Is Bitcoin a Pyramid or Ponzi scheme & what are the ramifications?

[MoonShadow]

Can people please, please stop encouraging this guy and feeding his need to muddy the forum.  It's not intelligent, it's not insightful, it's dribble, babble, nonsense.

Fair point.

I'm out.  Anonymint is on my ignore list.

Socialists must stick together and copy each other like mindless drones for alone and independent they are weak and incapable.

Is that what you told yourself when you put me on your ignore list?

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[AnonyMint]

Can people please, please stop encouraging this guy and feeding his need to muddy the forum.  It's not intelligent, it's not insightful, it's dribble, babble, nonsense.

Fair point.

I'm out.  Anonymint is on my ignore list.

Socialists must stick together and copy each other like mindless drones for alone and independent they are weak and incapable.

Is that what you told yourself when you put me on your ignore list?

Only one person is on my ignore list, anth0ny. That is because IMO (at least when he is responding to me) the information content of his posts is freakishly, microscopically low.

I just don't want to continue arguing the Transactions Withholding Attack with you because (after 8 pages of discussion) I am satisfied already that no one can refute it. You and readers are free to believe what you want.

[MoonShadow]

Can people please, please stop encouraging this guy and feeding his need to muddy the forum.  It's not intelligent, it's not insightful, it's dribble, babble, nonsense.

Fair point.

I'm out.  Anonymint is on my ignore list.

Socialists must stick together and copy each other like mindless drones for alone and independent they are weak and incapable.

Is that what you told yourself when you put me on your ignore list?

Only one person is on my ignore list, anth0ny.

NOW I'm offended.

I just don't want to continue arguing the Transactions Withholding Attack with you because (after 8 pages of discussion) I am satisfied already that no one can refute it. You and readers are free to believe what you want.

I'm simpy amazed that this is what you took away from those same 8 pages.

[AnonyMint]

I just don't want to continue arguing the Transactions Withholding Attack with you because (after 8 pages of discussion) I am satisfied already that no one can refute it. You and readers are free to believe what you want.

I'm simpy amazed that this is what you took away from those same 8 pages.

That is ok. All will be proven soon enough. That is why I am the programmer and you are not.

[MoonShadow]

I just don't want to continue arguing the Transactions Withholding Attack with you because (after 8 pages of discussion) I am satisfied already that no one can refute it. You and readers are free to believe what you want.

I'm simpy amazed that this is what you took away from those same 8 pages.

That is ok. All will be proven soon enough. That is why I am the programmer and you are not.

You might be the programmer, but don't forget that when it comes to economics, you'll forever be my student.

[AnonyMint]

The difference between fantasy and delusion, is only the whether the hair grows on the palm of your right or left hand.

[MoonShadow]

The difference between fantasy and delusion, is only the whether the hair grows on the palm of your right or left hand.

https://yourlogicalfallacyis.com/personal-incredulity

[theonewhowaskazu]

This is such a noob thread its not even funny.

Anonymint, there is a difference between a ponzi scheme and a bubble. In a ponzi/pyramid scheme, the system must be supported with growth at all time, else its worthless. In a bubble, no such growth is necessary; instead, there merely needs to be no impetus to break the bubble. Even if Bitcoin is a bubble, you can't call it a ponzi scheme, for the same reason you can't call traditional fractional reserve banking a ponzi scheme: They do work without growth, so long as there is no panic.

Whether or not Bitcoin is really a bubble is yet to be seen. One might argue that if the bubble doesn't pop, Bitcoin is still inherently a bubble, just one that has remained inflated so long it has solidified itself against popping, since, if everybody did indeed sell and nobody bought, it would be nearly worthless. This is true of almost all money, though, so its sort of just a terminology troll.

As for all this other crap, the answer is Anonymint likes saying everything and anything inflammatory just to be 'rad.' Nothing to see here.

[AnonyMint]

I wrote in email:

There were two threads on the Ponzi, the one that diverged with comments
about men vs. women was not the main one. Here is the main:

https://bitcointalk.org/index.php?topic=341594.0

I developed the gender discussion poorly because it was just a side remark
and I was very sleepy. I was merely trying to point out that men would
react more strongly once they lost livelihood, and women innately react
strongly daily (on local issues) and thus are more balanced. You
apparently got the point per your comments below. Thanks. I was trying to
get them to see that what seems rational now could turn very quickly and
they would see the type of emotional change they see in a women if her
daily interaction needs are not maintained. That doesn't mean I think that
women are incapable of greatness, just statistically they are less prone
to sacrifice the daily for the big strategic victory. And that is both a
strength and a weakness. Men have the hormonal structure to sacrifice
themselves. Women do to when the children are involved.

