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Crypto isn't a Ponzi scheme. A Ponzi scheme is form of fraud where funds from recent investors are used to pay (fictitious) profits to earlier investors. Say th

• coldcode 5y ago
  But at least gold has some inherent value, crypto is just math that is worth whatever the buyers/sellers think it should be. Stock in a company that stays in business will never go to zero as the company always has some value due to having revenue, but crypto has no real world floor (though unlikely to actually get to zero since someone will always buy).
  • fny 5y ago
    Gold does not have inherent value either. It's price is determined purely by a market and there are no other pricing mechanisms. You can't use discounted cash flow. You can't use comparables. You can use raw materials. It's a straight up rock that people price.
    • lanstin 5y ago
      Only in the same sense that nothing has inherent value. Gold is pretty and durable and people like it. That gives it value in the system of exchanging stuff amongst humans.
      • twic 5y ago
        Wheat has value because you can eat it. Dollars have value because you can pay your taxes in them. Gold does have craft and industrial uses, but not enough to explain its value.
    • SavantIdiot 5y ago
      Well, gold is a better conductor in electronic circuits than bitcoin, so it has SOME intrinsic value. ;-)
    • XorNot 5y ago
      It's still an actual rock though. Cryptocurrency is less then that. Cryptocurrency is expended energy. You can't use a cryptohash for anything. Whereas I can melt down gold and make earings with it.
      • broighbrobroigh 5y ago
        A failure of imagination to do something useful with crystalized math is more a commentary on the failure of imagination vs. the utility of math. If you compare any esoteric financial instrument against the melted rock utility test that you mention, the laity will err on the side of melted rocks.
        • jerf 5y ago
          "A failure of imagination to do something useful with crystalized math" I don't think I could possibly describe BitCoin as "crystallized math". It's not like it is somehow convertible into some useful solution to some other math problem. It's a solution to a math problem that is essentially designed to not be useful for anything else on the grounds that said "utility" would be a potential mechanism for cracking the hash algorithm. (e.g., if you built a "hash function" that also provided a solution to some isomorphic bin packing problem, your hash function would have the weakness that the correspondence would reveal a lot a lot of theoretical bits about what was hashed.) Besides, even if it is "crystallized math" than said math is independent of BitCoin's utility itself. If it were that useful you could go compute hashes until they have large numbers of zeros on the front all by yourself, without having to be involved with BitCoin. Since nobody has any conceivable use for such a thing as evidenced by the complete failure to do so, I have no idea what you think you're saying here. Merely working really hard at some computation does not make that computation useful for any other purpose.
          • abriosi 5y ago
            I read crystallized meth every time
      • symlinkk 5y ago
    • imtringued 5y ago
      I can buy overly expensive shiny rings made out of gold. The utility is purely cosmetic but it exists. The worst thing that could happen to your gold is that it gets turned into jewelry at a fraction of its original purchasing price.
  • phist_mcgee 5y ago
    Silly comparison. Crypto holds value for its utility. Why do you seem to think that its utility will just vanish?
    • lottin 5y ago
      Because the only utility it has is that it appreciates over time. Of course, until it no longer does, then becomes worthless.
      • phist_mcgee 5y ago
        And that I can send money worldwide to anyone at any time with no middleman.
        • nikanj 5y ago
          No, you can send arbitrary hashes to anyone at any time. It's just a mutual agreement that those hashes are worth anything at all.
          • phist_mcgee 5y ago
            And so is our physical money a shared belief that those pieces of plastic are worth something as well. Really though man, this argument has been hashed out in so many places on the internet innumerable times. Stop the downvoting and let's agree to disagree.
        • lanstin 5y ago
          D5CF5A343CEE5CF02556B7790D24C950495E04B9 Really a reply to the sibling.
        • imtringued 5y ago
          This mostly matters for avoiding capital controls. Those shouldn't exist in the first place.
    • camgunz 5y ago
  • sendbitcoins 5y ago
    More precise way of expressing this is: gold has industrial uses not "inherent value".
  • inter_netuser 5y ago
    Gold's monetary premium dwarfs its industrial value. Something like 90%+ is purely monetary usage.
    • onemoresoop 5y ago
      And that consists of taking gold out of the ground and putting it back under the ground - in vaults and adding an extra dash on paper. That's a lot of energy expenditure with destruction of the environment as well (cyanide is still used in gold mining). What we need is a more efficient digital currency and stores of value. Gold is not the answer either.
      • inter_netuser 5y ago
        Yes. That currency/store of value is Bitcoin. No cyanides, no blown up mountains, and can be powered by clean energy. Everyone thinks it will boil the oceans, for some reason. If renewables cannot provide power - then we have to either improve renewables, or accept that nuclear is the answer and move on.
  • arcticbull 5y ago
    Roughly 0.1% of the entire world's gold output is used to make bitcoin miners.
  • Stubb 5y ago
    The value of crypto is the access to the underlying network, which lets the users of that network transfer a known supply of tokens in a manner that's not forgeable, repudiable, confiscable, etc. or reliant on the permission of outside authorities. Final settlement takes an hour. It's worth whatever people will pay for that access.
• mumblemumble 5y ago
  It's neither. A defining feature of both pyramid schemes and Ponzi schemes is centralized control of the ledger and who is allowed to participate. And a defining feature of cryptocurrencies is, at least theoretically, the lack of such centralized control. I understand that people feel like there's something fraudulent going on with crypto. Given the sheer density of fraud and scamming surrounding crypto, it's hard to argue with that. But trying to make one's argument seem more concrete by picking the name of some well-known class of fraud and blithely using it to describe crypto in general is counterproductive. It muddies the waters, and makes it more difficult to have an organized discussion by removing clarity from the language we have to discuss these things. The urge to do so should be resisted for the same reason that we should resist the urge to try and make arguments involving statistics seem more authoritative by just guessing at numbers when we're not sure of them. False precision is, well, false.