D'oh!  I don't know how I missed that--must be time to get some sleep.  Paying .01 BTC to register seems like a really bad idea, since many people will want to ask questions here before starting to use BitCoin.

Is BitCoin a Ponzi or pyramid scheme? thread completed, work begun on "Introduction to BitCoin" and "Where do I get the free money?".  Questions/comments/suggestions/feedback?  Please post it here rather than in the actual thread, which should be left for newbies.

lol, I think we noticed the same problem at the same time.

We could have a combined announcements/introductions board, since there have been calls for the latter as well.

I've noticed a distinct increase in spam posts lately.  Is there perhaps a flagging function that could be enabled on the forums, or any other way that I can help moderators detect and remove these posts?  Or is the problem under control?

Q:  Is BitCoin a Ponzi or pyramid scheme?

A:  No.  Like any other currency, BitCoin is designed to be used as money, not as an investment.

A Ponzi scheme is a type of confidence scam where people who think they are earning unusually high returns on an investment are actually being paid from their own money and that of later investors.   If investors try and withdraw their original investment from the Ponzi operator, the scheme collapses because no actual profits exist and there is not enough money to return the deposited amounts.  Alternatively the Ponzi operator may simply leave and take the investors' money with them.

Similarly, a pyramid scheme is a type of confidence scam where people who "enroll" by paying a certain amount of money are made to believe they can make a large return on their investment by recruiting other people and receiving some portion of their enrollment fee.  The scheme collapses because it requires exponential growth, so it quickly runs out of new people to enroll.  The person starting the pyramid scam, who didn't have to pay an enrollment fee, makes money off of all their referrals; while the people at the bottom parts of the pyramid, who cannot find anyone new to refer, are left with no return.

Unlike either of these situations, BitCoin has no person "at the top" who collects money paid for bitcoins, or has to pay out when bitcoins are sold.  Neither is there any kind of scheme in BitCoin to harvest money off of unsuspecting people in complicated ways.  Instead, bitcoins are bought and sold on public exchanges amongst members of the general public who must all obey the same rules.  If someone has told you that BitCoin is a moneymaking scheme, they have misconstrued it--bitcoins follow the same economic model as any other finite commodity and over time will tend to approach a price that reflects the value people ascribe to being able to use them.  People who have made money off of buying and/or selling bitcoins are either lucky or have correctly predicted an increase in demand for them.  People who earn bitcoins through "mining" are being paid for verifying and securing network transactions in a highly competitive market.  In neither case is any kind of fraudulent activity or confidence scam happening.  For more details on earning money through BitCoin, see the "Where do I get the free money?" thread (coming soon).

Despite the fact that BitCoin itself is not a scam, caution is strongly advised when entering into transactions with untrusted entities.  As with any other valuable commodity, there are many people willing to separate your bitcoins from you in sneaky or fraudulent ways.  Remember that for all practical purposes BitCoin works just like cash.  Bitcoin Ponzi and pyramid schemes do exist and if you fall prey to them you will suffer the consequences.

In addition, bitcoins are a very new and unproven type of money.  Because their value depends on how widely they are accepted, they are susceptible to the same types of economic bubbles as any other commodity that is surging in popularity. The Bitcoin software is still in beta, and bitcoins should be considered "high-risk" from a financial perspective.  You should not invest money into bitcoins or BitCoin-related technologies unless you can afford to lose it!  Even firm believers in BitCoin tend to think it will take a while for the value of bitcoins to stabilise, and no one knows at what value that stabilisation might occur.  Trade and transact safely!




Note:

• This is a newbie-friendly thread--do not post in this thread unless you are either a newbie with questions or are willing to patiently help one out.  All other activity will be moved or deleted by moderators as off-topic.  DBTN! (Don't bite the newbs!)  There is a thread for general feedback, commentary, etc. regarding this thread here.
• Before posting in this thread, ensure you have read the Introduction to BitCoin, the answer above, and as much of this thread as possible.  There are many helpful people here, but please respect the time they have already invested.

As an experiment in improving feedback, please send tips for this post to 14nyin6Tiqb38NXN83KpTwJLCtcC8fM9fK , not the address in my signature below.

Yeah, I've run into a little hiccup with Bitcoin4cash myself, but I don't want to talk about it until Madhatter has had a fair chance to resolve it.  Let's just say that at the very least Canada Post is making mail delivery horrendously unpredictable right now.

You're more than welcome!

cw is not responding to my private messages, despite having visited the forum recently.  Does anyone have non-forum contact info for cw?  Perhaps through github?

Very true--but there's no need to speculate when the response that avoids speculation is already effective.  He might be wrong, he might be right; but either way it's not critical to BitCoin's survival.

To get difficulty high enough that successful hashes need to start with that many zeroes would take more computing power than you can conceivably imagine.  Which is the understatement of the century.   Reaching maximum difficulty would require a sustained rate of approximately 7*2^224 Mhash.