Alas all of that is not cast in stone for every person. I do look at every
person as unique, yet I can also save a lot of time by building a
taxonomy, e.g. as you say about expending too much time with socialists.

This is such a noob thread its not even funny.

Anonymint, there is a difference between a ponzi scheme and a bubble. In a ponzi/pyramid scheme, the system must be supported with growth at all time, else its worthless. In a bubble, no such growth is necessary; instead, there merely needs to be no impetus to break the bubble. Even if Bitcoin is a bubble, you can't call it a ponzi scheme, for the same reason you can't call traditional fractional reserve banking a ponzi scheme: They do work without growth, so long as there is no panic.

Whether or not Bitcoin is really a bubble is yet to be seen. One might argue that if the bubble doesn't pop, Bitcoin is still inherently a bubble, just one that has remained inflated so long it has solidified itself against popping, since, if everybody did indeed sell and nobody bought, it would be nearly worthless. This is true of almost all money, though, so its sort of just a terminology troll.

As for all this other crap, the answer is Anonymint likes saying everything and anything inflammatory just to be 'rad.' Nothing to see here.

You still don't get it.

Feel free to fill up the butt hurt form and submit it to air your grievances.

[CoinCube]

I read both threads. As someone with no stake in BTC right now I am very interested
in reading about the potential flaws before I invest. I appreciate all of you including AnonyMint who
took the time to present clear arguments on the merits of bitcoin. Despite the unnecessary flames and insults the thread overall is quite informative.

As someone who is an outsider (no skin in the game as of yet) I would have answered yes to the now closed poll asking if bitcoin is a pyramid/ponsi scheme. I think it is but its one unlike any the world has ever seen before.

1) The technology behind bitcoin is undoubtedly revolutionary. Something like bitcoin will no doubt be the currency of the future.
2) Bitcoin has several flaws mentioned by AnonyMint the worse of which is the unsolvable income concentration that I agree will doom bitcoin to being a minor player in the future.
3) The price of bitcoin will likely crash and stay crashed at some point in the future. Not at 0 but at some number a lot lower then the majority of buyers paid for it.

Where I disagree with AnonyMint's arguments is the consequences of these facts. AnonyMint envisions a future where all the world's wealth gets sucked up into bitcoin leading to a massive horrendous crash. This is not likely to happen.

Instead I believe the Bitcoin bubble is completely necessary. As was mentioned earlier in the thread a true stable and successful world wide cryptocurrency needs to be widely distributed and dispersed and widely mined ideally by CPU mining. The only way to accomplish that is to role out such a currency to a world population that is largely primed and excited to receive it.

The role of Bitcoin is to prime the world for its successor.  It is transparent and this will make it naturally self limiting. The higher the bubble grows the more resentment there will be towards those who got 10,000 + coin for almost nothing. This will naturally prime the way for Bitcoins successor.

For any successor to bitcoin to succeed and actually become a distributed world wide functional currency it will need to be widely adopted from the start. Bitcoin will establish the conditions where that can occur so I view the coming bubble as a largely good thing.

[AnonyMint]

Where I disagree with AnonyMint's arguments is the consequences of these facts. AnonyMint envisions a future where all the world's wealth gets sucked up into bitcoin leading to a massive horrendous crash. This is not likely to happen.

Instead I believe the Bitcoin bubble is completely necessary. As was mentioned earlier in the thread a true stable and successful world wide cryptocurrency needs to be widely distributed and dispersed and widely mined ideally by CPU mining. The only way to accomplish that is to role out such a currency to a world population that is largely primed and excited to receive it.

The role of Bitcoin is to prime the world for its successor. 

Actually you and I entirely agree. Very astute. I was actually pitching that outcome but it may be difficult to discern among the constant defense of the prior points. I stated two possible outcomes.

1. Bitcoin goes to $trillions market cap and we have systemic default problem on our hands.

2. Altcoins or other factor halts the ascent before that happens.

However, #2 forks into basically two possibilities and one of them is very scary IMO:

2a. Altcoin(s) and decentralized competition.

