, because - really - do you think the miners take a close look at the protocol the software they are using actually implements? Much less so the end users.

I see the software engineers of the Bitcoin clients as a largely underestimated force in the network dynamics. Even one subtly placed bug could bring down the whole currency in the long run.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#257

Post by blahbl4hblahtoo »

mason240 wrote: post #103
blahbl4hblahtoo wrote: post #37

Austrian economics are so painful. Its amazing to me how impervious to contrary evidence its adherents are... their blind faith in their core beliefs are so unshakable. Every time I read one of them say that money arose from markets I wonder why they don't sponsor a bill that sets up an agency like NOAA that watches for dangerous conditions in this primeval force called "the market" so that people can be warned when…

Are you saying that you don't believe that people can buy, sell, or trade with each other unless government is involved?

of course not.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#258

Post by fyolnish »

VLM wrote: post #35
fyolnish wrote: post #8

Earlier quoted context omitted.

This headline doesn't ask any question.

Yes, and much as that specific "law of headlines" exists, I'm proposing another unrelated "law of headlines" which is also almost universally true.

Ah yes, I should have read more carefully.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#259

Post by kylebrown »

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'm reading Graeber's book. The origin theory he settles on is that money was created by the state. Kings produced coins, gave them to soldiers, and mandated that the citizens accept the coins as payment for goods. This created a market, and solved the problem of how a kingdom could supply the needs of an army (weapons, clothes, and food).

He does thoroughly deconstruct the barter origin story, by showing that barter economies were actually driven by credit (and thus credit pre-dates money).

The story about religious ceremonies and temples is that in pre-market societies, there was a social currency (wampum, copper rings, special cloths, etc) used for ceremonial purposes. It was when market economies (and market currencies) became entangled with the social currencies that you see the development of slavery.

Re: Bitcoins: The Second Biggest Ponzi Scheme in History

#260

Post by gnaritas »

NikolaTesla wrote: post #174
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.

Interesting that the mere mention of "fiat currency" invokes tin-foil hat. Whether Bitcoins can survive the volatility is indeterminate. If it does survive, however, and becomes an alternative to (avert your eyes) fiat currencies, the impact will be far greater than another obscure fiat currency suddenly being used.

A fiat currency can't become an alternative to fiat currencies; it can only become a better managed fiat currency by way of being an algorithm rather than a human. Bitcoin is an obscure fiat currency suddenly being used.
Post reply on HN