Bitcoin Forum

Just want to get info on these terms.

I go with option 6. That both terms are incorrectly used.

Ponzi is where new investors investments are divided up as "Dividends" and Pyramid each bottom referral blosters up the reffers balance.. correct?

It's not a ponzi or a pyramid scheme, and if it was then so is gold and shares etc. People only call it a ponzi/pyrmid out of not understanding either cryptocurrencies or investments. Yes, you could lose all your money just as you can lose all your shares etc.

Yes.

Pretty much, my take is:

Ponzi is where central person or group pays old investors with new investors money.

Pyramid is same, but with recruiting bonuses paid by recruited people...
That is my understanding.

Whether or not the pyramid or ponzi scheme terms are misused by pedantic definitions does not provide an argument against bitcoin being a * scheme. It is a "bitcoin scheme" which closely resembles a pyramid scheme but has a few twists.

It's not pedantic to use words correctly as defined. Is trading fiat currencies or buying and selling shares or property a 'ponzi or pyramid scheme with twists'? No. Buying Bitcoin is an investment and you can win or lose but that doesn't automatically make it a scam.

Bitcoin is not a pyramid or a ponzi. The people who call it that are wrong. There really is nothing to discuss here.

I voted 6  ;D

Wish there was a number 7. Bitcoin is not a scam. But can be used by scammers.

so I went with 6

Except that they are not words, they are phrases that arose from specific scams to become more general terms for monetary scams.


I didn't say it did, I said that someone calling it a pyramid or ponzi scheme does not automatically make their argument irrelevant because bitcoin does not fit some specific definition of a pyramid or ponzi scheme. It is a bitcoin scheme, and whether or not it is considered a scam is for future history books to decide.

yes. there should be a list of most commonly misused terms.

ponzi cheme
pyramid scheme
intrinstic value
zero sum game (gain)

Ponzi is a word. Scheme/scam is a word. It's not a ponzi or pyramid scam/scheme. It doesn't fit the definition. Are you saying that it's only going to be a ponzi scheme/scam if in the future the value or BTC goes to zero or tanks? That makes it a failed investment, not a scam.

And can you define the phrase 'bitcoin scheme'?

"A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation." - http://en.wikipedia.org/wiki/Ponzi_scheme

Bitcoin was created by idealists who want to offer an alternative to fiat currency.  As such, its not fraudulent so can't ever be considered a Ponzi scheme.

"A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public" - http://en.wikipedia.org/wiki/Pyramid_scheme

Bitcoin is already a working currency.  So its not any more unsustainable than any other project and as such it can't ever be considered a Pyramid scheme.

Ponzi and pyramid is a specific kind of schemes...

Bitcoin might be a mania or used as an investment scheme by some part of users...

"Ponzi" is not a word, it's a name. I will also say yet again, since you don't seem to understand, that my point is that the terms are being used colloquially to denote a monetary scam. Arguing that bitcoin property X does not meet a textbook definition of a specific type of monetary scam does nothing to argue against it being a monetary scam. Calling it an investment does nothing to argue against it being a monetary scam. Madoff provided "investments" too. A decentralized scam does not make it not a scam.

This argument over whether or not the terms are being used correctly is the textbook definition of a red herring (http://en.wikipedia.org/wiki/Red_herring).

It's not the fiat that define ponzis and pyramids. Both schemes are perfectly possible with bitcoin, or seashells or anything else. It's bitcoin itself that people are calling ponzi/pyramid.

You need to explain what this "bitcoin scam" is and how it works. Simply slinging mud and hoping some of it sticks is... a poor form of debate.

I like how Minsky uses the term:


With that in mind, Bitcoin is not 'owe me', Bitcoin is 'paid in full'.

You're being pedantic, but you're also wrong. Ponzi is a name and a word: http://dictionary.reference.com/browse/ponzi?s=t

Pon·zi
[pon-zee]
noun
a swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks.

Who is swindling anyone? Who is offering a quick return? Who is luring people into investing more?

And I understand fine, you don't seem to understand how Bitcoin isn't a Ponzi/Pyramid scheme or a scam. It has nothing to do with colloquialisms, people are using the term of Ponzi/Pyramid schemes incorrectly. Madoff committed fraud by a Ponzi scam and got people to invest with cash for shares, so are all cash and shares a scam? No. You can use cash or shares for a scam just like you can use BTC, but Bitcoin in itself is not a scam.

