Re: [FAQ] Is BitCoin a Ponzi or pyramid scheme? (Newbie-Friendly)

[HBBZ]

Who are pushing bitcoin towards the dangerous Ponzi scheme? Those who

• hoard bitcoins and sell bitcoins in the exchane in volume
• and don't BUY anything with bitcoins,
• and they advocate that bitcoin is the future currency.

Who are friends of bitcoin that consolidate the value of bitcoin as currency? Happy and reasonable shoppers who BUY things with their bitcoins.

The risks of becoming a big ponzi scheme do exist if most bitcoins are bought and sold on the market.

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[HBBZ]

Another person telling me I shouldn't save my money for a rainy day.

I worked hard for my Bitcoins. I'll do whatever I damn well please with them. What's good for you might not be good for me. I don't need to consume everything under the sun to be happy.

easy man, ONLY those who 1 ) sell more than 1k bitcoins in the recent week; 2) and don't BUY anything with bitcoins for the recent week are criminals,  seriously .

Do you mean you meet the standards?

[drakahn]

Another person telling me I shouldn't save my money for a rainy day.

I worked hard for my Bitcoins. I'll do whatever I damn well please with them. What's good for you might not be good for me. I don't need to consume everything under the sun to be happy.

easy man, ONLY those who 1 ) sell more than 1k bitcoins in the recent week; 2) and don't BUY anything with bitcoins for the recent week are criminals,  seriously .

Do you mean you meet the standards?

... what?
if they sold bitcoins then they bought USD... so no one could meet both criteria

and... how is it criminal?

and... do you know what a ponzi is?

[arepo]

Who are pushing bitcoin towards the dangerous Ponzi scheme? Those who

• hoard bitcoins and sell bitcoins in the exchane in volume
• and don't BUY anything with bitcoins,
• and they advocate that bitcoin is the future currency.

Who are friends of bitcoin that consolidate the value of bitcoin as currency? Happy and reasonable shoppers who BUY things with their bitcoins.

The risks of becoming a big ponzi scheme do exist if most bitcoins are bought and sold on the market.

who are you anyway? this is a weird thread.

[Luno]

Biological life on Earth is a ponzi scheme. Were all gonna loose out in 0.7 billion years!!

[bb113]

Biological life on Earth is a ponzi scheme. Were all gonna loose out in 0.7 billion years!!

The Medea hypothesis is a term coined by paleontologist Peter Ward[1] for the anti-Gaian hypothesis that multicellular life, understood as a superorganism, is suicidal; in this view microbial-triggered mass extinctions are attempts to return the Earth to the microbial dominated state it has been for most of its history.

https://en.wikipedia.org/wiki/Medea_Hypothesis

[lucif]

S3052 and cypher - most respectable prophets of Bitcoin Ponzi here. Hehe. Also some idiots in Bitcoin Foundation.

BUY, BUY, BUY. DON'T SELL. HOLD. WE ARE UP 100500%, NO JOKE!
 

[Luno]

Biological life on Earth is a ponzi scheme. Were all gonna loose out in 0.7 billion years!!

The Medea hypothesis is a term coined by paleontologist Peter Ward[1] for the anti-Gaian hypothesis that multicellular life, understood as a superorganism, is suicidal; in this view microbial-triggered mass extinctions are attempts to return the Earth to the microbial dominated state it has been for most of its history.

https://en.wikipedia.org/wiki/Medea_Hypothesis

So human kind is the Rothshield of the microbial life? We communicate and pollute invent antibiotics etc.

So at one point bacteria are gonna "hack" us to mass extinction so there can be free blobs on every rock on Earth!

Thats an amazing theory, thanks!

[Hexadecibel]

Who are pushing bitcoin towards the dangerous Ponzi scheme? Those who

• hoard bitcoins and sell bitcoins in the exchane in volume
• and don't BUY anything with bitcoins,
• and they advocate that bitcoin is the future currency.

Who are friends of bitcoin that consolidate the value of bitcoin as currency? Happy and reasonable shoppers who BUY things with their bitcoins.

The risks of becoming a big ponzi scheme do exist if most bitcoins are bought and sold on the market.

7/10

Got some pretty good bites for the effort.

Also attracted other trolls to feed off your success.

You could have upped your score by godwinning or mentioning communism.

Congratulations and welcome to the forums and my ignore list.

[Explodicle]

(Maybe I'm feeding a troll, but I've met no shortage of people like this in real life.)

I am ALWAYS ranting about whatever amazing new computer program strikes my fancy. Lately it's been p2p financial software, and all of a sudden I'm pushing a Ponzi scheme?

There's just no winning with you folks. If I don't hold bitcoins, then I'm a hypocrite who implicitly acknowledges bitcoin's massive risk. If I do hold them, then I'm a hoarder who exemplifies what's wrong with deflation.

I'll spend my bitcoins whenever and wherever I want, taking into account my long-term assessment of their worth. Until then, I'll continue to talk it up, just like Ripple, Open Transactions, Linux, adblock, Bittorrent, Tor, and everything else I think is cool. Please excuse how I relentlessly promote these eeeevil schemes. If anything, I'm doing you a favor by making your coins worth more and letting you buy the things you want before I get mine.

Everyone is happy to rant about what they think is wrong with the economy. But when I accept a financial risk in order to actually DO something about it, I become as bad as the bankers they revile. Apparently the only thing I'm allowed to do is stew for four years and then vote for a lesser evil. No thanks, I want something to actually change, even if it means pissing off people who feel qualified to tell me what I should want.

TL;DR: no.

[bb113]

Biological life on Earth is a ponzi scheme. Were all gonna loose out in 0.7 billion years!!

The Medea hypothesis is a term coined by paleontologist Peter Ward[1] for the anti-Gaian hypothesis that multicellular life, understood as a superorganism, is suicidal; in this view microbial-triggered mass extinctions are attempts to return the Earth to the microbial dominated state it has been for most of its history.

https://en.wikipedia.org/wiki/Medea_Hypothesis

So human kind is the Rothshield of the microbial life? We communicate and pollute invent antibiotics etc.

So at one point bacteria are gonna "hack" us to mass extinction so there can be free blobs on every rock on Earth!

Thats an amazing theory, thanks!

What do you mean by rothshield? Rothschild?

Who is roth shield?
Answer:
They are the family controlling the world ecomony

http://wiki.answers.com/Q/Who_is_roth_shield

[Luno]

Biological life on Earth is a ponzi scheme. Were all gonna loose out in 0.7 billion years!!

The Medea hypothesis is a term coined by paleontologist Peter Ward[1] for the anti-Gaian hypothesis that multicellular life, understood as a superorganism, is suicidal; in this view microbial-triggered mass extinctions are attempts to return the Earth to the microbial dominated state it has been for most of its history.

https://en.wikipedia.org/wiki/Medea_Hypothesis

So human kind is the Rothshield of the microbial life? We communicate and pollute invent antibiotics etc.

So at one point bacteria are gonna "hack" us to mass extinction so there can be free blobs on every rock on Earth!

Thats an amazing theory, thanks!

What do you mean by rothshield? Rothschild?

Who is roth shield?
Answer:
They are the family controlling the world ecomony

http://wiki.answers.com/Q/Who_is_roth_shield

Bad analogy maybe, but we are the invisible higher lifeform that decides the life and death of bacteria.
It also made me think about the opening scene of the Prometheus movie; where a celluar poison decompile the alien to dna snippets that seed evolution on a new planet.

Related to ponzies: everything evolves as expected, until it does'nt.

[lucif]

You should look in the mirror. So far, you seem to only be their opposite.

Lucif - most respectable prophet of the Fiat Ponzi here. Hehe.

SELL, SELL, SELL. DON'T BUY. DON'T HOLD. WE ARE GOING DOWN 100500%, NO JOKE!

 

World needs good balance

[HBBZ]

Who are pushing bitcoin towards the dangerous Ponzi scheme? Those who

• hoard bitcoins and sell bitcoins in the exchane in volume
• and don't BUY anything with bitcoins,
• and they advocate that bitcoin is the future currency.

Who are friends of bitcoin that consolidate the value of bitcoin as currency? Happy and reasonable shoppers who BUY things with their bitcoins.

The risks of becoming a big ponzi scheme do exist if most bitcoins are bought and sold on the market.

who are you anyway? this is a weird thread.

Who am I? mmm, a newbie who just jumped on bandwagon, who doesn't know or have interest in mining, who planned to sell products for bitcoins, and found most articles are hype and most people are mining, buying and selling coins as a product. There's a long way to go for bitcoin to be a currency.
there's nothing wrong with bitcoin, but bicoiners might do great harm to what they love without noticing. If one has never bought anything with bitcoin, he does not have the right to spread the word bitcoin is the currency of the future. It sounds too close to lies. imho.

[HBBZ]

Another person telling me I shouldn't save my money for a rainy day.

I worked hard for my Bitcoins. I'll do whatever I damn well please with them. What's good for you might not be good for me. I don't need to consume everything under the sun to be happy.

easy man, ONLY those who 1 ) sell more than 1k bitcoins in the recent week; 2) and don't BUY anything with bitcoins for the recent week are criminals,  seriously .

Do you mean you meet the standards?

... what?
if they sold bitcoins then they bought USD... so no one could meet both criteria

and... how is it criminal?

and... do you know what a ponzi is?

i do know what is speculation and what is a ponzi scheme and what is pyramid scheme.

Let's say, a miner has 100 k bitcoins, he sells 50 k for profit, he never buys anything with bitcoin, that's not a problem, it's his freedom perfectly. But if he tells people everywhere that bitcoin is the currency of the future, he's a disgusting liar and ponzi scammer. Does that sound reasonable? and if a substantial percentage of bitcoiners are this type of person, bitcoin is doomed and held victim of a ponzi scheme.

[drakahn]

Another person telling me I shouldn't save my money for a rainy day.

I worked hard for my Bitcoins. I'll do whatever I damn well please with them. What's good for you might not be good for me. I don't need to consume everything under the sun to be happy.

easy man, ONLY those who 1 ) sell more than 1k bitcoins in the recent week; 2) and don't BUY anything with bitcoins for the recent week are criminals,  seriously .

Do you mean you meet the standards?

... what?
if they sold bitcoins then they bought USD... so no one could meet both criteria

and... how is it criminal?

and... do you know what a ponzi is?

i do know what is speculation and what is a ponzi scheme and what is pyramid scheme.

