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Question: Is Bitcoin a Pyramid or Ponzi scheme & what are the ramifications?
yes - 9 (13.2%)
no - 59 (86.8%)
Total Voters: 68

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Author Topic: Is Bitcoin a Pyramid or Ponzi scheme & what are the ramifications?  (Read 16936 times)
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dancupid
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November 21, 2013, 03:40:22 PM
 #81

Bitcoins are just worth whatever people are willing to pay for them - the market cap is irrelevant.

If Satoshi suddenly sells 1 million BTC then there will be massive slippage and the price will tank - but there's no con or scheme - everyone knows this.

We all know of the big stashes of bitcoins and what would happen if they were sold all at once (initially anyway)
We all know all the facts and we choose to buy/sell based on this reality.

Where's the con? How have we been tricked?
Dodgers
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November 21, 2013, 03:42:54 PM
 #82

Bitcoin supply is limited, the amount set is known from source code.

If for ponzi scheme, then the flow will be very oddly than bitcoin as a typical ponzi scheme obscures more information  than bitcoin, also there is only one node for the game. Bitcoin is, just like DSP, so if more people join, then the system will be better as the system will replace majority of transaction systems very soon as all people can monitor the flow.

That doesn't make any sense. Read the thread.

The transparency point was refuted on page 1.

The "majority of transactions" has been refuted in the recent page.

You would need to refute those prior refutations. I almost deleted your post because it violates the warning I put saying you must read the thread. But I decided to give this warning one last time.
Anonymint, I do enjoy your posts, and you do present interesting arguments, However I must ask as to your end-game?.
Is it purely educational
Is it a righteous ego trip where you get to flex your intellectual prowess… are you just looking for "i told you so"  moments??
Are you try to save ourselves from wasting time/effort/money?
Your agenda is quite telling, but your motives are not…. please explain.

AnonyMint (OP)
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November 21, 2013, 03:44:09 PM
 #83

Bitcoins are just worth whatever people are willing to pay for them - the market cap is irrelevant.

If Satoshi suddenly sells 1 million BTC then there will be massive slippage and the price will tank - but there's no con or scheme - everyone knows this.

We all know of the big stashes of bitcoins and what would happen if they were sold all at one (initially anyway)
We all know all the facts and we choose to buy/sell based on this reality.

Where's the con? How have we been tricked?

The con is you got several facts wrong.

When the number of new investors can't increase fast enough, it collapses. We don't need Satoshi to sell, that was a strawman invented to make it sound less likely.

Even only tiny stashes sell it will collapse at that point.

This is the nature of pyramid-ponzi schemes.

I explained that in great detail upthread. Once you bankrupt the later investors on that end-game collapse, you don't have any more investors to do it again.

This is assuming Bitcoin makes it to ponzi saturation point. It might be stopped before that by government action or an altcoin.

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AnonyMint (OP)
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November 21, 2013, 03:45:47 PM
 #84

Bitcoin supply is limited, the amount set is known from source code.

If for ponzi scheme, then the flow will be very oddly than bitcoin as a typical ponzi scheme obscures more information  than bitcoin, also there is only one node for the game. Bitcoin is, just like DSP, so if more people join, then the system will be better as the system will replace majority of transaction systems very soon as all people can monitor the flow.

That doesn't make any sense. Read the thread.

The transparency point was refuted on page 1.

The "majority of transactions" has been refuted in the recent page.

You would need to refute those prior refutations. I almost deleted your post because it violates the warning I put saying you must read the thread. But I decided to give this warning one last time.
Anonymint, I do enjoy your posts, and you do present interesting arguments, However I must ask as to your end-game?.
Is it purely educational
Is it a righteous ego trip where you get to flex your intellectual prowess… are you just looking for "i told you so"  moments??
Are you try to save ourselves from wasting time/effort/money?
Your agenda is quite telling, but your motives are not…. please explain.

I am preparing those who want something better to understand why it would be better, then hoping those who can develop it will see the opportunity.

In short, trying to fix the problem I see.

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dancupid
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November 21, 2013, 03:52:59 PM
 #85

Bitcoins are just worth whatever people are willing to pay for them - the market cap is irrelevant.

If Satoshi suddenly sells 1 million BTC then there will be massive slippage and the price will tank - but there's no con or scheme - everyone knows this.

We all know of the big stashes of bitcoins and what would happen if they were sold all at one (initially anyway)
We all know all the facts and we choose to buy/sell based on this reality.

Where's the con? How have we been tricked?

The con is you got several facts wrong.

When the number of new investors can't increase fast enough, it collapses. We don't need Satoshi to sell, that was a strawman invented to make it sound less likely.