Here's another one for you: http://dictionary.reference.com/browse/phrase?s=t


Why do you keep putting words in my mouth? I am here to argue the topic of this thread, not whether or not bitcoin is a scam. Can you possibly separate the two concepts?

I believe the most interesting aspect about these schemes is that you cannot apply them to bitcoin without applying them to all money; so it's not an argument of "bitcoin is a ponzi/pyramid scheme", it's an argument of "money is a ponzi/pyramid scheme", since it would be unusual to argue that one form of money is but not another, when they operate in the same ways.

In this way, the terms are being misused, solely on the basis that people are playing favorites; what applies to one isn't applying to the other, though the definitions of money and these various schemes never change.

If you're here to argue the topic of the thread, then "Are terms pyramid scheme and ponzi scheme misused?" Yes, by people like you.

You haven't explained what a "bitcoin scheme" is or how it "closely resembles a pyramid scheme [with] a few twists" yet.

Please point me to where I've misused the terms. Otherwise, kindly fuck off.

I've been a principle driver of the argument that BTC is a Pyramid scheme, so I will post here to defend this position.  I have previously stated that I do not feel Ponzi scheme is at all an accurate descriptor of BTC, and I accept the argument that the lack of a central figure that fraudulently misrepresents an investment rules out the Ponzi answer.  Frankly no one should be making any further arguments around Ponzi schemes because it is a settled point and one that is only distracting us form the point at issue now which is the Pyramid scheme.



Of all the posting so far only this one by Hawker makes a cogent argument, that I find worthy of a response.


I agree with his definition of Pyramid, it is a sufficiently broad definition that I feel it covers BTC even though BTC dose not have the kind of strick quota 'recruitment tree' structure which is common to most pyramids.  Some people might try to make this argument  but so far no one seems to have.  The defining pyramid qualities are

1) Unsustainable business model
2) Rewards members PRIMARILY for enrolling new members
3) Dose not provide it's rewards out of a real investment or profit making service

Hawker argues that BTC is 'a working currency' and is thus not unsustainable, and thus it would fail on point #1 to fit the definition of a Pyramid scheme.  Now right off the Bat Hawker is in my opinion conceding #2, as it is absolutely beyond doubt that the Primary reward most BTC users expect to receive is to see a rise in value of the BTCs they hold, and that rise has always been driven by expanding the user base.  So while a traditional Pyramid scheme has individual rewards for individual recruitment work, BTC offers collective rewards for collective effort (how oddly collectivist for a libertarian scheme but I digress).  The point is that BTC absolutely meets definition #2 in SPADES.

Now moving on to #3 is BTC providing it's rewards from a real investment or profit making service.  This is a bit trickier, as BTC's transaction ability is arguably a service and one that has some value.  But again this is not at all inconsistent with a Pyramid scheme, it is very common to receive and to provide some kind of real service from a pyramid scheme (books or household items are common), such services give the naive the feeling that the whole thing is above board.  This is why #2 says PRIMARILY, real commerce is always a fig-leaf in a Pyramid scheme so to assess BTC we need to actually get some kind of measurement of the real services provided and weight them against the rewards being distributed.

To determine profits we must first look at costs, and we all know BTC has HUGE costs in equipment and electricity.  So to be paying its rewards out of a profitable service BTC would need to be making a profit greater then all the combined rewards to miners in newly mined coins AND all of it's ongoing mining costs, only then could it sustainable maintain both of these expenditures.  But the total collection of transaction fees has consistently failed to keep pace with costs, and in fact the system is falling further and further into debt every day as can be seen on this graph which is transaction fees minus the cost of mining.

https://blockchain.info/charts/network-deficit

To make the situation worse the total costs of performing each transaction are rising as mining revenues increase.  It is impossible to see how a service which is rising in it's costs can be sustained.  Users of BTC are not currently feeling these costs, they are being pushed into the future.  But Ultimately the price of a service in a free market will always return to parity with it's cost.  Costs per transaction are now in the range of $10, a cost that would allow all conventional payment systems to be highly competitive against it.  Thus we can conclude that BTC is not now nor will it ever be a profitable service.

