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Author Topic: Ethics and Pyramids  (Read 1706 times)
CoinCube
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November 23, 2013, 07:41:08 AM
 #1

So I am struggling with an ethical quandary.
I am not currently a bitcoin investor but I am thinking
Of getting into the mining game in a big way.

Like many here I think Bitcoin is going to continue to do very
well at least for the next year or two.

Problem is I also think bitcoin is a pyramid scheme. I believe my gains will come at the expense of someone in the future who is going to get burned.

Now obviously if you don't believe it's a pyramid there is no problem. Unfortunately, However, I do so is it morally right for me to participate?

I think the bitcoin bubble is overall a good thing as it
will awaken people to crypto currency and its possibilities.
Does that justify participating in a Pyramid scheme that I worry
may end in tears for a lot of people?



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November 23, 2013, 08:01:04 AM
 #2

If you feel that Bitcoin is a pyramid scheme, but that cryptocoins are good in theory, then find an altcoin that you believe in. They are all going to go up for the next few years.

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November 23, 2013, 08:42:27 AM
 #3

I agree with you that bitcoin has many qualities of a pyramid scheme, and I too believe it will largely fall apart in the mid-term, year or two from now. But there is always a chance that we`re wrong and this will be the greatest invention since `fire` or the wheel, as some of the lunatics here seem to believe. Everyone investing in this is an adult (hopefully) and they have to make up their own minds if they want to throw their hat in the ring or not. If they naively come in with the notion that bitcoin is a 100% guaranteed investment, then they`re going to get burned anyway, whether it be by bitcoin or some other get rich quick scheme. It does scare me though, I admit, when I read posts on here of people taking money from their 401k  Shocked or running up debt to invest in bull trends, but hey, bitcoin is all about freedom and if that`s what they want to do, then more power to `em.

Night gathers, and now my bitcoinwisdom watch begins.
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November 23, 2013, 08:44:39 AM
 #4

Think about this another way:

A. Who has the majority of the wealth?
B. Do you really care if they have a bit less?

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November 23, 2013, 09:54:39 AM
 #5

you're better off buying than mining. if you want to mine something go for Litecoins. as far as the pyramid part, see my sig.


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November 23, 2013, 09:57:12 AM
 #6

Stop over analysing it

Draw the line in the sand and decide which side of it you want to be on

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November 23, 2013, 10:25:10 AM
 #7

You don't have an ethical dilemma.  Its exactly like trading in futures where every deal has a winner and a loser.  You will put your investment in based on the best information available to you and the buyers will do the same and let the market, which neither of you can predict, do the rest.

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porcupine87
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November 23, 2013, 11:58:57 AM
 #8

If you don't completly understand how the Bitcoin protocoll works or what potentials it can provide, I would only invest a small amount. Maybe to buy 1 to 5 coins. Secure it on a paper wallet and wait.

I persuaded my family to invest in a few coins. They accepted the offer because:
- they have spare money
- they don't know where to invest else. Stocks? -> economy is struggeling (dept) and they are at an all time high? Housing? Seems like a bubble, too.

I said to them: See the few bitcoins as an insurance. If the dollar, euro, economy doing well, bitcoin might collapse more likely. But if the hyper inflation or bankruptcies arre coming, the bitcoins will skyrocketing.

But I tell everyone about the potential and RISK.

"Morality, it could be argued, represents the way that people would like the world to work - whereas economics represents how it actually does work." Freakonomics
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November 23, 2013, 12:51:43 PM
 #9

A pyramid scheme stops when fiat money runs out. It is the same for housing and IT bubble, or even a pension fond

But what will happen to bitcoin when fiat money runs out? People will start to use real goods and services to exchange for bitcoin, thus the appreciation for bitcoin will continue until it exhausted all the available resources on the planet

It is a financial black hole  Wink

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November 23, 2013, 01:12:42 PM
 #10

Problem is I also think bitcoin is a pyramid scheme. I believe my gains will come at the expense of someone in the future who is going to get burned.