Even only tiny stashes sell it will collapse at that point.

This is the nature of pyramid-ponzi schemes.

I explained that in great detail upthread. Once you bankrupt the later investors on that end-game collapse, you don't have any more investors to do it again.

This is assuming Bitcoin makes it to ponzi saturation point. It might be stopped before that by government action or an altcoin.

Yep I know all this - Bitcoin could collapse. It could fail (like MySpace) - but that's my problem. I can sell or buy freely knowing this. Everyone already knows this.

When these coins are dumped, won't the new owners just continue the same game?
Aren't these the new investors? - all these people with cheaper coins? A new mass of people willing to hold or sell or start buying more?
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November 21, 2013, 03:59:02 PM
 #86

Bitcoin supply is limited, the amount set is known from source code.

If for ponzi scheme, then the flow will be very oddly than bitcoin as a typical ponzi scheme obscures more information  than bitcoin, also there is only one node for the game. Bitcoin is, just like DSP, so if more people join, then the system will be better as the system will replace majority of transaction systems very soon as all people can monitor the flow.

That doesn't make any sense. Read the thread.

The transparency point was refuted on page 1.

The "majority of transactions" has been refuted in the recent page.

You would need to refute those prior refutations. I almost deleted your post because it violates the warning I put saying you must read the thread. But I decided to give this warning one last time.
Anonymint, I do enjoy your posts, and you do present interesting arguments, However I must ask as to your end-game?.
Is it purely educational
Is it a righteous ego trip where you get to flex your intellectual prowess… are you just looking for "i told you so"  moments??
Are you try to save ourselves from wasting time/effort/money?
Your agenda is quite telling, but your motives are not…. please explain.

I am preparing those who want something better to understand why it would be better, then hoping those who can develop it will see the opportunity.

In short, trying to fix the problem I see.

I appreciate that, but your clearly not stupid.
Everyone on this forum is here because a vested interest in BTC.
"no one wants to be told there child is ugly"  and in a similar vein, no one here will agree with your every word…. because it goes against the reason that they frequent this forum in the first place… It's like going on a Ford forum and telling everyone that Honda is better….no one will listen regardless of if you are right.

Even if you provide a valid argument, no one is going to become enlightened as they have blickered vision.


I personally have a reasonable position in BTC… enough to make me what to fight it's corner, champion it's cause and hope it achieves half of what the optimists promise.
I am a realist, as most people are… many people post their desires here (even if they won't reach fruition) but continuing to try to push your point is a fool's errand and you will get no-where.

As much as I agree with much of what you say, the dreamer in me wants this to go to the moon, and no amount of analysis or speculation will change other peoples view… you will achieve nothing except frustrating yourself.

Surely your time may be better spent on another alt-coin forum so you can tell everyone how naive we are??
This way you will acheive praise, recognition and support…. rather than resistance.
AnonyMint (OP)
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November 21, 2013, 03:59:22 PM
 #87

Bitcoins are just worth whatever people are willing to pay for them - the market cap is irrelevant.

If Satoshi suddenly sells 1 million BTC then there will be massive slippage and the price will tank - but there's no con or scheme - everyone knows this.

We all know of the big stashes of bitcoins and what would happen if they were sold all at one (initially anyway)
We all know all the facts and we choose to buy/sell based on this reality.

Where's the con? How have we been tricked?

The con is you got several facts wrong.

When the number of new investors can't increase fast enough, it collapses. We don't need Satoshi to sell, that was a strawman invented to make it sound less likely.

Even only tiny stashes sell it will collapse at that point.

This is the nature of pyramid-ponzi schemes.

I explained that in great detail upthread. Once you bankrupt the later investors on that end-game collapse, you don't have any more investors to do it again.

This is assuming Bitcoin makes it to ponzi saturation point. It might be stopped before that by government action or an altcoin.

Yep I know all this - Bitcoin could collapse. It could fail (like MySpace) - but that's my problem. I can sell or buy freely knowing this. Everyone already knows this.

When these coins are dumped, won't the new owners just continue the same game?
Aren't these the new investors? - all these people with cheaper coins? A new mass of people willing to hold or sell or start buying more?

You apparently missed the post upthread about this. I will repeat the logic in case it got buried.

Assuming Bitcoin makes it to saturation, meaning everyone that will buy has bought, then it collapses because price can't move up, thus investors want to exit to go get gains else where.

Then only a few investors can cash out. The vast majority will be stuck with the crashed value. This is math at the top of the OP.

So then you've ended up with a very few who cashed out with huge gains (probably the early adopters who were selling all the way up slowly), and everyone else bankrupt.