Let's say, a miner has 100 k bitcoins, he sells 50 k for profit, he never buys anything with bitcoin, that's not a problem, it's his freedom perfectly. But if he tells people everywhere that bitcoin is the currency of the future, he's a disgusting liar and ponzi scammer. Does that sound reasonable? and if a substantial percentage of bitcoiners are this type of person, bitcoin is doomed and held victim of a ponzi scheme.

No...

If he has sold 50K bitcoins he has used those coins to buy USD, So it is impossible to both sell coins and not buy anything

People who save their coins mean someone else can get a good price for selling coins
People who sell their coins mean someone else can get a good price for buying coins
People who buy things other than USD with their coins mean someone else has a chance to save, sell or buy things with

all types are good

[bb113]

Another person telling me I shouldn't save my money for a rainy day.

I worked hard for my Bitcoins. I'll do whatever I damn well please with them. What's good for you might not be good for me. I don't need to consume everything under the sun to be happy.

easy man, ONLY those who 1 ) sell more than 1k bitcoins in the recent week; 2) and don't BUY anything with bitcoins for the recent week are criminals,  seriously .

Do you mean you meet the standards?

... what?
if they sold bitcoins then they bought USD... so no one could meet both criteria

and... how is it criminal?

and... do you know what a ponzi is?

i do know what is speculation and what is a ponzi scheme and what is pyramid scheme.

Let's say, a miner has 100 k bitcoins, he sells 50 k for profit, he never buys anything with bitcoin, that's not a problem, it's his freedom perfectly. But if he tells people everywhere that bitcoin is the currency of the future, he's a disgusting liar and ponzi scammer. Does that sound reasonable? and if a substantial percentage of bitcoiners are this type of person, bitcoin is doomed and held victim of a ponzi scheme.

How does him/her hoarding bitcoins and trying to play up the price damage the usefulness of them? If bitcoins aren't useful as money then they will fail regardless. Bitcoin is an experiment , let as many people experiment with it in as many different ways as possible.

[HBBZ]

i do know what is speculation and what is a ponzi scheme and what is pyramid scheme.

Let's say, a miner has 100 k bitcoins, he sells 50 k for profit, he never buys anything with bitcoin, that's not a problem, it's his freedom perfectly. But if he tells people everywhere that bitcoin is the currency of the future, he's a disgusting liar and ponzi scammer. Does that sound reasonable? and if a substantial percentage of bitcoiners are this type of person, bitcoin is doomed and held victim of a ponzi scheme.

No...

If he has sold 50K bitcoins he has used those coins to buy USD, So it is impossible to both sell coins and not buy anything

People who save their coins mean someone else can get a good price for selling coins
People who sell their coins mean someone else can get a good price for buying coins
People who buy things other than USD with their coins mean someone else has a chance to save, sell or buy things with

all types are good

I also figured that out. hoarding bitcoin is not a big deal thanks to the fact that a bitcoin can be divided more than a million times. The moment a hoarder dumps his bitcoins, the price of bitcoin drops accordingly. The profitability of hoarding bitcoins can be compared to interest rate, no more, no less. If bitcoin fails, hoarders lose everything. So bitcoiners are in the same boat

[HBBZ]

i do know what is speculation and what is a ponzi scheme and what is pyramid scheme.

Let's say, a miner has 100 k bitcoins, he sells 50 k for profit, he never buys anything with bitcoin, that's not a problem, it's his freedom perfectly. But if he tells people everywhere that bitcoin is the currency of the future, he's a disgusting liar and ponzi scammer. Does that sound reasonable? and if a substantial percentage of bitcoiners are this type of person, bitcoin is doomed and held victim of a ponzi scheme.

How does him/her hoarding bitcoins and trying to play up the price damage the usefulness of them? If bitcoins aren't useful as money then they will fail regardless. Bitcoin is an experiment , let as many people experiment with it in as many different ways as possible.

Since the profitability of hoarding bitcoin is linked to the growth of bitcoin economy and fluctuates around interest rate, the chance of revenue is far better to do day-trading than long-term possessing and dumping.

I totally agree that let as many people experiment with it in as many different ways possible. I see the greatness of bitcoin again. 

Bitcoin won't fall prey to ponzi schemers due to the abundance of supply and capability of division. The coming and leaving of hot money in bitcoin exchange only send the spectators and hoarders up in the air in a roller-coaster, business people and customers are not negatively affected at all in the long-run.

[Grant]

The profitability of hoarding bitcoins can be compared to interest rate...

No it absolutely can't! Interest rate is a tool central banks use to give the currency a value because the potential total moneysupply is infinite, and thus intrinsic future value of a USD is ±0. Now that can be considered a ponzi, because the people who get to spend/borrow the new money FIRST get most for their buck while the last people in the business-cycle pay inflated prices. (last pay for the first)

But in bitcoin there is no interest rate. Because bitcoins are in themself attractive due to a fixed, predictible supply similar to gold, nobody gets any benefit of spending/borrowing the money first or last.

Hoarding, is not an investment, its a speculation. And it can lead to losses.

[johnyj]

IMO, everything valueable in the world will always develope into a ponzi like scheme, but I call it crowd behavior

Take housing for example, as soon as the stable and continuously rising price has fall into the eyes of the mass, more and more capital will flow into the houses, and this process will eventually strengthen itself and suck in more and more capital, but at certain point of time, the available capital will be limited by the banks, sooner or later it will hit a brake and the fall will also strengthen itself

It's like a wave, it is a part of the nature

[Spaceman_Spiff]

IMO, everything valueable in the world will always develope into a ponzi like scheme, but I call it crowd behavior

Take housing for example, as soon as the stable and continuously rising price has fall into the eyes of the mass, more and more capital will flow into the houses, and this process will eventually strengthen itself and suck in more and more capital, but at certain point of time, the available capital will be limited by the banks, sooner or later it will hit a brake and the fall will also strengthen itself

It's like a wave, it is a part of the nature

Dude, you are talking about bubbles, not Ponzi schemes

Holliday just put up an excellent post laying out Ponzi schemes, pyramides schemes etc. a few posts back:  read it !

[HBBZ]

i do know what is speculation and what is a ponzi scheme and what is pyramid scheme.

Let's say, a miner has 100 k bitcoins, he sells 50 k for profit, he never buys anything with bitcoin, that's not a problem, it's his freedom perfectly. But if he tells people everywhere that bitcoin is the currency of the future, he's a disgusting liar and ponzi scammer. Does that sound reasonable? and if a substantial percentage of bitcoiners are this type of person, bitcoin is doomed and held victim of a ponzi scheme.

No, apparently you don't know what a ponzi or pyramid scheme is or isn't.

A ponzi scheme is an investment where the investors are paid interest with their own money or money from other investors. Normally, this requires fraud on the part of the operator. He lies about what the investment is used for and where the interest comes from. The operator obscures the actual nature of the investment, for obvious reasons.

Pyramid scheme? Same thing with slight differences. The operator promises returns for enrolling others into the scheme. There is no real investment and no real products or services. Those involved get a cut of the new money, as does the operator. Those at the bottom don't actually receive anything.

Again pyramid schemes without the lie can exist, but again the investors are playing with fire.

Bitcoin is nothing like either of these. There is no fraud. There are no obscured details. The protocol is open source for all to see and the block chain is a public ledger of every Bitcoin transaction in existence! Bitcoins are what they are, and users are free to share their opinion. It's up to those people to do their due diligence and decide what the facts are and these facts are available for anyone to find! They may or may not purchase Bitcoin depending on whether or not they value it's properties. This is a key point as well, Bitcoins do exist, and they do have real world uses as well as certain properties that make them desirable for some people.

If I purchase Bitcoins, once I receive the coins, and the seller receives the cash, the exchange is done. There is no interest. There is no promise of return. There is no promise of profit. There is no operator. There is no scheme. There is risk! There is risk that everyone else may decide the properties of Bitcoin have no value. There is risk that a flaw in the protocol may change the properties. There is a risk that a protocol with improvements may replace Bitcoin.

Sharing an opinion, regardless of what it might mean for you personally, does not make you a ponzi scammer. If you are lying it might make you a creep. Saying, "Bitcoin is the currency of the future," is a rather harmless opinion and it's practically impossible to verify. I used to use fiat, now I prefer Bitcoin. That makes it the currency of my future! As far as the rest of the world, who knows?

I figured everything out when I took a walk this afternoon.

When new participants flood their dollars in Bitcoin exchange, the price of bitcoin goes up, hoarders who spread the hypes dump their coins and make their profit, in a colletive and indirect way. You can't see the individual who snaped away your money as a newbie. This is nature of bitcoin exchange as a tool of ponzi scheme. The hypers work in a team that no one exposes his face as a schemer. Is this a ponzi scheme? simple and clear yes, a subtle hidden and intricate one.

Who rescues bitcoin? The feature that a bitcoin can be divided more than a million times which eliminates scarcity. That's why a ponzi scheme works fine with other designated commodity but doesn't work with bitcoin. Hypers and schemers are doomed because they cannot drive the market in the same way as they do with other investment to beat the average return on investment.

So, bubbles exist everywhere, a ponzi scheme has no chance to work with bitcoin if the owners of 51% of the coins are basically lucid.

[Spaceman_Spiff]

I figured everything out when I took a walk this afternoon.

When new participants flood their dollars in Bitcoin exchange, the price of bitcoin goes up, hoarders who spread the hypes dump their coins and make their profit, in a colletive and indirect way. You can't see the individual who snaped away your money as a newbie. This is nature of bitcoin exchange as a tool of ponzi scheme. The hypers work in a team that no one exposes his face as a schemer. Is this a ponzi scheme? simple and clear yes, a subtle hidden and intricate one.

Who rescues bitcoin? The feature that a bitcoin can be divided more than a million times which eliminates scarcity. That's why a ponzi scheme works fine with other designated commodity but doesn't work with bitcoin. Hypers and schemers are doomed because they cannot drive the market in the same way as they do with other investment to beat the average return on investment.

So, bubbles exist everywhere, a ponzi scheme has no chance to work with bitcoin if the owners of 51% of the coins are basically lucid.

no

[HBBZ]

The profitability of hoarding bitcoins can be compared to interest rate...

No it absolutely can't! Interest rate is a tool central banks use to give the currency a value because the potential total moneysupply is infinite, and thus intrinsic future value of a USD is ±0. Now that can be considered a ponzi, because the people who get to spend/borrow the new money FIRST get most for their buck while the last people in the business-cycle pay inflated prices. (last pay for the first)

But in bitcoin there is no interest rate. Because bitcoins are in themself attractive due to a fixed, predictible supply similar to gold, nobody gets any benefit of spending/borrowing the money first or last.

Hoarding, is not an investment, its a speculation. And it can lead to losses.

