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Author Topic: Wikipedia: "Some criticize Bitcoin for being a Ponzi scheme..."  (Read 5425 times)
Serith
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November 11, 2012, 11:29:55 PM
 #1

Wikipedia article about Bitcoin has a peculiar statement:

Some criticize Bitcoin for being a Ponzi scheme in that it rewards early adopters through early Bitcoin mining and increasing exchange rates.
I found out about it from Coding in My Sleep: Ponzi Schemes In Plain English.

I thought that in a day or two the statement will be deleted since it's usually pointless for wikipedia to list false believes. But SudoGhost's passionate arrogance prevents it from happening, and now even Mike Hearn is trying to convince him that he is wrong.

Can someone with wikipedia account point to the report made by European Central Bank where on page 27 it lists several arguments why bitcoin is not Ponzi Scheme:

  • On the one hand, the Bitcoin scheme is a decentralised system where – at least in theory – there
    is no central organiser that can undermine the system and disappear with its funds. Bitcoin users
    buy and sell the currency among themselves without any kind of intermediation and therefore, it
    seems that nobody benefits from the system, apart from those who benefit from the exchange rate
    evolution (just as in any other currency trade) or those who are hard-working “miners” and are
    therefore rewarded for their contribution to the security and confidence in the system as a whole.
  • Moreover, the scheme does not promise high returns to anybody. Although some Bitcoin users may
    try to profit from exchange rate fluctuations, Bitcoins are not intended to be an investment vehicle,
    just a medium of exchange. On the contrary, Gavin Andresen, Lead Developer of the Bitcoin
    virtual currency project, does not hesitate to say that “Bitcoin is an experiment. Treat it like you
    would treat a promising internet start-up company: maybe it will change the world, but realise that
    investing your money or time in new ideas is always risky”. In addition, Bitcoin supporters claim
    that it is an open-source system whose code is available to any interested party.


Full quote:

Another recurrent issue is whether Bitcoin works like a Ponzi scheme or not. Users go into the
system by buying Bitcoins against real currencies, but can only leave and retrieve their funds if
other users want to buy their Bitcoins, i.e. if new participants want to join the system. For many
people, this is characteristic of a Ponzi scheme. The US Securities and Exchange Commission
defines a Ponzi scheme in the following terms:

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing
investors from funds contributed by new investors. Ponzi scheme organizers often solicit new
investors by promising to invest funds in opportunities claimed to generate high returns with little
or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised
payments to earlier-stage investors and to use for personal expenses, instead of engaging in any
legitimate investment activity.

On the one hand, the Bitcoin scheme is a decentralised system where – at least in theory – there
is no central organiser that can undermine the system and disappear with its funds. Bitcoin users
buy and sell the currency among themselves without any kind of intermediation and therefore, it
seems that nobody benefits from the system, apart from those who benefit from the exchange rate
evolution (just as in any other currency trade) or those who are hard-working “miners” and are
therefore rewarded for their contribution to the security and confidence in the system as a whole.
Moreover, the scheme does not promise high returns to anybody. Although some Bitcoin users may
try to profit from exchange rate fluctuations, Bitcoins are not intended to be an investment vehicle,
just a medium of exchange. On the contrary, Gavin Andresen, Lead Developer of the Bitcoin
virtual currency project, does not hesitate to say that “Bitcoin is an experiment. Treat it like you
would treat a promising internet start-up company: maybe it will change the world, but realise that
investing your money or time in new ideas is always risky”. In addition, Bitcoin supporters claim
that it is an open-source system whose code is available to any interested party.

