Bitcoin is a 'two-phased' product, which makes it ponzi/pyramid-like

[antikvark]

How can you tell if you are the holder of a legitimate market product or a ponzi/pyramid-like product? It's simple. The life cycle of a legitimate market product has three phases. The creation phase, the circulation phase, and the utilization or liquidation phase. The life cycle of a ponzi/pyramid-like product has only two phases. The creation phase and the circulation phase. Let's start with the legitimate products.

Suppose that you bought an iPhone because you think it is cheap and you can sell it for a higher price in the future. That's the circulation phase of the iPhone. Once you sell it to someone, and that person starts to actually use it for its purpose(calls, texting...), iPhone is in utilization phase. Here we need to mention, that it is this phase where the value of the iPhone actually comes from. Meaning, the utilization of a product is the value of the product. When Apple was producing iPhone that was its creation phase. So the concept of phases in the life cycle of a product is pretty straightforward.

Market products such as dollars or bonds also have three phases. It is just that instead of utilization phase, they have the liquidation phase. Given that both dollars and bonds are debt based products, they operate similarly in the phases, the only difference being that dollar issuers(banks and borrowers) borrow and return goods and services from/to the public, while bond issuers borrow and return money. When corporations issue bonds and banks new units of dollars via loans, this is the creation phase of these products. Once they are created, the products enter the circulation phase. At the beginning of this phase, the corporations borrow money, while borrowers borrow goods and services from the public. Finally, the liquidation phase occurs when the corporations return money to the bondholders by paying principle, and when the borrowers return goods and services to dollar holders by making the loan payments. Namely, prior to loan payments, borrowers obviously had to give (trade) goods and services to dollar holders in order to get funds for these repayments. This is how the last dollar holders receive goods and services from the borrowers prior to liquidation. After dollars are liquidated, that is, withdrawn from circulation, they are again put into circulation with new loans. With loan repayments they are again liquidated and so on. So, dollars are in constant cycles of creation(loans), circulation(means of exchange) and liquidation (loan repayments). Hence, the three phases. And the same as with iPhone or bonds it is the third phase where the value of this product actually comes from. This is of course because the liquidation is where the last dollar holders receive goods and services from the borrowers, or from the taxpayers if the borrower is government.

Now that we know the phases in the life cycle of legitimate market products, we can examine the illegitimate products. Let's say that you bought membership in a ponzi scheme. This is the circulation phase of that product. The creation phase was obviously when the scheme organizers issued this product. But, unlike in the above cases, these issuers never liquidate this product to pay money, goods or services to its holders, nor is this product utilizable like iPhone. Meaning, this product lacks the third phase, and as such, it is in an infinite circulation phase. In this phase, more recent investors bring in the three-phased market products and trade them for your two-phased product(membership). Once the scheme collapses, you, as the last membership holder, are left with nothing since no third phase exists in which the value is paid or received.

Bitcoin has exactly the same features. It is a two-phased product. Its issuing is phase one. Its circulation in the market is phase two. But given that its issuers never liquidate it to pay money, goods or services to its holders, nor is Bitcoin utilizable like iPhone, this product lacks the third phase. As such, it has ponzi/pyramid-like features. Meaning, once you as an investor, brought in the three-phased market products, you are left only with hope that new investors will trade their three-phased products for your two-phased bitcoin so that you can get value in the third phase of these products. Once new investors stop investing, the scheme falls apart and you are left with nothing expect the digital record of membership.

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[avikz]

The definition of ponzi scheme is as below,

A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers

If I have to go by your definition, I will have to say everything that is traded in the market - is ponzi! Re-think these three phases with an iPhone 4 model.

Phase 1: Produced by Apple
Phase 2: purchased by you to sell it at higher cost
Phase 3: no taker in market so you can't sell it

Will you call iPhone 4 a ponzi scheme then?

It is a market rule. Everything comes with an expiry date. If you look at Kodak company, you will understand it! But having no buyer for some asset/product doesn't make it a ponzi scheme!

[gentlemand]

Man all these people are firing themselves up again. It's like a Tardigrade unfreezing and starting to twitch.

No idea what OP wrote nor do I care. Go and expend your energy shopping for a self isolating elderly person.

[Qcrypto]

OP has made 172 post (so far) with 0 merit to his name.


Reading this feels like FUD. Get people so scared they sell, so you can buy cheap.

It's gonna be the same with bullrun... Get people hyped to buy, so you can sell high.

[joniboini]

You forgot to mention that you can use Bitcoin to pay for goods and services, and other stuff. Or maybe, you just deliberately don't count it so there is no third phase to make it a ponzi.

Nice try.