So who buys your coin now? No one left to buy it.

End of story. End of world (if Bitcoin makes it to $trillions market cap).

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dancupid
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November 21, 2013, 04:05:58 PM
 #88

Bitcoins are just worth whatever people are willing to pay for them - the market cap is irrelevant.

If Satoshi suddenly sells 1 million BTC then there will be massive slippage and the price will tank - but there's no con or scheme - everyone knows this.

We all know of the big stashes of bitcoins and what would happen if they were sold all at one (initially anyway)
We all know all the facts and we choose to buy/sell based on this reality.

Where's the con? How have we been tricked?

The con is you got several facts wrong.

When the number of new investors can't increase fast enough, it collapses. We don't need Satoshi to sell, that was a strawman invented to make it sound less likely.

Even only tiny stashes sell it will collapse at that point.

This is the nature of pyramid-ponzi schemes.

I explained that in great detail upthread. Once you bankrupt the later investors on that end-game collapse, you don't have any more investors to do it again.

This is assuming Bitcoin makes it to ponzi saturation point. It might be stopped before that by government action or an altcoin.

Yep I know all this - Bitcoin could collapse. It could fail (like MySpace) - but that's my problem. I can sell or buy freely knowing this. Everyone already knows this.

When these coins are dumped, won't the new owners just continue the same game?
Aren't these the new investors? - all these people with cheaper coins? A new mass of people willing to hold or sell or start buying more?

You apparently missed the post upthread about this. I will repeat the logic in case it got buried.

Assuming Bitcoin makes it to saturation, meaning everyone that will buy has bought, then it collapses because price can't move up, thus investors want to exit to go get gains else where.

Then only a few investors can cash out. The vast majority will be stuck with the crashed value. This is math at the top of the OP.

So then you've ended up with a very few who cashed out with huge gains (probably the early adopters who were selling all the way up slowly), and everyone else bankrupt.

So who buys your coin now? No one left to buy it.

End of story. End of world (if Bitcoin makes it to $trillions market cap).

Well maybe it's best if you don't buy any bitcoins then - you've done your risk assessment and I've done mine.
AnonyMint (OP)
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November 21, 2013, 04:08:15 PM
 #89

Bitcoins are just worth whatever people are willing to pay for them - the market cap is irrelevant.

If Satoshi suddenly sells 1 million BTC then there will be massive slippage and the price will tank - but there's no con or scheme - everyone knows this.

We all know of the big stashes of bitcoins and what would happen if they were sold all at one (initially anyway)
We all know all the facts and we choose to buy/sell based on this reality.

Where's the con? How have we been tricked?

The con is you got several facts wrong.

When the number of new investors can't increase fast enough, it collapses. We don't need Satoshi to sell, that was a strawman invented to make it sound less likely.

Even only tiny stashes sell it will collapse at that point.

This is the nature of pyramid-ponzi schemes.

I explained that in great detail upthread. Once you bankrupt the later investors on that end-game collapse, you don't have any more investors to do it again.

This is assuming Bitcoin makes it to ponzi saturation point. It might be stopped before that by government action or an altcoin.

Yep I know all this - Bitcoin could collapse. It could fail (like MySpace) - but that's my problem. I can sell or buy freely knowing this. Everyone already knows this.

When these coins are dumped, won't the new owners just continue the same game?
Aren't these the new investors? - all these people with cheaper coins? A new mass of people willing to hold or sell or start buying more?

You apparently missed the post upthread about this. I will repeat the logic in case it got buried.

Assuming Bitcoin makes it to saturation, meaning everyone that will buy has bought, then it collapses because price can't move up, thus investors want to exit to go get gains else where.

Then only a few investors can cash out. The vast majority will be stuck with the crashed value. This is math at the top of the OP.

So then you've ended up with a very few who cashed out with huge gains (probably the early adopters who were selling all the way up slowly), and everyone else bankrupt.

So who buys your coin now? No one left to buy it.

End of story. End of world (if Bitcoin makes it to $trillions market cap).

Well maybe it's best if you don't buy any bitcoins then - you've done your risk assessment and I've done mine.

I am not.

I will buy the right altcoin if it comes. I will sit on the ask always in the early days and weeks, if it has the correct design.

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AnonyMint (OP)
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November 21, 2013, 04:17:18 PM
 #90

Bitcoin supply is limited, the amount set is known from source code.

If for ponzi scheme, then the flow will be very oddly than bitcoin as a typical ponzi scheme obscures more information  than bitcoin, also there is only one node for the game. Bitcoin is, just like DSP, so if more people join, then the system will be better as the system will replace majority of transaction systems very soon as all people can monitor the flow.