However, it is also true that the system demonstrates a clear case of information asymmetry. It is
complex and therefore not easy for all potential users to understand. At the same time, however,
users can easily download the application and start using it even if they do not actually know how
the system works and which risks they are actually taking. This fact, in a context where there is clear
legal uncertainty and lack of close oversight, leads to a high-risk situation. Therefore, although the
current knowledge base does not make it easy to assess whether or not the Bitcoin system actually
works like a pyramid or Ponzi scheme, it can justifiably be stated that Bitcoin is a high-risk system
for its users from a financial perspective, and that it could collapse if people try to get out of the
system and are not able to do so because of its illiquidity. The fact that the founder of Bitcoin uses
a pseudonym – Satoshi Nakamoto – and is surrounded by mystery does nothing to help promote
transparency and credibility in the scheme.
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November 11, 2012, 11:44:14 PM
 #2

Those comments from the ECB sum it up perfectly. And considering the authority of the ECB, it should be enough to totally debunk that accusation on the Wikipedia page.

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November 11, 2012, 11:48:36 PM
 #3

This gonna be interesting.

Those comments from the ECB sum it up perfectly. And considering the authority of the ECB, it should be enough to totally debunk that accusation on the Wikipedia page.

I dare you to edit it out using that article as a reference.

From the immortal Dumb and Dumber "Were in a hole... We just gotta dig ourselves out"
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November 11, 2012, 11:56:33 PM
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That guy also makes a bit of circular argument; considering that many of those articles that he talks about accusing Bitcoin of being a ponzi scheme reference his Wikipedia article as their source.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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November 12, 2012, 12:05:06 AM
 #5

well, i tried, but it seem that they did away with my account at some point in time Sad

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November 12, 2012, 12:11:51 AM
 #6

Aww crap Poe's Law owned me again.  Embarrassed

Seriously you are fighting windmills here guys.

From the immortal Dumb and Dumber "Were in a hole... We just gotta dig ourselves out"
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November 12, 2012, 12:27:09 AM
 #7

This gonna be interesting.

Those comments from the ECB sum it up perfectly. And considering the authority of the ECB, it should be enough to totally debunk that accusation on the Wikipedia page.

I dare you to edit it out using that article as a reference.
I don't think it's possible to edit the Bitcoin article because it's locked. But if I could edit it, I would change it to something like this:

Quote
Some criticize Bitcoin for being a Ponzi scheme in that it rewards early adopters through early Bitcoin mining and increasing exchange rates.[46] However, under the definition of a Ponzi scheme, Bitcoin is lacking many of the most important characteristics of a Ponzi scheme and cannot truly be classified as a Ponzi scheme.

The European Central Bank released a report in October of 2012 titled "Virtual Currency Schemes". On page 27 of this report they put forward several reasons why Bitcoin is not a Ponzi scheme and does not fulfil the definition of a Ponzi scheme.[ECB SOURCE]

Their first point is that Bitcoin is decentralized and as such "there is no central organiser that can undermine the system and disappear with its funds". They also note that "the scheme does not promise high returns to anybody", a key characteristic of a Ponzi scheme.

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November 12, 2012, 12:36:44 AM
 #8

You completely misunderstood me, This is not about Bitcoin but Wikipedia.
Editing an article there requires the understanding of their unwritten rules and the general mindset of a wikipedian.

Trying to edit out something what some reputable editor put in there will get you banned faster that you can say "NPOV"

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November 12, 2012, 01:05:54 AM
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Obviously I am completely aware of the lowbrow tactics Wikipedia staff will use to manipulate articles.

But at some point they have to accept the facts, especially when the reliable sources SudoDouche was asking for become available.

They can only propagate lies for so long. They will be forced to change it soon.

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November 12, 2012, 02:37:15 AM
 #10

Uhhhh....Bitcoin is money...hence, it's a Ponzi scheme. It's a little different in that those benefitting from the scheme are all those who hold BTC rather than the printer of fiat. But, I mean, duh -- it's as much a Ponzi scheme as the US dollar or GBP.

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November 12, 2012, 02:54:01 AM
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Uhhhh....Bitcoin is money...hence, it's a Ponzi scheme. It's a little different in that those benefitting from the scheme are all those who hold BTC rather than the printer of fiat. But, I mean, duh -- it's as much a Ponzi scheme as the US dollar or GBP.

