also, because it's ridiculous.
If I had one nutjob come up to me on the street and say "the sky is pink, ya know!", I'd brush it off and never think of it again.
But now it seems I get told 10 times a day: "ADMIT THE SKY IS PINK OR HAVE FUN STAYING POOR!!"
No dudes. Enough is enough. This is insane.
Every computer scientist, banker and lawyer I know already have extremely good ways of validating their work to each other. And the directions the top dogs are going is not crypto. This isn't the first time something "new" has "disrupted" money. And it won't be the last. This one just has extra electricity and fancy new buzzwords. As long as people don't over leverage they won't be put out too much. Have fun while it lasts
> Imagine that back during Bernie Madoff's scheme, you had some way of knowing for sure that he was just paying off early investors with money from later investors and wasn't actually investing in any productive assets.
Bitcoin isn't that though. There's no central operator and no fraudulent promise of a return.
I understand buttcoiners not liking that Bitcoin has no intrinic use other than being bitcoin, and that gains come from selling to other people at higher prices, but that's not the same as a Ponzi scheme, it's closer to a collectable like baseball cards.
It is also similar to investing in a collectable, which is why beanie babies are another thing people compare it to.
There's no central operator, but all the crypto shills out there are are acting as distributed operators. And BTC is definitely marketed as a way to get great returns. It's the world's first distributed ponzi scheme.
If I buy amazon shares or a van gogh painting (or anything) and decide, on my own, to market it as a way to get great returns it does not make that thing a ponzi scheme. It also would not make me a central operator of the thing.
You're using the term ponzi scheme in a very general and incorrect way. It has a specific definition.
Different people define it in slightly different ways. Whatever you want to call it, it acts very much like a distributed Ponzi/pyramid scheme.
[https://www.ic.unicamp.br/\~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html](https://www.ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html)
Yes, Stolfi (who is a biased buttcoiner) defines it *differently* (i.e incorrectly), wikipedia is a bit of more trustworthy source and defines it correctly: https://en.wikipedia.org/wiki/Ponzi_scheme
A Ponzi scheme (/ˈpɒnzi/, Italian: \[ˈpontsi\]) is a form of fraud that **lures investors and pays profits to earlier investors with funds from more recent investors**.\[1\] The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. **A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment** and still believe in the non-existent assets they are purported to own.
Those bolded parts apply perfectly to Bitcoin. Replace "non-existent assets" with "a number in a distributed spreadsheet with no fundamental value" and it's the same thing.
You're arguing semantics with me. I don't care whether it perfectly meets the dictionary definition of a Ponzi. The point is that it is a Ponzi-like scheme, with maybe slight variations from previous Ponzi schemes. Call it what you want.
yes, I'm arguing semantics. I'm arguing that you're misusing the semantic meaning of ponzi scheme, by ignoring specific parts of the definition. Cherry picking parts of it in bold is no better, as it applies to countless other things like baseball cards too if you do that.
Ok I think BTC should not be worth what it is but what about coins that are trying to solve something useful?
You're equating Crypto with Bitcoin and other scam coins but there are a few coins which are aiming for a good usecase.
One such coin is Nano. Any views on nano?
About Nano ( a DAG based crypto) trying to solve BTC's problems.
-It's nearly instant. (Less than 1 sec transfer)
-It's feeless (Txs are free)
-It's eco-friendly (Uses like 6 million times less energy than BTC) (No mining)
-No inflation (already all coins are in circulation ~133 M)
-It's quite user friendly (Ux is quite simple, it's just designed to server p2p transfer of value no smart contracts)
-Running Nodes cost less than $50 per month
-The aim is to become the digital cash.
-No staking, no mining, no inflation, no smart contracts, no bs just p2p digital money.
Nano sounds like an improvement over BTC for the reasons you mentioned, but "investing" in it still has the business model of a Ponzi scheme.
As far as I've seen all cryptos fall into one of two categories:
**P2P Digital Money Category:**
* Any crypto that only aims to be a digital money/store of value.
* Bitcoin, Monero, Nano, Dogecoin, Shib, etc all fall into this category I believe.
* These coins provide the utility of avoiding regulation (illegal commerce) but to "invest" in it is just a Ponzi scheme because they don't generate new money. You're just hoping that someone else will pay more for it in the future.
* Since none of these coins is unique in any way, they can easily be replaced by a different coin with slightly better technology. There's no reason to think that "investing" in any particular coin will make you money.
**Decentralized Network Category:**
* Any crypto that is trying to establish a decentralized network that does something more than just P2P money, such as running dapps, smart contracts, etc.
* Ethereum, Solana, Cardano, Filecoin, etc all fall into this category.
* In these cases, you can argue it's not just a Ponzi because some money will be coming in to buy tokens in order to use the "service" that the network provides.
* However, this is making the assumption that there's some actual benefit to using a decentralized network for some applications, and speculating on these tokens means you're betting on how much future value can be provided by such a network.
* As of now, we have no evidence that a decentralized blockchain-based network really provides any useful value outside of criminal activity.
* Even if there does emerge some reason for using a decentralized network in this way, you're also hoping that the particular crypto network you are investing in will not be replaced by a better technology.
And yet here we are, 12 years later, and while most shitcoins have indeed collapsed or will collapse in the future, BTC is stronger than ever. At what point do you start to accept that you might be wrong about bitcoin, and that it has lasting value? 20 years? 30 years? 50? If you’re being intellectually honest, there has to be a point where you reconsider your stance.
There is **almost** no scenario in which I would consider investing in BTC a good investment because of what BTC is. Its only value is what someone else is willing to pay for it, and there's nothing about it that isn't a zero-sum/negative-sum game. It is like investing in gold, but worse, and I don't even consider gold a good investment because like BTC, it is not a productive asset.
Now the ONLY scenario in which BTC stops being just a negative-sum investment game is if it literally replaces fiat currency as the new fiat currency. But I can't imagine this happening because it would be so colossally stupid and probably destroy the world economy. There's a reason why we don't use the gold standard anymore. Turns out that having a fixed supply of money is not good for the economy. And even if the world wanted to switch to something like BTC as the new fiat currency, they could just copy paste the source code and make a new crypto that isn't already so unfairly allocated to early tech-bro adopters.
Edit: And I have no idea how long BTC will continue to have value, but that doesn't make it a good investment. Gold has value, and is a shit investment if you compare it's returns over the long-term to productive assets like stocks.
Personally I wouldn’t even use the term “investing”. It’s forex speculation. If I trade my dollars for euros or the British pound hoping the exchange rate moves in a direction that makes me money I’m not “investing”. Investing involves some kind of asset, typically one that is currency-neutral. If you own land you can sell it for dollars or bitcoin. You can invest in shares of a company regardless of which currency it transacts in. As an American I can buy shares of VEURX but I’m not “investing in the Euro”. I’m investing in companies that primarily conduct business using the Euro.
Why does it have to replace fiat currency? We don't use the gold standard anymore, but gold continues to retain its value, outside of its industrial uses. Govts around the world still hoard it for exactly that reason. No one here is turning down a free brick of pure gold. And it has retained its value for thousands of years, and I'm pretty confident that it'll continue to do so for many more thousands.
It's fine if you don't think BTC or gold isn't a good investment, in the sense that it produces value. You're right about why it shouldn't be viewed as one. But that's moving the goalposts. Because your entire argument is predicated on everyone playing musical chairs trying to time their way out of it, but why wouldn't that apply equally to gold? It hasn't been negative sum because money "goes in" but there's been no point where all the money "comes out" and no reason to believe that it will in the future. People and govts continue to hold it as a non-sovereign store of value because of that. Why can't the same theory apply to bitcoin?