https://blockchain.info/charts/cost-per-transaction

Given that we can see that #2 and #3 defining features of a Pyramid scheme are fulfilled, we can clearly see that their is no way that #1 can not also be meet, for feature #1 is merely a description of what systemically happens when 2 and 3 are true (the hidden axiom here is that the population of potential new members is finite).  Hawkers argument that BTC is a 'working currency' is irrelevant unless he can prove that BTC is a SUSTAINABLE currency, for obviously things that are unsustainable still work FOR A WHILE and their short period of working is not a proof of sustainability.  I do not even need to explode the statement that BTC is currency to prove my case here, even though their are numerous arguments that can be made to that effect, even arguing about that is a misdirection by BTC apologists and an attempt to direct the argument into muddy semantics of what constitutes money or currency.

You would have to call gold a pyramid scheme too under your very loose definition. You are simply wrong.

Edit: for amusement, let's calculate what the cost of carrying gold coins around on your person would have been back when people used it. After all, they have a weight and thus require energy to manipulate, and energy has a cost.

Both terms tend to be used incorrectly but ponzi especially

Bitcoins are neither. They neither depend on more people joining,nor is the inherent value of a BTC dependent on newer adopters. These allegations of it being either a pyramid or ponzi scheme stem from the suddenly rising value of it,but that value inflation is due to pure demand-supply equations rather than anything else.

First, understanding the role of money. Money was created out of barter. Alice grows corn (competitive advantage, lower cost to produce corn). Bob grows wheat (competitive advantage, lower cost to produce wheat). Alice and Bob trade corn and wheat. There is an equilibrium or close to it in the barter system or fairness in the barter, otherwise Alice and Bob would not trade with each other. Thus, the characteristics of sounded money has to have this close equilibrium as in barter.

Bitcoin is not sounded money.

Some people call Bitcoin a ponzi scheme without understanding what the term means. To them, it's an all encompassing term for scam. Stop calling it a ponzi scheme. Bitcoin does not fit the definition of ponzi scheme. Bitcoin fits under the broader term, scam.

BITCOIN IS A PYRAMID SCHEME.

Bitcoin can be separated into two components:
A) the distributed peer-to-peer payment technology
B) the Bitcoin scheme, monetary, method of creation and issuing new coins

The technology part is not the problem. You can have a pyramid scheme over the postal mail system, something like Mailcoin, but it would not be as efficient and will not have the exponential growth than a distributed p2p network has over the Internet.

The monetary part is where the pyramid scheme for Bitcoin is concocted. The early adopters control a huge percentage of BTC and the Pharaoh (Satoshi) controls the most BTC. Immediately that should give an objective person alarm bell that there is something wrong with this picture.

If a new participant were to enter Bitcoin, mining for BTC is astronomically difficult. At the same computing power, a new participant would take more than a million years to get 50 BTC compare to what Satoshi got in 10 minutes at the beginning. That is not how money should work. So, new participants have to use real world currency to buy into Bitcoin, this is where value is flowing up the pyramid.

People that have 1 or more BTC have some skin in Bitcoin, so this make it hard for some to be rational and objective about the Bitcoin scheme. I hope some will step outside the box and take a hard look at it. Some Bitcoiners might know it is a pyramid scheme, but lack the ethical conscience to care. These Bitcoiners are marketing and pumping Bitcoin to get new participants to enter, thus driving the price of Bitcoin up and then cash out with the gains.

For new people that want to get in on Bitcoin, I hope you take an objective view of Bitcoin. If you do choice to buy into Bitcoin with real world currency, just hope you are not one of the many at the bottom of the pyramid left holding the bag when this thing collapses. I am not here to judge your morality. Keep in mind, you are participating in this fraud.

Do yourself a favour.  Go to wikipedia and look up pyramid scheme and greater fool fallacies.  Then revise your post as you don't understand the term "pyramid scheme".

28%. Wow we are making headway in the consciousness of the audience.

The key characteristics of anything that resembles a ponzi or pyramid scheme are:

1. No intrinsic value (https://bitcointalk.org/index.php?topic=344216.msg3702445#msg3702445), it is all a willful delusion of the participants.