[antikvark]

The definition of ponzi scheme is as below,

A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers

If I have to go by your definition, I will have to say everything that is traded in the market - is ponzi! Re-think these three phases with an iPhone 4 model.

Phase 1: Produced by Apple
Phase 2: purchased by you to sell it at higher cost
Phase 3: no taker in market so you can't sell it

Will you call iPhone 4 a ponzi scheme then?

It is a market rule. Everything comes with an expiry date. If you look at Kodak company, you will understand it! But having no buyer for some asset/product doesn't make it a ponzi scheme!

Your definition says this: "...generates returns for early investors by acquiring new investors..." The lack of the third phase in bitcoin means that you, as an earlier investor, can benefit only from the three-phased products brought in by new investors. Hence, according to your definition Bitcoin is a Ponzi.

iPhone 4 is a tangible good and cannot be Ponzi by definition.

[pooya87]

this subject and users posting about it are like roaches that crawl out of their hole each time they smell shit. just like roaches they never die either they keep coming back out every time there is a dip and they are spreading diseases...

[antikvark]

this subject and users posting about it are like roaches that crawl out of their hole each time they smell shit. just like roaches they never die either they keep coming back out every time there is a dip and they are spreading diseases...

Nice comparation if you think that telling the truth is spreading diseases.

[Jating]

this subject and users posting about it are like roaches that crawl out of their hole each time they smell shit. just like roaches they never die either they keep coming back out every time there is a dip and they are spreading diseases...

Nice comparation if you think that telling the truth is spreading diseases.

That is according to you, but majority of us thinks otherwise, do most of us here are wrong? sorry to burst your bubble.

Do you think that Craig Wright is also telling the truth?

[hypersonic1]

Guys this is what's called a bad faith argument. All the best lies are hidden within the truth.

[amishmanish]

LOL. Bitcoin is not created by the miners. If you consider Bitcoin (The network and the currency) as a product, then it was created right when Satoshi wrote down those line of codes and the whitepaper.
It has been circulating as an idea and as undeniable proof of transaction and work for a decade now. Those calling it a ponzi scheme are typically bitter people who think they did not deserve to be left behind by the 2009-2016 train. Yet, that is the reality for a lot of your kind. Trying to spread FUD won't change your situation.

Try surrendering to the Honey badger and you may feel all that hate evaporating..LOL!

[antikvark]

Guys this is what's called a bad faith argument. All the best lies are hidden within the truth.

Well, you must show what in the OP is lie. It's pretty simple. Otherwise you're just making empty assertions.

[AGD]

OP. You can call Bitcoin whatever you want. Bitcoin couldn't care less. You sound like a guy who missed the oportunity to buy early and is butthurt ever since. No one here will take you and your anti Bitcoin rantings serious. You can stop it now.

[antikvark]

OP. You can call Bitcoin whatever you want. Bitcoin couldn't care less. You sound like a guy who missed the oportunity to buy early and is butthurt ever since. No one here will take you and your anti Bitcoin rantings serious. You can stop it now.

Bitcoin is not a person so it cannot care by definition. Bitcoin is a number put into a database when you give your three-phased market products to an earlier investor and than hope that another investor will give you more three-phased products in the future in exchange for your two-phased number.

[Mulann2]

OP. You can call Bitcoin whatever you want. Bitcoin couldn't care less. You sound like a guy who missed the oportunity to buy early and is butthurt ever since. No one here will take you and your anti Bitcoin rantings serious. You can stop it now.

If he miss the chance to buy early, now is another opportunity to accumulate only he is too busy looking for a way to fight the Machine and for him to be able to survive this fight he needs lots and lots of energy drink
@OP dear, nobody gives a shit about your opinion on btc, am sure when you see a ponzi scheme you will recognize it a mile away, my advice to you, don't go down this part, you will get exhausted with wrinkled face and heavy migraine
Have fun!

[bearexin]

A lot of people keep arguing about this and I’m really tired of it meehn. Don’t you think it’s time we just let everyone believe whatever they want to believe about cryptocurrency? If you think that cryptocurrency is a Ponzi and you think it’s bad, that’s meant for you to believe and maybe you should sell your coins and look for other things to be doing instead of stressing about this.

Seriously, I have seen people who would buy Bitcoin, but would still go around and be telling others that Bitcoin is bad. I just don’t understand why people would be such a thing.