2b. Government supply electronic fiat currency.

I've known for a long-time what the government's strategy was, and now they are starting to reveal it:

You parrot Paul Krugman's nonsense. The QE ended up as dollar bond issues in the developing world, because of the carry trade on ZIRP ostensibly through the primary dealers and other arbitrages.

So in 2015 you will hear a giant sucking sound from BRICs et al into the dollar as these loans have to be serviced into a collapsing global trade given ECB just started NIRP (negative interest rate policy).

http://armstrongeconomics.com/2013/11/21/negative-interest-rates-coming-soon-to-a-bank-near-you/

http://armstrongeconomics.com/2013/11/17/negative-interest-rates-eliminating-cash-the-summers-solution/

http://armstrongeconomics.com/2013/11/18/15800/

http://armstrongeconomics.com/2013/11/21/will-electronic-money-be-deflationary/

http://armstrongeconomics.com/2013/11/20/the-tree-has-been-cut-electronic-money-will-force-an-underground-economy-based-on-barter/

http://armstrongeconomics.com/2013/11/20/the-bitcoin-hearing/

http://armstrongeconomics.com/2013/11/19/congressional-hearings-on-bitcoin/

They can accomplish it with the market failure of Bitcoin.

They have two main vectors of takeover:

1. Regulate the people and business who use Bitcoin, since it is not anonymous.

2. Technical takeover employing Amazon et al.

[CoinCube]

I am not too worried about government fiat crypto currency.
I think we are entering an era where it will soon become clear to the masses that fiat currency is a bad idea.
This will add fuel to the Bitcoin bubble. It will also undermine any government attempt to launch a fiat centralized cryptocurrency.

So I guess I am optimistic about the future of some yet to be invented altcoin. I am also seriously thinking about investing in bitcoin. I think we could have some ways to go before the huge crash. We are somewhere in the middle of the pyramid right now.

As has been mentioned in the news bitcoin is a perfect asset bubble.
http://www.businessinsider.com/bitcoin-bubble-2013-11

These things can go on for way longer then one would think they could.
Look at the recent housing bubble. That was obvious for years but it kept going and going way longer then I ever thought it would.

What makes me hesitate is I have not yet figured out a way to be confident I get out in time.

[AnonyMint]

My opinion is watch the market cap. As long as it it less than a stock, we shouldn't be near saturation. I figure 2014 or 2015 is the top based on current doubling rate. Maybe 2016 at most.

I am very worried about the government fiat, because neither the geeks nor the libertarians can really see what is going on here. They are so complacent.

My group is the only one on the planet who is taking action as far as know.

There are others designing altcoins, but they have a different focus.

And I know a lot of people and receive a lot of information flowing to me.

Hope I am wrong.

[CoinCube]

Some governments are certain to try and issue fiat cryptocurrencies but I doubt these have much chance of success.

One writer who's work I highly recommend is John Mauldin
http://www.mauldineconomics.com/about-us/john-mauldin/

He has a free newsletter that is very informative. I first learned about bitcoin from this newsletter.
He lays out a very convincing case that we are in for a world of hurt in the near future.

Personally I think it will start in Japan. Before too long Japan with their current trajectory is going to be in a situation where it becomes obvious to everyone that that the only way they will ever pay off their crazy high government debt is to keep printing money.

Once it becomes obvious to all that Japan has not choice but to print and keep printing (they will choose this over default) we are in for some nasty inflation. Not just in Japan but in all the countries playing around with QE (which is pretty much everyone).

By the time the show is over there will be little to no faith in fiat as a store of value in my opinion. If things play out this way any centralized government crypto is destined to be a huge flop.

[An amorous cow-herder]

That incorrect assumption is why I am a world-class programmer and you are not.

Sure you are. If you had at said you took a couple of word classes i might have actually believed you.

[AnonyMint]

Some governments are certain to try and issue fiat cryptocurrencies but I doubt these have much chance of success.

One writer who's work I highly recommend is John Mauldin
http://www.mauldineconomics.com/about-us/john-mauldin/

He has a free newsletter that is very informative. I first learned about bitcoin from this newsletter.
He lays out a very convincing case that we are in for a world of hurt in the near future.

Personally I think it will start in Japan. Before too long Japan with their current trajectory is going to be in a situation where it becomes obvious to everyone that that the only way they will ever pay off their crazy high government debt is to keep printing money.