Ponzi scheme has a pretty specific meaning. Fiat money, social security, bitcoin and a million other things are not Ponzi schemes.  Anything where someone might make or lose money is not automatically a Ponzi. 

A Ponzi scheme is advertised as an INVESTMENT (bitcoin, fiat money don't qualify) which falsified returns are supposedly earned (social security does not do this) and later investors money is used to pay the earlier investors these fake returns. 


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November 12, 2012, 09:05:55 AM
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I doubt you'll be able to get it completely removed, but it's not objectively phrased. As it is, it pretty much states that Bitcoin is a Ponzi scheme, and some people criticize it for that. It should be changed to something like "Some accuse Bitcoin of being a Ponzi scheme, on the grounds that...". Then a reference to the ECB report could be added to debunk it.
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November 12, 2012, 09:30:28 AM
 #13

Reference [46] to back that quote refers to a link which gives a 404 error: http://www.hightechforum.org/bitcoins-a-crypto-geek-ponzi-scheme/

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November 12, 2012, 09:51:48 AM
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We have a credibility contest here. On on hand there is a 404 page on the other hand we have European Central Bank's white paper. I am wondering who will win? My bets are on the 404 page. </sarcasm>

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November 12, 2012, 09:54:56 AM
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We have a credibility contest here. On on hand there is a 404 page on the other hand we have European Central Bank's white paper. I am wondering who will win? My bets are on the 404 page. </sarcasm>


lol, it really is a toss up.

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November 12, 2012, 10:24:20 AM
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Don't forget that they prefer reliable sources, and 404 pages certainly have that timeless quality that you get nowhere else! Cheesy

It's strange how Wikipedia accepts known media agencies as "reliable sources". It's not like media agencies actually verify the things they publish and many fake news have been published by a news agency and copied by 100+ other agencies without anyone verifying it.

The part: "Some criticize Bitcoin for BEING a Ponzi scheme" sounds like that's a fact, but it's not. There will always be some people who disagree with all this, but in this case some WP moderators have spelt it as if it's proven, but it's not - it's just THEIR opinion.

It should be more like: "Some people are arguing that Bitcoin might be a Ponzi scheme"

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November 12, 2012, 10:36:37 AM
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In reality, every economic boom and bust is a ponzi scheme, IT bubble, housing bubble etc... We are currently in a situation that no ponzi scheme is available, so that the economy is in so terrible shape, people strongly need a ponzi scheme to revive the economy. Of course it will inevitably cause another crash, but then another ponzi scheme will save the world again... Roll Eyes

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November 12, 2012, 12:08:22 PM
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I doubt you'll be able to get it completely removed, but it's not objectively phrased. As it is, it pretty much states that Bitcoin is a Ponzi scheme, and some people criticize it for that. It should be changed to something like "Some accuse Bitcoin of being a Ponzi scheme, on the grounds that...". Then a reference to the ECB report could be added to debunk it.

+1
That is indeed the crux of the matter. I agree that as it stands, the wikipedia page is itself making a statement of 'being' regarding Bitcoin.

I'm also fine with them noting the fact that some have claimed it is a ponzi, but right now it's a bit like saying:
"Some criticize Obama for being a Muslim.." 

The talk page for the Bitcoin article hasn't really addressed this properly. Perhaps the Obama example will make the bias more obvious to those missing it.


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November 12, 2012, 03:26:09 PM
 #19

I never understood how Wikipedia works, but there doesn't seem to be any way to contribute to the discussion on the talk page. Only admins can edit the page itself it seems, but why did they close the discussion? Looks like blatant censorship to me.

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November 12, 2012, 05:14:24 PM
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Quote
Some criticize Bitcoin for being a Ponzi scheme in that it rewards early adopters through early Bitcoin mining and increasing exchange rates

Some criticize Apple for being a Ponzi scheme in that it rewards early adopters through early Aple stock buying and increasing stock price..
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