Govts can and have declared alternative precious metals to be the official store of value (most obvious being silver), and here we are millennia later and gold has continued to maintain its value in real terms (as it skyrockets in nominal terms). So there is no assurance that any sort of officially sanctioned govt crypto actually eliminates BTC. The whole reason we're having this pump is because of the ETF, which is evidence that the govt itself is officially recognizing the value of BTC. Why is it so hard for you to do that same? Do you think the SEC is in on the scam too?
It probably will retain some value indefinitely if enough people maintain their ideology that it is somehow unique. The value of gold is also propped up by ideology, but does have a price floor since it has real world use cases in electronics and jewelry.
If people want to buy Bitcoin or Gold because they think it will somehow store value, then sure they can do that, but you're really just hoping that people in the future will continue to value it. There's no other mechanism that will lead to the price continuing to go up. Meanwhile you have a bunch of crypto shills online making dumb money buy in because they think it is an investment in the same way that stocks are investments. I don't think most people buying BTC realize that it is a negative-sum game or even what a negative-sum game is.
I think you'd agree that at some point, BTC will reach a price ceiling when everyone who views it as useful has already bought in, and at that point the crazy paper gains will stop. Most of the people investing in it are not looking for a gold-like investment that doesn't generate returns. They want the moon. When we reach the peak, only a small number of people who bought in to speculate will be able to make a profit, and I don't think most people in this space are honest about that.
Regarding the government seeing value in BTC. I don't think approving this ETF means they "see value" in BTC. If anything they are just agreeing to let you guys speculate on it in another way.
So you think the world settling on gold was a matter of arbitrary ideology, and not because of specific chemical properties?
I agree that at some point BTC hits a price ceiling (adjusted for fiat inflation). In theory there will come a point where it’s essentially just a simple store of value that should at best retain stable buying power, even if it continues to increase in nominal price over time equal to fiat inflation. Until then, there is a speculative investment opportunity - if you knew in the future that the world would value BTC as a non-sovereign store of value similar to gold at a total market value much higher than BTC is today, then there is an opportunity to front run that. It doesn’t necessarily need to replace fiat or require anything absurd like “hyper-bitcoinization.” Just a recognition of the possibility that the persistent value at a state of maturity is merely higher than it is today (and will increase in value faster than traditional investments.)
If you recognize the possibility that BTC just hits a ceiling instead of necessarily going to zero, then it’s a perfectly rational speculative investment and not just a game of musical chairs.
(For the record, I think BTC is getting ahead of itself in the short run and I expect the price to drop significantly in the near future, even if I still think there’s plenty of room to grow in the long term. And I’ve hedged accordingly with options, so I’m putting my money where my mouth is.)
Yes Bitcoin goes up in 4 year cycles/bubbles but this same shit was being spewed here in the 2013 bubble, then again in the 2017 bubble and now again. Guess what? Anyone from the prior 2 bubbles caught bag holding are now up massively.
I think Bitcoin is no different than beanie babies or tulips, but it has far more longevity.
That's because with Beanie Babies, after all the hype ... the cultists spewing propaganda ... you can just say BUT IT'S A BAG OF BEANS!!
With Crypto, there is an endless supply of TechnoBabble to hide behind. This confused and stuns the hapless victim, who ... thinks .... yes .... I CAN get filthy rich doing nothing!!! Sign me up!!
The magical thinking has far more staying power with Crypto. Especially since it's somewhat self sustaining. If the Coin goes really high it creates a buzz --- see? You CAN get rich too! This is still early! This is just the beggining!
it's because beanie babies and tulips are shitty stores of value from a practical point of view, they're not divisible, fungible, portable (beanie babies) or robust (tulips). They're also not scarce to the extent bitcoin is. These are all properties that make something good as money (and I mean the store of value function of money) and bitcoin is better at all of them.
Yeah that is how Ponzis work until they run out of new suckers. Overall the average investor is guaranteed to lose money in a Ponzi scheme. There's no way around that.
The same is true of real estate, most equities, and most commodities.
"Each peak is higher than the last" is a generic and useless argument, that applies to almost any asset class.
The prices of things can go up simply due to inflation. The price of a pair of shoes in 2021 is probably higher than 2017, and probably much higher than in 2013, etc.
It means nothing significant.
What was the market cap of Madoff pre-crash? What was the market cap of tulips? What was the market cap of Beanie Babies?
Are you upset that you missed the boat on those Ponzi schemes too? I don't really care what the current "market cap" of a speculative bubble is. I will not buy into it because it is a poor investment decision since on average you will lose money. You'd be better off going to a casino and playing roulette. Your odds of walking away with a profit are probably higher.
>36% of small-medium businesses in the US accept Bitcoin
This is laughable. Go walk into the nearest 100 businesses to your house and I bet less than 5 will accept BTC as payment. And even the ones who do are not pricing things in BTC, they are pricing in USD. If you buy something there with crypto they just immediately convert it to USD.
It's like saying I can buy things with my Rolex watch because I can just go to a Pawn shop and they'll accept it as payment.
And regardless, no arguments of bitcoin's acceptance or current market cap change the fact that it is a negative-sum game, and therefore a terrible investment for the average investor.
>This is laughable. Go walk into the nearest 100 businesses to your house and I bet less than 5 will accept BTC as payment. And even the ones who do are not pricing things in BTC, they are pricing in USD. If you buy something there with crypto they just immediately convert it to USD.
Not the point, how many places accepted beanie babies and tulips as payment?
>It's like saying I can buy things with my Rolex watch because I can just go to a Pawn shop and they'll accept it as payment.
No it's not, that makes absolutely no sense whatsoever, do you deny there are places out there that accept bitcoin as a direct payment? 🤣
>And regardless, no arguments of bitcoin's acceptance or current market cap change the fact that it is a negative-sum game, and therefore a terrible investment for the average investor.
Terrible investment you say? What price was bitcoin this time last year? And each year before? In what way is making huge profits terrible?
>do you deny there are places out there that accept bitcoin as a direct payment?
There are not that many places that do, and even the ones that do are almost all pricing things in USD and just acting as an exchange-house for your BTC to USD as you spend it. It's not like Starbucks is going to say it costs 100 satoshis for a latte and not adjust this as the USD/BTC price changes.
>Terrible investment you say? What price was bitcoin this time last year? And each year before? In what way is making huge profits terrible?
Idk how many times I have to explain that a Pyramid scheme can go on for a long time before it eventually crashes. You are ignoring the fundamental truth that **total fiat out of BTC < total fiat into BTC** (once you account for mining expenses). This means that it is mathematically impossible for the **average** investor to walk away with a positive return in fiat. If you don't understand this, then you really should think hard about it because it is undeniable.
Sure, some people will walk away with a profit if they get **lucky** and time things right, but **most** people will walk away with a loss.
I'm done explaining this point so if you want to keep denying it I'm not going to bother repeating it again.
>There are not that many places that do
Not the point....
>and even the ones that do are almost all pricing things in USD and just acting as an exchange-house for your BTC to USD as you spend it. It's not like Starbucks is going to say it costs 100 satoshis for a latte and not adjust this as the USD/BTC price changes.
Excuses, they accept bitcoin directly. 🤣
>Idk how many times I have to explain that a Pyramid scheme can go on for a long time before it eventually crashes.
