Why are bitcoins still being made? (Pyramid-Ponzi)

[Kazimir]

BluesBrother, you seem to misunderstand some essential attributes of Bitcoin.

There's no reason to stop at 21^

Eh, it's not like "they" (who?) will decide to stop producing more coins at 21M. People will keep on mining forever, but by the very definition of Bitcoin, every next four years they will only mine half as much.

The general problem of bitcoins is that it is based on nothing but trust

No, exactly the opposite. Bitcoin is based on not needing to trust anyone. Thanks to the magic of mathematics and cryptography.

Gold has intrinsic value

Oh really? Why?

Bitcoin has intrinsic value because it offers some brilliant, new possibilities, technological advancements that perfectly fit with the digital information age we live in, and huge advantages over fiat currency and commodities like gold. So there you go.

[1715279820]

1715279820

[BluesBrother]

BluesBrother, you seem to misunderstand some essential attributes of Bitcoin.

There's no reason to stop at 21^

Eh, it's not like "they" (who?) will decide to stop producing more coins at 21M. People will keep on mining forever, but by the very definition of Bitcoin, every next four years they will only mine half as much.

The general problem of bitcoins is that it is based on nothing but trust

No, exactly the opposite. Bitcoin is based on not needing to trust anyone. Thanks to the magic of mathematics and cryptography.

Gold has intrinsic value

Oh really? Why?

Bitcoin has intrinsic value because it offers some brilliant, new possibilities, technological advancements that perfectly fit with the digital information age we live in, and huge advantages over fiat currency and commodities like gold. So there you go.

I agree with everything here.
So no I haven't missed out but you put it into words better than I could.

About gold~
Gold has some intrinsic value but it's in a bubble now I think.

[BluesBrother]

Ponzi could be right if you stretch the definition a bit. Every Bitcoin user is running the ponzi and the victims are anyone printing fiat. Thats where is falls down though, eventually Bitcoin would find the same kind of equilibrium as any other limited resource and if a superior method of storing and transferring value came along then Bitcoin would have to keep up or loose its value.

That's sorta what I thought in that "rubbish post" i made as well; especially since it can be divided up almost endlessly but then I thought about it a little bit extra and now I'm not so sure it works that way even if it's a resource that can't be consumed. Let's sleep over this an come back tomorow and tell me what you think.

Although you are wrong on one point.
As I said the victim is the "investor" the "fraudster" is the printer (minter) and the user (if he sells and buys frequently) isn't really either one but is using both for his own puposes.

This is if the theory is correct.

[BluesBrother]

Bitcoins, much like yen or dollars or gold coins, have to come into existance somehow before we can use them. The way bitcoins are minted is the most democratic, verifiable, fair, and controlled among the currencies in use today.
I've minted bitcoins. You can, too. Try doing that with dollars, and consequences for you will be painful and violent. I don't see how anyone with at least half a brain functioning can have a problem with bitcoins "still being minted."

I guess half my brain isn't isn't yours

[herzmeister]

Bitcoin is not a Ponzi.

In a Ponzi, if there are no more buyers, it collapses.

On Bitcon exchanges, if there are no buyers, the price would remain constant.

Bitcoin is a global borderless potentially anonymous value transfer system. It uses its own units of accounting which have to be kept scarce in order to be valuable (I don't think it doesn't matter much in this context if they would have been designed to slightly inflate forever or eventually cap out at 21 million, except the capped variance surely has always been more appealing to libertarians).

If people choose to invest, all they need to do is to hold some of the 21 million units whose value is determined by supply and demand. So they act like an asset, a share. But it's a share in an openly and transparently developed system, which is quite a novelty. And it's taking away real market share from PayPal, Western Union and others, which surely are not scams or pyramid schemes either. Good related read: https://bitcointalk.org/index.php?topic=168858.0

Now that doesn't mean there isn't any risk if people choose to invest. They have to know what they're doing. There are risks. There could be a total loss. There could be a better competitor. Governments could outlaw exchanges and merchants accepting it.

If it keeps going, Bitcoin (or a successor, for that matter) will probably go through the hype cycle, multiple times over, fractally.



But it will probably stabilize when it has reached ubiquity and mass adoption, as this is only a matter of depth. We're far from everybody on this planet having used it at least once, directly or indirectly, or at least heard of it.

