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Author Topic: Slate: - Bitcoin is a ponzi scheme  (Read 3720 times)
bitbit
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April 12, 2013, 02:14:32 AM
 #1

http://www.slate.com/articles/news_and_politics/view_from_chicago/2013/04/bitcoin_is_a_ponzi_scheme_the_internet_currency_will_collapse.html

Any mistakes in this article?
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April 12, 2013, 02:15:31 AM
 #2

Load of rubbish. Don't bother taking them seriously.
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April 12, 2013, 02:31:23 AM
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Load of rubbish. Don't bother taking them seriously.

Maybe rubbish, but why?
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April 12, 2013, 02:43:57 AM
 #4

Slate still exists?  Huh

It doesn't make any money.  It's never made any money.   Cheesy

It's just a vanity venture, run by some snotty New York rich kids who would sooner put on a burka than serve in a US military uniform.   Roll Eyes

Ignore poo-flinging nancy boys like Eric Posner.  Their time is over, they know it, but they haven't stopped whining.   Grin


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April 12, 2013, 02:44:49 AM
 #5

fiat is a ponzi scheme


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April 12, 2013, 02:53:52 AM
 #6

Slate is a ponzi scheme.

http://www.bitpools.com
Pool your bitcoins with others. Vote on solutions using the Bitcoin blockchain. Keep your bitcoins in your cold storage until you find a solution you like.
Links and Reviews of useful every day places to spend bitcoins: https://bitcointalk.org/index.php?topic=943143.0
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April 12, 2013, 02:58:24 AM
 #7

It assumes Bitcoin, the system not the currency, cant create any realeconomic value. If you assume that then bitcoin is a ponzi scheme.

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https://bitcointalk.org/index.php?topic=171505
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April 12, 2013, 03:04:43 AM
 #8

Quote
Yet history shows that private currencies always end in tears; if central banks sometimes abuse the trust we place in them, the alternatives are worse.

Hahaha! bitcoin is a private currency. I love these fellow imbecile reporters  Grin

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April 12, 2013, 03:10:27 AM
 #9

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Yet history shows that private currencies always end in tears; if central banks sometimes abuse the trust we place in them, the alternatives are worse.

Hahaha! bitcoin is a private currency. I love these fellow imbecile reporters  Grin

You can't trust individuals, so trust governments! Gotta dig upi the quote from these forums that went something like, "Every major government to back a currency has reneged."

Currently selling XRP for BTC. PM for details and quotes.
https://bitcointalk.org/index.php?topic=171505
silzero
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April 12, 2013, 04:14:29 AM
 #10

Here's my analysis.
Bitcoin is a Ponzi scheme by Eric Posner on Slate.com. All quotes from Eric Posner.

{Post Script Note} I go from objective to slightly subject towards the end. Sheesh. Slate.

Quote
Bitcoin is a fantasy. The Internet’s currency—a secure, private, decentralized type of money that makes possible anonymous and virtually costless transactions across borders—contains the seeds of its own destruction.
Every sentence is factually incorrect. Bitcoin is real in the sense that people are not using it in their dreams. Bitcoin is not the "Internet's" currency. It does cost to do bitcoin transactions. You could get away with free transactions, but not quickly.

Quote
More than anything else, it resembles a Ponzi scheme
"resembles" a Ponzi scheme is different from "is" a Ponzi scheme as claimed in the title.

Quote
As more bitcoins are produced, the problems become more complex, requiring more computer power to solve them, and this limits the total number of bitcoins that can be created over time
Factually inaccurate. Number of Bitcoins is hard limited to a maximum of 21 million. The limitation is not due to the effect of the "complex problems...require more computer power"

Quote
Bitcoin may be useful for certain types of transactions, especially illegal ones.
You can just as easily replace this with: "<Cash> may be useful for certain types of transactions, especially illegal ones."

Quote
...without any government role, so designed as to make inflation impossible and bank transfer fees unnecessary...
Inflation and deflation is possible as recent swings have shown keeping the number of coins relatively same.

Quote
These features are supposed to make bitcoins irresistible for consumers.
Where is the reference to your survey of customers?

Quote
Meanwhile, stripped of the power to manipulate currencies to advance nefarious ends, governments will collapse, and we will live in an anarcho-utopia.
Every currency's secondary objective is to become the de-facto currency in the world. Bitcoin is no different from others.