2. Viral adoption as deluded participants scurry to induce greater fools by word-of-mouth.

Physical gold investment most certainly has an intrinsic value and you will always have that rarity and tangible value (that you can hold in your hand) and thus it can't go to 0. Bitcoins are not rare, because anyone can create an altcoin, and the only thing holding people into Bitcoin is a) the poor quality of the competitors thus far, b) the delusion that Bitcoin is something that it isn't (it isn't a currency), c) the delusion that the limited network effects thus far are a barrier to a great altcoin, d) the delusion that Bitcoin doesn't have technological flaws which doom it, e.g. Transactions Withholding Attack (https://bitcointalk.org/index.php?topic=336350.0) and the Spiraling Transactions Fees (https://bitcointalk.org/index.php?topic=340686.0).

Shares on major markets usually have intrinsic value and they almost never have the ability to sell like a virus, because most people are inherently skeptical of pink sheets shares because they have many examples of failure.

Whereas, "this is new, it has never happened before, this is the greatest new innovation" is what spreads like a virus.

I see so many of these schemes, such as "this health system will restore your vitality" pyramid schemes, and there is no intrinsic value. It is just herbs you could buy for 1/1000 the price in bulk.

If you want to defeat this logic of mine, your only chance is to argue that Bitcoin has an intrinsic value and justify your willful, collective (what I strongly believe to be) delusion.

Arguing for pedantic, narrow definitions of such schemes makes you look desperate. Actually argue the point.

You can try to argue against:


Read this entire thread:

Problem With Altcoins (https://bitcointalk.org/index.php?topic=279650.msg3495695#msg3495695)

The price of Bitcoin is going up because Bitcoiners are pumping it to get more and more new participants to enter. The media is not helping the situation either with their report of skyrocketing prices. This should be a clue for some people that the Bitcoin scheme is a pyramid scheme.

As you state that Bitcoin can work with no new participants. Can it work?
Let's do a thought experiment.

Assuming:
No new coin creation, it stops now
12 million total BTC supply and it's fixed at 12 million
1 million Bitcoiners

Looking at BTC Distribution.
the Pharaoh (Satoshi) 3m BTC 25%
early adopters, ruling class Lords (~100 people) 2m BTC 17%
early adopters, ruling class Governors (~2000 people) 1m BTC 8%
early adopters, elite class (~15000 people) 1m BTC 8%
.... it gets granular as we go down, but let's lump the rest together
late adopters, working and slave class (~980000 people) BTC 5m 42%

This is a rough estimate distribution from Bitcoin supply issuance scheme and early adopters were few, maybe under 20000 people.
Teleport the one million Bitcoiners to planet BitEarth.

On BitEarth, let's simplified things and condense time so we can get a better visual. The basic principle is the same.
One generation is one year and population growth doubles every year. Die-offs after 3 generations.

Year - Population
1 - 1m
2 - 2m
3 - 4m
4 - 7m (1m die-off)
5 - 12m (2m die-off)
6 - 20m (4m die-off)

Since money supply is fixed at 12 million BTC, as population grows economic activity grows, the money supply can be increased by moving the decimal point, 0.01 (year 1), 0.001 (year 2) and so on. Over subsequent generations, the wealth gaps incremental widens more and more. The slave class where the majority resides have the widest gap between the ruling class.

This is not how a fair monetary system can possible work.
I hope people can see why the Bitcoin scheme is a pyramid scheme.

Okay, so you don't even bother to address my points, but dismiss my argument entirely over semantics that I do not know the meaning of pyramid scheme.

Looks like, we do not have much to discuss further. I will say though. You are now plugged into the Matrix. As Morpheus says to Neo.

"The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it."

Anyways. If you so believe in Bitcoin, buy more BTC and hold on to it. It is going up and up. That's sarcasm. I do hope you weak up.

You honestly sound like a communist. The fact that some people are richer than others does not in itself make it a pyramid scheme. And it's totally fair. Without the early inventors and pioneers people like me would never have gotten into it. They deserve to make thousands of times more on bitcoin than me, and those who come after. That is their market value.

The market value is only what you can cash out. Otherwise the price is just a delusion (https://bitcointalk.org/index.php?topic=341594.0).