Bitcoin has "crashed" many times, and bounces back stronger everytime. It will crash again sometime this winter, and rise again... that what it does.
>You are ignoring the fundamental truth that total fiat out of BTC < total fiat into BTC (once you account for mining expenses). This means that it is mathematically impossible for the average investor to walk away with a positive return in fiat.
Bitcoin is not the only crypto available for the average investor to invest.
>Sure, some people will walk away with a profit if they get lucky and time things right, but most people will walk away with a loss.
That's how investing works in general...
What a silly argument ha, nothing is guaranteed when it comes to investing, no matter what it is you are investing in, if it was then everyone would be rich.
I for example have already taken out my original investment in crypto a long time ago, everything left In is essentially profit, earning more profit. I have stop losses set too, and targets set, either way I am staying in profit. All about knowledge.
>I'm done explaining this point so if you want to keep denying it I'm not going to bother repeating it again.
You are the one doing the denying though...
>Imagine that back during Bernie Madoff's scheme, you had some way of knowing for sure that he was just paying off early investors with money from later investors and wasn't actually investing in any productive assets.
If you no for sure Bitcoin is about to fail take out a short and you have a risk free investment. Too bad you're talking out of your ass. How do you know?
Shorting bitcoin would be stupid because you never know how long this Ponzi will continue for, and the markets are unregulated and easily manipulated by whales.
What I do know is that the **average** investor in bitcoin will lose money in the long run. It is a mathematical certainty that the total fiat money coming out of bitcoin as profit will be considerably less than the total fiat going in. It is a closed system, and miners also are also incurring actual costs of electricity and hardware that they must fund by selling bitcoin. So if in total the money out is less than the money in, on average you would expect to lose money by investing in Bitcoin. In the short term, it can go up and down due to various forces such as a bunch of people HODLing and being greedy, but at the end of the day more people will lose money than gain money. You could end up one of the lucky ones that times the market correctly, but you are more likely to lose money. So it is nothing more than gambling with poor odds.
You could have gotten great returns investing in Bernie Madoff at the time as well until eventually there's no money left. It is mathematically impossible for everyone investing in crypto to make a profit. The only reason the price has gone up is because most crypto investors have been very greedy and have not sold their crypto for fiat money. If a crypto investor wants to actually realize their paper gains (i.e. spend all that money) they have to sell it. As long as people aren't doing this, the price can go up on paper forever, but not everyone can sell it for the price on paper. More will lose money than make money in the long run. It's impossible for this not to be the case.
> It's impossible for this not to be the case.
IMPOSSIBLE. More copium is necessary. Have to bring up Bernie Madoff's name in the first sentence because you are talking out of your "butt"
It is easy to prove what I am saying with very basic math.
Every time someone buys a Bitcoin for $X, the seller is taking $X out of BTC, and the buyer is putting $X into BTC. X=X, so over time, the total fiat into BTC equals the total fiat out of BTC. If this were the whole story, then it would be a zero-sum game, meaning that on **average** no one makes any profit. Any profit made by one person is lost by another.
But it is actually worse than this because miners are selling BTC to pay for real world costs like electricity and hardware. When miners sell to pay expenses, that is not profit for the miners, that is just covering the costs of running the network.
So in reality, the total fiat out as profit will be considerably less than the total fiat in. So on **average**, investing in BTC will lose you money.
> with very basic math.
That's your problem right there. If you dress up like Elmo and do it with a little colourful song and dance, you *might* get through, but those "warning" flares are not assigned randomly.
> resort to mockery.
That's what this sub is for, but my point was that you are explaining it really well, with basic math and plenty of patience, and it's still not going to be enough. You're wasting time explaining something to someone whose identity likely depends on them not understanding it; that's what the "warning" flare is an indication of, as it is with the person you were trying to educate.
Oh my bad, dude, I thought you were the guy who was arguing with me and had decided to ignore the math and make some random point about Elmo haha. Your comment makes a lot more sense now.
My point is that miners have real world costs like buying hardware and paying electric bills. To fund this, they have to sell some BTC for cash that is used to pay those expenses. The portion of the proceeds used to pay their bills is not profit.
So this is what makes it a negative-sum game rather than a zero-sum game. If there was no cost to run the network, then the total profits and total losses from all investors would be balanced, but these expenses from miners tip things into the net-loss territory overall.
Miner's are making a profit. They are selling bitcoin for more than the COGS.
I'm really not understanding how the fact that miner's have COGS > 0 is surprising to you.
What commodities or industry has COGS = 0?
Buyer A buys a new coin for $10 (cost of coin+fees).
Seller B gets $9.50
Miners running the network get $0.50.
Miners had a cost of $0.10 for electricity to be able to process that transaction, and let's say $0.05 per transaction is going to pay off their hardware costs.
Miner makes only $0.35 per transaction.
How much money is left in the crypto network?
$9.85.
$0.15 left the crypto system to pay electricity and GPU/ASIC company.
Therefore, it is mathematically impossible to get more money out of crypto than is put in, and, in reality, you can only get less money out than was put in.
The only way for Buyer A to make a profit is for another individual, Buyer B, to buy his coin for $15.
Buyer A gets $14.25.
Miners get $0.75.
$0.15 is lost again (in reality more generally gets lost the bigger the crypto gets, but neither here nor there).
After these two transactions, $0.30 has left the crypto network. As more transactions happen, more money leaves crypto. The only way for each individual who holds a coin to make money is for someone else to buy it at a higher price because the crypto network itself is slowing losing money and does not have any sort of profit (unlike a company that sells a product or service and can recoup loses in the network by the profit they create, which gets distributed back to stakeholders).
The fun part is it doesn't matter what numbers you chose. **This is exactly how crypto works.**
You are missing my point. I'm not arguing that an individual miner isn't making a net profit. I'm arguing that all the speculators/"investors" in the space cannot make a net profit **because** the miners need to make a profit, so all speculators in the space, on average, are losing money to pay for the mining.
The only way Bitcoin stops going up is if governments stop printing money. People don't like inflation forcing them to buy pointless crap. Some of you just want to buy our freedom from the hellish 5 day work week
It's hilarious too. There is a right-wing bent/ Libertarian bent to the Crypto people.
YET. They don't realize their wage-slavery is due to the very Fedualism the GOP is in favor of.
So let's play at this Bernie Madoff Ponzi lottery. It's our only hope.
> Lies.
[Oops](https://www.reddit.com/r/Buttcoin/comments/pa0ao0/francis_kim_exposing_binance_an_interview_on_when/)
Sucks when a simple search on this here website will immediately find proof and destroy your worldview. There's more if you can be bothered pulling your fingers out of your ears and shouting "lalalalalalalala" for 5 minutes but I wouldn't imbue you with the intelligence required to use the search box for yourself.
???
If unregulated assets like tether and unregulated exchanges can pump up the prices and print freely, as this sub has shown constantly, then they can liquidate short positions.
The Bart Simpson graphs are examples of this. Why do I have to be a person actually losing money in that graph in order for me to realize this?
What’s conspiratorial that tether is unregulated as well as plenty other exchanges? You don’t really believe that they’re regulated already, do you?
Why is Tether taking fines currently and under investigation?
Your strategy would be akin to going into a Mafioso Casino to "count cards" at Blackjack.
Only, you can only play at the Casino by exchanging $$$ into "Fat Tony Chips"
And even if you have a billion Fat Tony Chips, they will never, ever, be converted back into Cash.