Quote
Hoarding accounts for the large increase in the value of bitcoins;
That might be true. Its the same for any currency. Just that its easier to manage by printing more money. A single Bitcoin might get divided into fractions.

Quote
An even more fundamental problem with bitcoins, and indeed any private currency, is that there is no way to limit its supply. True, bitcoins cannot be manufactured beyond the limits set by Nakamoto.
Two logically conflicting sentences negate each other.

Quote
But there is no way to prevent future Nakamotos from creating bitcoin substitutes—say, bytecoin, or botcoin.
If there is more demand for one product over the other, the other lesser in demand product will die. So?
When this hits, value of Bitcoin will fall, and hoarding people will sell in panic and other people will buy.
If Bitcoin can die so can any currency. Cases in point:
1. Brazilian Cruzeiro -> Cruzeiro real -> Real
2. Euro replacing other currencies.


Quote
Unless a bitcoin has value as a currency, it has no value at all, and its price in dollars will fall to zero.
A value is anything someone is willing to pay for an item. This statement may or may not be true because it is set in the future without proof. I call it worthless sentence.

Quote
A regular Ponzi scheme collapses when people realize that earlier investors are being paid out of the investments of later investors rather than from the returns on an underlying asset.
Ok... I'm still looking for how is it a Ponzi Scheme. Lets assume the first investor bought 1 bitcoin for 1 cent. Today 1 bitcoin is  bought for 100 cents. In a Ponzi scheme, you buy and hold the asset and get a return from later buy ins. The Bitcoin is not generating anything if you just hold it. It only becomes valuable if you exchange it for something of value. Once you do, you lost possession of the bitcoin asset. So who's paying returns to whom while still holding the asset?  How's Bitcoin any different than a stock IPO?

If you are complaining now, you missed the boat.

Quote
A real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion.
Without proof, anything can "seem" like anything.

Quote
Given this, why all the enthusiasm for bitcoin? Partly, the technological ingenuity of the scheme, of course. And people have misinterpreted the run-up in price as a sign of success rather than failure.
"Of course." What is the point of this sentence? As a counter example, have people correctly interpreted run-up of the DOW as sign of failure?

Quote
Yet history shows that private currencies always end in tears; if central banks sometimes abuse the trust we place in them, the alternatives are worse.
Possibly true. How does it relate to your "Ponzi" claim?

Quote
The strangest feature of the bitcoin saga is that people who are so suspicious of government put their trust in Satoshi Nakamoto, who could be anyone, or anyones—eccentric academic researchers, mischievous Fed economists, DARPA, U.N. globalizers in black helicopters, a criminal syndicate, a bored 11-year-old Ukrainian genius.
L.O.L. (yes I put the periods). No one trusts Nakamoto more than the next person. The Bitcoin source code is open source. If I use Linux OS, that does not mean I trust Linus Torvalds.

I don't know how much reputation Slate.com has for journalism, but there is no hint of even attempting to scratch the surface.
Any logically biased and non inquisitive, English essay like this would have been shredded by my English professor who teaches in a third world country who's native is not even English.

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April 12, 2013, 04:19:57 AM
 #11

Very sad how greedy fools can cause such negative attention. We'll be fighting this for years to come. Congratulations.
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April 12, 2013, 04:44:55 AM
 #12

The article is full of crap.


"put their trust in Satoshi Nakamoto, who could be anyone, or anyones"

Nobody is trusting Satoshi Nakamoto.  You trust the software.


"Once hoarding takes over, circulation ends, and with it the function of the currency."
"Unless a bitcoin has value as a currency, it has no value at all, and its price in dollars will fall to zero."

So, the guys argument is that the price will go to zero, because the price will be too high?   Yes, that makes sense.

As long as there are exchanges, you will be able to buy bitcoins, and use them for online transactions.   Hoarding does not change this fact. 











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April 12, 2013, 07:10:55 AM
 #13

Btc is NOT a ponzi scheme and anyone who calls it one either doesn't understand what a ponzi scheme actually is or doesn't understand btc - likely both.  Btc MIGHT be a pyramid scheme - that is at least worth discussing, but not ponzi.

Key differences - pyramid schemes CAN be legal (multi-level marketing etc) while ponzi is not
participants are aware of, or can be aware of the situation in a pyramid, in a ponzi there is deception over what is really happening

Anyone who calls btc a ponzi should really just be ignored as a fool.

