Understanding the Ponzi Narrative

[cryptosize]

Hmm, interesting. However, is it proper to compare what nature does to human with what human does to human? Ponzi is a form of fraud made by humans effecting solely humans.

Yes, because humans are part of nature and follow nature's laws, even if they don't realize it.

So, BTC is also a product of nature in a sense... just like fractals (sacred geometry).

I think it's advisable to say that laws exist to protect the society. Legalization happens from the state to supposedly protect/take care of you. Yeah, pension looks like a pyramid, and many other things in life too. That's why the ponzi, as a term, is strict.

In theory, yes, they enforce certain things to "protect" you. The reality is little bit more different.

Besides, ponzi is by far a big fraud. What fraudulent does the pension system have?

Uhm, I don't know, maybe paying taxes for 40+ years to get a shitty pension in the end?

Just imagine doing DCA for 40 years: https://dcabtc.com/

Even 5 years only can pay huge dividends.

The choice is clear for me. I don't trust the state, I trust myself more (BTC as a pension).

Of course not everyone is a responsible person. Most people would rather have instant gratification and spend their whole capital prematurely.

I prefer to treat adults like adults, not babies (infantilization) that need "protection" from a "dad" (nanny state).

Do you consider this a strong proof to consider the entire pension system fraudulent?

Yeah, especially since abortions are legal too. You cannot have both abortions (so lack of workers) and a strong social security/pension system. You cannot have your cake and eat it too. You have to pick only one.

I agree about the latter, but for the former, I'm not yet convinced.

Monopolies hurt competition and increase corruption. Absolute power corrupts absolutely.

Do ethics matter?

For the state? They clearly don't!

How ethical can it be to pay 40% taxes and get shitty rewards from the state...

Come on, we crypto people look for the lowest fees all the time, even 5% seems crazy high. 40% fees would be insane and yet, sheeple eat it up.

[BlackHatCoiner]

So, BTC is also a product of nature in a sense... just like fractals (sacred geometry).

By that reasoning, isn't everything a part of nature?

In theory, yes, they enforce certain things to "protect" you. The reality is little bit more different.

Yes, there's power abusage. However, at least there's a theoretical protection. I can't see it same like I do with classic ponzis.

Of course not everyone is a responsible person. Most people would rather have instant gratification and spend their whole capital prematurely.

So, what to do since these people live among you and me? The overwhelming majority doesn't trust themselves more than the state.

Monopolies hurt competition and increase corruption. Absolute power corrupts absolutely.

Of that I'm agreed. I spoke about the pension system.

[IadixDev]

The thing is need to dissociate the media from the scheme. As madoff used $ to make ponzi doesnt mean $ is a ponzi. You can do ponzi with paperclips or socks. Its all in how you sell the asset with a promise of return when there is no return to expect at all.

Satoshi said clearly there is no dividend to expect from bitcoin its not like stock its like commodity.

I found this thread last day it was intersting to read on many levels.

https://bitcointalk.org/index.php?topic=57.msg4772#msg4772

But still nowday cant deny most people buy bitcoin because they are sold a future benefit by selling it again latter. And this still gravitate around fraudulent schemes.

Can say its same in theory with some other kind of commodity but in reality rarely the case and even more rare twice and beyond that you can call a pyramid scheme.

Like ok you can resell a car but rarely more expansive used after 10 years than what you bought it new.

You can resell a computer but rarely more expansive used 10 years after than what you bought it new.

You can find some case like either some retro thing that is not in production anymore, or production is made more expansive for some reason. None of this really apply to bitcoin at all.

Only stocks or productive assets can be sold multiple times over years with a profit without being really a crude pyramid scheme because some value is created along the way and what you sell is a share of the owernship of this productive asset.

Bitcoin is not a stock or a productive asset, not by the huge margin of profit people expect from it ( x10, x100 etc ).

So in many case its still sold in a way that is close to fraudulent pyramid scheme by selling it as something that will rise in value for someone else latter.

And ponzi != pyramid scheme != greater fool game != mlm.

But many of those tricks or some form of market cornering are used to sell cryptos for a profits. You could even argue most of the demand is fueled by that. Hence why some people assimilate the crypto economy with fradulent scheme.

You can very rarely find legitimate case where you are going to buy a commodity and resell it at higher price without someone being ripped in the way.

Merchants are doing profits but they have a shop, some inventory, tax to pay and the staff that are essential part of making the commodity available. And that where the profit is going and its a one time profit.