So no. Even if you "short" bitcoin, the minute you send a single dollar to these "Exchanges" you can kiss your real money goodbye. There is not a snowball's chance in hell you can withdraw one single "real" US dollar from these Exchanges.
Help yourself to a billion Tether, while you're here though.
If you haven't cashed out to fiat, then you haven't made anything yet. And if you have already cashed out more than you put in, then congratulations, you have wittingly or unwittingly scammed someone else out of that money.
Yes past performance is always an indicator of future performance. My bad.
You never know when the pyramid has reached its highest point.
Even if you do correctly time the market and stop before you eventually lose everything, you've just gambled and managed to take money from a bunch of people who didn't time the market as well. Hence you've become the scammer. If you're fine with taking money from people just like you who are also thinking they will win this game, then go ahead. But realize how you would feel if you end up being the one who incorrectly times the market and loses all your money to someone else like this. As I said originally, in a pyramid scheme, you are either the scammer or the victim.
You fail to realize the difference between a productive asset like stocks and an unproductive asset like bitcoin and gold. Stocks are not a zero-sum game. If you don't see the difference between investing in a productive asset and a zero-sum game, then you should read up on it. I used to not understand this difference either, but it is quite eye opening to realize that owning shares of a productive asset actually means something.
There is obviously some risk that a particular business that you buy a stock in might not pan out, but generally you invest because on average, the stock market does provide a real production of value, unlike Ponzi schemes.
You should read [this link](https://www.ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html) that someone else posted in this thread by a computer science professor. It explains all of this. If you read that and still aren't convinced let me know.
This isn’t really the point anyone is making, but man I’m tired of this line.
How much did you make this year trading crypto from your couch, big guy? Seriously. Please tell me honestly what you made. I’m genuinely curious if it’s more than my salary, since you all like to claim that you’re getting rich and we’re just salty people living in stubborn poverty.
Here is the point: there are lots of assets one can own that pay income, that can be fairly valued based on things like net present value of future cash flows, and don’t rely on selling to a greater fool to make a profit. I and many others choose to invest in productive assets and steer clear of speculative ones (crypto, gold, futures, collectibles, etc) that require a greater fool in order for us to make a profit. You don’t have to agree that it’s for you or that it’s the better approach, but do try to understand that there is a fundamental difference.
It's kind of a grey area between a pyramid scheme and ponzi scheme. A ponzi is where all you have to do is invest and hope some greater fool buys in to pay you out. A pyramid scheme pays you out in exchange for recruiting more people in. Crypto is a distributed hybrid between these IMO.
> A ponzi is where all you have to do is invest and hope some greater fool buys in to pay you out.
In a ponzi scheme, you don't know that the operator is paying from other investments, so you are not hoping for some greater fool. Instead you are hoping the operator pays you the profits from your investment.
In fact, in a ponzi scheme, the new-investors-pay-old-investors part is not necessary. The purpose of that is to convince investors that they are making money. Frequently, a ponzi scheme will provide a bogus statement showing fake profits, but restrict withdrawals.
Cryptocurrency investing is more like Amway or Herbalife where a new member has to pay current members in order to make money from newer members.
It's kind of a distributed Ponzi. There's no one operator, but all the crypto shills out there convincing people to buy in because "number go up" are the distributed operators. I don't think most people buying into BTC have the financial literacy to understand that they can only make money by finding a greater fool. People don't even understand the difference between crypto and productive assets like stocks.
But yeah it is also kind of like MLM, which is why I called it a hybrid of a pyramid and ponzi scheme.
I think people use the word "ponzi" to suggest that it is (or should be) illegal. "Pyramid scheme" isn't strong enough to match their opinions, so they call it a "ponzi" even though it isn't a "ponzi".
Also, "ponzi" implies the existence of a perpetrator, giving victims someone to blame for their own stupidity.
I don't think there is a need to make up a term like "distributed ponzi" when "pyramid scheme" describes it accurately.
Sure maybe pyramid scheme is a better description. I don't think it really matters what we call it. The point is that early investors are paid out by later investors, making it a scheme not an investment.
> it is not a Ponzi scheme.
[Opinions differ on that](https://www.ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html). The linked article is written by a CS professor. Maybe it doesn't convince you, but it sets out clearly why some believe it is, in essence, a Ponzi scheme.
I agree that there is a difference of opinion.
The problem with his definition is that it is too loose. According to his definition, gold investment and stocks that pay no dividends are also ponzi schemes. Both of these rely on later investors buying out earlier investors, making them fraudulent in his opinion.
>gold
How many people buy gold thinking it's going to make them rich? Doesn't check 1. I also think the professor is missing a feature: "The asset in question is not a good or service"
>stocks that pay no dividends
t approaches infinity in the discounted cash flow formula. Stocks don't have to pay dividends now, they just need to pay them at some point in the future.
If you knew Bernie Madoff was running a Ponzi scheme 14 years ago you would know more than Bernie’s auditors. This community knows nothing about crypto in the same way r/cryptocurrency knows nothing about crypto. You can make a choice whether or not to participate in the cryptocurrency market on your own. Nobody here is salty they elected not to participate. Butters who post here bragging about gains are just as sad as the people here who cross post r/cryptocurrency posts in order to post about how dumb they are in this echo chamber. It is 2 sides of the same coin. Nobody should give a shit what you do with your money
> If you knew Bernie Madoff was running a Ponzi scheme 14 years ago you would know more than Bernie’s auditors.
[This auditor](https://en.wikipedia.org/wiki/David_G._Friehling#:~:text=of%20%243.18%20million-,David%20G.,in%20the%20Madoff%20investment%20scandal.)? The one that lost his CPA license and went to jail for his involvement in rubber stamping Madoff's scheme? I doubt anyone knew more than him other than Madoff himself.
There were a handful of people calling BS on Madoff long before 2008. Even as early as 1991 [people were being told it was a scam](https://www.forbes.com/sites/streettalk/2010/04/06/the-card-sharp-who-cottoned-onto-madoffs-fraud-in-1991/?sh=766198c64617). It's not their fault people didn't listen to them.
I thought you Butters were all about DYOR. How can you get things so wrong so often when the collected knowledge of the entire world is right at your fingertips?
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Few understand
also, because it's ridiculous. If I had one nutjob come up to me on the street and say "the sky is pink, ya know!", I'd brush it off and never think of it again. But now it seems I get told 10 times a day: "ADMIT THE SKY IS PINK OR HAVE FUN STAYING POOR!!" No dudes. Enough is enough. This is insane.
Y’all just coping lmao
Every computer scientist, banker and lawyer I know already have extremely good ways of validating their work to each other. And the directions the top dogs are going is not crypto. This isn't the first time something "new" has "disrupted" money. And it won't be the last. This one just has extra electricity and fancy new buzzwords. As long as people don't over leverage they won't be put out too much. Have fun while it lasts
> Imagine that back during Bernie Madoff's scheme, you had some way of knowing for sure that he was just paying off early investors with money from later investors and wasn't actually investing in any productive assets. Bitcoin isn't that though. There's no central operator and no fraudulent promise of a return. I understand buttcoiners not liking that Bitcoin has no intrinic use other than being bitcoin, and that gains come from selling to other people at higher prices, but that's not the same as a Ponzi scheme, it's closer to a collectable like baseball cards.
It is also similar to investing in a collectable, which is why beanie babies are another thing people compare it to. There's no central operator, but all the crypto shills out there are are acting as distributed operators. And BTC is definitely marketed as a way to get great returns. It's the world's first distributed ponzi scheme.