Let's look in this way, new participants put their dollars in bitcoin exchange and take bitcoins in their wallets as a debit note for their dollars. They expect a higher profit than putting it in a bank. Does that penetrate the surface?

So interest rate is a precise term in this situation, which is the benchmark of alll the investment.

[johnyj]

IMO, everything valueable in the world will always develope into a ponzi like scheme, but I call it crowd behavior

Take housing for example, as soon as the stable and continuously rising price has fall into the eyes of the mass, more and more capital will flow into the houses, and this process will eventually strengthen itself and suck in more and more capital, but at certain point of time, the available capital will be limited by the banks, sooner or later it will hit a brake and the fall will also strengthen itself

It's like a wave, it is a part of the nature

Dude, you are talking about bubbles, not Ponzi schemes

Holliday just put up an excellent post laying out Ponzi schemes, pyramides schemes etc. a few posts back:  read it !

From mathematical point of view, they are the same. The interest can be just the price increase itself and people might reinvest the interest into BTC. If the BTC price increased and you sell part of them, it is equal to collecting interest. As long as there is capital flow into the investment target continuously, be it a concept or a virtual thing or a real thing, the effect is the same

[HBBZ]

IMO, everything valueable in the world will always develope into a ponzi like scheme, but I call it crowd behavior

Take housing for example, as soon as the stable and continuously rising price has fall into the eyes of the mass, more and more capital will flow into the houses, and this process will eventually strengthen itself and suck in more and more capital, but at certain point of time, the available capital will be limited by the banks, sooner or later it will hit a brake and the fall will also strengthen itself

It's like a wave, it is a part of the nature

Dude, you are talking about bubbles, not Ponzi schemes

Holliday just put up an excellent post laying out Ponzi schemes, pyramides schemes etc. a few posts back:  read it !

From mathematical point of view, they are the same. The interest can be just the price increase itself and people might reinvest the interest into BTC. If the BTC price increased and you sell part of them, it is equal to collecting interest. As long as there is capital flow into the investment target continuously, be it a concept or a virtual thing or a real thing, the effect is the same

hey, you know what I'm thinking.

It's common that people hype and rip to increase their chances of profitability. That's the shadow of ponzi scheme, in which there are more than one operator. You can't prosecute them and call them by the name ponzi scheme operators because there are too many. You can't find a specific operator to revenge even if you are intoxicated into buying and losing money. In an organized ponzi scheme, an operator can be identified and held guilty for all the hypes the participants spread. A little unfair, is it?

[odolvlobo]

I figured everything out when I took a walk this afternoon.

I'm not so sure...

Anyway, if you have to pick ponzi or pyramid, bitcoin is a classic pyramid scheme because all the information is available and members make money by finding new members.

However, this is true for any commodity. Housing is a pyramid scheme! If you want to make money in housing, get more people interested in owning a house. Yep, it should be illegal to own a house.

[darkmule]

From mathematical point of view, they are the same. The interest can be just the price increase itself and people might reinvest the interest into BTC. If the BTC price increased and you sell part of them, it is equal to collecting interest. As long as there is capital flow into the investment target continuously, be it a concept or a virtual thing or a real thing, the effect is the same

That's nonsensical.  BTC appreciates in price because its actual market value increases over time, on average, at least now.  Nobody is issuing bogus guarantees that it will continue to appreciate in value.

A Ponzi is backed by absolutely nothing, except usually claims of doing some kind of investing which is total fiction.  A Ponzi invariably hits the point of mathematical catastrophe and collapses.

There is no reason to believe BTC has any of the qualities that would cause it to meet the same fate.

[thoughtfan]

I figured everything out when I took a walk this afternoon.

Your belief that you've 'figured everything out' is the first clue that you're a very long way from having figured much out at all!  I suspect you're going to need to take a good few more walks to make sense of all this.

Your idea of what a Ponzi is seems pretty mixed up to me.  May I suggest you take some time thinking about what makes a Ponzi a Ponzi to you.  What are the disparate elements and how do they fit in with what you consider to be ethical or legal?  Once you have done this then look at Bitcoin again you can see what does or doesn't fit the model and why.  As long as you continue to mush the mathematical, the moral and legal aspects your 'concept' of what a Ponzi is I believe you will continue to make it impossible for you to come to a reasonable understanding of what is going on.

At least until then I'd highly recommend holding back from accusing people of acting immorally by their Bitcoin-related activity just because they don't conform with your mixed up ideas of what's what.

[HBBZ]

I figured everything out when I took a walk this afternoon.

When new participants flood their dollars in Bitcoin exchange, the price of bitcoin goes up, hoarders who spread the hypes dump their coins and make their profit, in a colletive and indirect way. You can't see the individual who snaped away your money as a newbie. This is nature of bitcoin exchange as a tool of ponzi scheme. The hypers work in a team that no one exposes his face as a schemer. Is this a ponzi scheme? simple and clear yes, a subtle hidden and intricate one.

No, you didn't figure anything out.

An increasing exchange rate and early adopters profiting does not make a ponzi scheme. By your definition anything that went up in value would be a ponzi scheme. Google stock is a ponzi scheme. Gold is a ponzi scheme. Land is a ponzi scheme. Oil is a ponzi scheme.

So for your world to be without ponzi schemes, nothing could ever change value. That sounds like prison because someone is going to have to enforce it. The fact is things change. People change. What they value changes. The free market is all about price discovery. Bitcoin doesn't only go up, it goes down as well. Anyone who purchased any Bitcoins at any point from the very start has taken the risk of losing value. That is not a scheme, the risk is, and always will be, there for everyone.

The ponzi operator takes no financial risk (beyond punishment if caught obviously)!

Also, I have no idea what you are going on about with the "divided more than a million times" idea. You can divide it as much as you want, everyone still holds the same percentage of the total. It makes no difference what-so-ever as far as scarcity is concerned. Only how you perceive it. There are either 21 million Bitcoins or 2.1 quadrillion satoshis, I still have the same amount in my wallet and can affect the market equally in either scenario.

Someone came into my home and took my TV. They are a thief! (I forgot to mention that I placed an AD in the local paper offering my TV for sale and then accepted their money in exchange for it.)

It's an honor to have you enaged in a serious discussion. Sorry to hear the theft in your house, has the police done something with that?

I'd like to draw a timeline to determing whether bitcoiners are legally ponzi schemers or not. If 50% of available bitcoins are actively traded in exchange between dollars or euros etc yet less than 5% are used as currency serving as medium of transactions and bitcoin is in perilous situation.

That is not speculation any more.

I'll tell you some of my observations. Bitcoin in mainland China is absolutely a ponzi scheme and gambling with possibly less than 1 BTC used as currency per day. Everyone in a user discussion group is talking about mining, hoarding, buying, selling bitcoins, the daily volume of exchange at BTCCHINA is approximately around 1k.

[odolvlobo]

HBBZ,

It is very apparent that you don't know what a ponzi scheme is. You should take another walk, but this time -- walk to the library and learn what a ponzi scheme is.

[mobodick]

Who are pushing bitcoin towards the dangerous Ponzi scheme? Those who

• hoard bitcoins and sell bitcoins in the exchane in volume
• and don't BUY anything with bitcoins,
• and they advocate that bitcoin is the future currency.

Who are friends of bitcoin that consolidate the value of bitcoin as currency? Happy and reasonable shoppers who BUY things with their bitcoins.

The risks of becoming a big ponzi scheme do exist if most bitcoins are bought and sold on the market.

One crucial mistake.
Hoarding means NOT selling, especially at high volume.

[HBBZ]

Thanx gentlemen, I've completed my own questioning whether bitcoin is a ponzi scheme or not. Thanx a lot for crowd-proving it false that bitcoin is a ponzi scheme .

Dare to question,

Dare to trust,

Dare to be foolish,

And dare to do all,

That is a bitcoiner

[cbeast]

The difference between Bitcoin and a Ponzi scheme:
A Ponzi scheme requires a person lying about what is backing the investment.
Bitcoin only requires the truthful answer to a math problem to back the investment.
Otherwise they are very similar. The real question is why people invest in anything?

[BitPirate]

I figured everything out when I took a walk this afternoon.

When new participants flood their dollars in Bitcoin exchange, the price of bitcoin goes up, hoarders who spread the hypes dump their coins and make their profit, in a colletive and indirect way. You can't see the individual who snaped away your money as a newbie. This is nature of bitcoin exchange as a tool of ponzi scheme. The hypers work in a team that no one exposes his face as a schemer. Is this a ponzi scheme? simple and clear yes, a subtle hidden and intricate one.

No, you didn't figure anything out.

An increasing exchange rate and early adopters profiting does not make a ponzi scheme. By your definition anything that went up in value would be a ponzi scheme. Google stock is a ponzi scheme. Gold is a ponzi scheme. Land is a ponzi scheme. Oil is a ponzi scheme.

So for your world to be without ponzi schemes, nothing could ever change value. That sounds like prison because someone is going to have to enforce it. The fact is things change. People change. What they value changes. The free market is all about price discovery. Bitcoin doesn't only go up, it goes down as well. Anyone who purchased any Bitcoins at any point from the very start has taken the risk of losing value. That is not a scheme, the risk is, and always will be, there for everyone.

The ponzi operator takes no financial risk (beyond punishment if caught obviously)!

Also, I have no idea what you are going on about with the "divided more than a million times" idea. You can divide it as much as you want, everyone still holds the same percentage of the total. It makes no difference what-so-ever as far as scarcity is concerned. Only how you perceive it. There are either 21 million Bitcoins or 2.1 quadrillion satoshis, I still have the same amount in my wallet and can affect the market equally in either scenario.

Someone came into my home and took my TV. They are a thief! (I forgot to mention that I placed an AD in the local paper offering my TV for sale and then accepted their money in exchange for it.)

It's an honor to have you enaged in a serious discussion. Sorry to hear the theft in your house, has the police done something with that?

I'd like to draw a timeline to determing whether bitcoiners are legally ponzi schemers or not. If 50% of available bitcoins are actively traded in exchange between dollars or euros etc yet less than 5% are used as currency serving as medium of transactions and bitcoin is in perilous situation.

That is not speculation any more.

I'll tell you some of my observations. Bitcoin in mainland China is absolutely a ponzi scheme and gambling with possibly less than 1 BTC used as currency per day. Everyone in a user discussion group is talking about mining, hoarding, buying, selling bitcoins, the daily volume of exchange at BTCCHINA is approximately around 1k.

The market is not yet developed in China -- but that doesn't mean it won't develop. People said the same thing about the property market in China. And the coffee market... and numerous others, far too many to mention.