Only a few can possibly cash out (because there is no income and no intrinsic value, thus only greater fools between you and 0) and I doubt you will be one of those few who cash out before the supply of greater fools whithers and the stampede towards 0 ensues.

Also there is confusion between Bitcoin and bitcoin mining.

This

 wow and if my grandmother had testicles she would be my grandfather.

dude you have the great gift of imagination I love it.  While I think BTC has lots of long term problems  your example is ?????

 can BTC last forever no it can't , but it can last until 2025 maybe 2030.     So i am taking profits as I type are you?

yep and   since all world wide interest rates suck at this moment  people are more willing to take a shot at something like this.

 sell me a 30 year fed bond for 10% a year and I have no interest in BTC.

 we have left a 30 plus year world of high interest rates.. getting 5-10% has stopped worldwide and people want something to put money into.  a few years ago gold and silver were hot now this is hot.    As long as easy interest does not exist   there will be a substitute for investers .

that was a very good post, but I think what you successfully argued here is not so much that BTC is a pyramid scheme but that, in its current form, it is unsustainable.

Presumably you could find technical solutions that will lower transaction costs, while at the same time increasing profits - as the number of BTC transactions rise. Pyramid schemes could never become sustainable except by fundamentally altering their nature.

Real businesses however are often unsustainable (money losing) in the short (and even mid) term - because of the expectation of long term profitability (see Amazon, Google etc.)

EDIT: there are some issues with BTC that could not be so easily fixed, namely wealth distribution. I'd love to get the Gini coefficient stats for BTC. Unfortunately though, wealth distribution in the US is no better - and on a global scale it is much worse than BTC.

Yes some business will initially plow all their Revenue back into expansion and show no Profit.  But that is not an accurate description of BTC, the model is not capable of turning a profit by simply reducing it's expansion rate, like a shark it has too keep swimming or die.  I think you would agree that BTC would need such radical changes in it's protocol that it would no longer BE Bitcoin anymore.

So while I do not believe BTC is sustainable, I do think their is a future for Crytographicly secured currency, and even decentralized Peer2Peer forms of it.  But the sustainable implementations will come from new systems that go in radically different direction.  This is why I'm with Freicoin which takes the base technology in a direction that BTC would never go, and with the goal of making a sustainable currency.

Well, in the dev forum there is certainly acknowledgment of the concerns you've raised and some proposals to address them. I wouldn't give up the game on BTC just yet, if only because if it falls the crash will be so spectacular that it will likely take all other crypto coins along with it.

I like Freicoin but it is difficult to drive early adoption to a product that discourages hording and thus has little speculative upside.

What I predict will eventually happen is we will see a separation into two financial instruments - 'coins' that are primarily a store of value (displacing gold); and coins that are primarily a medium of exchange (displacing the $).

The BTC paradox is that when it was created it was intended to become the latter (so Satoshi claimed) but the manner in which the protocol was devised makes it far more suited to the former.

Why do some people think saving is bad anyway? What is meant by wealth distribution in practical terms and why should people go along with it?

Greed is basic human nature and is the driver behind bitcoin. Without a possibility of turning a profit nobody would invest meaningful money into it. Greed is, in other words, good, or at the very least necessary.

What makes bitcoin unsustainable? The fact that it will some day stop rising in value? But that is exactly what others say is necessary to make it a useful currency. Is it simply envy at work or is there something being left out of the discussion?

I don't think anyone made that argument here, but that is certainly an interesting question to ponder vis-à-vis bitcoin - if it *were* to become the dominant global currency, and given how it encourages saving, the economic landscape would change in quite fundamental ways.

Not all of this is predictable of course, but e.g. you might be a bitcoin millionaire -  but forget about buying that new Ferrari, no one would be around to make it (because the opportunity cost of simply sitting on the coin rather than investing in infrastructure would make it extremely unprofitable). The only things people would still be producing on an industrial scale would be necessities, and prices would be very dear.

People would therefore likely group together in largely self sustaining communities, but since control of land and other resources will be concentrated in so few hands we might see pseudo-feudal systems developing, where land is exchanged for labour by local mega landlords.

But I digress and this is all just speculation. Sorry.

 

Doubt it would go that way. Look at your stereotypical lotto winner, they go out and spend their money instead of investing it and living off the interest which would enable them to live a nice life without ever having to work again.