This post isn't worth taking seriously.  His argument is literally "it's safe to assume that bitcoin has serious flaws" which is just ridiculous.  But if you need all four points debunked:

1.  BitCoin has nothing to do with a gold standard.  Because there's no gold.  To be more precise, this issue only matters if the entire economy were to become BitCoin, and this isn't going to happen.  BitCoin is a niche--distributed, zero-trust, low-overhead money.  If his argument is true the only consequence is that the whole economy won't become BitCoin because it will be outcompeted in other sectors of money usage:  not that BitCoin will fail.
2.  Governments won't squash it if it has any significant momentum, because the private information transfer problem is mathematically solved.  When comparing to filesharing one has to note that multi-gigabyte files are being shared via p2p, which is the only reason the whole business hasn't gone fully dark yet.  If there is any threat to BitCoin, the whole system can be easily encrypted and undetectable with just a few lines of code.  See the BitFN project.
3.  lol.  LOL.  lol.  Just ask any crypto pro about whether "it's safe to assume that [bitcoin's cryptosystem] has serious flaws".  This guy needs to learn some math, and do his homework.  BitCoin uses very highly tested crypto in very highly tested ways.  Online banking would fail first.
4.  Yes.  BitCoin is only useful online.  Too bad the internet is such a fledgling project with no future.

Just let this thread die.

I like the idea of dropping the 's' since it's not really in discrete counting units.  "We use coin."  "How much is that?  50 coin."  "No, not your corporation, the apples you're selling!  Oh, 25 satoshi."

But only in the highly competitive mining market--a comparatively tiny portion of the bitcoin economy.

This.
A more realistic scenario is that those who get to custom silicon first can probably double-spend profitably over short timeframes if they want to.  Such events will likely be widely publicised, leading to a rush for custom silicon and a huge set of profits for chip manufacturers.  Net impact on bitcoin economy?  Not huge, unless you're unlucky enough to be the one who was double-spent against.  It's like a big famous bank robbery:  people are fascinated but only a few are affected.

I think I might have a couple of low-level ones I could dredge up.  But if we want an organisation to push for mainstream acceptance of BitCoin, they might be the perfect thing since they stand to profit a *lot* over Nvidia especially if mining continues to grow.  They would also probably be an excellent source for custom silicon due more to the economic particulars of how high-end gpu's work than anything else.  BitCoin is right up their whole "chip for every job" approach to computing angle.  If that sentence makes any sense.

Slow down a little bit:

Step 1:  Try to fix the system
Step 2:  Try to build a better alternative to the system
Step 3:  If possibilities for step 1 and step 2 are not exhausted, retry the corresponding step
Step 4:  Then, attack the system with your integrity intact

What about if we let the experiment go on for a couple more days, and then if the community hasn't developed a useful way of using the ratings that doesn't sweat a couple of intentional abuses, try one of the more advanced options?  Until then I think we should all remember that this is just an experiment.  Try to make it useful, and if we aren't able to we can move on to other options.  Don't use it in a way that you don't want it to be used.  That's just not helpful for an experiment.

And awesome greasemonkey chops, theymos!  Just imagine if we were all on Apple's vision of the internet.  shiver

Excellent work, Bruce!  This is a much-needed initiative, and I would love to help in expanding the scope beyond the U.S. if there is any way I can do so.  Just let me know!

lol, I would.  Not everybody is concerned with anonymity/privacy--I just want to see it succeed as an incredibly effective technology.  If you're trying to avoid taxes or something like that it's a decision that has nothing to do with the technology of bitcoin.  Personally, I'd advise against it.

Calm down a bit there, pipe-smoking cat.  A forum search for "how do ratings work?" or "what causes a negative rating?" doesn't show those threads; whereas now this thread will appear, so ericools has done future searchers a valuable service.  DBTN (don't bite the newbs)

To sum up the current situation, ericools, forum members with at least 250 posts can see a little plus and minus next to other user's names when they post.  If they "plus" or "minus" a user they must wait 240 hours (ten days) before doing so again.  So the "-2" just means that a couple of people have clicked the minus on you.  I wouldn't worry about it too much:  as you can see I have a couple minuses myself.  I suspect they are the result of forum users who aren't taking the +/- thing very seriously, and/or are hoping to reduce the significance of the minuses they themselves were given.  I've checked through your posts and you haven't done anything egregious.

The rating function is pretty new and experimental, so it might change in the future.  In the meantime I've given you a plus one for your polite and useful question.  Don't worry about the wide variety of personalities here--you'll get used to it.  It can be chaotic at times, but most users mean well.  Take mewantsbitcoins above--the common sense stab is a little harsh, but he also took the time to provide three helpful links that will lead you to more information on ratings, and on bitcoins in general.  So the gruff, pipe-smoking cat is, like most users, here to help you out!