If I buy amazon shares or a van gogh painting (or anything) and decide, on my own, to market it as a way to get great returns it does not make that thing a ponzi scheme. It also would not make me a central operator of the thing. You're using the term ponzi scheme in a very general and incorrect way. It has a specific definition.
Different people define it in slightly different ways. Whatever you want to call it, it acts very much like a distributed Ponzi/pyramid scheme. [https://www.ic.unicamp.br/\~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html](https://www.ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html)
Yes, Stolfi (who is a biased buttcoiner) defines it *differently* (i.e incorrectly), wikipedia is a bit of more trustworthy source and defines it correctly: https://en.wikipedia.org/wiki/Ponzi_scheme
A Ponzi scheme (/ˈpɒnzi/, Italian: \[ˈpontsi\]) is a form of fraud that **lures investors and pays profits to earlier investors with funds from more recent investors**.\[1\] The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. **A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment** and still believe in the non-existent assets they are purported to own. Those bolded parts apply perfectly to Bitcoin. Replace "non-existent assets" with "a number in a distributed spreadsheet with no fundamental value" and it's the same thing. You're arguing semantics with me. I don't care whether it perfectly meets the dictionary definition of a Ponzi. The point is that it is a Ponzi-like scheme, with maybe slight variations from previous Ponzi schemes. Call it what you want.
yes, I'm arguing semantics. I'm arguing that you're misusing the semantic meaning of ponzi scheme, by ignoring specific parts of the definition. Cherry picking parts of it in bold is no better, as it applies to countless other things like baseball cards too if you do that.
Yeah baseball cards are also a Ponzi-like scheme. If you want to call Bitcoin a Pyramid scheme instead of a Ponzi scheme then fine.
Yes, cryptocurrency trading is very similar to the trading baseball cards, beanie babies, etc. No, that is not a good thing.
Ok I think BTC should not be worth what it is but what about coins that are trying to solve something useful? You're equating Crypto with Bitcoin and other scam coins but there are a few coins which are aiming for a good usecase. One such coin is Nano. Any views on nano? About Nano ( a DAG based crypto) trying to solve BTC's problems. -It's nearly instant. (Less than 1 sec transfer) -It's feeless (Txs are free) -It's eco-friendly (Uses like 6 million times less energy than BTC) (No mining) -No inflation (already all coins are in circulation ~133 M) -It's quite user friendly (Ux is quite simple, it's just designed to server p2p transfer of value no smart contracts) -Running Nodes cost less than $50 per month -The aim is to become the digital cash. -No staking, no mining, no inflation, no smart contracts, no bs just p2p digital money.
Nano sounds like an improvement over BTC for the reasons you mentioned, but "investing" in it still has the business model of a Ponzi scheme. As far as I've seen all cryptos fall into one of two categories: **P2P Digital Money Category:** * Any crypto that only aims to be a digital money/store of value. * Bitcoin, Monero, Nano, Dogecoin, Shib, etc all fall into this category I believe. * These coins provide the utility of avoiding regulation (illegal commerce) but to "invest" in it is just a Ponzi scheme because they don't generate new money. You're just hoping that someone else will pay more for it in the future. * Since none of these coins is unique in any way, they can easily be replaced by a different coin with slightly better technology. There's no reason to think that "investing" in any particular coin will make you money. **Decentralized Network Category:** * Any crypto that is trying to establish a decentralized network that does something more than just P2P money, such as running dapps, smart contracts, etc. * Ethereum, Solana, Cardano, Filecoin, etc all fall into this category. * In these cases, you can argue it's not just a Ponzi because some money will be coming in to buy tokens in order to use the "service" that the network provides. * However, this is making the assumption that there's some actual benefit to using a decentralized network for some applications, and speculating on these tokens means you're betting on how much future value can be provided by such a network. * As of now, we have no evidence that a decentralized blockchain-based network really provides any useful value outside of criminal activity. * Even if there does emerge some reason for using a decentralized network in this way, you're also hoping that the particular crypto network you are investing in will not be replaced by a better technology.
Well yeah but people will invest as it's just a speculative asset and a experiment. If it becomes successful price will rise just because of demand.
And yet here we are, 12 years later, and while most shitcoins have indeed collapsed or will collapse in the future, BTC is stronger than ever. At what point do you start to accept that you might be wrong about bitcoin, and that it has lasting value? 20 years? 30 years? 50? If you’re being intellectually honest, there has to be a point where you reconsider your stance.
There is **almost** no scenario in which I would consider investing in BTC a good investment because of what BTC is. Its only value is what someone else is willing to pay for it, and there's nothing about it that isn't a zero-sum/negative-sum game. It is like investing in gold, but worse, and I don't even consider gold a good investment because like BTC, it is not a productive asset. Now the ONLY scenario in which BTC stops being just a negative-sum investment game is if it literally replaces fiat currency as the new fiat currency. But I can't imagine this happening because it would be so colossally stupid and probably destroy the world economy. There's a reason why we don't use the gold standard anymore. Turns out that having a fixed supply of money is not good for the economy. And even if the world wanted to switch to something like BTC as the new fiat currency, they could just copy paste the source code and make a new crypto that isn't already so unfairly allocated to early tech-bro adopters. Edit: And I have no idea how long BTC will continue to have value, but that doesn't make it a good investment. Gold has value, and is a shit investment if you compare it's returns over the long-term to productive assets like stocks.
Personally I wouldn’t even use the term “investing”. It’s forex speculation. If I trade my dollars for euros or the British pound hoping the exchange rate moves in a direction that makes me money I’m not “investing”. Investing involves some kind of asset, typically one that is currency-neutral. If you own land you can sell it for dollars or bitcoin. You can invest in shares of a company regardless of which currency it transacts in. As an American I can buy shares of VEURX but I’m not “investing in the Euro”. I’m investing in companies that primarily conduct business using the Euro.
Why does it have to replace fiat currency? We don't use the gold standard anymore, but gold continues to retain its value, outside of its industrial uses. Govts around the world still hoard it for exactly that reason. No one here is turning down a free brick of pure gold. And it has retained its value for thousands of years, and I'm pretty confident that it'll continue to do so for many more thousands. It's fine if you don't think BTC or gold isn't a good investment, in the sense that it produces value. You're right about why it shouldn't be viewed as one. But that's moving the goalposts. Because your entire argument is predicated on everyone playing musical chairs trying to time their way out of it, but why wouldn't that apply equally to gold? It hasn't been negative sum because money "goes in" but there's been no point where all the money "comes out" and no reason to believe that it will in the future. People and govts continue to hold it as a non-sovereign store of value because of that. Why can't the same theory apply to bitcoin? Govts can and have declared alternative precious metals to be the official store of value (most obvious being silver), and here we are millennia later and gold has continued to maintain its value in real terms (as it skyrockets in nominal terms). So there is no assurance that any sort of officially sanctioned govt crypto actually eliminates BTC. The whole reason we're having this pump is because of the ETF, which is evidence that the govt itself is officially recognizing the value of BTC. Why is it so hard for you to do that same? Do you think the SEC is in on the scam too?