[johnyj]

Market products such as bonds or fiat currencies also have three phases. It is just that instead of utilization phase, they have the liquidation phase. When a corporation issues a bond, or a bank new units of dollars via loan, this is the creation phase. When the corporation or a borrower put them on the market, the products enter the circulation phase. Finally, when bond maturity date occurs or a borrower makes the loan repayments to the bank, this is the liquidation phase. And the same as with iPhone, it is this phase where the value of a product actually comes from. Namely, in the liquidation phase the bond issuer pays principle to bond holders, while the borrower pays goods and services to dollar holders. What does it mean to pay principle or goods and services. Well, at the beginning of the circulation phase, people invested their money into bonds or goods and services into newly issued dollars. In that way the bond issuer and the borrower received monetary or non-monetary value. For that reason, they have to pay back such value to people who became the holders of bonds or dollars in the circulation phase. The value is paid in the liquidation phase. In this phase the bond issuer pays principle to bond holders, while the borrower pays goods and services to dollar holders to get dollars for the loan payments. In that way, these products are taken out of circulation or in short, they are liquidated, while their last holders received value.

Great! OP you seems to be able to do some independent thinking, lets discuss it

Your theory that fiat money also have phase 3 is difficult to grasp: When you liquidate bond, you get fiat money (if that is what you call "received value"), but what you get when you liquidate fiat money? What kind of "received value" you get from liquidating fiat money?

I think that the usage of the word "liquidate" in your definition is a bit strange. Normally liquidation means selling one product in exchange of more liquid assets, typically USD. You never liquidate USD, at least I have never heard about such terms

[dothebeats]

Everything you see on every market, if going by your definition, is a ponzi scheme. Regardless of what kind of item, currency, whatever it is, it passes through this phases--and obviously passes through the highs and the lows. I wonder why you fail to categorize fiat currencies as a ponzi product and ignoring the fact that they are the large profiteers from the coffers of the public?

Perhaps come with a better counter-argument to those being thrown at you here in this post the next time. We've seen things like these come and go every time the market bleeds.

[AGD]

OP. You can call Bitcoin whatever you want. Bitcoin couldn't care less. You sound like a guy who missed the oportunity to buy early and is butthurt ever since. No one here will take you and your anti Bitcoin rantings serious. You can stop it now.

Bitcoin is not a person so it cannot care by definition. Bitcoin is a number put into a database when you give your three-phased market products to an earlier investor and than hope that another investor will give you more three-phased products in the future in exchange for your two-phased number.

You corrected the first part, but didn't correct the second. Additionally you forgot the option, that I can (and I do) buy goods directly with Bitcoin, which makes your 3 phase rubbish obsolete. There is no need to exchange into fiat money.

[antikvark]

Market products such as bonds or fiat currencies also have three phases. It is just that instead of utilization phase, they have the liquidation phase. When a corporation issues a bond, or a bank new units of dollars via loan, this is the creation phase. When the corporation or a borrower put them on the market, the products enter the circulation phase. Finally, when bond maturity date occurs or a borrower makes the loan repayments to the bank, this is the liquidation phase. And the same as with iPhone, it is this phase where the value of a product actually comes from. Namely, in the liquidation phase the bond issuer pays principle to bond holders, while the borrower pays goods and services to dollar holders. What does it mean to pay principle or goods and services. Well, at the beginning of the circulation phase, people invested their money into bonds or goods and services into newly issued dollars. In that way the bond issuer and the borrower received monetary or non-monetary value. For that reason, they have to pay back such value to people who became the holders of bonds or dollars in the circulation phase. The value is paid in the liquidation phase. In this phase the bond issuer pays principle to bond holders, while the borrower pays goods and services to dollar holders to get dollars for the loan payments. In that way, these products are taken out of circulation or in short, they are liquidated, while their last holders received value.

Great! OP you seems to be able to do some independent thinking, lets discuss it

Your theory that fiat money also have phase 3 is difficult to grasp: When you liquidate bond, you get fiat money (if that is what you call "received value"), but what you get when you liquidate fiat money? What kind of "received value" you get from liquidating fiat money?

I think that the usage of the word "liquidate" in your definition is a bit strange. Normally liquidation means selling one product in exchange of more liquid assets, typically USD. You never liquidate USD, at least I have never heard about such terms

Dollar is debt based product, just like bonds. It is just that dollar issuers(banks and borrowers) borrow and return goods and services from the public, while bond issuers borrow and return money. Liquidation of dollars is taking dollars out of circulation via loan payments. Obviously, prior to liquidation, borrowers had to give (trade) goods and services to the last dollar holders in order to get funds for loan repayments. This is how these holders receive value prior to liquidation. After dollars are liquidated they are again put into circulation with new loans. With loan payments they are again liquidated and so on. As you can see, dollars are in constant cycles of creation(loans), circulation(means of exchange) and liquidation (loan repayments). Hence the three phases. The last phase is where the value is received. Bitcoin lacks this phase, the same as ponzi or pyramid schemes.