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Author Topic: I feel like I'm dreaming, is this crap for real? For how long?  (Read 5243 times)
Nemesis099
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June 09, 2011, 08:35:43 PM
 #21

But by mining you kind of buy insurance against a fall in bitcoin value, considering the (historically) strong correlation between price and difficulty (but of course: historic results...no guarantees....etc.)



The correlation is that newcomers buy up coins, price goes up, kiddies run out and buy as much hardware as they can.  Since Bitcoin has no utility yet (except for criminals or people who want to make micropayments without fees), it's essentially nothing more than a glorified ponzi scheme - the machine needs new entrants (investors) to keep the scheme running, otherwise it fizzles out and dies.  Though I do hope it becomes much more than that, because the ideas behind it are revolutionary.

I just started and what I liked about it is that as long as I'm able to make money back to pay off the equipment in around 3-4 months it is worth it to me.  This gives me a huge return as I get a computer I wanted without my wife complaining about purchasing it.  So hopefully the ponzi scheme lasts long enough for me to do that or I won't hear the end of it.
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dingus
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June 09, 2011, 08:38:07 PM
 #22

I am confused by these two statements. You say it is a ponzi scheme but how is that revolutionary?

You clearly missed the part where I stated the _ideas_ are revolutionary.  I was referring to the design from a technical and logical standpoint.

Bitcoin is still boot-strapping itself and it's economy. Of course those who were early adopters will be wealthier than those who came in late. It is part of the risk. The higher risk you take the more money you could possibly earn or lose. It's the same as those who bought google stocks before they shot up in price. Would you call that a ponzi scheme? I am willing to bet if you were an early adopter with 100k+ coins you wouldn't be screaming ponzi scheme.

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AngelusWebDesign
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June 09, 2011, 08:42:35 PM
 #23

Bitcoin IS indeed a Ponzi scheme if people can't (or don't) start paying for everyday purchases with Bitcoin.

If it's mostly guys speculating in Bitcoins and/or computer hardware, how is it different than Dot-com stocks, house flipping, or tulip bulbs?  In all those cases, people thought the value would keep going up, until some physical limit was reached (houses are only affordable up to a certain price; someone said "$500? Hey, I just bought a tulip bulb for $500!") and then it all unravels/collapses.

Bitcoin needs to have a more stable value -- that is, a value in something other than exchanging it for US currency. To exchange it, someone has to want to BUY Bitcoins on the other side. Who does that today? Mostly speculators hoping to cash in on the rise of Bitcoin value.
FreeJAC
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June 09, 2011, 08:45:07 PM
 #24

I don't think this can be characterized as a ponzi scheme because of the fact that you can mine as in do work and be paid for it. Ponzi schemes are giving noobs money to the seasoned folks that have been around longer and that isn't really happening here. Or am I that naive? LOL! Many have not put any money into this scheme and have taken money out doing work. (AKA mining)

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gat3way
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June 09, 2011, 08:49:43 PM
 #25

Once seasoned folks decide to cash out it's very much becoming a Ponzi scheme. Well someone gotta profit on all that swarm of people throwing thousands of fiat currency into GPUs and BTC. Anyway, unlike Ponzi schemes that would not be the end of it all. It's like evolution you know Smiley  Nobrainers deserve their fate.
bcpokey
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June 09, 2011, 08:50:46 PM
 #26

Well FreeJaC people are playing fast and loose with the definition of ponzi scheme. They are really conflating the idea with a pyramid scheme. Neither one is technically true, but they're both close enough that it's not really worthwhile to argue it.

Bitcoin does need to be usable for transactions. It is. But it needs wider penetration. However you have to remember that bitcoin is still tiny. I keep telling people this and they keep dropping it out of their heads. Already however you can buy food, computer parts, lots of illegal drugs, pornography, and other things with bitcoins, that's a pretty good start considering there are only about 30-50000 users (not sure at the moment).

Right now there is healthy interest in bitcoin, and it is growing, and growing fast (even if most of the attention is focused on mining and selling). It may collapse either from too little growth or too much growth in the future, but so can anything.
dingus
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June 09, 2011, 08:52:30 PM
 #27

Bitcoin IS indeed a Ponzi scheme if people can't (or don't) start paying for everyday purchases with Bitcoin.