Same with bitcoin, people will spend what they need to get what they want. I personally plan to travel and maybe buy a boat before it reaches anywhere near maximum value. Only for a small part of it of course, but still enough that, years later, I could be looking at lost millions.

And businesses right now make sick profits from accepting payment in bitcoin. If anything, production of consumer goods would go up.

No. Reread Impaler's post. What is unsustainable is that transaction fees are rising rapidly, but that at the same time they are unable to cover network costs.

But - the second graph doesn't mean a lot by itself, we need to see transaction fees as a percentage, not as a dollar figure- and even then what's interesting is the median, not the average.

https://blockchain.info/charts/cost-per-transaction

One could argue that bitcoin's sustainability is not yet fully tested.

Currently miners are highly incentivized by the block reward.  The question is, as that dwindles towards zero, will miners be sufficiently rewarded by transaction fees to continue providing adequate hashing power to secure the network.  Arguably, for that happen, a market mechanism for transaction fees must be operating in the system, and that is not yet the case, though I hear developers have plans in the works.  Also, there is the matter of block size and the lengthy 10 minute window...

Your stereotypical Bitcoin owner is going to end up just like people who plow their savings into the lotto-- bankrupt.

You won't be buying a boat nor traveling, because you will sell too late and for the gains you do cash out (if any), it is my belief the authorities will come clawing it all back as Bitcoin is going to destroy 99% of the people in it, and thus there will be calls for action from those instead of getting their dream ended up with a nightmare result.


Disclaimer: I am not giving investment advice. Consult your own professional. I am merely sharing my unprofessional thoughts. I have no position long nor short in BTC, nor do I plan to obtain one.

I don't understand that chart. Is it saying that it costs $50+ in transaction fees per transaction or per block?

Btw, I predicted Spiraling Transaction Fees Destruction of Bitcoin (https://bitcointalk.org/index.php?topic=341594.msg3682800#msg3682800).

Also Bitcoin appears to be broken already. Sending medium size (e.g. $50) transactions from localbitcoins to Bitpay invoice is not working. These were working at 1 BTC = $350. I suppose the system has frozen because all the transactions are going to those buying and selling BTC for dollars in mania speculation fever, thus willing to pay much higher transaction fees.

This sort of thing if true, may be the end folks. If I owned BTC, I would get out while I still could before the greed turns to fear and a stampede towards 0.

Here is what Bitpay did in the past, yet I don't expect that localbitcoins is delaying broadcasting the transaction:

http://blog.bitpay.com/2013/03/applying-late-transactions-to.html


Disclaimer: I am not giving investment advice. Consult your own professional. I am merely sharing my unprofessional thoughts. I have no position long nor short in BTC, nor do I plan to obtain one.

The transaction fee has been adjusted several times already and will be again. And participation in the network is voluntary - if it's too expensive for you, you have the option of not being part of it. Most objections of that sort stem from simple ignorance of some aspects of the system. And I have no doubt people will keep making them for years to come.

I tried to distill the information content of your post, and ended up with the empty set.

Did you make any point?

The linked chart is showing rising transaction fees. And it is showing them to be too high apparently to send a $50 transaction from localbitcoins to bitpay, two of the most popular Bitcoin services.

What "objections of the sort"? We are talking reality of what is anecdotally happening right now, not objections.

Saving is great, but there's probably gonna be a point where you want to cash out or spend your BTC on something physical. And at what point do you cash out and/or start buying tangible goods? Do you become greedy and hoard your BTC in the hope it'll be worth millions some day, or do you cash out when it's worth thousands and sit back on a tidy profit? Remember, it could all go tits up any day or even the day before you're about to cash out for your millions and you'll be left with nothing. Suddenly that few K you could've made seems a lot bigger when you're left with zero or only a few $.

Did you know it's against BitPay TOS to use their service as your own personal bitcoin exchange? Plus, I thought you didn't have any bitcoins,so how did you see that issue?

Also, I have sent at least 6 transactions with zero fees in the last 3 days with no issues. All confirmed just fine.

This would only make sense (happen) if the medium of exchange coins somehow had less transaction friction than the store of value coins.  That would mean the medium of exchange coin having more apps, hardware wallets, exchanges/liquidity, and merchants. If a store of value coin happens to have more of those, it will simply be easier to use it instead of the medium of exchange, regardless of what the coin's intentions were.