You believe that it's a pyramid and that you 'll burn someone else but you don't worry about yourself getting burned first?
That doesn't make sense.
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November 23, 2013, 01:55:30 PM
 #11

It's not a pyramid scheme and there's nothing unethical about investing. Sure, investors could lose out if the currency bombs, but people should know and understand the risks as with any investment or purchase. You can buy gold, shares or property and the markets can crash and you can lose a lot or even all of your money, but are they pyramid schemes? No. You also cannot be responsible for the risks of others. What happens if in the future somebody has seen the steadily rising value or Bitcoin and decides to put all their lifesavings into them and buys at some ridiculous price each, then the next day the price tanks or becomes worthless for whatever reason? That's the gamble. People lose their lifesavings into legitimate investments all the time, doesn't make them scams, they just took the gamble and unfortunately lost.

People are quite rightly wary or cryptos because of the way they are sometimes told/sold to people as get rich quick schemes, and they sound too good to be true, so that's why people think they're probably Ponzi/Pyramid Schemes. If you tell somebody you bought a Bitcoin for £70 and a couple of days later it doubled in price and a few months later it's worth seven-times as much, it's going to sound like a scam. Invest and risk at your own peril.

philip2000uk
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November 23, 2013, 02:03:34 PM
 #12

So I am struggling with an ethical quandary.
I am not currently a bitcoin investor but I am thinking
Of getting into the mining game in a big way.

Like many here I think Bitcoin is going to continue to do very
well at least for the next year or two.

Problem is I also think bitcoin is a pyramid scheme. I believe my gains will come at the expense of someone in the future who is going to get burned.

Now obviously if you don't believe it's a pyramid there is no problem. Unfortunately, However, I do so is it morally right for me to participate?

I think the bitcoin bubble is overall a good thing as it
will awaken people to crypto currency and its possibilities.
Does that justify participating in a Pyramid scheme that I worry
may end in tears for a lot of people?



Think of it this way.  A Pyramid Scheme also uses US Dollars.  Bitcoin isn't a pyramid scheme.  Think of online games where you have to pay to buy their money (which i don't like) but it can be thought of like that.
A Pyramid is taking someones money then asking them to ask the person below for money so they can have money then getting them to ask the lower one for money.

Bitcoin is like gold (gold is worth whatever someone pays and also the scarcity of gold makes it worth more)

I bought just to keep and wait for it to gain value.  (though i'm trying to spend a little playing on the btcchina)

Leather girls identity film2 on youtube and website link i accept bitcoin Smiley
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November 23, 2013, 04:01:33 PM
 #13

I said to them: See the few bitcoins as an insurance. If the dollar, euro, economy doing well, bitcoin might collapse more likely. But if the hyper inflation or bankruptcies arre coming, the bitcoins will skyrocketing.

Where is the insurance?
It's absolutly normal, that when the USD values crashes bitcoin will go up.

You need more USD to buy a bread and butter, so you need the same factor more to buy bitcoins...
If there is a hyperinflation and you need to pay 10 million instead of 1$ for a peanut butter, 1 bitcoin will be worth 10 million times more then today.

But can you buy more with this bitcoin? NO! It has the same purchasing power as before. You can't generate wealth out of thin air.


Think of it this way.  A Pyramid Scheme also uses US Dollars.  Bitcoin isn't a pyramid scheme.  Think of online games where you have to pay to buy their money (which i don't like) but it can be thought of like that.
A Pyramid is taking someones money then asking them to ask the person below for money so they can have money then getting them to ask the lower one for money.


It's the same. If you want to cash out your bitcoins, you need to find an idiot to pay you -> otherwise you don't made a profit.
It's not like gold. With gold you have something physically. Bitcoin on it's own are worthless, because the lack of proper infrastructure and daily usage.

< 100 BTC is not worth mentioning. Poor souls will always remain poor. Don't miss the failtrain.
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November 23, 2013, 04:20:04 PM
 #14

...snip...
It's the same. If you want to cash out your bitcoins, you need to find an idiot to pay you -> otherwise you don't made a profit.
It's not like gold. With gold you have something physically. Bitcoin on it's own are worthless, because the lack of proper infrastructure and daily usage.

You can't eat gold and there is no virtue in something being physically in your hand as opposed to digitally on your USB drive.  In both cases you have to sell and get fiat currency.  That is easier with gold as its been in use for 1000s of years and there are jewellers and pawn shops all over the place.  Bitcoin is harder but its 4 years old.  As it matures, infrastructure that is easier to use will start to appear.