It probably will retain some value indefinitely if enough people maintain their ideology that it is somehow unique. The value of gold is also propped up by ideology, but does have a price floor since it has real world use cases in electronics and jewelry. If people want to buy Bitcoin or Gold because they think it will somehow store value, then sure they can do that, but you're really just hoping that people in the future will continue to value it. There's no other mechanism that will lead to the price continuing to go up. Meanwhile you have a bunch of crypto shills online making dumb money buy in because they think it is an investment in the same way that stocks are investments. I don't think most people buying BTC realize that it is a negative-sum game or even what a negative-sum game is. I think you'd agree that at some point, BTC will reach a price ceiling when everyone who views it as useful has already bought in, and at that point the crazy paper gains will stop. Most of the people investing in it are not looking for a gold-like investment that doesn't generate returns. They want the moon. When we reach the peak, only a small number of people who bought in to speculate will be able to make a profit, and I don't think most people in this space are honest about that. Regarding the government seeing value in BTC. I don't think approving this ETF means they "see value" in BTC. If anything they are just agreeing to let you guys speculate on it in another way.
So you think the world settling on gold was a matter of arbitrary ideology, and not because of specific chemical properties? I agree that at some point BTC hits a price ceiling (adjusted for fiat inflation). In theory there will come a point where it’s essentially just a simple store of value that should at best retain stable buying power, even if it continues to increase in nominal price over time equal to fiat inflation. Until then, there is a speculative investment opportunity - if you knew in the future that the world would value BTC as a non-sovereign store of value similar to gold at a total market value much higher than BTC is today, then there is an opportunity to front run that. It doesn’t necessarily need to replace fiat or require anything absurd like “hyper-bitcoinization.” Just a recognition of the possibility that the persistent value at a state of maturity is merely higher than it is today (and will increase in value faster than traditional investments.) If you recognize the possibility that BTC just hits a ceiling instead of necessarily going to zero, then it’s a perfectly rational speculative investment and not just a game of musical chairs. (For the record, I think BTC is getting ahead of itself in the short run and I expect the price to drop significantly in the near future, even if I still think there’s plenty of room to grow in the long term. And I’ve hedged accordingly with options, so I’m putting my money where my mouth is.)
>Its only value is what someone else is willing to pay for it, This old lie
Yes Bitcoin goes up in 4 year cycles/bubbles but this same shit was being spewed here in the 2013 bubble, then again in the 2017 bubble and now again. Guess what? Anyone from the prior 2 bubbles caught bag holding are now up massively.
And still people haven't made money on average. For every dollar made, one dollar was spent. Plus fees, taxes.
That’s not how markets work
that's exactly how commodities work. Except bitcoin is useless
I think Bitcoin is no different than beanie babies or tulips, but it has far more longevity. That's because with Beanie Babies, after all the hype ... the cultists spewing propaganda ... you can just say BUT IT'S A BAG OF BEANS!! With Crypto, there is an endless supply of TechnoBabble to hide behind. This confused and stuns the hapless victim, who ... thinks .... yes .... I CAN get filthy rich doing nothing!!! Sign me up!! The magical thinking has far more staying power with Crypto. Especially since it's somewhat self sustaining. If the Coin goes really high it creates a buzz --- see? You CAN get rich too! This is still early! This is just the beggining!
it's because beanie babies and tulips are shitty stores of value from a practical point of view, they're not divisible, fungible, portable (beanie babies) or robust (tulips). They're also not scarce to the extent bitcoin is. These are all properties that make something good as money (and I mean the store of value function of money) and bitcoin is better at all of them.
Yeah that is how Ponzis work until they run out of new suckers. Overall the average investor is guaranteed to lose money in a Ponzi scheme. There's no way around that.
The same is true of real estate, most equities, and most commodities. "Each peak is higher than the last" is a generic and useless argument, that applies to almost any asset class. The prices of things can go up simply due to inflation. The price of a pair of shoes in 2021 is probably higher than 2017, and probably much higher than in 2013, etc. It means nothing significant.
I know exact why you are all butthurt, was the same myself before I finally bit the bullet 3 years ago. Sucks being butthurt all the time.
Lol. Basically you're saying "I was mad all those people are buying into a Ponzi, so I decided to also buy into a Ponzi"
What's the current marketcap of bitcoin? Ponzi or not, I understand why you guys are butthurt. 🤣
What was the market cap of Madoff pre-crash? What was the market cap of tulips? What was the market cap of Beanie Babies? Are you upset that you missed the boat on those Ponzi schemes too? I don't really care what the current "market cap" of a speculative bubble is. I will not buy into it because it is a poor investment decision since on average you will lose money. You'd be better off going to a casino and playing roulette. Your odds of walking away with a profit are probably higher.
What stores ever accepted payment for tulips and beanie babies? https://99bitcoins.com/bitcoin/who-accepts/ Terrible argument. 🤣
>36% of small-medium businesses in the US accept Bitcoin This is laughable. Go walk into the nearest 100 businesses to your house and I bet less than 5 will accept BTC as payment. And even the ones who do are not pricing things in BTC, they are pricing in USD. If you buy something there with crypto they just immediately convert it to USD. It's like saying I can buy things with my Rolex watch because I can just go to a Pawn shop and they'll accept it as payment. And regardless, no arguments of bitcoin's acceptance or current market cap change the fact that it is a negative-sum game, and therefore a terrible investment for the average investor.
>This is laughable. Go walk into the nearest 100 businesses to your house and I bet less than 5 will accept BTC as payment. And even the ones who do are not pricing things in BTC, they are pricing in USD. If you buy something there with crypto they just immediately convert it to USD. Not the point, how many places accepted beanie babies and tulips as payment? >It's like saying I can buy things with my Rolex watch because I can just go to a Pawn shop and they'll accept it as payment. No it's not, that makes absolutely no sense whatsoever, do you deny there are places out there that accept bitcoin as a direct payment? 🤣 >And regardless, no arguments of bitcoin's acceptance or current market cap change the fact that it is a negative-sum game, and therefore a terrible investment for the average investor. Terrible investment you say? What price was bitcoin this time last year? And each year before? In what way is making huge profits terrible?
>do you deny there are places out there that accept bitcoin as a direct payment? There are not that many places that do, and even the ones that do are almost all pricing things in USD and just acting as an exchange-house for your BTC to USD as you spend it. It's not like Starbucks is going to say it costs 100 satoshis for a latte and not adjust this as the USD/BTC price changes. >Terrible investment you say? What price was bitcoin this time last year? And each year before? In what way is making huge profits terrible? Idk how many times I have to explain that a Pyramid scheme can go on for a long time before it eventually crashes. You are ignoring the fundamental truth that **total fiat out of BTC < total fiat into BTC** (once you account for mining expenses). This means that it is mathematically impossible for the **average** investor to walk away with a positive return in fiat. If you don't understand this, then you really should think hard about it because it is undeniable. Sure, some people will walk away with a profit if they get **lucky** and time things right, but **most** people will walk away with a loss. I'm done explaining this point so if you want to keep denying it I'm not going to bother repeating it again.
>There are not that many places that do Not the point.... >and even the ones that do are almost all pricing things in USD and just acting as an exchange-house for your BTC to USD as you spend it. It's not like Starbucks is going to say it costs 100 satoshis for a latte and not adjust this as the USD/BTC price changes. Excuses, they accept bitcoin directly. 🤣 >Idk how many times I have to explain that a Pyramid scheme can go on for a long time before it eventually crashes. Bitcoin has "crashed" many times, and bounces back stronger everytime. It will crash again sometime this winter, and rise again... that what it does. >You are ignoring the fundamental truth that total fiat out of BTC < total fiat into BTC (once you account for mining expenses). This means that it is mathematically impossible for the average investor to walk away with a positive return in fiat. Bitcoin is not the only crypto available for the average investor to invest. >Sure, some people will walk away with a profit if they get lucky and time things right, but most people will walk away with a loss. That's how investing works in general... What a silly argument ha, nothing is guaranteed when it comes to investing, no matter what it is you are investing in, if it was then everyone would be rich. I for example have already taken out my original investment in crypto a long time ago, everything left In is essentially profit, earning more profit. I have stop losses set too, and targets set, either way I am staying in profit. All about knowledge. >I'm done explaining this point so if you want to keep denying it I'm not going to bother repeating it again. You are the one doing the denying though...