I have no idea why you erroneously assumed localbitcoins wallet can not used to send payments to merchants.

I didn't write that the instance was my BTC holding.

Not if buying the Bitcoin requires impoverishing oneself and society into hyperinflation (https://bitcointalk.org/index.php?topic=347349.msg3718969#msg3718969).

You can't have this type of radical transfer of wealth to speculators. Society will never allow it.

Bitcoin doesn't have feelings, and thus doesn't care if it is impoverishing anyone into anything. So if causing hyperinflation to other currencies is the end result of bitcoin's existence, people will just try to be the first ones on the bitcoin bandwaggon, instead of being the last ones left holding the fiat bag.


How do you supposee that society will not allow that? Society can't tell who has how many bitcoins and it can't stop people from buying or exchanging bitcoins. Do you expect that people will stubbornly hold on to their bags of fiat out of sheer want to preserve their society? That will only work until some of those holders think "screw the rest of you" and start moving into BTC. In the end, you'll end up with the same scenario as above.

Wow you really doubt the power of the government. I guess you forget who has the bigger guns.

You are not anonymous in Bitcoin. They can attack with the tax agencies without bringing out the big guns. The big guns are the last resort. As the final resort, nuclear winter and the underground shelters the elite have built.

Absolutely no way the elite will hand over the power over the creation of money. They will co-opt it peacefully or by as much violence as it requires.

http://en.wikipedia.org/wiki/James_Warburg

Oh! I thought by "society" you meant "society," as in the socialism-voting middle to lower class, not the wealthy elite who will likely be one of the first to move their money into bitcoin, and out of the reach of money-grubbing government. You know, the one that relies on its money-grubbing to pay for things like big guns and winter-causing nuclear weapons. Plus no amount of big guns or nukes can decrypt a password or a private key.   :)

But your BTC early adopters have already decided that they will not sell, rather they expect to hold coins until they are wealthier then the current 'elites', thus your giving the current elite no peaceful option to preserve their wealth and position by buying into BTC.  Your ultimate aim is to over throw them and become the new elites, which is the OLDEST game in history btw.  But your trying to win that struggle with a mere software protocol, a tool which is completely dependent on the infrastructure of the internet, hardly a reliable weapon.  Groups that typically win battles to overthrow elites have access to their own independent sources of power.

Yes I would like to see it as a percentage, but remember BTC has already established a president of LOWERING MINIMUM FEES to keep fees affordable as the value of BTC rises.  That is continually pushing back the point when the Network can sustain itself by transaction fees because it counteracts the rise in revenue that miners would normally see.  I would not be at all surprised if Fees are actually dropping as a percentage of mining revenue.  By my Math the transaction fees are 0.6% of miners revenue now, but I lack the data to establish a trend, I can see that transactions measured in coins has been fairly constant at 25-50 per day for a year, this seems to be what people are willing to spend and what miners are willing to take.  If that number holds then we would see Transaction being about half of miners revenue in ~30 years, but I expect a continuing decline in fees such that this point is pushed out 1 year per year, a messiah that people will continually be withing for.

Okay, keep in mind I'm a trader by training, so don't yell at me when I say...

I think it's WAY more like a stock IPO.

The inventor gets a huge chunk upfront (inventor, remember). He hopes it becomes worth something in the future.

Then there are the financiers (banks, those that set up the shares, etc). These would be the miners and early adopters. They get to buy at a special lower price. $1, wow. Sweet deal now.

Then the public steps in and buys and sells. Drives the price up and down.

Now just like an IPO, the early adopters cannot liquidate their holdings too easily. They would likely drive the price down with large dump selling. I don't know, to sell 1000 bitcoins is going to have to find people willing to pay 1 million dollars. So liquidity is poor.

So just like a stock, they need to wait until their holdings vest, and sink into the market before they can begin pulling cash out.

So rich in paper, cash -- not so much.

So it feels just like an IPO to me.

Are IPOs ponzi schemes. Wait don't answer that : )

: )

cj

Not sell? Not counting the fact that early adopters still have to pay for food, shelter, and bills, don't forget that these early adopters are some of the biggest investors in Bitcoin businesses. These newly-minted millionaires are spending millions to pay other programmers and designers to build new Bitcoin services and hardware.