That doesn't make any sense. Read the thread.

The transparency point was refuted on page 1.

The "majority of transactions" has been refuted in the recent page.

You would need to refute those prior refutations. I almost deleted your post because it violates the warning I put saying you must read the thread. But I decided to give this warning one last time.
Anonymint, I do enjoy your posts, and you do present interesting arguments, However I must ask as to your end-game?.
Is it purely educational
Is it a righteous ego trip where you get to flex your intellectual prowess… are you just looking for "i told you so"  moments??
Are you try to save ourselves from wasting time/effort/money?
Your agenda is quite telling, but your motives are not…. please explain.

I am preparing those who want something better to understand why it would be better, then hoping those who can develop it will see the opportunity.

In short, trying to fix the problem I see.

I appreciate that, but your clearly not stupid.

Thank you. So you must also not be.

Everyone on this forum is here because a vested interest in BTC.

12% say they don't.

"no one wants to be told there child is ugly"  and in a similar vein, no one here will agree with your every word…. because it goes against the reason that they frequent this forum in the first place… It's like going on a Ford forum and telling everyone that Honda is better….no one will listen regardless of if you are right.

Even if you provide a valid argument, no one is going to become enlightened as they have blickered vision.

Agreed.

So they won't be early adopters. They will miss the gains from 0.0001 to $1 or $10. But still they won't buy, because their pride as they will remember me telling them here that they would be forced to buy.

So the goal is to make sure they won't buy until it is $100 or $1000. So they don't run the new economy. Because I think they are the socialists and not the wise ones that we need running the new economy.

You might wise up at around $1, because you are apparently not stupid.

I personally have a reasonable position in BTC… enough to make me what to fight it's corner, champion it's cause and hope it achieves half of what the optimists promise.
I am a realist, as most people are… many people post their desires here (even if they won't reach fruition) but continuing to try to push your point is a fool's errand and you will get no-where.

My advice to you is don't be greedy. Sell early, maybe at sometime next year or 2015. Take your triple or 10X gains and run like hell from Bitcoin and hold your nose that you are losing more gains.

You will be very grateful you did that.

Maybe let a small portion ride, just for the thrill and just for a what if experiment.

As much as I agree with much of what you say, the dreamer in me wants this to go to the moon, and no amount of analysis or speculation will change other peoples view… you will achieve nothing except frustrating yourself.

Surely your time may be better spent on another alt-coin forum so you can tell everyone how naive we are??
This way you will acheive praise, recognition and support…. rather than resistance.

This is a time where men will be separated from boys and (most) women.

I need a few good men.

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November 21, 2013, 04:34:43 PM
Last edit: November 21, 2013, 05:01:58 PM by AnonyMint
 #91

Well boys you've pushed it down to 11%,

11% of 7 billion = 770 million people.

That is still about 750 million more than I need. So just keep voting on the socialist choice. It thrills me to no end.

Dodgers there was one more motivation. I wanted to see if I could learn anything or be rebuked. I did learn several new things in this thread.

Probably also subconsciously to demonstrate I am the alpha/sigma-male here amongst mostly betas, and I suspect Impaler is a sigma.  Embarrassed

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November 21, 2013, 04:38:12 PM
 #92

So what back twitter? If everybody wants to sell their tweeter stock, what would be the value of a tweeter stock?

I wrote on page 1:

4. ... This is why ponzi schemes are so incredibly evil and dangerous. This is different from a stock, because a stock has intrinsic value to due earnings, profit, cash-on-hand, talent of management, talent of employees, contracts, etc..

Tweeter as more debt than asset then would the value be 0 as your exemple sugest? Clearly not. A tweeter bond would have NO value as if nobody sells, nobody buys!
Would tweeter stop to be if nobody was
Willing to buy a tweeter bond? No idea, maybe

Investors see value in their existing software. That have a huge codebase already.

Their huge userbase which can be marketed to, because Twitter is not decentralized. You can't market to Bitcoin users from the public ledger.

Etc..

No way for Bitcoin to generate an income. It must be a currency, else it has no intrinsic value.
Then we agree to disagree if you think investor invest in tweeter for any other reason than increasing or protecting their wealth.

I didn't disagree with that.

I said the value can't go to 0, because there is a significant intrinsic value backing it up.

If the estimates of its intrinsic value are too high, then the investors are wrong.

The Bitcoin investors are egregiously overestimating the intrinsic value of Bitcoin. The currency use is a very tiny fraction of the market cap, and can't increase as fast as the market cap is increasing.

