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This is a terrible argument, and clickbait. Obvious enough to anyone who actually understands how bitcoin, or eth work, it does not fit the definition of a ponz

This is a terrible argument, and clickbait. Obvious enough to anyone who actually understands how bitcoin, or eth work, it does not fit the definition of a ponzi scheme. Most tech stocks fit the definition better. Just because a few centralized banks, (FTX, centralized crypto exchanges are banks) have failed, means nothing, since the original idea of cryptocurrency was to do away with centralized institutions like this.

lamontcg 4y ago
> Most tech stocks fit the definition better. The fact that the stock market has almost forgotten about dividends and bubble mechanics have taken over the tech sector isn't a real counter example. That is also bad.
- everfree 4y ago
  If that is also bad, then why don't we see more news pieces about how tech stocks are a ponzi?
  - lamontcg 4y ago
    Because the editors of rags like businessinsider hold considerable amounts of tech stocks in their portfolios, as do their readers. And actual businesses with cash flows are obviously not pure Ponzis and some of them will undoubtably be actually successful. The ones where people are investing in the stock, without any dividends, on the hope of growth, selling to the next highest bidder, hoping that the economy doesn't hit a sharp recession and a crash is very Ponzi-like. Early buyers do well, late buyers lose it all, none of the cash from the business ultimately leaves to the stockholders through dividends. And I'm just responding to the parent post who defended crypto by claiming tech stocks looked like more of a Ponzi than crypto. If you can see the bubble/ponzi-like behavior in the stock market, that isn't a defense of crypto (if you can't see the similarities in behavior between either of them, then I can't help you at all).
_uhtu 4y ago
If the idea was to do away with the centralized institutions but overwhelmingly people use centralized institutions which frequently act like ponzi schemes, perhaps the "idea" no longer matters and the actual real-world situations matter more.
ohgodplsno 4y ago
Classic crypto-enthusiast denial. Your dreamt of, decentralized system that was imagined by Satoshi is gone. It will either never exist anymore and be gangrened by said centralized exchanges (which are the only things that are artificially prop up the value of your coins), or it will go back to the days where you can pay 10 000 BTC for a pizza because someone decided it would be fun. ETH would be worthless without exchanges (because its current value is only propped up by "what bullshit can I sell that mimics real world services but without any legal repercussions when I commit fraud and exchange it for cash, disappearing in the Bahamas in the process?"), doge would be worthless, USDT would be worthless, etc. A system that has no real world value will not exchange anything, unless scammers like Binance and FTX come in to sell get-rich-quick dreams to suckers and artificially bring in money and "volume". When 99% of your volume is just big traders sending money to one another and keeping the price high (because it makes cryptobros feel good when they see their big number go bigger), you don't have an economy, you have at best a really shit game of Monopoly.
- rosnd 4y ago
  > Your dreamt of, decentralized system that was imagined by Satoshi is gone What do you mean? There are tons of decentralized exchanges I can use to acquire cryptocurrency to buy drugs with.
- yieldcrv 4y ago
  I don't get the impression that you two are talking about that same thing, like, you didn't really give a rebuttal to what they said, how do you feel what you wrote is related? the best I can tell is that you are saying that centralized institutions having extremely large influence is necessary? in which case I would disagree
  - ohgodplsno 4y ago
    Having large, centralized institutions is necessary if you want your obscure, no-application-in-the-real-world funny coin to have value. They'll bring in money by suckering in people in believing it has value.
chinathrow 4y ago
If regular banks would fail with the same rate Crypto venues fail, then you might have a point.
- lrvick 4y ago
  Early banks failed all the time. Give it another decade or so for regulation to start mandating accountability.
  - ifeeltriedboss 4y ago
    Banks failed because they weren't regulated. If we regulate crypto, whole crypto premise is lost. So what's the point?
    - lrvick 4y ago
      We only need to regulate crypto-banks that are holding other peoples assets. We should not regulate those that wish to hold their own assets.