I think BTC is *particularly* attractive in China, given the non-convertibility of the renminbi.

Either way, you can't divorce the reality in China from the reality in the rest of the world. Despite apparent authoritarian efforts to the contrary, the Internet is global. Bitcoin is global. Demand in one country will increase the value for all holders and all within the ecosystem.

[Adrian-x]

@ HBBZ

I won't deny Bitcoin could be a ponzi.

For a little history peoples masks chang with the tide. At the moment it is the permabulls v the bears, but it wasn't long ago it was all about economic principles - Austrians v Keynesians.

Before you make up your mind consider the following topics for research.

1) the economic benefits of having a fixed amount of money in an economy (Austrian economics)

2) what is the best way to distribute that money (Addam Smith and for intrest Mises money regression theorem)

3) preventing the copying of digital information - no double spending (the blockchain and cryptography)

In my opinion you need to think of the Bitcoin community as an economy. It can be a store of wealth like Switzerland, or gold of today, or it can be a currency.

At the moment it is growing as a store of wealth, and is susceptible to your concerns as a ponzi, but there are the fundamental principles that make it strong.

On the other hand using it as a currency is premature, prices are deflating, very fast, making it more profitable to save than to invest or spend.

There are problems in the distribution that I can see but then again assess the fundamentals give it a value and see if you are willing to risk it. It could all go up in smoke tomorrow.

[darkmule]

@ HBBZ

I won't deny Bitcoin could be a ponzi.

Then either you don't know what Bitcoin is, don't know what a Ponzi is, or know what both are, yet are not able to determine why they're not the same thing, or you do know what both are, yet are unwilling to tell the truth.

Bitcoin is not a Ponzi by any possible definition of either term.

[piramida]

Re: old beaten topic of buying things with bitcoins (even though I do, even when I don't need to) - it is still a for-fun thing mostly, and maybe in some illegal cases it is the only way so it makes sense there, but until there are more unique things you can only buy with bitcoins, it will be an asset used for hoarding. Why? Because you can not buy anything with bitcoins yet. Bitpay and other converters just help you hide the fact of actually buying with fiat; you are using BTC as the transport (which is an intended method) but you as a merchant are stocking up using fiat and your buyers get BTC using fiat, so the coins are only a transport, you stil buy things with fiat.

And this will be slowly changing, over many years ahead. Don't expect everyone to suddenly start buying everything with bitcoins - because there's currently no need to, only if you don't have access to standard fiat transport methods or you want to anonymize them. Later, when we get more products which are produced and marketed using only bitcoins, which will have prices nominated in Bitcoins (not changing with USD exchange rate), that would be the real BTC market where people would have no choice but to buy with coins, and where salaries would be paid in coins, but it is, again, years from fruition.

[oakpacific]

Re: old beaten topic of buying things with bitcoins (even though I do, even when I don't need to) - it is still a for-fun thing mostly, and maybe in some illegal cases it is the only way so it makes sense there, but until there are more unique things you can only buy with bitcoins, it will be an asset used for hoarding. Why? Because you can not buy anything with bitcoins yet. Bitpay and other converters just help you hide the fact of actually buying with fiat; you are using BTC as the transport (which is an intended method) but you as a merchant are stocking up using fiat and your buyers get BTC using fiat, so the coins are only a transport, you stil buy things with fiat.

And this will be slowly changing, over many years ahead. Don't expect everyone to suddenly start buying everything with bitcoins - because there's currently no need to, only if you don't have access to standard fiat transport methods or you want to anonymize them. Later, when we get more products which are produced and marketed using only bitcoins, which will have prices nominated in Bitcoins (not changing with USD exchange rate), that would be the real BTC market where people would have no choice but to buy with coins, and where salaries would be paid in coins, but it is, again, years from fruition.

The fiats saved in the transportation of my fiat purchases=bitcoin's intrinsic value.

[piramida]

The fiats saved in the transportation of my fiat purchases=bitcoin's intrinsic value.

I agree, bitcoin is an excellent transport. However until prices are set in BTC the double conversion process equals out the transportation efficiency. Also, there's a hanging shadow of having to completely trust the business, especially for large purchases, which tips the scales in fiat's favor now. I would never buy an MBP using bitcoins, for example.

[oakpacific]

The fiats saved in the transportation of my fiat purchases=bitcoin's intrinsic value.

I agree, bitcoin is an excellent transport. However until prices are set in BTC the double conversion process equals out the transportation efficiency.

Not for Chinese whose credit cards are usually not even accepted by American online stores.

Also, there's a hanging shadow of having to completely trust the business, especially for large purchases, which tips the scales in fiat's favor now. I would never buy an MBP using bitcoins, for example.

With multisigs implemented, everyone can conduct a third-party less escrow transaction, I suspect this maybe tempting for those merchants who do not want to pay paypal fees.

[mobodick]

@ HBBZ

I won't deny Bitcoin could be a ponzi.

For a little history peoples masks chang with the tide. At the moment it is the permabulls v the bears, but it wasn't long ago it was all about economic principles - Austrians v Keynesians.

Before you make up your mind consider the following topics for research.

1) the economic benefits of having a fixed amount of money in an economy (Austrian economics)

2) what is the best way to distribute that money (Addam Smith and for intrest Mises money regression theorem)

3) preventing the copying of digital information - no double spending (the blockchain and cryptography)

In my opinion you need to think of the Bitcoin community as an economy. It can be a store of wealth like Switzerland, or gold of today, or it can be a currency.

At the moment it is growing as a store of wealth, and is susceptible to your concerns as a ponzi, but there are the fundamental principles that make it strong.

On the other hand using it as a currency is premature, prices are deflating, very fast, making it more profitable to save than to invest or spend.

There are problems in the distribution that I can see but then again assess the fundamentals give it a value and see if you are willing to risk it. It could all go up in smoke tomorrow.

In a cryptocurrency world there will be no limit to the ammount of money in the world.
Atcoins will pop up and become coin reserves of their own.
Altcoins can compete on any front with bitcoin and so bitcoin itself will never be a magical safe store of value.

[mobodick]

Re: old beaten topic of buying things with bitcoins (even though I do, even when I don't need to) - it is still a for-fun thing mostly, and maybe in some illegal cases it is the only way so it makes sense there, but until there are more unique things you can only buy with bitcoins, it will be an asset used for hoarding. Why? Because you can not buy anything with bitcoins yet. Bitpay and other converters just help you hide the fact of actually buying with fiat; you are using BTC as the transport (which is an intended method) but you as a merchant are stocking up using fiat and your buyers get BTC using fiat, so the coins are only a transport, you stil buy things with fiat.

And this will be slowly changing, over many years ahead. Don't expect everyone to suddenly start buying everything with bitcoins - because there's currently no need to, only if you don't have access to standard fiat transport methods or you want to anonymize them. Later, when we get more products which are produced and marketed using only bitcoins, which will have prices nominated in Bitcoins (not changing with USD exchange rate), that would be the real BTC market where people would have no choice but to buy with coins, and where salaries would be paid in coins, but it is, again, years from fruition.

The fiats saved in the transportation of my fiat purchases=bitcoin's intrinsic value.

That is not what intrinsic value means tho...
Take away the monetary uses of bitcoin and what you're left with is its intrinsic value.
It is all the other ways you can use bitcoin in when it cannot be used as a trade instrument.
Someone mentioned bitcoins could make a neat random number generator.

[oakpacific]

Re: old beaten topic of buying things with bitcoins (even though I do, even when I don't need to) - it is still a for-fun thing mostly, and maybe in some illegal cases it is the only way so it makes sense there, but until there are more unique things you can only buy with bitcoins, it will be an asset used for hoarding. Why? Because you can not buy anything with bitcoins yet. Bitpay and other converters just help you hide the fact of actually buying with fiat; you are using BTC as the transport (which is an intended method) but you as a merchant are stocking up using fiat and your buyers get BTC using fiat, so the coins are only a transport, you stil buy things with fiat.

And this will be slowly changing, over many years ahead. Don't expect everyone to suddenly start buying everything with bitcoins - because there's currently no need to, only if you don't have access to standard fiat transport methods or you want to anonymize them. Later, when we get more products which are produced and marketed using only bitcoins, which will have prices nominated in Bitcoins (not changing with USD exchange rate), that would be the real BTC market where people would have no choice but to buy with coins, and where salaries would be paid in coins, but it is, again, years from fruition.

The fiats saved in the transportation of my fiat purchases=bitcoin's intrinsic value.

That is not what intrinsic value means tho...
Take away the monetary uses of bitcoin and what you're left with is its intrinsic value.
It is all the other ways you can use bitcoin in when it cannot be used as a trade instrument.
Someone mentioned bitcoins could make a neat random number generator.

OK, how do we define the value of its possible application in intermediary-less escrow service? Sounds a bit tricky to me.

[mobodick]

Re: old beaten topic of buying things with bitcoins (even though I do, even when I don't need to) - it is still a for-fun thing mostly, and maybe in some illegal cases it is the only way so it makes sense there, but until there are more unique things you can only buy with bitcoins, it will be an asset used for hoarding. Why? Because you can not buy anything with bitcoins yet. Bitpay and other converters just help you hide the fact of actually buying with fiat; you are using BTC as the transport (which is an intended method) but you as a merchant are stocking up using fiat and your buyers get BTC using fiat, so the coins are only a transport, you stil buy things with fiat.

And this will be slowly changing, over many years ahead. Don't expect everyone to suddenly start buying everything with bitcoins - because there's currently no need to, only if you don't have access to standard fiat transport methods or you want to anonymize them. Later, when we get more products which are produced and marketed using only bitcoins, which will have prices nominated in Bitcoins (not changing with USD exchange rate), that would be the real BTC market where people would have no choice but to buy with coins, and where salaries would be paid in coins, but it is, again, years from fruition.

The fiats saved in the transportation of my fiat purchases=bitcoin's intrinsic value.

That is not what intrinsic value means tho...
Take away the monetary uses of bitcoin and what you're left with is its intrinsic value.
It is all the other ways you can use bitcoin in when it cannot be used as a trade instrument.
Someone mentioned bitcoins could make a neat random number generator.

OK, how do we define the value of its possible application in intermediary-less escrow service? Sounds a bit tricky to me.

Nah, its simple.
Does this valuing have anything to do with the bitcoin being used as a currency? Yes?
Then it is not intrinsic.

[KTE]

Intrinsic value is for example the weight of a pound of gold, or the shiny color of it. The amount of money you get by selling it to someone is not intrinsic to the pound of gold, it can be taken away.