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CoinCube
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November 23, 2013, 04:36:46 PM
 #15

Bitcoin is like gold (gold is worth whatever someone pays and also the scarcity of gold makes it worth more)

I think of bitcoin more like shell money
http://en.wikipedia.org/wiki/Shell_money
Early adopters get the the easiest to find shells and then convince everyone else they are money.

you're better off buying than mining. if you want to mine something go for Litecoins. as far as the pyramid part, see my sig.
If I got in, I would do it via ASIC mining. I would rather fund the ASIC manufacturer (someone who worked/invested/built the latest
shell finder) then pay into the pyramid.

You believe that it's a pyramid and that you 'll burn someone else but you don't worry about yourself getting burned first?
That doesn't make sense.

I think I am sophisticated enough to get out in time. Also I think we are only in the middle this thing right now with lots of future investors to come.
Cryptocurrency is one of the most compelling ideas I have ever seen. That underlying idea combined with slick marketing gives bitcoin the potential to form into one of the greatest asset bubbles in history.

A pyramid scheme stops when fiat money runs out. It is the same for housing and IT bubble, or even a pension fond

But what will happen to bitcoin when fiat money runs out? People will start to use real goods and services to exchange for bitcoin, thus the appreciation for bitcoin will continue until it exhausted all the available resources on the planet

Typically with most asset bubbles they crash and crash hard when the fiat money runs out. Your conclusion does not necessarily follow your premise.

If you feel that Bitcoin is a pyramid scheme, but that cryptocoins are good in theory, then find an altcoin that you believe in. They are all going to go up for the next few years.

There is not an altcoin yet that I believe in though I am hopeful one is coming. I think bitcoin will pave the way for a truly global cryptocurrency that is widely distributed from the start (pretty much my main requirement for believing in an altcoin).

It seems like the the overwhelming answer is that there is no problem with investing. I will probably do so. I think bitcoin has a long way to go yet and I hate to leave potential gains on the table.

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November 25, 2013, 01:19:21 AM
 #16

If you believe it is a pyramid and you see the incredibly volatility, then you should know there is a greater chance you will be trapped than you will profit at the expense of others.

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November 25, 2013, 08:43:44 AM
 #17

I agree with you that bitcoin has many qualities of a pyramid scheme, and I too believe it will largely fall apart in the mid-term, year or two from now. But there is always a chance that we`re wrong and this will be the greatest invention since `fire` or the wheel, as some of the lunatics here seem to believe.

In 2 years, bitcoin will be worth at least $100,000 if it hasn't crashed by then.  And by then, I will have taken out 66 times my initial investment.  Oh no, it's going to crash.  And I'm a lunatic for making 66 times my money in 2½ years.

In fact, I plan to do my first cashout at $5,000, which is probably the middle of next year.  And I will make 3 times my initial investment then.  Bitcoin can crash all it wants after that.  There's still no other way in the world I could have made 3 times my money in one year.  But we're all lunatics.

Quote
Everyone investing in this is an adult (hopefully)

No.  Don't you remember the "Am I doing the right thing?" kid?

Quote
It does scare me though, I admit, when I read posts on here of people taking money from their 401k

I already made more money in 5 days in bitcoin than in 5 years in my retirement accounts.  And borrowing half of my 401k for this (and paying interest to myself) is only 5% of my retirement money in bitcoin (I want to put 20%, but there's no way to do it).

Actually, now that I think about it, it's now almost 9% of my retirement...

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November 25, 2013, 08:54:31 AM
 #18

I already made more money in 5 days in bitcoin than in 5 years in my retirement accounts.  And borrowing half of my 401k for this (and paying interest to myself) is only 5% of my retirement money in bitcoin (I want to put 20%, but there's no way to do it).

Actually, now that I think about it, it's now almost 9% of my retirement...

Where is the other 95%? I hope not a bank, a bond, a pension, a house, or a stock, because after 2016, all of those are going crash and go poof.

So are you are basically left with gold and silver which will blast off after 2015, and maybe carefully selected stocks, maybe the Yuan, maybe collectables such as ancient coins. I might have missed a few potential safe havens.

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November 25, 2013, 09:02:00 AM
 #19

A pyramid scheme stops when fiat money runs out. It is the same for housing and IT bubble, or even a pension fond

But what will happen to bitcoin when fiat money runs out? People will start to use real goods and services to exchange for bitcoin, thus the appreciation for bitcoin will continue until it exhausted all the available resources on the planet

It is a financial black hole  Wink

Wow. Just wow.
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November 25, 2013, 09:04:44 AM
 #20

Sorry, AnonyMint.  I don't believe in your zombie apocalypse.

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