You are not going to buy a commodity in a shop and just sell it back twice the price to someone else. Or its already in the gray area of morality/scam and in the realm of pyramid scheme. Because maybe you abuse someone vulnerability or weakness in a way or another.

[Zilon]

What is the best argument against the Ponzi scheme narrative?

In what ways are Ponzi schemes different from bitcoin?

How do they generate value differently?

Educating the masses would help clearify the issue of Bitcoin seen as ponzi. Many people have been a victim of ponzi schemes and most of them now generalize any online investment or opportunity as ponzi. But educating the masses can throw some enlightenment and clear the notion off. Ponzi is very different from ponzi in the sense that Bitcoin is completely decentralized and once a fraction is purchased either through a p2p network or throw any other means it remains in your wallet giving the buyer complete possession of the coin. In the area of ponzi the investor is investing in a project that isn't self explanatory. The attractive attributes is the promise to double the investment by an attractive percentage and most investors fall for that

[Taskford]

What is the best argument against the Ponzi scheme narrative?

In what ways are Ponzi schemes different from bitcoin?

How do they generate value differently?

Educating the masses would help clearify the issue of Bitcoin seen as ponzi. Many people have been a victim of ponzi schemes and most of them now generalize any online investment or opportunity as ponzi. But educating the masses can throw some enlightenment and clear the notion off. Ponzi is very different from ponzi in the sense that Bitcoin is completely decentralized and once a fraction is purchased either through a p2p network or throw any other means it remains in your wallet giving the buyer complete possession of the coin. In the area of ponzi the investor is investing in a project that isn't self explanatory. The attractive attributes is the promise to double the investment by an attractive percentage and most investors fall for that

There are so many educational videos scattering everywhere towards this ponzi schemes but unfortunately many still fall from it due to their own greed and laziness because many still believe that they can earn passive income without doing nothing. We see it keep existing and I believe this kind of investment schemes will never stops as many are hungry to earn without doing anything.

[TimeTeller]

Educating the masses would help clearify the issue of Bitcoin seen as ponzi. Many people have been a victim of ponzi schemes and most of them now generalize any online investment or opportunity as ponzi. But educating the masses can throw some enlightenment and clear the notion off. Ponzi is very different from ponzi in the sense that Bitcoin is completely decentralized and once a fraction is purchased either through a p2p network or throw any other means it remains in your wallet giving the buyer complete possession of the coin. In the area of ponzi the investor is investing in a project that isn't self explanatory. The attractive attributes is the promise to double the investment by an attractive percentage and most investors fall for that

Yes, education is the key for these people to change their perspectives towards bitcoin.
Because most people who are identifying btc as comparable to ponzi scheme don't know what they are talking about.
If they try to learn more about btc and these alt projects, they can easily check the difference.
Understanding on what's really happening in crypto market starts from educating yourself.

[BuNga_cute]

Educating the masses would help clearify the issue of Bitcoin seen as ponzi. Many people have been a victim of ponzi schemes and most of them now generalize any online investment or opportunity as ponzi. But educating the masses can throw some enlightenment and clear the notion off. Ponzi is very different from ponzi in the sense that Bitcoin is completely decentralized and once a fraction is purchased either through a p2p network or throw any other means it remains in your wallet giving the buyer complete possession of the coin. In the area of ponzi the investor is investing in a project that isn't self explanatory. The attractive attributes is the promise to double the investment by an attractive percentage and most investors fall for that

Yes, education is the key for these people to change their perspectives towards bitcoin.
Because most people who are identifying btc as comparable to ponzi scheme don't know what they are talking about.
If they try to learn more about btc and these alt projects, they can easily check the difference.
Understanding on what's really happening in crypto market starts from educating yourself.

Therefore, when I introduce Bitcoin to other people, I will always recommend that person learn Bitcoin from a trusted source. Then before investing
in Bitcoin, we really have to learn everything about Bitcoin first, that way will understand how Bitcoin works, this will finally be able to make
people understand that Bitcoin cannot be equated with a ponzi scheme. Most people I find around me who say that Bitcoin is a ponzi scheme,
usually he reads about Bitcoin from the wrong sources or he got a story about Bitcoin from a Bitcoin hater. Actually people who say Bitcoin is
a ponzi scheme, they don't understand what they are saying. So my advice try to learn Bitcoin properly and from various sources, so being able
to compare how Bitcoin works with a ponzi scheme is very much different. This is why I always want Bitcoin to be included in school subjects,
so that people understand Bitcoin from an early age.