Once it becomes obvious to all that Japan has not choice but to print and keep printing (they will choose this over default) we are in for some nasty inflation. Not just in Japan but in all the countries playing around with QE (which is pretty much everyone).

By the time the show is over there will be little to no faith in fiat as a store of value in my opinion. If things play out this way any centralized government crypto is destined to be a huge flop.

It will be global coordination of the G20 that create the new electronic currency. See my upthread links from Armstrong.

They can just morph Bitcoin. See my Transactions Withholding Attack.

Btw, I follow Mauldin and many others. Michael Pettis and Martin Armstrong are two you should read also (Mauldin knows them of course)

Pettis is the China expert. He has a recent blog about Japan's future.

Armstrong ran the worlds largest hedge fund at $3 trillion

http://mpettis.com/

http://armstrongeconomics.com/armstrong_economics_blog/

I agree with you, the entire system will come crashing down.

And that is precisely how they will get a global electronic money fiat.

Hungry billions agree to accept a solution. The destroyed nation-states won't be able to offer a solution.

The only solution will be a global debt restructuring and new currency regime.

This is crystal clear, and Mauldin knows this. He is just a gatekeeper for the central banks as is Pettis. They both belong to the CFR.

You should wonder why Mauldin is pitching this Bitcoin mania to you. He like Max Keiser are working with the system. Only Armstrong tells the truth about Bitcoin's future.

Armstrong is the true outsider (I think?).

[CoinCube]

CFR?

Thanks I have not had a chance to read either of them I will check them out when I have time.

I think you are underestimating the distrust that the general population will have of fiat currency after having so recently been burned by a collapse.

I don't have time to read your transaction attack thread tonight but even if such a thing happened people would simple leave bitcoin for an altcoin that was more robust. Once burned by a fiat crisis I don't think the population will ever trust fiat especially with a multitude of non fiat alternatives to choose from that are no doubt in the works.

My grandparents lived through the great depression. It changed them. Their entire lives they were crazy savers and never wasted anything.

A fiat crisis will likewise change our generation. We will become crazy fiat haters. This is why I don't think a centralized fiat system will succeed.

Here is the article from Mauldin on bitcoin from 5/2013. Its an interesting read (whenever you have time not too relevant to this conversation) I felt it was fair. Did not really pump bitcoin much. In fact their take was that government would probably try to outlaw it. Looks like they were wrong on that one at least so far.
http://www.mauldineconomics.com/ttmygh/bit-happens

[AnonyMint]

CFR?

Thanks I have not had a chance to read either of them I will check them out when I have time.

I think you are underestimating the distrust that the general population will have of fiat currency after having so recently been burned by a collapse.

I don't have time to read your transaction attack thread tonight but even if such a thing happened people would simple leave bitcoin for an altcoin that was more robust. Once burned by a fiat crisis I don't think the population will ever trust fiat especially with a multitude of non fiat alternatives to choose from that are no doubt in the works.

My grandparents lived through the great depression. It changed them. Their entire lives they were crazy savers and never wasted anything.

A fiat crisis will likewise change our generation. We will become crazy fiat haters. This is why I don't think a centralized fiat system will succeed.

People won't see it as fiat. It will be of course sold to them with propaganda just like Bitcoin was sold by Max Keiser et al to goldbugs as the better gold.

People are myopic and gullible (i.e. a form of "stupid" or preoccupied), don't forget that.

Fork won't stop my attack.

Sorry you are naive on all this, that is why you aren't worried as you should be.

CFR = Council on Foreign Relations a creation of the establishment akin to Rockefeller and his Trilateral Commission.

Note due to compartmentalization not every person (e.g. Angelina Jolie) in the CFR sees themself as a gatekeeper. They see themselves as part of a greater good.

[CoinCube]

People are stupid but getting burned tends to make them pay attention. We shall see.

I am out for the night have to work tomorrow.
I think you make interesting points (delivery could use some work however).

As the saying goes you catch more flies with honey then vineger. I think you would find more converts if you were a wee bit less confrontational in your post.

I enjoyed the conversation. Thanks for the interesting read.

[AnonyMint]

(delivery could use some work however).

I am a programmer. Many geeks (often the most productive ones) are not good at English prose delivery. We speak Klingon to the computer daily.