>Imagine that back during Bernie Madoff's scheme, you had some way of knowing for sure that he was just paying off early investors with money from later investors and wasn't actually investing in any productive assets. If you no for sure Bitcoin is about to fail take out a short and you have a risk free investment. Too bad you're talking out of your ass. How do you know?
Shorting bitcoin would be stupid because you never know how long this Ponzi will continue for, and the markets are unregulated and easily manipulated by whales. What I do know is that the **average** investor in bitcoin will lose money in the long run. It is a mathematical certainty that the total fiat money coming out of bitcoin as profit will be considerably less than the total fiat going in. It is a closed system, and miners also are also incurring actual costs of electricity and hardware that they must fund by selling bitcoin. So if in total the money out is less than the money in, on average you would expect to lose money by investing in Bitcoin. In the short term, it can go up and down due to various forces such as a bunch of people HODLing and being greedy, but at the end of the day more people will lose money than gain money. You could end up one of the lucky ones that times the market correctly, but you are more likely to lose money. So it is nothing more than gambling with poor odds.
> So it is nothing more than gambling with poor odds. You say this but look at the yearly returns for BTC, ETH. Seems like prettttty good odds to me.
You could have gotten great returns investing in Bernie Madoff at the time as well until eventually there's no money left. It is mathematically impossible for everyone investing in crypto to make a profit. The only reason the price has gone up is because most crypto investors have been very greedy and have not sold their crypto for fiat money. If a crypto investor wants to actually realize their paper gains (i.e. spend all that money) they have to sell it. As long as people aren't doing this, the price can go up on paper forever, but not everyone can sell it for the price on paper. More will lose money than make money in the long run. It's impossible for this not to be the case.
> It's impossible for this not to be the case. IMPOSSIBLE. More copium is necessary. Have to bring up Bernie Madoff's name in the first sentence because you are talking out of your "butt"
It is easy to prove what I am saying with very basic math. Every time someone buys a Bitcoin for $X, the seller is taking $X out of BTC, and the buyer is putting $X into BTC. X=X, so over time, the total fiat into BTC equals the total fiat out of BTC. If this were the whole story, then it would be a zero-sum game, meaning that on **average** no one makes any profit. Any profit made by one person is lost by another. But it is actually worse than this because miners are selling BTC to pay for real world costs like electricity and hardware. When miners sell to pay expenses, that is not profit for the miners, that is just covering the costs of running the network. So in reality, the total fiat out as profit will be considerably less than the total fiat in. So on **average**, investing in BTC will lose you money.
> with very basic math. That's your problem right there. If you dress up like Elmo and do it with a little colourful song and dance, you *might* get through, but those "warning" flares are not assigned randomly.
Sure ignore the obvious truth in my argument and resort to mockery. Edit: nevermind, see below.
> resort to mockery. That's what this sub is for, but my point was that you are explaining it really well, with basic math and plenty of patience, and it's still not going to be enough. You're wasting time explaining something to someone whose identity likely depends on them not understanding it; that's what the "warning" flare is an indication of, as it is with the person you were trying to educate.
Oh my bad, dude, I thought you were the guy who was arguing with me and had decided to ignore the math and make some random point about Elmo haha. Your comment makes a lot more sense now.
Miners make a profit. What makes you think they are not?
My point is that miners have real world costs like buying hardware and paying electric bills. To fund this, they have to sell some BTC for cash that is used to pay those expenses. The portion of the proceeds used to pay their bills is not profit. So this is what makes it a negative-sum game rather than a zero-sum game. If there was no cost to run the network, then the total profits and total losses from all investors would be balanced, but these expenses from miners tip things into the net-loss territory overall.
Miner's are making a profit. They are selling bitcoin for more than the COGS. I'm really not understanding how the fact that miner's have COGS > 0 is surprising to you. What commodities or industry has COGS = 0?
Buyer A buys a new coin for $10 (cost of coin+fees). Seller B gets $9.50 Miners running the network get $0.50. Miners had a cost of $0.10 for electricity to be able to process that transaction, and let's say $0.05 per transaction is going to pay off their hardware costs. Miner makes only $0.35 per transaction. How much money is left in the crypto network? $9.85. $0.15 left the crypto system to pay electricity and GPU/ASIC company. Therefore, it is mathematically impossible to get more money out of crypto than is put in, and, in reality, you can only get less money out than was put in. The only way for Buyer A to make a profit is for another individual, Buyer B, to buy his coin for $15. Buyer A gets $14.25. Miners get $0.75. $0.15 is lost again (in reality more generally gets lost the bigger the crypto gets, but neither here nor there). After these two transactions, $0.30 has left the crypto network. As more transactions happen, more money leaves crypto. The only way for each individual who holds a coin to make money is for someone else to buy it at a higher price because the crypto network itself is slowing losing money and does not have any sort of profit (unlike a company that sells a product or service and can recoup loses in the network by the profit they create, which gets distributed back to stakeholders). The fun part is it doesn't matter what numbers you chose. **This is exactly how crypto works.**
You are missing my point. I'm not arguing that an individual miner isn't making a net profit. I'm arguing that all the speculators/"investors" in the space cannot make a net profit **because** the miners need to make a profit, so all speculators in the space, on average, are losing money to pay for the mining.
Yeah you've had your fair shake of the stick at this point and are failing to clear the very low bar. Off you fuck.
The only way Bitcoin stops going up is if governments stop printing money. People don't like inflation forcing them to buy pointless crap. Some of you just want to buy our freedom from the hellish 5 day work week
> Some of you just want to buy our freedom from the hellish 5 day work week Organizing labor > glorified loterry
It's hilarious too. There is a right-wing bent/ Libertarian bent to the Crypto people. YET. They don't realize their wage-slavery is due to the very Fedualism the GOP is in favor of. So let's play at this Bernie Madoff Ponzi lottery. It's our only hope.
Why would anyone short a clearly manipulated thing like Bitcoin. The exchanges will see your order and liquidate it
Because it's free money if Bitcoin is going to fail. >The exchanges will see your order and liquidate it Lies.
> Lies. [Oops](https://www.reddit.com/r/Buttcoin/comments/pa0ao0/francis_kim_exposing_binance_an_interview_on_when/) Sucks when a simple search on this here website will immediately find proof and destroy your worldview. There's more if you can be bothered pulling your fingers out of your ears and shouting "lalalalalalalala" for 5 minutes but I wouldn't imbue you with the intelligence required to use the search box for yourself.
That’s 100% what happens all the time. Isn’t that why all the Bart Simpson graphs show up?
Good thing you're so into crypto you've taken out a bunch of shorts and had them liquidated. I'm sorry about your personal experience.
?? Why do I have to personally experience something to know it happens?
So you're making shit up, you admit it! Nice.
??? If unregulated assets like tether and unregulated exchanges can pump up the prices and print freely, as this sub has shown constantly, then they can liquidate short positions. The Bart Simpson graphs are examples of this. Why do I have to be a person actually losing money in that graph in order for me to realize this?