Whereas Twitter has billion users I think, and can send display advertising to all of them to generate revenue. That is a significant intrinsic  value, despite being in debt to develop that.
Yeah then i guess you over estimate the revenue you can get from advertising. I personnally think tweeter fits very well all your definition as the advertising stuff really look far over estimated to me. Now both tweeter stock and bitcoin have this speculative value in it. It s all about what it may do in the futur not what it does right now and this is very hard to estimate. May be that bitcoin will be used for some very surprising things later on...
So if one day investor realise that ads will never pay back tweeter will be in the position you think bitcoin will be when nobody will want to protect there monney/speculate/make cheap transaction anymore. To me one will happen and to you looks like it ll be the other one. Maybe none will and every body ll be happy.

The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions

Satoshi Nakamoto : https://bitcoin.org/bitcoin.pdf
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November 21, 2013, 04:41:52 PM
 #93

So what back twitter? If everybody wants to sell their tweeter stock, what would be the value of a tweeter stock?

I wrote on page 1:

4. ... This is why ponzi schemes are so incredibly evil and dangerous. This is different from a stock, because a stock has intrinsic value to due earnings, profit, cash-on-hand, talent of management, talent of employees, contracts, etc..

Tweeter as more debt than asset then would the value be 0 as your exemple sugest? Clearly not. A tweeter bond would have NO value as if nobody sells, nobody buys!
Would tweeter stop to be if nobody was
Willing to buy a tweeter bond? No idea, maybe

Investors see value in their existing software. That have a huge codebase already.

Their huge userbase which can be marketed to, because Twitter is not decentralized. You can't market to Bitcoin users from the public ledger.

Etc..

No way for Bitcoin to generate an income. It must be a currency, else it has no intrinsic value.
Then we agree to disagree if you think investor invest in tweeter for any other reason than increasing or protecting their wealth.

I didn't disagree with that.

I said the value can't go to 0, because there is a significant intrinsic value backing it up.

If the estimates of its intrinsic value are too high, then the investors are wrong.

The Bitcoin investors are egregiously overestimating the intrinsic value of Bitcoin. The currency use is a very tiny fraction of the market cap, and can't increase as fast as the market cap is increasing.

Whereas Twitter has billion users I think, and can send display advertising to all of them to generate revenue. That is a significant intrinsic  value, despite being in debt to develop that.
Yeah then i guess you over estimate the revenue you can get from advertising. I personnally think tweeter fits very well all your definition as the advertising stuff really look far over estimated to me. Now both tweeter stock and bitcoin have this speculative value in it. It s all about what it may do in the futur not what it does right now and this is very hard to estimate. May be that bitcoin will be used for some very surprising things later on...
So if one day investor realise that ads will never pay back tweeter will be in the position you think bitcoin will be when nobody will want to protect there monney/speculate/make cheap transaction anymore. To me one will happen and to you looks like it ll be the other one. Maybe none will and every body ll be happy.

You may be correct. Many dot.com stocks were clearly ponzi-pyramid schemes as there was nothing there (no intrinsic value) at all and they went poof and they collapsed and died forever. It was all smoke and mirrors. Ditto many junior mining companies. Perhaps ditto most PinkShits stocks (pink sheets, hehe).

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November 21, 2013, 04:50:27 PM
 #94

You are probably the stupidest person I have ever quoted....

You need to provide an argument, otherwise this is just a temper tantrum.

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November 21, 2013, 05:03:31 PM
 #95

Bitcoin is a technology. It is a blockchain-based transaction ledger. There is a limited number of claims to this ledger. These are called satoshis, or bitcoins (10^8 satoshi). We are here to deduce if Bitcoin is a Ponzi scheme, a Pyramid scheme, a Greater-Fool's-game or just a freely-traded something, subject to markets' whims, resulting in booms, busts, bubbles and crashes.


A) I start with assuming that "Ponzi scheme" option is already refuted beyond doubt.


B) As for "Pyramid scheme", after much deliberation I fail to see the logic, how Bitcoin would qualify. I wonder if we even read the same definitions for a Pyramid scheme:
- Wikipedia
- Investopedia.

The essential qualifications for a pyramid are not met.


C) What has been discussed upthread under the name Pyramid scheme, should more precisely be called Greater-Fool's-game. The essence in this would be that people buy in anticipation of a price rise, without regard of the intrinsic value. If the price is indeed rising, this may suck quite many people in, resulting in a spectacular collapse if the intrinsic value fails to meet the expectations.

It does not matter whether we are talking about Internet stocks with currently negative earnings, tulip bulbs, shares of the Blockchain pie, or something "completely useless" such as modern art. The fact is that people are (in most jurisdictions) free to invent, produce and sell things for whatever price they can gouge in a voluntary market. Also buying at inflated prices is not criminalized.