Bitcoin it's a technology, not a scheme of any kind, but speculators could of course use it to scam investors the same way they do everyday on Wall Street.

 Fiat currecies are in fact a ponzi.

The actual average fee per transaction is around $0.30 (divide 'total transaction fee' by 'number of transactions' here):

http://blockchain.info/stats

what's scary is the electricity cots - $11 mil per 24 hrs??

EDIT: the electricity stat is BS. I'd estimate total cost at around $150,000 per day. Don't know why they publish this? Do they want to make it seem that mining is not profitable?

The stats are here, it's 0.69% of miner revenue (good guess!). See my post above on the transaction fees - only around $0.30.

Good work npl, a .30 cent transaction fee is already starting to get heavy, the only reason it's toterable is that users are still shielded from it by the debasement coins being paid to miners.  I suspect we will have another lowering of minimum fees at this rate.  I can't stress how much this already well established and now EXPECTED practice of fee lowering demonstrates that the BTC really has no intention of ever being transaction fee supported.

Your estimate of Electrical costs, can you summarize how you arrive at it?  Are you assuming all ASIC?  I think their are still a lot of inaccurate estimates floating around from the GPU era.  The best ASICs are around 1 J/GH which would mean the 5 million GH/s are consuming 5 million J/s or 5 million watts, or 5,000 kW, or 5MW (the output of a very small power-plant but not really that much in the grand scheme of things).  5MW times 24 hours is 120,000 kw/h, times 15 cents a kw/h is just $18,000 a day.  Naturally a lot of the mining hardware is a generation or two behind so an estimate of as much as 10 times as much is'nt unreasonable, but we would want to discount these marginal miners because the network truly dose not need them.

So with Transaction fees in the ~$30,000 range it looks like the fees are roughly able to pay for electricity, a somewhat surprising result actually.  The problem is that hardware acquisition and depreciation is now the primary cost to miners, and we fully expect electrical costs to continue to rise as more miners come online.

You missed the failure mode.

If miner revenue is to be only a tiny fraction of commerce, then 50+% attack is extremely likely.

Only perpetual coin rewards can secure the network adequately.

Otherwise transaction fees must be too high, and also significant revenue from transaction fees allows the Transactions Withholding Attack (https://bitcointalk.org/index.php?topic=336350.0).

In a Ponzi, the participants believe that the operator invests smartly, but he either invests badly or not at all, repaying old participants with money from new entrants, thus the participants are defrauded.

In a pyramid, the participants know that there is no investment, they just can't fathom how many new participants are needed to pay off the old. It is exponential, so after a while there are no more entrants available and the scheme falls apart.

The difference is what the participants believe is inside the scheme.

I would like to add that in Pyramid the participants do the requirement for their own benefit...

Semantics of naming is irrelevant. What matters is the Bitards believe Bitcoin has an intrinsic value. If they are incorrect as I have argued in great detail over the past week or two, then they are scamming all the greater fools by spreading their delusion via word-of-mouth.

But who started that delusion? And pitched it and continues to pitch it on these forums?

You know the names well. The "experts" who also happen to be early adopters. One is involved with SatoshiDice which accounts for 59% of the transactions in Bitcoin last time I checked.

So you want to discuss the Ponziness or the pyramidness of bitcoin with a relativistic vocabulary?

You prefer to avoid the salient point (NO INTRINSIC VALUE = SCAM) by obfuscating with arbitrarily chosen narrow definitions?

Do you want to derogate our most eminent, most knowledgeable and godliest econometrists Bernanke and Krugman by implying that the fiat, the best money ever, is a scam?

The guy is bored and sad that he missed out on Bitcoin.  If you are enjoying yourself, great, but if you are trying to reason with him, you may be disappointed. 

Yeah I know.

There is no such term as "intrinsic value" in modern day economics...

And it is very good that this thread is not self-moderated and you are not its author, so you can no longer delete posts of your opponents proving where you're wrong and where you just stick to outright lies

He is not only an arrogant schmuck but he is also a hypocritical one at that. Just read below the two quotes of him, one from this thread and the other from another thread made a few days ago