If so - What incentive is there for someone new to cryptocurrencies to get into something like BTC? Mining is pretty much hopeless unless you are willing to spend tons on highly specialized mining rigs. Given the volatility in BTC value, investing USD to buy BTC is a financially dumb and risky move and pretty much amounts to gambling. So why/how should Joe Schmo get into BTC at this stage and how is it going to be in his interest to do so? From the outside looking in, it looks like all the early adopters want Joe Schmo and all his buddies to adopt BTC and invest money into it, so they can cash out and make their money.
Buying BTC is financially dumb? Amounts to gambling? ..what do you call investment in any capacity? You're judging Bitcoin by the individuals involved rather than the coin itself. Of course, the people buying into BTC are mostly speculative and driven by greed - the dream to get rich with little to no effort. So this causes you to call BTC a pyramid scheme?
Instead of looking at who is holding the coin, we should look at what Bitcoin, or more importantly, cryptocurrencies offer;
-Anyone can send money to anyone else, anywhere with no limitations, with no middle-men for little to no fee.
-Less risk for merchants having to deal with fraudulent charge-backs, & no payment processor fees to the merchant
-Protects against identity theft as it doesn't expose any of the customers' sensitive information the way credit cards do
-The ability of a globally accepted currency to reach places in which other payment systems are not established -or are corrupted
-Liberating from corrupt centralized agencies
-Entirely market driven; the value is set upon pure market conditions only
-It's secure (as secure as the initiative a person puts into securing their assets -requires responsibility) and it's transparent
-Naturally deflationary -encourages responsible spending, instead of gluttonous consumption
..and these are only from a strictly financial standpoint. They are capable of much more than merely a system of payment.
Pyramid Scheme? I'm sorry, but you don't understand what this is all about then. It may not be Bitcoin, it might be something else entirely -but cryptocurrencies will do to financial mediums of exchange what the Internet did to information gathering and sharing.
Thanks for the reply. I do understand quite well the advantages of a crypto coin, or any online digital currency and I think those merits are certainly admirable and nice to have. However, fundamentally, with all cryptocoins, you essentially require:
1) Widespread adoption by a critical mass of people before it can become worth anything. Your online wallet can tell you that you have millions of BTC or any other alt coin but it isn't worth a damn till you have buy in from a large number of people. That's why coins have to be marketed so aggressively and if I own a large amount of any alt coin, it is in my interest to have as many other people I know adopt the coin. This ends up being very much like a MLM/Pyramid scheme. To become rich, you need people below you to buy into the system.
2) The entire concept of mining using computational power seems pretty dumb imho, especially when combined with the fact that early adopters are the ones who stand to make out like bandits when it comes to any cryptocurrency. So someone with a 100+ GPUs chained together ends up becoming top dog and a "millionaire" just because he/she spent resources on a crazy rig that is of no other use than to mine coins, something that contributes zero to society as a whole. At least with "Ripple" there is a noble idea behind the concept...donating the computational power to science rather than wasting untold amounts of power and computational resources on pointless calculations.
3) Freemarket - That's a very very shaky argument when it comes to crypto currencies. Any currency that is seeing 50+% swings in value is really not very free market, and certainly all cryptocurrencies, including BTC are susceptible to a lot of shady tactics in the market place. And when you have reports like this -
http://bitcoinexaminer.org/small-group-of-47-people-owns-almost-30-percent-of-all-bitcoins/, it is all the more concerning how any currency like BTC can be a great model, or considered to be operating under free market principles. In reality, it is at the mercy of a select few people and with the rise of ASIC mining and the threat of 51% attacks, it only makes the entire situation more concerning.
Cryptocurrencies are certainly intriguing and I like a lot of things about them, but points 1 & 2 are a massive concern for me. For all the proclamations of how anti-establishment cryptocurrencies are, they divide people even more into the rich and poor, where the rich are the blessed people with massive mining rigs who pointed their rigs at mining cryptocurrencies right when they were announced.... which is pretty ridiculous.