At most, Bitcoin could be classified in this category.

It has to be noted that this kind of speculative bubbles are almost completely harmless. If the product does not have intrinsic value, its production does not burden the real economy. Every time someone buys the bag at a higher price, another one receives the money. The only way to become bankrupt is to take excessive risk or leverage, which are always very stupid actions and people prone to them cannot be helped unless all banks and casinos are closed.

Unlike Ponzis and Pyramid schemes, which revert to zero when unfolding, speculative bubbles revert to their intrinsic value. There are many Internet stocks that are doing good in Nasdaq, tulip bulbs have a certain price, bitcoins will always have a price and art has its valuation. The real economy lives on quite unaffected of the speculative valuation.


D) It seems that the crux of the matter is, whether Bitcoin/bitcoins have intrinsic value as a currency/money or not. If not, it has been a recurring fad over several years and numerous bubbles, which have repeatedly risen higher and higher. In fact, the numbers we are seeing in the exchanges testify that every day until this week has been a bear trap.

It is hardly possible that Bitcoin would have survived the 2011 bubble if there was not a promise of significant utility. The word promise is important, because money is a high network-effect thing. If I have all the money in the world, it is most likely worth less than half of it. Money tends to be worth the most when it is distributed in a Pareto way.

If all money belongs to a few and others are uniformly poor, the rich cannot employ their money to buy goods and services because the poor are not capitalized to produce them. Similarly the poor cannot buy from the rich because they don't have the money. The (hypothetical and unachievable) situation that everyone has the same amount of money, quickly leads to Pareto distribution (or "worse" top-heaviness, unless the rule of law is present).

Let's think the valuation of Facebook from the user perspective. When Facebook had one user, it was worthless. I would say the value per user grew rather quickly when the earliest users came. Just out of my hat, let's say they valued it at $100 on average. As new users were added, the value for them was initially just above zero (the threshold of joining in is to receive positive value), but the old users' value was increased due to network effects. The more Facebook grew, the more value for everyone. From systems perspective, it should have been obvious that the supermajority of the target segment globally would become users.

The valuation of Facebook in the stock market is $112 billion, which is $95 per monthly active user. If the ownership of the system were possible for everyone in every stage of the adoption process, we would have an ownership distribution curve similar to Bitcoin's. (Now there is some 29-year old geek that owns 24% of all, talk about inequality  Angry ) In both cases, the value is roughly proportional to the number of users, but the issuance is fixed.

Facebook would not have become so valuable if it had not become widespread. Then the investors would have lost their stake. If Bitcoin fails, investors lose likewise. If someone sees the failure before the others and sells out, good for him. It is not a reason to be jailed. This is the basic free stock market operation, nothing new to see there.

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And there is no way to deconcentrate it from the current 90+% of BTC is in a few hands. Thus it can't be a widely accepted currency, because it is not widely held and can't be widely held. By the time 1% of the global population has purchased, it will be priced on the order $30,000+ and then the other 99% won't be able to afford to get much BTC at all. You say that is okay, but it means you impoverish the rest of the world relative to early adopters so the velocity of money would collapse, because very rich people spend a much smaller % of their money than middle class people. The 99% will never go for that arrangement, they will stick with fiat and then the collapse of Bitcoin's bubble will ensue and the stampede to the exits with all trampled and value lost.

Bitcoin is currently distributed in an even theoretically near-optimal scale-invariant Pareto way. Bitcoins can be easily traded in many parts of the world. The free market ensures that they are most optimally distributed, because if someone finds himself with too many bitcoins, he can sell. The one lacking can buy. The distribution of bitcoins is way more efficient and widespread than Facebook stock, and will soon become possible for practically everyone on the planet, which is unprecedented for any investment vehicle or even currency!

We share the vision that the inordinate gains in price drive adoption quicker than the general understanding of Bitcoin spreads. This will lead to a bubble of extraordinary valuation. But that will pop even quicker than it formed and no value will have been lost. The recent examples to be carefully analyzed are the Nasdaq bubble of 1999-2000 and the PM in 1980. Bubbles act as boosters to the underlying. Nasdaq bubble fueled the all-pervasiveness of Internet in the 2000s by providing ample VC money to everyone interested. PM bubble encouraged mining, resulting in tumbling PM prices when the mines started operations a decade later.