That's the simplest explanation I can give. You can expand that example to anything, including bitcoin. Bitcoin has no intrinsic value, it is just arbitrary data.

[mobodick]

Intrinsic value is for example the weight of a pound of gold, or the shiny color of it. The amount of money you get by selling it to someone is not intrinsic to the pound of gold, it can be taken away.

That's the simplest explanation I can give. You can expand that example to anything, including bitcoin. Bitcoin has no intrinsic value, it is just arbitrary data.

In economy the distinction is subtly different.
We try to separate the economical value of a value holder (what you can get for it on the market) from what you can use the actual value holder for if you decide not to exchange it for something else in the economy.
An apple has an intrinsic value. You can eat it and it makes your hunger go away.
But you can also exchange it for something else. That is its economical value.
A dollar bill has intrinsic value. It is made from fibers and you could burn them, for instance, to get some energy.
But you can also exchange it for something else. That is its economic value.
(You can actually see situations where intrinsic value of paper money becomes greater than its economic value because of hyper inflation. In such situations you can find that people keep their houses warm with the by then pretty worthless money bills.)

Since bitcoin is pretty useless when not being used extrinsically you can say that bitcoin has (pretty much) no intrinsic value whatsoever.

[mobodick]

Intrinsic value is for example the weight of a pound of gold, or the shiny color of it. The amount of money you get by selling it to someone is not intrinsic to the pound of gold, it can be taken away.

That's the simplest explanation I can give. You can expand that example to anything, including bitcoin. Bitcoin has no intrinsic value, it is just arbitrary data.

In any case, i think you are talking about intrinsic properties, not intrinsic value.
Any value needs a human to value it. Nothing has intrinsic value without a human to valuing it.

[oakpacific]

Re: old beaten topic of buying things with bitcoins (even though I do, even when I don't need to) - it is still a for-fun thing mostly, and maybe in some illegal cases it is the only way so it makes sense there, but until there are more unique things you can only buy with bitcoins, it will be an asset used for hoarding. Why? Because you can not buy anything with bitcoins yet. Bitpay and other converters just help you hide the fact of actually buying with fiat; you are using BTC as the transport (which is an intended method) but you as a merchant are stocking up using fiat and your buyers get BTC using fiat, so the coins are only a transport, you stil buy things with fiat.

And this will be slowly changing, over many years ahead. Don't expect everyone to suddenly start buying everything with bitcoins - because there's currently no need to, only if you don't have access to standard fiat transport methods or you want to anonymize them. Later, when we get more products which are produced and marketed using only bitcoins, which will have prices nominated in Bitcoins (not changing with USD exchange rate), that would be the real BTC market where people would have no choice but to buy with coins, and where salaries would be paid in coins, but it is, again, years from fruition.

The fiats saved in the transportation of my fiat purchases=bitcoin's intrinsic value.

That is not what intrinsic value means tho...
Take away the monetary uses of bitcoin and what you're left with is its intrinsic value.
It is all the other ways you can use bitcoin in when it cannot be used as a trade instrument.
Someone mentioned bitcoins could make a neat random number generator.

OK, how do we define the value of its possible application in intermediary-less escrow service? Sounds a bit tricky to me.

Nah, its simple.
Does this valuing have anything to do with the bitcoin being used as a currency? Yes?
Then it is not intrinsic.

Yea, I guess so, I was just randomly pulling things out of my brain.

Anyway, my point was something along the line of "cryptocurrency is as uniquely useful to people as PMs are", in fact you can even count it as something with "industrial applications".

[AndyRossy]

Bitcoin speculation is a pyramid yes.

[oakpacific]

http://en.wikipedia.org/wiki/Intrinsic_value_(numismatics)   OK, there seems to be different definitions for it.

Bitcoin speculation is a pyramid yes.

So are nearly all speculations, no news here.

[AndyRossy]

http://en.wikipedia.org/wiki/Intrinsic_value_(numismatics)   OK, there seems to be different definitions for it.

Bitcoin speculation is a pyramid yes.

So are nearly all speculations, no news here.

But, what % of bitcoin activity is speculation vs trade?  This is the scary part.

Most people who are "doing well" equate doing well, as having lots of dollar-worth in BTC, not the BTC themselves.

[oakpacific]

http://en.wikipedia.org/wiki/Intrinsic_value_(numismatics)   OK, there seems to be different definitions for it.

Bitcoin speculation is a pyramid yes.

So are nearly all speculations, no news here.

But, what % of bitcoin activity is speculation vs trade?  This is the scary part.

Most people who are "doing well" equate doing well, as having lots of dollar-worth in BTC, not the BTC themselves.

You can only realize bitcoin's full potential if people really put their money behind it, the market has to grow to a certain size and liquidity.

I can give you a example: I would like to run a bitcoin remittance service, but if the bitcoin market in the destination country is not big enough, my daily liquidation will be able to swing the market price by +/- 10 dollars, if I want to process enough volume to pay our salaries with the fee incurred. Another example would be cold storage of serious wealth, needless to say people will only use it if they can be certain that bitcoin market is big enough to ensure their coins would not become worthless after years.

[Adrian-x]

@ HBBZ

I won't deny Bitcoin could *edit* be have similarities with *edit*  a ponzi.

Then either you don't know what Bitcoin is, don't know what a Ponzi is, or know what both are, yet are not able to determine why they're not the same thing, or you do know what both are, yet are unwilling to tell the truth.

Bitcoin is not a Ponzi by any possible definition of either term.

Thanks for the correction, your analysis may be technically correct, and Bitcoin is not technically a Ponzi but there are similarities between Bitcoin and a Ponzi scheme.

Should the Bitcoin GDP develop to justify the current market cap (M1 money supply) then I would see no similarities, but the economy is underdeveloped, and can't develop while in deflation, hence the similarity.  

The PO has a point, that is what he is trying to evaluate, denying the point because of a technical definition over a metaphorical colloquial interpretation of the term Ponzi doesn't address the issue.

[Adrian-x]

@ HBBZ

....preventing the copying of digital information - no double spending (the blockchain and cryptography)...

In a cryptocurrency world there will be no limit to the ammount of money in the world.
Atcoins will pop up and become coin reserves of their own.
Altcoins can compete on any front with bitcoin and so bitcoin itself will never be a magical safe store of value.

That is a good point, and one of the features in my opinion that give Bitcoin its value - much like gold is the preferred rare element, I agree it is still a huge risk hence I'd be more comfortable with higher market volatility.

 I see no point in any Altcoins that don't improve on Bitcoin, an improvement would need to be substantial like a huge sift equal to that needed to justify a move from the current internet or, e-mail protocols.

So while I will never have gains like the "Bitcoin Nouveau riche", I will pedal the technical merits and push it as a store of wealth.  As long as you understand what Bitcoin is before you buy in, you only have to follow 2 rules 1) never sell for less then you paid, and 2) keep it safe, don't lose it.  From there an economy will emerge in a few years, or people will keep the dream alive by invest their savings in Bitcoin.

Whatever happens I see a greener future.

[KTE]

Intrinsic value is for example the weight of a pound of gold, or the shiny color of it. The amount of money you get by selling it to someone is not intrinsic to the pound of gold, it can be taken away.

That's the simplest explanation I can give. You can expand that example to anything, including bitcoin. Bitcoin has no intrinsic value, it is just arbitrary data.

In any case, i think you are talking about intrinsic properties, not intrinsic value.
Any value needs a human to value it. Nothing has intrinsic value without a human to valuing it.

You're absolutely right, I was talking about intrinsic properties. Thanks for correcting me. Properties and value are connected though. The intrinsic value is value that comes from intrinsic properties, so in my two gold examples gold would have added intrinsic value because of its weight should you need something to hold things down, or due to its shininess should you want to signal someone from afar via reflection. Also, gold's chemical properties give it more added intrinsic value.

I would however question the need of humans for objects to have intrinsic value. It only requires a lifeform that can gain something from the object. Soil has intrinsic value for trees.

[AndyRossy]

http://en.wikipedia.org/wiki/Intrinsic_value_(numismatics)   OK, there seems to be different definitions for it.

Bitcoin speculation is a pyramid yes.

So are nearly all speculations, no news here.

But, what % of bitcoin activity is speculation vs trade?  This is the scary part.

Most people who are "doing well" equate doing well, as having lots of dollar-worth in BTC, not the BTC themselves.

You can only realize bitcoin's full potential if people really put their money behind it, the market has to grow to a certain size and liquidity.

I can give you a example: I would like to run a bitcoin remittance service, but if the bitcoin market in the destination country is not big enough, my daily liquidation will be able to swing the market price by +/- 10 dollars, if I want to process enough volume to pay our salaries with the fee incurred. Another example would be cold storage of serious wealth, needless to say people will only use it if they can be certain that bitcoin market is big enough to ensure their coins would not become worthless after years.

People put money behind pirate, and other real world ponzis.  Are you arguing that large pyramids have more potential? I agree.

[mobodick]

Intrinsic value is for example the weight of a pound of gold, or the shiny color of it. The amount of money you get by selling it to someone is not intrinsic to the pound of gold, it can be taken away.

That's the simplest explanation I can give. You can expand that example to anything, including bitcoin. Bitcoin has no intrinsic value, it is just arbitrary data.

In any case, i think you are talking about intrinsic properties, not intrinsic value.
Any value needs a human to value it. Nothing has intrinsic value without a human to valuing it.

You're absolutely right, I was talking about intrinsic properties. Thanks for correcting me. Properties and value are connected though. The intrinsic value is value that comes from intrinsic properties, so in my two gold examples gold would have added intrinsic value because of its weight should you need something to hold things down, or due to its shininess should you want to signal someone from afar via reflection. Also, gold's chemical properties give it more added intrinsic value.

I would however question the need of humans for objects to have intrinsic value. It only requires a lifeform that can gain something from the object. Soil has intrinsic value for trees.

Ecosystems show a lot of structures that can be found in economy.
In the end it's all a form of cycling energy or entropy.
But i think we should consider them separately.
Our economy is based on mechanisms that simply are impossible in a natural ecosystem.
We deal in value, representations of value and representations of representaions of value.
Ecosystems are all about what you described as instrinsic value. It's mostly an intrinsic world. Very few animals are capable of things like reason and planning which is needed to consider the future value of things. Try explaining to a lion that this piece of gold will buy him a whole gazelle. The lion will propably only see the intrinsic value of your meat.
There are some examples of informational structures in nature but they are nowhere near anything like money based economy inside our society.

[oakpacific]

http://en.wikipedia.org/wiki/Intrinsic_value_(numismatics)   OK, there seems to be different definitions for it.