[Wind_FURY]

Bitcoin IS a “Ponzi”, but a natural-occuring Ponzi, like Gold.

There's no such thing as a natural-occuring ponzi. Something is a ponzi or it isn't. Neither gold and bitcoin are ponzis as there are no promised returns from (the) creators.

That’s why it’s called a “natural-occuring” Ponzi, not an overt Ponzi. That’s how Bitcoin started to have surging value, as a “Ponzi”. For it to pay profit to a holder for higher value, newer investors must enter the system and buy them from those holders. BUT, like Gold, it stopped being a “Ponzi” when it was started to be used as currency in the dark markets, creating a circular economy.

[witcher_sense]

That’s why it’s called a “natural-occuring” Ponzi, not an overt Ponzi. That’s how Bitcoin started to have surging value, as a “Ponzi”. For it to pay profit to a holder for higher value, newer investors must enter the system and buy them from those holders. BUT, like Gold, it stopped being a “Ponzi” when it was started to be used as currency in the dark markets, creating a circular economy.

Before bitcoin was started to be used as a currency of dark markets, it had no market value, and couldn't give any profit to early holders because newer investors had no reason to invest in something with no market value. Moreover, even if they wanted to invest in bitcoin, they couldn't do it anyway because early adopters saw no reason to "sell" their bitcoin. Those who wished to obtain bitcoin didn't buy it but rather invested their money to buy hardware with which to acquire useless (priceless) bitcoin. It was but an indirect purchase that didn't involve other people except for the miner himself. No one could have predicted that bitcoin would transform into something that has a non-zero value, but the fact that did happen doesn't make early adopters somehow look like nefarious creators of Ponzi schemes. This is an example of the natural-occurring evolution of money when it starts its journey as being collectible/commodity and ends up being used as a universal unit of measurement.

[Wind_FURY]

That’s why it’s called a “natural-occuring” Ponzi, not an overt Ponzi. That’s how Bitcoin started to have surging value, as a “Ponzi”. For it to pay profit to a holder for higher value, newer investors must enter the system and buy them from those holders. BUT, like Gold, it stopped being a “Ponzi” when it was started to be used as currency in the dark markets, creating a circular economy.

Before bitcoin was started to be used as a currency of dark markets, it had no market value, and couldn't give any profit to early holders because newer investors had no reason to invest in something with no market value.

Is that a fact? It had market value if it had a market.

Plus what did the market look like for Bitcoin before its acceptance in the Silk Road? I believe the chart would be like some pumps, some crashes, like illiquid shitcoins.

Moreover, even if they wanted to invest in bitcoin, they couldn't do it anyway because early adopters saw no reason to "sell" their bitcoin. Those who wished to obtain bitcoin didn't buy it but rather invested their money to buy hardware with which to acquire useless (priceless) bitcoin. It was but an indirect purchase that didn't involve other people except for the miner himself.

There wasn’t a market to buy, or sell Bitcoin?

No one could have predicted that bitcoin would transform into something that has a non-zero value, but the fact that did happen doesn't make early adopters somehow look like nefarious creators of Ponzi schemes. This is an example of the natural-occurring evolution of money when it starts its journey as being collectible/commodity and ends up being used as a universal unit of measurement.

But how did Bitcoin start to have value before the Silk Road? It didn’t start with investors coming into the system to bid, and holders to sell, and as new investors came in, the market and the value of the coin didn’t become larger?

[franky1]

i gotta laugh here.

im agreeing with blackhatcoiner and disagreeing with windfury.
(expect social drama from them later)

bitcoin is not a ponzi.
bitcoin does not earn people dividends or interest for holding on..
bitcoins profit is from letting go of the asset.

no one earns anything until they sell it. and when they sell it only that seller gets the profit of his sale.
and once sold, the seller gets nothing after the sale. and got nothing before the sale. he just gets the value of the sale

there is no treasury pot of cash that is saved up, which takes buyers money in and spreads it out to existing investors to keep them in.

its simply trade. if i have 1 banana. i make no money unless i sell my banana. and selling my banana i get the full amount of the sale. no one else. and then i no longer have a banana. there is no 'continual income' for holding. there is no income from other investors for holding. you just buy and sell. thats it

its that simple

bitcoin is a tradable asset, not a ponzi investment.

