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Author Topic: Thought Experiment: Is Bitcoin a Ponzi scheme?  (Read 11978 times)
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March 11, 2011, 01:52:38 PM

Suppose a Bitcoin clone with little to no changes would startup tomorrow. Would miners switch?

I think they would, because early adoptors had (and still have) a big advantage with the current inflation model.
During the first year about half of all currently existing bitcoins were mined, while there were practically no transactions, and almost none of it has been spend.
Why would late comers simply accept this? If you newly learn about Bitcoin, you'll always have an incentive to start from zero.
Unlike gold, bitcoin is not unique and was never intended to be.
I'm not arguing on economic grounds, and do support the austrian school, so please don't restart the old inflation vs. deflation debate.
It's about sustainability of continuous network growth, which seems to need an equal playing ground in time.

The reason bitcoin is not a ponzi scheme is that the dollar value of your bitcoins is just an indicative valuation based on mtgox's recent transactions. There is no certainty that you will definitely be able to sell your bitcoins for any amount of dollars.

The difference with a ponzi scheme is that people receive statements quoting the amount of dollars that they're supposed to have, but don't exist.

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March 11, 2011, 08:07:41 PM

If you're talking about arbitrage (making money from currencies mispriced in respect to one another), then you have discovered nothing new. In fact, arbitrage is one way that those pricing errors get fixed.

So, good luck to you, I guess?

Ah, considering recent events. I think I will put a hold on the experiment. Maybe, I will just send the $20 bucks to a charity over there.

Net Worth = 0.10    Hah, "Net" worth Smiley
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March 12, 2011, 10:08:34 AM

...waiting to spend coin on something useful, like helicopters.

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