Bitcoin speculation is a pyramid yes.

So are nearly all speculations, no news here.

But, what % of bitcoin activity is speculation vs trade?  This is the scary part.

Most people who are "doing well" equate doing well, as having lots of dollar-worth in BTC, not the BTC themselves.

You can only realize bitcoin's full potential if people really put their money behind it, the market has to grow to a certain size and liquidity.

I can give you a example: I would like to run a bitcoin remittance service, but if the bitcoin market in the destination country is not big enough, my daily liquidation will be able to swing the market price by +/- 10 dollars, if I want to process enough volume to pay our salaries with the fee incurred. Another example would be cold storage of serious wealth, needless to say people will only use it if they can be certain that bitcoin market is big enough to ensure their coins would not become worthless after years.

People put money behind pirate, and other real world ponzis.  Are you arguing that large pyramids have more potential? I agree.

Geez,  "bitcoin needs people to put their money behind it to succeed"+"ponzi needs people to put their money behind it "=bitcoin is a bigger ponzi??? That's one hell of a logic.

[JoelKatz]

If you think that the only significant source of value Bitcoins will ever have will be speculative value due to people believing their value will increase due to others who will believe the same, then it's not unreasonable to describe Bitcoins as a pyramid scheme, Ponzi scheme, or scam. This would make Bitcoins ultimately a zero sum game where every gain must be balanced out by somebody's loss with those late to the party footing the bill for those who got there sooner.

If you believe that Bitcoins may eventually (or already) have significant value as a means of exchange, then it is unreasonable to describe Bitcoins as a pyramid scheme, Ponzi scheme, or scam. Then buying and selling Bitcoins is not a zero sum game but a distribution of the the value Bitcoins create by providing a superior means of exchange.

Of course, even if it's reasonable to believe the Bitcoins will eventually have significant value as a means of exchange that still might not happen. In that case, Bitcoins aren't a scheme or scam but simply a good idea that failed. Most people will probably wind up losing money if that happens, but that will be because they took a calculated risk and it didn't pan out. That's the nature of risk.

[Tirapon]

Of course, even if it's reasonable to believe the Bitcoins will eventually have significant value as a means of exchange that still might not happen. In that case, Bitcoins aren't a scheme or scam but simply a good idea that failed. Most people will probably wind up losing money if that happens, but that will be because they took a calculated risk and it didn't pan out. That's the nature of risk.

If bitcoin were to fail, I think the worst thing would be people saying 'I told you it was a ponzi scheme' who never bothered to understand the fundamentals...

[oakpacific]

If you think that the only significant source of value Bitcoins will ever have will be speculative value due to people believing their value will increase due to others who will believe the same, then it's not unreasonable to describe Bitcoins as a pyramid scheme, Ponzi scheme, or scam. This would make Bitcoins ultimately a zero sum game where every gain must be balanced out by somebody's loss with those late to the party footing the bill for those who got there sooner.

If you believe that Bitcoins may eventually (or already) have significant value as a means of exchange, then it is unreasonable to describe Bitcoins as a pyramid scheme, Ponzi scheme, or scam. Then buying and selling Bitcoins is not a zero sum game but a distribution of the the value Bitcoins create by providing a superior means of exchange.

Of course, even if it's reasonable to believe the Bitcoins will eventually have significant value as a means of exchange that still might not happen. In that case, Bitcoins aren't a scheme or scam but simply a good idea that failed. Most people will probably wind up losing money if that happens, but that will be because they took a calculated risk and it didn't pan out. That's the nature of risk.

Bitcoin doesn't fit the definition of a Ponzi scheme, wherever you look up the definition, a Ponzi scheme has to be fraudulent, i.e., giving people false information, there is no false information in bitcoin itself, everything is there for you to know.

[JoelKatz]

Bitcoin doesn't fit the definition of a Ponzi scheme, wherever you look up the definition, a Ponzi scheme has to be fraudulent, i.e., giving people false information, there is no false information in bitcoin itself, everything is there for you to know.

It does *if* you believe that the only value Bitcoins could ever reasonably be expected to have comes from other people buying Bitcoins. The fraud then would be the false claim that Bitcoins are a potentially-viable future crypto-currency and thus may reasonably be expected to gain value as a means of exchange, not just a store of value. If that belief is implausible, but widely spread by people who stand to make money from Bitcoins appreciating in value, then it fits the definition of a Ponzi scheme. (Value propped up by unreasonable representations. Only source of value future investments. Early investors profit from the money put in by later investors. Later investors must lose money because there's no real source of produced value.)

That is, of course, a mighty big "if". Most of the people who claim Bitcoin is a Ponzi scheme (at least, in my experience) either don't realize that it's not a Ponzi scheme if there's a reasonable expectation of significant future value from a source other than investment or don't believe such an expectation is reasonable.

[oakpacific]

Bitcoin doesn't fit the definition of a Ponzi scheme, wherever you look up the definition, a Ponzi scheme has to be fraudulent, i.e., giving people false information, there is no false information in bitcoin itself, everything is there for you to know.

It does *if* you believe that the only value Bitcoins could ever reasonably be expected to have comes from other people buying Bitcoins. The fraud then would be the false claim that Bitcoins are a potentially-viable future crypto-currency and thus may reasonably be expected to gain value as a means of exchange, not just a store of value. If that belief is implausible, but widely spread by people who stand to make money from Bitcoins appreciating in value, then it fits the definition of a Ponzi scheme. (Value propped up by unreasonable representations. Only source of value future investments. Early investors profit from the money put in by later investors. Later investors must lose money because there's no real source of produced value.)

That is, of course, a mighty big "if". Most of the people who claim Bitcoin is a Ponzi scheme (at least, in my experience) either don't realize that it's not a Ponzi scheme if there's a reasonable expectation of significant future value from a source other than investment or don't believe such an expectation is reasonable.

Wrong, you could claim whatever you want about bitcoin, a certain stock, etc, but that doesn't make that particular investment a Ponzi scheme, as you are just another normal investor, you are in a no more special position than the next one in the line. What really matters is what the people "run" it say, which bitcoin doesn't have any, and every bit of information is open and freely accessible, if you don't look it up it's just your laziness and can't blame anyone else. Besides, as bitcoin is not run by any people, it will never promise you high income return, an essential part of the running of a Ponzi business, you will just have to do the risk assessment yourself.

[JoelKatz]

Wrong, you could claim whatever you want about bitcoin, a certain stock, etc, but that doesn't make that particular investment a Ponzi scheme, as you are just another normal investor, you are in a no more special position than the next one in the line. What really matters is what the people "run" it say, which bitcoin doesn't have any, and every bit of information is open and freely accessible, if you don't look it up it's just your laziness and can't blame anyone else. Besides, as bitcoin is not run by any people, it will never promise you high income return, an essential part of the running of a Ponzi business, you will just have to do the risk assessment yourself.

I don't agree. One can certainly imagine a Ponzi scheme where the operator of the scheme never makes any false promises and just leaves that up to the early investors. So long as there is no realistic chance of a revenue source other than investment, earlier investors get money from later investors, and later investors are told that there is a reasonable expectation of an outside source of revenue, it's a Ponzi scheme.

If you believe that Bitcoin has no possible way of producing value other than by people buying Bitcoins in the hopes that the price will go up due solely to other investors who believe the same, you believe Bitcoin has no realistic chance of deriving significant value from being a means of exchange, and you further believe that some people are mislead into buying Bitcoins in the belief that it may ultimately have a source of revenue other than by investment, then it is reasonable to describe Bitcoin as a Ponzi scheme.

Just to be clear, I don't think those are reasonable beliefs. I think there's clearly a reasonable chance that Bitcoin will derive significant value from being a means of exchange and is most likely already deriving an amount of value from that source that is not insignificant.

[oakpacific]

Wrong, you could claim whatever you want about bitcoin, a certain stock, etc, but that doesn't make that particular investment a Ponzi scheme, as you are just another normal investor, you are in a no more special position than the next one in the line. What really matters is what the people "run" it say, which bitcoin doesn't have any, and every bit of information is open and freely accessible, if you don't look it up it's just your laziness and can't blame anyone else. Besides, as bitcoin is not run by any people, it will never promise you high income return, an essential part of the running of a Ponzi business, you will just have to do the risk assessment yourself.

I don't agree. One can certainly imagine a Ponzi scheme where the operator of the scheme never makes any false promises and just leaves that up to the early investors. So long as there is no realistic chance of a revenue source other than investment, earlier investors get money from later investors, and later investors are told that there is a reasonable expectation of an outside source of revenue, it's a Ponzi scheme.

I am sorry, but this is the real world definition of "pyramid scheme", which is somehow not equivalent to "Ponzi scheme", to be a Ponzi scheme fraudulent activities of operators have to be involved.

[JoelKatz]

I am sorry, but this is the real world definition of "pyramid scheme", which is somehow not equivalent to "Ponzi scheme", to be a Ponzi scheme fraudulent activities of operators have to be involved.

No. The difference between a Ponzi scheme and a pyramid scheme is that in a pyramid scheme, it is explicit that your revenue comes from those you sign up and recruiting is emphasized. In a Ponzi scheme, you are told you can just buy the investment and sit back and wait for it to appreciate in value or dividends to be paid.

And I totally disagree that a Ponzi scheme *must* have "operators" who make the misrepresentations. It is quite sufficient for the early investors to make those misrepresentations. And even so, I think it's reasonable to construe people like early adopters and Satoshi as "operators". These are not mathematically precise terms.

[oakpacific]

I am sorry, but this is the real world definition of "pyramid scheme", which is somehow not equivalent to "Ponzi scheme", to be a Ponzi scheme fraudulent activities of operators have to be involved.

No. The difference between a Ponzi scheme and a pyramid scheme is that in a pyramid scheme, it is explicit that your revenue comes from those you sign up and recruiting is emphasized. In a Ponzi scheme, you are told you can just buy the investment and sit back and wait for it to appreciate in value or dividends to be paid.

And I totally disagree that a Ponzi scheme *must* have "operators" who make the misrepresentations. It is quite sufficient for the early investors to make those misrepresentations. And even so, I think it's reasonable to construe people like early adopters and Satoshi as "operators". These are not mathematically precise terms.

Every definition about Ponzi scheme out there mentions that it has to involve fraudulent activities ,check for yourself, if you want to make up your own definition, fine, but please make it clear in the first place. And yes, early investors could certainly setup Ponzi scheme with bitcoin as an instrument, but it would be silly to call bitcoin itself a Ponzi scheme, it's like not only calling Charles Ponzi's business a Ponzi scheme, but calling the postal reply coupon a Ponzi scheme as well.