To exchange it, someone has to want to BUY Bitcoins on the other side. Who does that today? Mostly speculators hoping to cash in on the rise of Bitcoin value.


There are benefits to turning your USD into bitcoins. One reason is you control your money. No one can pump money into the system to devalue your dollars. Pseudo-anonymity being another reason. The fact that bitcoin is bankless (and therefore fee-less) is another reason. The fact that I can send coins to anyone around the world without converting and reconverting between different currencies is another reason. The fact that any number of coins can all fit into a postage stamp sized SD card is yet another benefit.

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dingus
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June 09, 2011, 08:55:16 PM
 #28

Once seasoned folks decide to cash out it's very much becoming a Ponzi scheme. Well someone gotta profit on all that swarm of people throwing thousands of fiat currency into GPUs and BTC. Anyway, unlike Ponzi schemes that would not be the end of it all. It's like evolution you know Smiley  Nobrainers deserve their fate.

Don't you see the 1000 coin and up trades happening on mt gox? At what coin amount do you consider "cashing out" to be?

ding·us/ˈdiNGgəs/
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The Koolio
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June 09, 2011, 08:56:55 PM
 #29

calling it a ponzi scheme is like saying buy some shares in a company and in 10 years cash out cause they are 20 times more in value... now thats not a ponzi is it?

1. Litecoin 2. Bitcoin 3. Any of the Anon coins
eleuthria
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June 09, 2011, 08:58:42 PM
 #30


Someone posted it for me based off of 4 grx cards

http://bitcoinx.com/profit/index.php

Ok, well I guess if a webpage said it then it must be true.

No different from anyone else telling me, how about you stop being so rude.
I want to punch you. That is all.

Off-topic (probably my first completely off-topic forum post in history), but bleedkira, I love you.  That one liner just brightened my day, and I'm not just saying that because you have a BTC Guild sig.

R.I.P. BTC Guild, 2011 - 2015.
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dingus
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June 09, 2011, 08:58:59 PM
 #31

calling it a ponzi scheme is like saying buy some shares in a company and in 10 years cash out cause they are 20 times more in value... now thats not a ponzi is it?
Yes, of course it is. And that is based solely on the fact that the early buyers made more money than you.  Roll Eyes

ding·us/ˈdiNGgəs/
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gat3way
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June 09, 2011, 08:59:16 PM
 #32

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Don't you see the 1000 coin and up trades happening on mt gox? At what coin amount do you consider "cashing out" to be?

Who knows? That's what keeps the influx of new miners after all.
pwnyboy
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June 09, 2011, 09:15:49 PM
 #33

What makes it a ponzi scheme right now, IMO, is the fact that Bitcoins are only a store of value.  That's all.  They're something that a few people agree have some worth.  Some will argue that mining is the "good/service" aspect of it - analogous to those stocks that keep getting mentioned.  That's incorrect.  There's a difference in Bitcoins and stocks.  Publicly traded companies MUST demonstrate utility, or a likelihood thereof, in order to get bought.  Bitcoins do not.  Bitcoins at this point are just an idea.  An idea with much potential, but an idea none the less.  I got into Bitcoins heavily when I saw the article on MoneyLaundering.com - that was my "buy" signal.  Some day it might have utility to criminals, but right now, who could a drug dealer find to move $50MM USD of currency across a border, in an end-to-end cash to cash exchange with Bitcoins as the conduit?  If such an exchange exists, they certainly don't make themselves known.  So until it has at least a modicum of utility, beyond storing value, it's nothing more than a house of cards.  And again, I'm hoping the utility aspect will improve, because the ideas are strong.
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June 09, 2011, 09:20:32 PM
 #34

I don't think this can be characterized as a ponzi scheme because of the fact that you can mine as in do work and be paid for it. Ponzi schemes are giving noobs money to the seasoned folks that have been around longer and that isn't really happening here. Or am I that naive? LOL! Many have not put any money into this scheme and have taken money out doing work. (AKA mining)

I said "many similarities to a brilliant Ponzi scheme", you are describing one of the brilliant features, IMO.