There will be no point in purchasing anything since any purchase would thin out your finite investment and in the same way you couldn't possibly sell anything.

This refers to a thing called Gresham's Law. This only is valid when the weak currency that people want to get rid of (USD) is enforced by a government. If there is no such enforcement, then think again. People may want to get rid of their weak and devaluing means of exchange (corn, cattle), but merchants will prefer the strong ones (gold, silver, bitcoins).

[BluesBrother]

Good progress made. I think I'll have to sleep on this

[niko]

Bitcoins, much like yen or dollars or gold coins, have to come into existance somehow before we can use them. The way bitcoins are minted is the most democratic, verifiable, fair, and controlled among the currencies in use today.
I've minted bitcoins. You can, too. Try doing that with dollars, and consequences for you will be painful and violent. I don't see how anyone with at least half a brain functioning can have a problem with bitcoins "still being minted."

I guess half my brain isn't isn't yours

Then kindly think about the rest of my post, and provide comments here.

[wblabla4]

21M coins to prevent hyper inflation after bitcoin becomes very popular and there are lots of miners

[jorov]

21 M coins is chosen to represent half of "the meaning of life - 42".
The other half is you spending your coins. That is what life is going to be.

Here are my answers to some of the most important questions about Bitcoin constants.

1. Why mining?
Because mining is a form of involvement - it makes you feel you are a part of something great. Also a certain amount of intellectual capabilities are required to start mining.
In my opinion it is quite difficult for people with IQ below 100 to understand how Bitcoin works.
It is a way to transfer money to smart and open-minded people.

2. Why blocks in 10 minutes ?
It is based on predictions of how Bitcoin will evolve. If less - there would be too much processing overhead for block verification.
if more - transactions will be verified too slowly.

3. Why difficulty adjust in ~ two weeks ?
These are two mini-cycles in world economy - not enough time for big changes to happen
and yet long enough to make you confident on how mining would go during that period.

4. Why halving in for years:
Bitcoin evolution is predicted to happen in 4 year periods:
 - p1: (2009 - 2013) awareness - early adopters, huge fluctuations, heavy debugging. Supply has to be heavy keeping value low enough.

 - p2: (2013 - 2017) primary adoption period - 1000s of businesses start accepting Bitcoin, 1000s of new Bitcoin based businesses pop out.
Supply halved - new businesses are encouraged to accept payments in Bitcoin and eventually exchange later to cover local currency expenses.

 - p3: (2017 - 2021) scaling - system has to be adjusted in order to handle big transaction volumes (> 100 tps)
Supply is low, network is maturing.

 - p4: (2021 - 2025) secondary adoption period - establishment of a new standard in payments based on Bitcoin and other virtual currencies relying on Bitcoin.
Supply is insignificant compared to real trading volumes. Mining is still quite profitable: price slowly rising from $30 000 to about $100 000 per Bitcoin (based on current value of USD).

 - p5: (2025 - 2029) People start using Bitcoin to buy other currencies if needed.

...

P.S. I made these calculations:
My PC (core2 duo 3Ghz, 4 RAM) could currently handle about 50 tps at 1/2 cpu load
and Blockchain database would exhaust my dedicated disk space in about one year (1 TB).

[dc7d]

Bitcoin is a Ponzi - but ONLY if it will end (soon). But it doesn't seem so...

[odolvlobo]

Bitcoin is a Ponzi - but ONLY if it will end (soon). But it doesn't seem so...

Sigh. I feel like I have to respond every time the words "ponzi" and "bitcoin" occur in the same sentence.

@dc7d, you probably don't know what a Ponzi scheme is. Not every form of financial fraud is a Ponzi scheme.

Let's look at what a Ponzi scheme is:

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation.

According to this description, a Ponzi scheme has three characteristics:

• 1. It is run by an individual or an organization.
• 2. The operator of the scheme claims to earn profits on investments, but does not. This is the fraudulent part.
• 3. It pays returns to its investors from their own money or the money paid by subsequent investors.

Bitcoin fails #1 because it is not run by an individual or an organization.
Bitcoin fails #2 because the non-existent operator of the scheme does not claim to earn a profit that is paid to investors.

Bitcoin is not and can not be a Ponzi scheme. Anyone that says that Bitcoin is a Ponzi scheme either does not know how Bitcoin works or does not know what a Ponzi scheme is.