The bubble happens when the 2nd % wants to buy. Then it crashes and the 98% can slowly start buying. My father still owns Internet stocks, he only bought them long after the bubble Wink Life and markets go on and do not magically stop at the bubble top. Bitcoin exchange rate will not go to zero, it will go down and provide a spectacular buying opportunity in the wake of mass adoption that will drive the price to its realistic long term value (if there is one).

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I see it can never scale as a currency, thus it has no value to you once the gains stop. Thus you and everyone else will exit and the value will go to near 0. Because only a very small fraction of the market cap is using it for spending.

This can't change, because Bitcoin isn't designed to distribute out to the masses to get them involved in spending it.

Gold is also not used as a currency. Gold is the most salable commodity, meaning that it is the easiest to part with in large quantities. This has been called Money in the past.

As bitcoin grows bigger, it may surpass gold in this regard, or may have already done so. Thought experiment is that a person finds himself in a random place with $1 million worth of gold or bitcoins. How long time and how many % loss he must spend to make the transactions necessary to convert the value to what he needs.

Silver used to be the most hoardable commodity, meaning that it is easiest to accumulate in small increments. Bitcoin has already become the most hoardable thing, proven by tipboxes etc. In long-range applications bitcoins are easier to accumulate than even cash!

There is a reason why the word 'silver' and 'money' are the same in 49 languages.

Distributing the mining coin rewards to millions of people who download it with one-click will do that.

And the investors can buy from them. So no problem the greed will help then.

Bitcoin is the inverse (converse)!

The investors mine the coins, then the masses are expected to buy them. brain dead design for a coin.

The Russians tried to privatize the communist state wealth directly to the people. The result was 50 million people who owned their share of huge enterprises for a few minutes, until somebody bought it from them at a price of a small bottle of vodka, or a cup of coffee. The companies ended back in oligarch control. It is not optimal, workable or possible for everybody to own a little. It invariably ends in somebody owning it all, and the masses do not get much of a benefit for selling their share. As much as we both would like it, faucets don't work.

In a more theoretical vein, if we assume that the altcoin system is worth $1,000 per user, and the users generate the value for themselves by CPU mining, and the inflation rate mimics gold's 2% APR, then the mining reward is $20 per user per year, and it is indeed a perfect analogy to exchange your monthly reward for a cup of coffee. Hardly a recipe for a stealth mass-adoption.

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November 21, 2013, 05:09:07 PM
 #96

So my little economic knowledge makes me think you confuse an over over valuation ( bubble ) with pyramid scheme one is a scam from the beggining ( operators according to sec ) the other is a bunch of fool fooling themself and other but at least didn t start as a scam.
Is bitcoin in the later stage? That may be hard to tell ofc ...

The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions

Satoshi Nakamoto : https://bitcoin.org/bitcoin.pdf
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November 21, 2013, 05:55:12 PM
 #97

Lets do a little simple math as follows.

Joe invests $100 to buy all the BTC from Satoshi on day 1, all of BTC is worth $100
Sally invests $1000 to buy 10% of BTC from Joe, all of BTC is worth $10,000
Joe wants to withdraw his $9000, but there is only $1100 invested in BTC.

I'm not sure you quite understand investments. There is not $1100 invested in BTC in this scenario, there is only BTC invested in BTC. As soon as Joe pays Satoshi $100 for some BTC all that happens is Satoshi has $100. That money no longer has anything to do with bitcoin. And neither does Sally's.

If I'm trying to raise capital and issue new shares which can be bought directly from me to be used for whatever purpose I'm raising capital from, then and only then can you really say the amount paid is "invested in" something.

No
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November 21, 2013, 06:06:59 PM
 #98

Are you trying to save us from financial ruin..??   Are you trying to promote some other form of Coin??

Yes. Yes.

By "us", I mean avoiding a world like 1984 which will come very rapidly now.

As you can see, most westerners are now socialists. We don't have many John Wayne's any more. I want to save the few we have and promote them to the top to run the world in freedom. The socialists don't comprehend where they are going.

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November 21, 2013, 06:56:25 PM
Last edit: November 21, 2013, 07:37:42 PM by AnonyMint
 #99

I am extremely sleepy.

I will obliterate this nonsense from my "friend" Risto.

Bitcoin is a technology. It is a blockchain-based transaction ledger. There is a limited number of claims to this ledger.

Ditto YACoin.


A) I start with assuming that "Ponzi scheme" option is already refuted beyond doubt.
B) As for "Pyramid scheme", after much deliberation I fail to see the logic, how Bitcoin would qualify. I wonder if we even read the same definitions for a Pyramid scheme:
- Wikipedia
- Investopedia.

The essential qualifications for a pyramid are not met.

Constructing a strawman is a disingenuous form of non-argumentation. It basically means you gave up before you started.

