Bitcoin - Part 2

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Roger Ramjets said:
I am willing to entertain the idea that 'Satoshi Nakamoto' was simply an idealistic hacker with a limited understanding of economics, who though he was doing the World a favor by kick-starting a 'digital currency' which (he thought) was desperately needed to avert global catastrophe. But if so then he was either hopelessly naive or blinded by conspiracy theories himself.

And perhaps the reason he hasn't 'de-cloaked' is that he doesn't want to admit his naivety and take responsibility for the monster he created. Or perhaps he saw how much money could be made from it...

But while he/it remains anonymous there will always be a question mark around his/its motives. A Ponzi scheme may not start out as deliberate fraud, but it becomes one when its creator realizes that the investment has no legs - and yet continues to promote it.
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Inflation of price is not a Ponzi scheme. Ponzi schemes are purposely masking new investor money as return on investment from a different source. A ponzi scheme is even different from a pyramid where the source of returns is not hidden.
 
BobTheCoward said:
Inflation of price is not a Ponzi scheme. Ponzi schemes are purposely masking new investor money as return on investment from a different source.
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Where is the real source of 'investment return' for bitcoin, and is anyone 'masking' it?

Bitcoin has failed as a currency, so at this point the price is being propped up solely by the amount of money 'invested' in it. But we still have bitcoin promoters insisting that it is a revolutionary new technology that will replace 'failing' fiat currencies, and that this is the reason the price will 'go to the moon'. That is masking the true source of bitcoin's 'return'.

In fact bitcoin was designed from the start to be highly deflationary, so the more people buy it the higher the price should go - even if it is not used as 'money'. Bitcoin's creator obviously knew this, and must have seen that he could make a fortune by mining a pile of bitcoins and then encouraging their use. But even if he resisted the temptation, this feature has not escaped the notice of others.

So now we have big investors such as the Winklevoss twins insisting that bitcoin has a bright future. Of course they do - they stand to make a fortune if the price continues to climb. But what are they not telling us? That the only thing keeping the price up is more 'investment' pouring in, and that is bitcoin's only source of 'income'. This is why bitcoin is being compared to classic Ponzi schemes, which work the same way.
 
BobTheCoward said:
Inflation of price is not a Ponzi scheme. Ponzi schemes are purposely masking new investor money as return on investment from a different source. A ponzi scheme is even different from a pyramid where the source of returns is not hidden.
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That is totally irrelevant. As long as Ponzi schemes are bad, bitcoin will always be called a Ponzi scheme.
 
Roger Ramjets said:
Where is the real source of 'investment return' for bitcoin, and is anyone 'masking' it?

Bitcoin has failed as a currency, so at this point the price is being propped up solely by the amount of money 'invested' in it. But we still have bitcoin promoters insisting that it is a revolutionary new technology that will replace 'failing' fiat currencies, and that this is the reason the price will 'go to the moon'. That is masking the true source of bitcoin's 'return'.

In fact bitcoin was designed from the start to be highly deflationary, so the more people buy it the higher the price should go - even if it is not used as 'money'. Bitcoin's creator obviously knew this, and must have seen that he could make a fortune by mining a pile of bitcoins and then encouraging their use. But even if he resisted the temptation, this feature has not escaped the notice of others.

So now we have big investors such as the Winklevoss twins insisting that bitcoin has a bright future. Of course they do - they stand to make a fortune if the price continues to climb. But what are they not telling us? That the only thing keeping the price up is more 'investment' pouring in, and that is bitcoin's only source of 'income'. This is why bitcoin is being compared to classic Ponzi schemes, which work the same way.
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Source of investment is belief in the willingness of a person to purchase a Bitcoin in the future at a higher price then you paid for it. The source of that return is the money from that purchaser. Simply thinking that is a bad idea does not make it a Ponzi scheme. Pump and dumps and pyramids are also not Ponzi scheme.

ETA: paying for something that also has no value is also not a Ponzi scheme. Delusion is not a Ponzi scheme.
 
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BobTheCoward said:
Source of investment is belief in the willingness of a person to purchase a Bitcoin in the future at a higher price then you paid for it. The source of that return is the money from that purchaser. Simply thinking that is a bad idea does not make it a Ponzi scheme. Pump and dumps and pyramids are also not Ponzi scheme.

ETA: paying for something that also has no value is also not a Ponzi scheme. Delusion is not a Ponzi scheme.
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Give it up Bob, you are dealing with people who are not interested in facts.

They have redefined "legitimate investment" to mean investing in an asset that produces an income (bonds, shares in a company, etc). Any asset that does not generate an income but merely appreciates in value is therefore a scam or Ponzi scheme or any other nefarious type of scheme.

It is not about the nature of the nefarious schemes, it's all about bitcoin.
 
psionl0 said:
Give it up Bob, you are dealing with people who are not interested in facts.

They have redefined "legitimate investment" to mean investing in an asset that produces an income (bonds, shares in a company, etc). Any asset that does not generate an income but merely appreciates in value is therefore a scam or Ponzi scheme or any other nefarious type of scheme.

It is not about the nature of the nefarious schemes, it's all about bitcoin.
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Nothing "merely appreciates in value" without producing any revenue. It either appreciates only for a short time, then slumps, as Bitcoin is doing, or it is a scam. A bubble or a swindle.
 
And today I met a woman who is part-time into cryptocurrency. She buys and sells Platincoin.

It has a new twist. It is also a pyramid marketing scheme where "commissions" flow upwards from the base of the pyramid. Get 10 people below you who each have 10 people below them and so on down to 11 levels.

And this in a country where people don't have money to spend! South Africa.
 
psionl0 said:
Regardless of you now playing dumb, you illustrated my post perfectly. You just described the entire commodities market as "a scam. A bubble or a swindle".
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No I haven't. I have described in those words only the commodities that
- Have no use value
- produce no income; but nonetheless magically
- appreciate in value.

Pork bellies and copper futures have, or guarantee, use value; airline company shares provide dividend revenue, derived from passenger fares, and so on.

These are not necessarily bubbles or swindles; though of course like anything else they can be used as cover for swindles.
 
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Craig B said:
No I haven't. I have described in those words only the commodities that
- Have no use value
- produce no income; but nonetheless magically
- appreciate in value.

Pork bellies and copper futures have, or guarantee, use value; airline company shares provide dividend revenue, derived from passenger fares, and so on.

These are not necessarily bubbles or swindles; though of course like anything else they can be used as cover for swindles.
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What about comic books? I don't think action comics #1 has done anything but appreciate in value for decades.
 
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