[Wind_FURY]

i gotta laugh here.

im agreeing with blackhatcoiner and disagreeing with windfury.
(expect social drama from them later)

bitcoin is not a ponzi.

I never said that Bitcoin is a Ponzi like the OVERT Ponzi schemes made by central entities, or a cabal to intentionally scam investors. I said that it started as a natural-occuring Ponzi, like Gold.

[witcher_sense]

But how did Bitcoin start to have value before the Silk Road? It didn’t start with investors coming into the system to bid, and holders to sell, and as new investors came in, the market and the value of the coin didn’t become larger?

You said that Bitcoin stopped being "a natural occurring Ponzi scheme" once it was recognized as a currency in the dark markets. Why did they recognize bitcoin if it never hadn't been used as a currency or a medium of exchange before? The thing is that it has constantly been used as a medium of exchange since its very first exchange, which was a situation where a guy bought two pizzas (real goods) for bitcoin. According to the definition you provided, that was the turning point when bitcoin stopped being a Ponzi scheme and started its development as a currency. But before this happened, no one was trading bitcoin for real goods or other currencies, everyone was just mining and casually sending useless transactions. No one was expecting to become rich from hodling bitcoin or selling it to others, so there was nothing there that indicated any signs of a scheme.

[Peanutswar]

Most of the ponzi schemes are just promising one of the most common things.

• Your money is safe.
• Can double your earning
• Can get back your capital immediately.
• 100% safe THIS IS NOT A SCAM

This is better to make yourself keep aware on the possible things might happen if you are trying to make an investment to different projects always make a full potential research.

[Wind_FURY]

But how did Bitcoin start to have value before the Silk Road? It didn’t start with investors coming into the system to bid, and holders to sell, and as new investors came in, the market and the value of the coin didn’t become larger?

You said that Bitcoin stopped being "a natural occurring Ponzi scheme" once it was recognized as a currency in the dark markets. Why did they recognize bitcoin if it never hadn't been used as a currency or a medium of exchange before? The thing is that it has constantly been used as a medium of exchange since its very first exchange, which was a situation where a guy bought two pizzas (real goods) for bitcoin. According to the definition you provided, that was the turning point when bitcoin stopped being a Ponzi scheme and started its development as a currency. But before this happened, no one was trading bitcoin for real goods or other currencies, everyone was just mining and casually sending useless transactions. No one was expecting to become rich from hodling bitcoin or selling it to others, so there was nothing there that indicated any signs of a scheme.

I’m asking about Bitcoin before it was used as amedium if exchange, before the Silk Road. How did it have the value against fiat, if not from a group of people buying and selling it from each other, which grew, and therefore the value grew. I believe you, and I cannot answer that because we were not there.

[witcher_sense]

I’m asking about Bitcoin before it was used as amedium if exchange, before the Silk Road. How did it have the value against fiat, if not from a group of people buying and selling it from each other, which grew, and therefore the value grew. I believe you, and I cannot answer that because we were not there.

This is how I look at it. There is a difference between a speculative demand for bitcoin and a "transactional" demand for bitcoin. The speculative demand is when buyers and sellers meet and exchange bitcoin for fiat back and forth for the sake of temporary profit. The transactional demand is when people use bitcoin as a medium of exchange not because it has some value in fiat terms but because bitcoin should be used and seen as a medium of exchange. It is a sort of demand that is driven primarily by ideological reasons rather than economic ones. People would send bitcoin to each other and exchange it for different services and goods so that they could prove that bitcoin actually works as unstoppable electronic cash without authorities behind it. It is natural that they wanted other people to recognize the significance of Satoshi's invention, and that is why they spread awareness that bitcoin exists and works. It was not a Ponzi scheme because the motivation to spread the word was different from that driven by greed and profit-seeking. It was to convince other people to use bitcoin as a medium of exchange. Obviuosly, they didn't succeed and only attracted speculators who don't care about the transactional value of bitcoin.

[Wind_FURY]

I’m asking about Bitcoin before it was used as amedium if exchange, before the Silk Road. How did it have the value against fiat, if not from a group of people buying and selling it from each other, which grew, and therefore the value grew. I believe you, and I cannot answer that because we were not there.

This is how I look at it. There is a difference between a speculative demand for bitcoin and a "transactional" demand for bitcoin.