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bcpokey
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June 09, 2011, 09:23:05 PM
 #35

What makes it a ponzi scheme right now, IMO, is the fact that Bitcoins are only a store of value.  That's all.  They're something that a few people agree have some worth.  Some will argue that mining is the "good/service" aspect of it - analogous to those stocks that keep getting mentioned.  That's incorrect.  There's a difference in Bitcoins and stocks.  Publicly traded companies MUST demonstrate utility, or a likelihood thereof, in order to get bought.  Bitcoins do not.  Bitcoins at this point are just an idea.  An idea with much potential, but an idea none the less.  I got into Bitcoins heavily when I saw the article on MoneyLaundering.com - that was my "buy" signal.  Some day it might have utility to criminals, but right now, who could a drug dealer find to move $50MM USD of currency across a border, in an end-to-end cash to cash exchange with Bitcoins as the conduit?  If such an exchange exists, they certainly don't make themselves known.  So until it has at least a modicum of utility, beyond storing value, it's nothing more than a house of cards.  And again, I'm hoping the utility aspect will improve, because the ideas are strong.

Say what? All currency is a "store of value". Green pieces of paper have no more intrinsic worth than that people have agreed that it does.  And there have been far more than a few paperbacks that have ended up worthless because people lost faith in it and it had nothing to back it beyond that faith.

Publicly traded companies have no requirement like you specify. They need merely convince people that they will be worth more than they are now or interest people in the company, same thing.

Also as to drug trafficking, there is already a massive drug trade via bitcoin, to the point where senators are trying to shut down bitcoin because of it.

But anyway, that aside, bitcoin is in its infancy, whether it will be seen as a ponzi scheme or not will be decided in the future by its success or failure/.
gat3way
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June 09, 2011, 09:25:57 PM
 #36

Green paper currency is backed by multi-billion industry/mining/services sector that puts its trust in it. Bitcoin OTOH is not.
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June 09, 2011, 09:28:58 PM
 #37

dont dream too long.

when I built my first rig 2 months ago I had a 8 BTC mining day with just 1000 mh/s

1000 mh/s mines between 1-2 BTC per day now.

and its only going to keep going up.
bcpokey
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June 09, 2011, 09:30:34 PM
 #38

Green paper currency is backed by multi-billion industry/mining/services sector that puts its trust in it. Bitcoin OTOH is not.

Do you see how circular an argument that is? A multi-billion dollar industry puts its faith into dollars. Therefore dollars have value because of the dollar value of faith lenders.

Anyway, I'm not saying that bitcoin is inferior or superior, but the argument that bitcoin only has the value that people place in it is not a valid one, as that is true of all world currency that are not guaranteed by anything tangible.

gat3way
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June 09, 2011, 09:34:33 PM
 #39

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Do you see how circular an argument that is? A multi-billion dollar industry puts its faith into dollars. Therefore dollars have value because of the dollar value of faith lenders.

IMO yes, faith is what drives demand and demand is one of the two factors driving value.
Jack of Diamonds
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June 09, 2011, 09:34:36 PM
 #40

How many times do people need to hear it. It's not a fucking ponzi. I haven't bought a cent worth of BTC but I frequently trade them for tangible commodities, fiat currency and save them in encrypted wallets. It's called mining.

A ponzi scheme requires new members to pay to old members. If you start mining today you are not paying anyone anything with the exception of some hardware store and your electricity company. Chances are you already had internet access.

If someone wants to buy bitcoins then more power to them. Many people see it as a lot more hassle free than running mining operations, and it can yield a good return in the long haul too.

If someone wants to go on BitEgg and buy memory cards for their camera then more power to them. If they want to speculate on the price going up or down then more power to them.
If they realize it's a finite commodity that is practically impossible to forge, with very high levels of security and anonymity compared to ordinary money, even better.

Newsflash: The money I get in exchange for BTC in my bank account is virtual too. It's just numbers. There is absolutely nothing backing it, or its' value up except some vague promises from the state. BTC on the other hand is backed by extremely strong cryptography and a finite supply. A central bank on the other hand creates new fiat currency out of thin air.

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