11–20 of 82 posts
It would be as much a Ponzi scheme as gold would be.
Not really. People don't invest in gold thinking it will go to the moon. They invest in it thinking it will be a stable value to protect from currency / inflation / recession risks.
The difference might seem little because it's just a detail in how you get your payout, right? And indeed, if the two were legitimate investments, there would not be much of a difference (outside of details like taxation).
However, the default dividend based payment puts the classical ponzi scheme into a challenging situation compared to crypto. The person running the scheme has to serve the payments otherwise their scheme collapses, which means they have to grow, and find new people to invest in. As the dividends are usually high to motivate people to invest, you usually have really fast exponential growth. With simple calculations you can obtain a date limit at which the scheme has to have collapsed.
Compare this to crypto where the (group of) people running the NFT/token/etc. only have to keep enough people to HODL. This is a much easier task, as people who own crypto for investment purposes already believe that it's a good investment so why not keep the "dividends" inside. Thus, there is no requirement for crypto to grow indefinitely in terms of real revenue. At the exchanges, you can in fact have the same revenue in terms of dollars for years but for decreasing numbers of your cryptocurrency and arrive at a positive story for your token. Ultimately, there is no law that the fake currency has to collapse, and in fact if people continue believing in it, it won't.
However, as there is no "real" value behind it, its value is 100% made up of speculation, which makes it extremely dangerous for investors (speculators/gamblers is probably a better word to describe them). It's a giant bubble and one day it will pop. Hopefully it won't take large parts of the economy down, but the total size of the bubble is already larger than the one that caused the 2007/2008 crash.
Earlier quoted context omitted.
Not to mention Gold also has actual industrial and other uses!
Well now you can argue that crypto also has actual industrial and other uses, they just shadow the most of the trading volume which is all about speculation and money laundering
Cryptography is useful, yes, as an abstract framework. That's not what's under discussion. Buying bitcoin is not the same as investing in cryptography research.
To be more precise, if Bitcoin's price goes to zero, there's no reward for mining so the blockchain will literally stop.
I think of more like a combination between russian roulette and a ponzi. Assuming you refuse to sell at a loss you mainly risk being stuck. Price never recovers to a profitable point for you (you took the bullet, those who sold to you won). I think everyone knows that at some point, the party ends, and it's mostly about how far you're willing to take it, who will end up with the bullet in their head.
Earlier quoted context omitted.
Not to mention Gold also has actual industrial and other uses!
Well now you can argue that crypto also has actual industrial and other uses, they just shadow the most of the trading volume which is all about speculation and money laundering
It would be as much a Ponzi scheme as gold would be.
Not really. People don't invest in gold thinking it will go to the moon. They invest in it thinking it will be a stable value to protect from currency / inflation / recession risks.
The human history is basically one big arms race to get the maximum profit with the minimum effort.
Up until the invention of BTC bankers and capital allocators like Buffett were leading this arms race. Making tons of money doing very little physical work (or even domain specific intellectual work).
Now enter BTC circa 2009.
BTC leverages people's deep fear of inflation and turns it on its head using deflationary financial engineering.
Deflation attracts people because it's a hugely attractive proposition to increase one's net worth while doing nothing during the day and partying with likeminded people at night. Almost too good to be true.
BTC skyrocketed because people don't understand that if something is too good to be true, it probably is. At the end of the day Power Law is undefeated and only one person benefits from the too good to be true scheme, much like only one person wins the lottery. For sure it can't be too good to be true for what amounts to hundreds of millions of people who bought into the scheme.
Something gotta give
Earlier quoted context omitted.
Well now you can argue that crypto also has actual industrial and other uses, they just shadow the most of the trading volume which is all about speculation and money laundering
Name one industrial use for cryptocurrencies that isn't some form of grifting.
1. Honest lottery where result is derived from some bits considered to be random.
2. Abuse-proof selling of (controversial) digital goods like vpn or porn with not enough old actresses for your jurisdiction.
3. Storing some bits of data forever (this is the most important feature of so-called cryptocurrencies from my point of view).
4. Donates if you don't want to deal with third-parties like please allow me to support the guys you have considered as terrorists without any legal consequences for me.
5. Taking my money with me if going abroad (if you are both not going to pay tax for taking too much cash and not allowed to make some transactions using bank accounts).