The speculative demand is when buyers and sellers meet and exchange bitcoin for fiat back and forth for the sake of temporary profit. The transactional demand is when people use bitcoin as a medium of exchange not because it has some value in fiat terms but because bitcoin should be used and seen as a medium of exchange.

It is a sort of demand that is driven primarily by ideological reasons rather than economic ones. People would send bitcoin to each other and exchange it for different services and goods so that they could prove that bitcoin actually works as unstoppable electronic cash without authorities behind it.

It is natural that they wanted other people to recognize the significance of Satoshi's invention, and that is why they spread awareness that bitcoin exists and works. It was not a Ponzi scheme because the motivation to spread the word was different from that driven by greed and profit-seeking. It was to convince other people to use bitcoin as a medium of exchange. Obviuosly, they didn't succeed and only attracted speculators who don't care about the transactional value of bitcoin.

But it was a natural-occuring Ponzi. Bitcoin accrued value through buying and selling, and which it should have a willing participant to buy it higher from a participant before the willing participant. But it’s not a scam. There was no central entity scamming the users, the “Ponzi-process” was simply a necessary function to bootstrap the system.

Is it a Ponzi today? No, because a circular economy has been building, and developing behind it. But it started as one, a natural-occuring Ponzi, not a scam-Ponzi.

[witcher_sense]

But it was a natural-occuring Ponzi.

Okay, you made me do some research. A natural occurring Ponzi is a term that was coined by Noble prize-winning economist Robert Shiller. Here is the definition of this kind of scheme that can be found in his book called "Irrational Exuberance":

“Ponzi schemes do arise from time to time without the contrivance of a fraudulent manager. Even if there is no manipulator fabricating false stories and deliberately deceiving investors in the aggregate stock market, tales about the market are everywhere. When prices go up a number of times, investors are rewarded sequentially by price movements in these markets just as they are in Ponzi schemes. There are still many people (indeed, the stock brokerage and mutual fund industries as a whole) who benefit from telling stories that suggest that the markets will go up further. There is no reason for these stories to be fraudulent; they need to only emphasize the positive news and give less emphasis to the negative.”

This term was also mentioned by World Bank that criticized and attacked Bitcoin back in 2014: https://www.coindesk.com/markets/2014/07/17/world-bank-report-bitcoin-is-a-naturally-occurring-ponzi/

As far as I understand, "a natural-occurring Ponzi scheme" is another way of saying "a bubble driven by natural laws of supply and demand", which is basically correct because bitcoin has always been the product of a free market. The problem with the word "Ponzi" is that it implies malicious activities of some kind and sounds very negative. Natural occurring malicious activity sounds no better than a Ponzi scheme. I think that this term is mostly used by those who want to attack bitcoin and make others into incorrect thinking. It is misleading and dangerous, and doesn't help much to explain things.

[gabbie2010]

People still think that bitcoin is akin to a Ponzi scheme? I don't exactly know how they go on about their lives being such a dumbass, it's like they're trying to make things wrong for bitcoin and discourage people from getting into it, plus who is at the top of bitcoin that's getting all the money then?

Honestly it's a herculean task trying to convince unknowledgeable people that bitcoin is not a Ponzi scheme, most of the basis of their assumptions is the fact that a hodler earns some reasonable amount of profits
 whenever there is pump in the price of the coin during a bullish run equally losing during the a bearish run, a concept that they think is synonymous with Ponzi scheme, which is absolutely untrue, infact an illerate will never get convinced about the whole idea about bitcoin thus will always discourage any newbie.

[qwertyup23]

What is the best argument against the Ponzi scheme narrative?
In what ways are Ponzi schemes different from bitcoin?
How do they generate value differently?

First and foremost, ponzi schemes already existed long before cryptocurrencies were created. The idea is simple- people would offer ridiculous amounts of interest rates in exchange for a minimum investment in a project, to be cashed out in a minimum of days or months depending on the deal/package you offer.

Bitcoin is definitely not a ponzi-scheme. It can be so difficult to imagine it being associated with it since it is entirely a system where people would invest in a certain project for a 'guaranteed' investment. Like what the name suggests, it is a 'scheme' where the risk of losing your money is so great that most people (myself included) got scammed by it.

As someone who consistently reports ponzi-schemes being advertised in the forum, I tell you that most have poorly-designed websites that were created in order to attract newbies into thinking that they can generate this amount of money in a short amount of time.