[mobodick]

I don't agree. One can certainly imagine a Ponzi scheme where the operator of the scheme never makes any false promises and just leaves that up to the early investors. So long as there is no realistic chance of a revenue source other than investment, earlier investors get money from later investors, and later investors are told that there is a reasonable expectation of an outside source of revenue, it's a Ponzi scheme.

But this is not what happens with bitcoin.
For one, no interest is involved unless you decide so.
So just by owning bitcoin you do not receive or require to give anything to support earlier investors.
Or maybe you can show me how my money goes to even earlier investors or how i get money from new investors?
And is a ponzi scheme still a ponzi if if can grow backwards and survive? Bitcoin has fluctuated quite dramatically in the past. I'm pretty sure i made some money off of old investors. So information can flow both ways and is not at all like the one way alley called ponzi scheme, right?
Maybe you can call it a balanced ponzi because anyone can cover for anyone and does so more or less at random.

[JoelKatz]

And I totally disagree that a Ponzi scheme *must* have "operators" who make the misrepresentations. It is quite sufficient for the early investors to make those misrepresentations. And even so, I think it's reasonable to construe people like early adopters and Satoshi as "operators". These are not mathematically precise terms.

Every definition about Ponzi scheme out there mentions that it has to involve fraudulent activities ,check for yourself, if you want to make up your own definition, fine, but please make it clear in the first place. And yes, early investors could certainly setup Ponzi scheme with bitcoin as an instrument, but it would be silly to call bitcoin itself a Ponzi scheme, it's like not only calling Charles Ponzi's business a Ponzi scheme, but calling the postal reply coupon a Ponzi scheme as well.

This is goalpost moving. Please either agree with my argument that a Ponzi scheme need not have "operators" or rebut it.

I agree that a Ponzi scheme must involve fraudulent activities and said as much. I 100% agree that unless you believe that there's fraud, you cannot call it a Ponzi scheme. That's why I said that you can only argue Bitcoin is a Ponzi scheme if you argue that people buy Bitcoins because they believe that there is or may be significant value to Bitcoins due to their present or future use as a means of exchange, they get that belief from people who stand to benefit from an increase in the price of Bitcoins, and that belief is not reasonable.

You claimed that even given these things, Bitcoin could still not be considered a Ponzi scheme for a variety of reasons, each of which I've rebutted.

And, again, for the record I believe that Bitcoin cannot be considered a Ponzi scheme because that belief is reasonable. You can argue, if you want, that widespread Bitcoin adoption as a means of exchange is unlikely and you can argue that it's inevitable, but I don't think you can argue that it's unreasonable to believe it's possible.

To rebut the argument that Bitcoin is a Ponzi scheme, it is very important to understand the *precise* difference between Bitcoins and a Ponzi scheme so that we can make the strongest possible arguments. The belief that those who buy Bitcoins today could possibly see a profit from the sale of those Bitcoins for use as a means of exchange is reasonable. That's a very weak statement, and so it should be very easy to convince people of, and that's all you need to convince them of to rebut the various "Bitcoin is a scam" arguments.

[oakpacific]

And I totally disagree that a Ponzi scheme *must* have "operators" who make the misrepresentations. It is quite sufficient for the early investors to make those misrepresentations. And even so, I think it's reasonable to construe people like early adopters and Satoshi as "operators". These are not mathematically precise terms.

Every definition about Ponzi scheme out there mentions that it has to involve fraudulent activities ,check for yourself, if you want to make up your own definition, fine, but please make it clear in the first place. And yes, early investors could certainly setup Ponzi scheme with bitcoin as an instrument, but it would be silly to call bitcoin itself a Ponzi scheme, it's like not only calling Charles Ponzi's business a Ponzi scheme, but calling the postal reply coupon a Ponzi scheme as well.

This is goalpost moving. Please either agree with my argument that a Ponzi scheme need not have "operators" or rebut it.

I agree that a Ponzi scheme must involve fraudulent activities and said as much. I 100% agree that unless you believe that there's fraud, you cannot call it a Ponzi scheme. That's why I said that you can only argue Bitcoin is a Ponzi scheme if you argue that people buy Bitcoins because they believe that there's is or may be significant value to Bitcoins due to their present or future use as a means of exchange, they get that belief from people who stand to benefit from an increase in the price of Bitcoins, and that belief is not reasonable.

It's not goalpost moving, you said "In a Ponzi scheme, you are told you can just buy the investment and sit back and wait for it to appreciate in value or dividends to be paid", this is something which can be 100% non-fraudulent, and thus not sufficient to define a Ponzi scheme.

And I don't know why you have to insist that a neutral instrument like bitcoin itself could become a Ponzi scheme just because what people do with it, unless the protocol itself is designed to help the creation of such a scheme.

[JoelKatz]

It's not goalpost moving, you said "In a Ponzi scheme, you are told you can just buy the investment and sit back and wait for it to appreciate in value or dividends to be paid", this is something which can be 100% non-fraudulent, and thus not sufficient to define a Ponzi scheme.

I agree. "In a car, you can eat dinner" doesn't mean any place you can eat dinner is a car. I never claimed that was sufficient to define a Ponzi scheme, only that it was what distinguished a Ponzi scheme from a pyramid scheme.

And I don't know why you have to insist that a neutral instrument like bitcoin itself could become a Ponzi scheme just because what people do with it, unless the protocol itself is designed to help the creation of such a scheme.

It wouldn't be just the instrument itself. As I argued, numerous other components would be necessary, including prior investors using deception to lure future investors and including having no reasonable source of legitimate profits to be distributed to investors other than investments. (And, again, I don't personally believe those things are true of Bitcoin. But that's what you have to address to rebut the argument that Bitcoins are a Ponzi scheme.)

You keep changing your arguments and refusing to either respond to my arguments or agree with them. One last chance for me to keep my presumption that you are arguing in good faith:

1) Either agree with or rebut my argument that a Ponzi scheme does not need "operators" or that, to the extent it does, Bitcoin has them.

2) Either agree with or rebut my argument that Bitcoin is more like a Ponzi scheme than a pyramid scheme because there is no requirement that you recruit people to make money and no downline but instead the claim is more that you can just put money in, do nothing, and take money out. That is the key difference between a Ponzi scheme and a pyramid scheme.

(Of course, you are free to make new arguments or continue other ones. But you cannot simply ignore an argument I've made and move on to just something else. You must do me the courtesy of agreeing with or rebutting the arguments I've made as I've extended that same courtesy to you.)

[oakpacific]

It's not goalpost moving, you said "In a Ponzi scheme, you are told you can just buy the investment and sit back and wait for it to appreciate in value or dividends to be paid", this is something which can be 100% non-fraudulent, and thus not sufficient to define a Ponzi scheme.

I agree. "In a car, you can eat dinner" doesn't mean any place you can eat dinner is a car. I never claimed that was sufficient to define a Ponzi scheme, only that it was what distinguished a Ponzi scheme from a pyramid scheme.

I agree. "In a car, you can eat dinner" doesn't mean any place you can eat dinner is a car. I never claimed that was sufficient to define a Ponzi scheme, only that it was what distinguished a Ponzi scheme from a pyramid scheme.

We may think about the same thing, but since you said in a pyramid scheme investors know too well their money can only come from later investors, so there is possibly no defrauding involved, I would assume anything distinguishing the two may involve some fraudulent elements, but of course it may not be the only one, I don't want to investigate further though.

And I don't know why you have to insist that a neutral instrument like bitcoin itself could become a Ponzi scheme just because what people do with it, unless the protocol itself is designed to help the creation of such a scheme.

It wouldn't be just the instrument itself. As I argued, numerous other components would be necessary, including prior investors using deception to lure future investors and including having no reasonable source of legitimate profits to be distributed to investors other than investments.

If you are talking  about the whole Bitcoin community as a whole I would not argue, but I always find the need to emphasize the neutrality of the infrastructure itself, the narrowed-down definition of Bitcoin, to dispel the FUDs.

[mobodick]

I'm still wondering.
Is it possible for a ponzi or a piramid scheme to decrease in size in a stable manner?
I mean, is there some mathematical valley of stability that could allow the price of bitcoin to go from $30 to $2 dollars and then grow to $70 through several 'horizontal' periods?
The reason i bring this up is that i think that in a situation where you need new investors to pay off old ones such a balance (the way bitcoin price has changed over time) would be impossible to maintain.
So to me that is the strongest evidence that bitcoin is not composed only of pozi scheme or piramid scheme but in fact has some real financial bottom to it.

[JoelKatz]

The reason i bring this up is that i think that in a situation where you need new investors to pay off old ones such a balance (the way bitcoin price has changed over time) would be impossible to maintain.
So to me that is the strongest evidence that bitcoin is not composed only of pozi scheme or piramid scheme but in fact has some real financial bottom to it.

This seems to me to be a very good argument. It does seem improbable that a scam could increase and decrease in value, sometimes remaining at a fairly stable point for some time. Either a scam is an amazing investment or people should be abandoning it. A feedback loop seems very difficult to sustain unless it has a significant component that's not speculative. I certainly can't think of any precedent offhand.

Theoretically someone could manipulate a market to do that. For example, Pirate could have made extra money by stalling a payment (claiming he had "difficulties", causing panic selling as people fear the Ponzi is collapsing) and then buying up his own debt at a discount through straw buyers. Then when he makes up the stalled payments with a little extra "to apologize", the price soars and he sells his own debt. Theoretically, a manipulator could do that for a few cycles. But pretty quickly the panic selling will stop. And besides, you can't do that with Bitcoins directly, you'll lose money. The manipulator has to be the counterparty in the majority of transactions (otherwise, anyone else can take all the profit you intended for yourself), and I doubt anyone could do that with Bitcoins.

[cbeast]

You cannot have a Ponzi scheme without a Mr. Ponzi type person lying to customers.

[Bit_Happy]

Is BitCoin a Ponzi or pyramid scheme?
No, not in the traditional sense.
But...
We need a bunch more new bag-holders to take this rocket ship up to $100 next week! 

[JoelKatz]

You cannot have a Ponzi scheme without a Mr. Ponzi type person lying to customers.

As discussed above, you can if the earlier investors make unreasonable representations to later investors in order to get new investors whose investment will wind up in the hands of the earlier investors. The earliest investors in a Ponzi scheme have the same incentive the creator of the scheme does.

Pirate, for example, could have just said "I'm borrowing money and paying x% interest" (which is true). He then could have shut up and let just his investors keep the hype going and make the misrepresentations about where the money was going. It still would have been a Ponzi scheme.