Must I quote from you the discussions in thread where we decided it has an amalgamation of ponzi and pyramid qualities. Surely you understand it is Marxism to require me to do your reading for you.

C) What has been discussed upthread under the name Pyramid scheme, should more precisely be called Greater-Fool's-game. The essence in this would be that people buy in anticipation of a price rise, without regard of the intrinsic value. If the price is indeed rising, this may suck quite many people in, resulting in a spectacular collapse if the intrinsic value fails to meet the expectations.

Not. Because you continue to blithe-fully ignore systemic effects.

No where do I see any dot.com stock professing valuations based on all 7 billion people one day buying in because it is a currency.

Currency is a very powerful implied con. It implies power far beyond any stock exchange, much less individual stock.

It does not matter whether we are talking about Internet stocks with currently negative earnings, tulip bulbs, shares of the Blockchain pie, or something "completely useless" such as modern art. The fact is that people are (in most jurisdictions) free to invent, produce and sell things for whatever price they can gouge in a voluntary market. Also buying at inflated prices is not criminalized.

And none of those do we claim the economy-of-scale of the whole globe in one investment.

I strongly suggest you read Nicolas Taleb's new bestseller Antifragility.

The strongest characteristic of a ponzi scheme is the massive destruction it causes because the players don't see the systemic risk of pooling themselves. They are blinded to it by a mania.

And that is exactly what we have here today with Bitcoin.

It has to be noted that this kind of speculative bubbles are almost completely harmless.

Ha! You ignore systemic risk like any good collectivist does.

If the product does not have intrinsic value, its production does not burden the real economy.

Bring all the world's money into one investment, then tell me how can the world function when that investment is not a currency.

bitcoins will always have a price

You don't seem to understand that if you tie 7 billion people's shoelaces together they now walk as one.

Penny or nanopenny makes no difference. What matters is the relative potential energy outside the single TITANIC THING.

D) It seems that the crux of the matter is, whether Bitcoin/bitcoins have intrinsic value as a currency/money or not. If not, it has been a recurring fad over several years and numerous bubbles, which have repeatedly risen higher and higher. In fact, the numbers we are seeing in the exchanges testify that every day until this week has been a bear trap.

How you relate speculation to transaction volume by value is beyond me.  Roll Eyes

If all money belongs to a few and others are uniformly poor, the rich cannot employ their money to buy goods and services because the poor are not capitalized to produce them. Similarly the poor cannot buy from the rich because they don't have the money. The (hypothetical and unachievable) situation that everyone has the same amount of money, quickly leads to Pareto distribution (or "worse" top-heaviness, unless the rule of law is present).

You apparently don't know that the Power-law (Pareto is special case) distribution of wealth only applies at the top 3%:

"Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States" by A. A. Dragulescu and V. M. Yakovenko

Distributing the mining coin rewards to millions of people who download it with one-click will do that.

And the investors can buy from them. So no problem the greed will help then.

Bitcoin is the inverse (converse)!

The investors mine the coins, then the masses are expected to buy them. brain dead design for a coin.

The Russians tried to privatize the communist state wealth directly to the people. The result was 50 million people who owned their share of huge enterprises for a few minutes, until somebody bought it from them at a price of a small bottle of vodka, or a cup of coffee. The companies ended back in oligarch control. It is not optimal, workable or possible for everybody to own a little. It invariably ends in somebody owning it all, and the masses do not get much of a benefit for selling their share. As much as we both would like it, faucets don't work.

In fact the 97% own very little morsels which is mostly always moving as spending and wages in virtuous cycle.

And we don't give it away, the must mine it which means put up resources and effort to get it.

In a more theoretical vein, if we assume that the altcoin system is worth $1,000 per user, and the users generate the value for themselves by CPU mining, and the inflation rate mimics gold's 2% APR, then the mining reward is $20 per user per year, and it is indeed a perfect analogy to exchange your monthly reward for a cup of coffee. Hardly a recipe for a stealth mass-adoption.

Where I live that is 1-2 weeks salary and a months supply of rice. I realize you live socialist Europe, where everything costs 3X what it should do to unions and 2X Lafer rate taxes.

The more salient point is you can expose many more people to this neat technology and then they will think of ways to make money with it and become merchants, etc.

The networking effects are unfathomable.

You are a clueless technological neophyte because you've never shipped a download software to 1 million people. I have. I know there are a zillion unforseen interactions and spin-offs.

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November 21, 2013, 07:07:32 PM
 #100

All your arguments, AnonyMint, seem to be based on your own assumption, that "Bitcoin can not be a currency".

I want you to to back this up with some evidence.
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