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April 12, 2013, 01:30:57 PM
 #14

Btc is NOT a ponzi scheme and anyone who calls it one either doesn't understand what a ponzi scheme actually is or doesn't understand btc - likely both.  Btc MIGHT be a pyramid scheme - that is at least worth discussing, but not ponzi.

Please describe how BTC might be a pyramid scheme... I'm interested in this.
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April 12, 2013, 02:15:14 PM
 #15

Btc is NOT a ponzi scheme and anyone who calls it one either doesn't understand what a ponzi scheme actually is or doesn't understand btc - likely both.  Btc MIGHT be a pyramid scheme - that is at least worth discussing, but not ponzi.

Please describe how BTC might be a pyramid scheme... I'm interested in this.

When the price of bitcoin is bubbling (as it was the past couple months), people buy bitcoins because they hope to sell it tomorrow for more money. This continues until there are no new people to buy the bitcoins at a higher rate, and the price collapses.

However, when the price is more stable (like for most of 2012), bitcoins are able to function more like a currency. People sell things for bitcoin and then use the bitcoins to buy other stuff.

So if you are not using bitcoins as a currency, then it resembles a pyramid scheme. Bitcoin is very flexible, it has many uses and each person can chose whether they want to view it as money or a commodity, currency or investment, store of wealth or payment processor.

Use CoinBR to trade bitcoin stocks: CoinBR.com

The best place for betting with bitcoin: BitBet.us
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April 12, 2013, 02:25:38 PM
 #16

Bitcoin is no more a ponzi scheme or pyramid-scam any more than any equity stocks are on the NYSE or LSE. Mt gox and all btc exchanges as well as all stock markets are markets for second-hand goods and securities. the ipo market for btc is in mining.

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April 12, 2013, 02:29:17 PM
 #17

It's only a ponzi scheme if the ultimate end point of Bitcoin's value ends up being $0, as the people who get in last will be the losers who gave their money away to the people who got in early.

But if Bitcoin succeeds and never falls to $0, it will not have the qualifications of a ponzi scheme.
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April 12, 2013, 02:46:59 PM
 #18

Is ponzi scheme the new "it" word?

Bitcoins is a currency and a market. You don't talk about hyperinflation as a "ponzi scheme" or a "pyramide game"

The bubble we are seeing now is speccualtion based on what people think it will be worth in the future combined with a form of musical chairs like in any other highly volatile market.

It is most likely unsubstainable, at least for the near future, but it's not a ponzi or a pyramide.


BitCoin is NOT a pyramid - it's a pagoda.
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April 12, 2013, 09:18:39 PM
 #19

Is ponzi scheme the new "it" word?

Bitcoins is a currency and a market. You don't talk about hyperinflation as a "ponzi scheme" or a "pyramide game"

The bubble we are seeing now is speccualtion based on what people think it will be worth in the future combined with a form of musical chairs like in any other highly volatile market.

It is most likely unsubstainable, at least for the near future, but it's not a ponzi or a pyramide.



Given a choice between learning something new and parroting a spoon-fed secondhand opinion, most people will do the latter and strenuously object to the former.

That's because they are sheeple.  But they don't matter; only we top 1% IQ types actually change the world and write history.  The rest are dead weight, kept around to clean our toilets, change our oil, and dig our ditches.

The dim witted sheeple are familiar with old ideas such as bubbles, Ponzi, and pyramid schemes.

It's a nice shortcut for the intellectually lazy/limited to use these comfortingly well worn tropes for reckoning about Bitcoin, instead of investing the mental effort and enduring the cognitive dissonance required to understand challenging new concepts.

That way they get say something (albeit completely unoriginal) about the new hotness everyone is talking about, satisfying both their herd instinct and desire to bleat for attention.



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Monero
"The difference between bad and well-developed digital cash will determine
whether we have a dictatorship or a real democracy." 
David Chaum 1996
"Fungibility provides privacy as a side effect."  Adam Back 2014
Buy and sell XMR near you
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April 12, 2013, 09:21:38 PM
 #20

But they don't matter; only we top 1% IQ types actually change the world and write history.  The rest are dead weight, kept around to clean our toilets, change our oil, and dig our ditches.
Get over yourself.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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