These aren't precise legal distinctions. The term "Ponzi scheme" covers a range of schemes with fuzzy boundaries. Their general attributes are:

1) Investors believing claims that they can get returns way above what legitimate investments provide.

2) Investors believing claims that their investment is very low in risk relative to the expected returns.

3) No reasonable expectation of a source of revenue for investors other than contributions from later investors.

4) No requirement for investor participation to get revenue.

5) Earlier investors are in fact paid from the investments of later investors.

Bitcoin meets all of these criteria except 3.

If someone claims Bitcoin is a Ponzi scheme and you want to address that claim head on and honestly, what you have to argue is that there's a reasonable expectation that Bitcoins will appreciate in value over the long term due to demand for Bitcoins as a means of exchange. If you don't believe that, then Bitcoins as an investment basically *is* a Ponzi scheme.

[cbeast]

You cannot have a Ponzi scheme without a Mr. Ponzi type person lying to customers.

As discussed above, you can if the earlier investors make unreasonable representations to later investors in order to get new investors whose investment will wind up in the hands of the earlier investors. The earliest investors in a Ponzi scheme have the same incentive the creator of the scheme does.

Pirate, for example, could have just said "I'm borrowing money and paying x% interest" (which is true). He then could have shut up and let just his earliest investors keep the hype going and make the misrepresentations about where the money was going. It still would have been a Ponzi scheme.

Pirate was not selling Bitcoins. He was selling a different product of his own design. Apples and oranges.

[RodeoX]

Damn people get a thesaurus and at least start misusing some new words. 

[JoelKatz]

You cannot have a Ponzi scheme without a Mr. Ponzi type person lying to customers.

As discussed above, you can if the earlier investors make unreasonable representations to later investors in order to get new investors whose investment will wind up in the hands of the earlier investors. The earliest investors in a Ponzi scheme have the same incentive the creator of the scheme does.

Pirate, for example, could have just said "I'm borrowing money and paying x% interest" (which is true). He then could have shut up and let just his earliest investors keep the hype going and make the misrepresentations about where the money was going. It still would have been a Ponzi scheme.

Pirate was not selling Bitcoins. He was selling a different product of his own design. Apples and oranges.

I was rebutting your claim that "You cannot have a Ponzi scheme without a Mr. Ponzi type person lying to customers" and using Pirate as an example only to rebut that specific claim. It makes no difference whether Pirate is anything like Bitcoin. All that matters is that Pirate is a Ponzi scheme and would have still been a Ponzi scheme even if all the misrepresentations had been made by investors and none by Pirate himself or any "operator" of the scheme.

If your point was just that someone must make misrepresentations, then I agree with you. There must be misrepresentations and people must invest on the basis of them. That's why whether or not Bitcoin is a Ponzi scheme comes down to whether investors' belief that Bitcoins may get future value from demand for them as a means of exchange is reasonable or the result of a misrepresentation.

[cbeast]

If someone claims Bitcoin is a Ponzi scheme and you want to address that claim head on and honestly, what you have to argue is that there's a reasonable expectation that Bitcoins will appreciate in value over the long term due to demand for Bitcoins as a means of exchange. If you don't believe that, then Bitcoins as an investment basically *is* a Ponzi scheme.

Bitcoin is more like investing in a patent. The invention of the bitcoin is specifically intended to drive the economy of the internet. There are many other alternate ideas that are for sale, but Bitcoin is the original. It is better than a patent, because it cannot be counterfeited. It is not like buying stock in the company that owns a patent, but rather partial ownership in the entire production chain. Expecting a profit on the investment is not based on hearsay, it is opened sourced and based on the research of some of the greatest minds in math and cryptography. I can understand if you are trying to sell someone on the idea of investing in bitcoin on your say-so, but you don't need to. All the code, whitepapers, and wikis are available for anyone to research.

Perhaps some people interpret terms like Ponzi scheme to mean a risky investment, but I perceive that it's more like investing in a fundamental technology itself. This idea is too difficult for most people to wrap their mind around so they reach for the easiest analogy. Bitcoin requires not only people willing to monetize the tokens, but also requires a form of cooperation that forms every social relationship. Without getting into the woo zone, Bitcoin is more like the discovery of atomic energy and Bitcoin is the Manhattan Project. Sure, you could build your own, but not before Bitcoin is adopted by the majority of socially adjusted people that understand the purpose and usefulness of this tool to benefit the majority.

Normally, paradigm-shifting ideas like this are never fully understood by the masses, but instead they trust the peer reviewed experts that endorse the technology. Bitcoin is not a political tool. Bitcoin is not merely a financial tool. Bitcoin is a social tool for communicating value on a global scale. It can be used for much more and has the potential for becoming a powerful social science tool (because of its anonymity), but for now it can be developed to scale and help humanity break through many of the societal barriers created by nations and globalist powers. Someday Bitcoin will even replace these barriers.

tl;dr Bitcoin is too hard to wrap your head around, like nuclear physics. People use the term Ponzi to describe anything financial they don't understand. Bitcoin doesn't need salesmen, it needs trusted scientists to approve of the technology before it will be adopted by the masses.

[odolvlobo]

5) Earlier investors are in fact paid from the investments of later investors.

Bitcoin also doesn't meet criteria #5, because #5 should actually read, "Investors are told they are being paid returns from a certain investment, when earlier investors are in fact paid from the investments of later investors."

It is more accurate to claim that Bitcoin is a pyramid scheme (as opposed to a Ponzi scheme), and that has a grain of truth (considering how many are buying bitcoins now, with the sole intention of selling later at a profit).

[Wekkel]

There is no periodical payment due in the Bitcoin system. The Bitcoin you hold remains a Bitcoin. Therefore, I think it cannot be deemed a pyramid or a ponzu scheme. It's no other than people holding a fixed amount of rocks whereas the Bitcoin rock happens to be easily transferable over the Internet.

[MonkeyBear68]

Bitcoin is NOT a Ponzi or pyramid scheme. Its success however will depend on how many merchants accept it as a method of payment. The more merchants that accept it as payment the higher the market capitalization must be to support that level of trade. The best way to support it is to support the merchants that accept it by using BTC to purchase goods from them. It is fine to hold some for investment purposes, but using it is what will ultimately make it succeed and cause it to go up.

[manfred]

If Bitcoin is a Ponzi or Pyramid scheme is debatable, it certainly is a get rich scheme for Satoshi whoever it is, private individual or entity (i believe the later).
I can start to smell a rat.
Lets look at some quick facts. 2009 birth of Bitcoin. Not much happens for 20 months 6 million coins mined. Then slowly some geeks and tech savy persons get involved and start mining and selling the coins too. So now we have about 10 million coins mined until now, about 4 million since 2011. It is fair to say that the Satoshi group has mined way more than 50% (if not all coins) until 2011 and since the have the hardware and means to generate this huge collection of coins in a relative short time its fair to assume that since 2011 they again mined the majority of the coins. So that leaves the Satoshi guy or group with way over 50% of the market and as with control of it. They can "pump and dump" whenever they feel like, which means the gain control of even more coins since they know when to get "out" of a particular direction. Satochi, more than 50% ownership on day one more than 50% ownership as long as bitcoin exists.

This truly "one world" currency is just an updated version of the existing Fiat system. A small group controls a lot, the masses fight for the left overs.   

http://www.youtube.com/watch?v=K5VC58gjnjY&list=UU-7vnmA1Zf1cRyqs9aR77ag

[JoelKatz]

This truly "one world" currency is just an updated version of the existing Fiat system. A small group controls a lot, the masses fight for the left overs.   

Even if you're right, you have the identity of the "small group" wrong. It's all the people who bought or mined significant numbers of Bitcoins when they were below $2. And, that's not really any different from people who founded successful companies or bought stock in them early.

The big question is this -- does the ability of Bitcoins to be quickly and cheaply transacted around the world add significant value? If so, then that value is being divided the same way profitable companies divide value -- those who start it and those who invest in it early get lots of it and everyone in the world gets some. It's only if you think Bitcoin -- the product, the system -- is really useless and has no potential to provide real value that your argument makes sense.

[manfred]

those who start it and those who invest in it early get lots of it and everyone in the world gets some

Exactly, just like the existing Fiat system. A small group (thousands) get lots and the fast majority (billions) get left over crumbs just enough for the "system" to work.

[JoelKatz]

those who start it and those who invest in it early get lots of it and everyone in the world gets some

Exactly, just like the existing Fiat system. A small group (thousands) get lots and the fast majority (billions) get left over crumbs just enough for the "system" to work.

Quite possibly so, but only if Bitcoin doesn't ever succeed on a massive scale. And even if it doesn't, there's a good chance that it will pave the way for future crypto-currencies that will.

Perhaps the Internet is something of an analogy. It was grown by for profit companies who were looking to make money. But the net effect of the Internet is that even the most repressive governments in the world can't keep their citizens from reading Western media and blogging about conditions in their country. The people in the early days of the Internet had the idea that they could be changing the world, and there were certainly people telling them that those beliefs were unrealistic. But they did change the world.

In the early days, the Internet's development was filled with both with people who labored tirelessly trying to change the world and people who were just looking for a quick buck, and everything in-between. But they are all moved us in the same direction. There was nothing unholy about the alliance.

If I didn't think there's any chance at all the crypto-currencies will ever create significant value or benefit, then I would agree with you. But I think there's a very good chance that some future or present crypto-currency will change the world in a big way. In fact, I think it's as inevitable as the Internet. Of course, I have no idea which one or when.

[manfred]

But I think there's a very good chance that some future or present crypto-currency will change the world in a big way. In fact, I think it's as inevitable as the Internet. Of course, I have no idea which one or when.

There is no debate about that one.
If it is bitcoin or not depends if the powers to be have control of it or not. since nobody knows how is behind the satoshi entity and what percentage of bitcoins it controls its hard to know the outcome. time will tell.
If anyone would try to establish a "one world currency" the traditional way he would face a revolt and people fighting toe to nail. Yet coming in in a a*se about way from behind it becomes "cool" and people trolling over each other to have a "one world currency".
The powers in charge will be in control of whichever internet money will be used.

[JoelKatz]

The powers in charge will be in control of whichever internet money will be used.

Just like they control everything else on the Internet?

[darkmule]

those who start it and those who invest in it early get lots of it and everyone in the world gets some

Exactly, just like the existing Fiat system. A small group (thousands) get lots and the fast majority (billions) get left over crumbs just enough for the "system" to work.

Fate favors the agile.  Get smart or get left behind.