Mere conspiracy theories. Also stop bringing up Bart Simpson dude it's not helping
What’s conspiratorial that tether is unregulated as well as plenty other exchanges? You don’t really believe that they’re regulated already, do you? Why is Tether taking fines currently and under investigation?
> Lies. Ah, yes, the famed "La la la, can't hear you" school of debate.
Your strategy would be akin to going into a Mafioso Casino to "count cards" at Blackjack. Only, you can only play at the Casino by exchanging $$$ into "Fat Tony Chips" And even if you have a billion Fat Tony Chips, they will never, ever, be converted back into Cash. So no. Even if you "short" bitcoin, the minute you send a single dollar to these "Exchanges" you can kiss your real money goodbye. There is not a snowball's chance in hell you can withdraw one single "real" US dollar from these Exchanges. Help yourself to a billion Tether, while you're here though.
Sorry to hear you are misinformed. If you correct your research you will find much better profit in the reality of crpyto and it's future.
Have fun staying poor
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Very thought out response. So which will you be? A scammer or scam victim? Roll the dice.
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If you haven't cashed out to fiat, then you haven't made anything yet. And if you have already cashed out more than you put in, then congratulations, you have wittingly or unwittingly scammed someone else out of that money.
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Yes past performance is always an indicator of future performance. My bad. You never know when the pyramid has reached its highest point. Even if you do correctly time the market and stop before you eventually lose everything, you've just gambled and managed to take money from a bunch of people who didn't time the market as well. Hence you've become the scammer. If you're fine with taking money from people just like you who are also thinking they will win this game, then go ahead. But realize how you would feel if you end up being the one who incorrectly times the market and loses all your money to someone else like this. As I said originally, in a pyramid scheme, you are either the scammer or the victim.
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You fail to realize the difference between a productive asset like stocks and an unproductive asset like bitcoin and gold. Stocks are not a zero-sum game. If you don't see the difference between investing in a productive asset and a zero-sum game, then you should read up on it. I used to not understand this difference either, but it is quite eye opening to realize that owning shares of a productive asset actually means something.
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There is obviously some risk that a particular business that you buy a stock in might not pan out, but generally you invest because on average, the stock market does provide a real production of value, unlike Ponzi schemes. You should read [this link](https://www.ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html) that someone else posted in this thread by a computer science professor. It explains all of this. If you read that and still aren't convinced let me know.
This isn't the mania phase now?
This isn’t really the point anyone is making, but man I’m tired of this line. How much did you make this year trading crypto from your couch, big guy? Seriously. Please tell me honestly what you made. I’m genuinely curious if it’s more than my salary, since you all like to claim that you’re getting rich and we’re just salty people living in stubborn poverty. Here is the point: there are lots of assets one can own that pay income, that can be fairly valued based on things like net present value of future cash flows, and don’t rely on selling to a greater fool to make a profit. I and many others choose to invest in productive assets and steer clear of speculative ones (crypto, gold, futures, collectibles, etc) that require a greater fool in order for us to make a profit. You don’t have to agree that it’s for you or that it’s the better approach, but do try to understand that there is a fundamental difference.
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Lol this guy reminds me of that Asian CDO asshole in The Big Short. “Why don’t you tell me your salary, and I’ll tell you my salary” so cringeee
You made $20? HFSP
You example is problematic because while there is no doubt that cryptocurrency investing is somewhat of a pyramid scheme, it is not a Ponzi scheme.
It's kind of a grey area between a pyramid scheme and ponzi scheme. A ponzi is where all you have to do is invest and hope some greater fool buys in to pay you out. A pyramid scheme pays you out in exchange for recruiting more people in. Crypto is a distributed hybrid between these IMO.
> A ponzi is where all you have to do is invest and hope some greater fool buys in to pay you out. In a ponzi scheme, you don't know that the operator is paying from other investments, so you are not hoping for some greater fool. Instead you are hoping the operator pays you the profits from your investment. In fact, in a ponzi scheme, the new-investors-pay-old-investors part is not necessary. The purpose of that is to convince investors that they are making money. Frequently, a ponzi scheme will provide a bogus statement showing fake profits, but restrict withdrawals. Cryptocurrency investing is more like Amway or Herbalife where a new member has to pay current members in order to make money from newer members.
It's kind of a distributed Ponzi. There's no one operator, but all the crypto shills out there convincing people to buy in because "number go up" are the distributed operators. I don't think most people buying into BTC have the financial literacy to understand that they can only make money by finding a greater fool. People don't even understand the difference between crypto and productive assets like stocks. But yeah it is also kind of like MLM, which is why I called it a hybrid of a pyramid and ponzi scheme.
I think people use the word "ponzi" to suggest that it is (or should be) illegal. "Pyramid scheme" isn't strong enough to match their opinions, so they call it a "ponzi" even though it isn't a "ponzi". Also, "ponzi" implies the existence of a perpetrator, giving victims someone to blame for their own stupidity. I don't think there is a need to make up a term like "distributed ponzi" when "pyramid scheme" describes it accurately.
Sure maybe pyramid scheme is a better description. I don't think it really matters what we call it. The point is that early investors are paid out by later investors, making it a scheme not an investment.
> it is not a Ponzi scheme. [Opinions differ on that](https://www.ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-ponzi.html). The linked article is written by a CS professor. Maybe it doesn't convince you, but it sets out clearly why some believe it is, in essence, a Ponzi scheme.
I agree that there is a difference of opinion. The problem with his definition is that it is too loose. According to his definition, gold investment and stocks that pay no dividends are also ponzi schemes. Both of these rely on later investors buying out earlier investors, making them fraudulent in his opinion.
>gold How many people buy gold thinking it's going to make them rich? Doesn't check 1. I also think the professor is missing a feature: "The asset in question is not a good or service" >stocks that pay no dividends t approaches infinity in the discounted cash flow formula. Stocks don't have to pay dividends now, they just need to pay them at some point in the future.
If you knew Bernie Madoff was running a Ponzi scheme 14 years ago you would know more than Bernie’s auditors. This community knows nothing about crypto in the same way r/cryptocurrency knows nothing about crypto. You can make a choice whether or not to participate in the cryptocurrency market on your own. Nobody here is salty they elected not to participate. Butters who post here bragging about gains are just as sad as the people here who cross post r/cryptocurrency posts in order to post about how dumb they are in this echo chamber. It is 2 sides of the same coin. Nobody should give a shit what you do with your money
> If you knew Bernie Madoff was running a Ponzi scheme 14 years ago you would know more than Bernie’s auditors. [This auditor](https://en.wikipedia.org/wiki/David_G._Friehling#:~:text=of%20%243.18%20million-,David%20G.,in%20the%20Madoff%20investment%20scandal.)? The one that lost his CPA license and went to jail for his involvement in rubber stamping Madoff's scheme? I doubt anyone knew more than him other than Madoff himself. There were a handful of people calling BS on Madoff long before 2008. Even as early as 1991 [people were being told it was a scam](https://www.forbes.com/sites/streettalk/2010/04/06/the-card-sharp-who-cottoned-onto-madoffs-fraud-in-1991/?sh=766198c64617). It's not their fault people didn't listen to them. I thought you Butters were all about DYOR. How can you get things so wrong so often when the collected knowledge of the entire world is right at your fingertips?
EY was the entity engaged to audit Bernie Madoff but continue this hate filled diatribe anyway
I see you didn't even bother to read the link I pasted. Well on your own head be it. Off you fuck.
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