[crypTrade]

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation.

According to this description, a Ponzi scheme has three characteristics:

• 1. It is run by an individual or an organization.
• 2. The operator of the scheme claims to earn profits on investments, but does not. This is the fraudulent part.
• 3. It pays returns to its investors from their own money or the money paid by subsequent investors.

Bitcoin fails #1 because it is not run by an individual or an organization.
Bitcoin fails #2 because the non-existent operator of the scheme does not claim to earn a profit that is paid to investors.

Bitcoin is not and can not be a Ponzi scheme. Anyone that says that Bitcoin is a Ponzi scheme either does not know how Bitcoin works or does not know what a Ponzi scheme is.

You misunderstand the definition you quoted. The part after "rather than" explains what legitimate investments do, not what Ponzi schemes do. Legitimate investments have individuals or organizations running the operation who earn a profit that's distributed to investors. Ponzi schemes don't have this.

If what you quoted was in fact a defintiion (it's not, but that's another story, then Bitcoin would be a ponzi scheme if it paid returns to investors from their own money or money paid by subsequent investors, which of course it does. When you sell bitcoins, the money you make comes from other people who buy bitcoins, many of which are also investors. As you point out, bitcoin has nobody running it who makes a profit they distribute to investors, they key sign of a ponzi scheme by the "definition" you repsented.

[dc7d]

Bitcoin fails #1 because it is not run by an individual or an organization.

Satoshi no individual?

Bitcoin fails #2 because the non-existent operator of the scheme does not claim to earn a profit that is paid to investors.

Why do you think he's anonymous? Because of NO profit?

Bitcoin is not and can not be a Ponzi scheme. Anyone that says that Bitcoin is a Ponzi scheme either does not know how Bitcoin works or does not know what a Ponzi scheme is.

I think you obviously didn't know what i mean: Bitcoin is NO Ponzi now. Until everyone stops mining. I don't think that but who knows.

[DannyHamilton]

Bitcoin fails #1 because it is not run by an individual or an organization.

Satoshi no individual?

Satoshi doesn't run anything.  He described how it could work and publicly released the source code for the first software implementation of the concept.  Anyone can do anything they want with that source code, and it has been modified by many people.  It is entirely available to the public, and Satoshi has no control over it any longer.

Bitcoin fails #2 because the non-existent operator of the scheme does not claim to earn a profit that is paid to investors.

Why do you think he's anonymous? Because of NO profit?

I wouldn't even try to guess why the person or organization known as Satoshi has chosen to remain anonymous.  It really shouldn't matter since all they did is describe a concept.

Bitcoin is not and can not be a Ponzi scheme. Anyone that says that Bitcoin is a Ponzi scheme either does not know how Bitcoin works or does not know what a Ponzi scheme is.

I think you obviously didn't know what i mean: Bitcoin is NO Ponzi now. Until everyone stops mining. I don't think that but who knows.

If everyone stops mining, then transactions will stop being confirmed.  Of course, that will make it very profitable for someone to start mining again since they will get all the blocks and all the transaction fees.  Then others will start mining too because they will see the opportunity to get some of that profit.  What makes you think everyone would ever stop all mining?

[dc7d]

If everyone stops mining, then transactions will stop being confirmed.  Of course, that will make it very profitable for someone to start mining again since they will get all the blocks and all the transaction fees.  Then others will start mining too because they will see the opportunity to get some of that profit.  What makes you think everyone would ever stop all mining?

Sorry, maybe i slur. I DON'T think that Bitcoin is Ponzi and i DON'T think that it will stop!

[adamh87]

Greetings!

Why are bit coins being made (minted)?
To me it would be more reasonable to release the full amount from the start or in a worst case scenario organise a trust which releases bit coins at a set rate.  From a cynical point of view this could be argued to be some advanced fom of a ponzi-scheme hidden in a pyramid-scheme.

how would you release all at the start? who would get them? that would be unfair.

the software needs "proof of work" to keep the legder balanced and prevent double spending.
that proof is guessing hard math problem. Reward is needed to get people to run their computers
to do this.

The only possible modification that would work is to never limit to 21 million but keep going
forever. However that would not have made bitcoin popular. People only get involved in the begining because
they knew it was a rare limited resource. Who would run their computer electric bills high to get
something that looses value?