      - deleted 4y ago
        [deleted]
    - Ztynovovk 4y ago
      The only way crypto works is if it had stayed niche. If (old) people loose money, they will complain, legislators will notice, regulating policy will be implemented. There is no point. Crypto is a fantasy.
    - hanklazard 4y ago
      There’s an important subtlety here though: Centralized entities (ie businesses) that are holding people’s funds absolutely should be regulated, and certainly more than the current state. The scammers in this space don’t have any real connection to the tech per se, they’ve just identified a relatively friction-free way to scam people. “Crypto” itself (the tech) can’t be regulated, short of coordinating all countries to confiscate mining rigs/validators and make them seriously illegal, thus breaking the network. So regulating the businesses does not invalidate the premise—it just protects people as they onboard funds.
onethought 4y ago
I mean communism looks pretty cool on paper too, the actual idea. But we seem to have had a real hard time implementing it. Could crypto be like that?
- lrvick 4y ago
  Except crypto actually works for its intended use cases. I use it constantly. Maybe it works poorly for traders but those of us actually using cryptoassets for privacy, inflation resistance, and censorship resistance ignore the scams and traders. Scams and traders dominate the conversation of most new technology. Same things happen in traditional markets. Cults of personality and false promises by corporations inflate stock prices all the time. Takes a while to find the real price sometimes.
  - mym1990 4y ago
    Inflation resistance is meaningless for a currency that has wild fluctuations, and not just sometimes, but on a daily basis. You have to be joking to say that something that went from basically 0, to 61k, down to 16k and wild swings in between that is "inflation resistant".
    - lrvick 4y ago
      Not joking at all. Inflation hits you the most in the long term. If you acquire deflationary but volatile assets like Bitcoin for long term holding, you use dollar cost averaging so the swings become meaningless. Buy a little every month. I was buying at $10, $1k, $10k, $60k, and everywhere between. I will be buying at 100k too. Deflationary assets trend to be short term volatile, but long term up. https://inv.riverside.rocks/watch?v=XbZ8zDpX2Mg https://inv.riverside.rocks/watch?v=XbZ8zDpX2Mg
  - vesinisa 4y ago
    > those of us actually using cryptoassets for [...] inflation resistance Heh, gotta say cryptos have weathered their first real test as a hedge against rising global inflation (since early 2021) really well. Meaning, the rising interest rates have almost decimated dollar valuation of cryptos as the tech gold rush imploded. Please do not mistake this article's author's concern as an attack on the libertarian fundamentals of cryptocurrency. The article is about how crypto has been marketed as an investment to retail consumers, and this space is simply wrought with terrible scams.
bb88 4y ago
Proclaiming that your intellectual opponents are ignorant without pointing out where they're wrong is a pretty common response from bitcoin maximalists these days.
- rosnd 4y ago
  Did you reply to the wrong comment? > Obvious enough to anyone who actually understands how bitcoin, or eth work, it does not fit the definition of a ponzi scheme. This is indeed obvious to anyone who knows what both of those things are. He very clearly explained where they got it wrong.
  - bb88 4y ago
    I don't believe I did. And he doesn't. The article is pretty clear in it's thesis and argumentation. Saying "you don't understand something" is not an argument.
    - rosnd 4y ago
      If you know what a "car" and a "bicycle" are, it's obvious that a bicycle is not a car. It would be silly for anyone to waste their time by explaining you the difference between the two. Same applies here. > Saying "you don't understand something" is not an argument It's a statement of fact. Edit: I can't reply below due to HN ratelimits, so I will do so here. >Saying "it's not" is not an argument, particularly when a good argument has just been laid out in front of you. It's pretty clear that you haven't actually read the article we're discussing, it does not at any point attempt to explain how cryptocurrencies would meet the definition of a Ponzi scheme. The part which comes closest is this, but you'd be delusional to call it a "good argument" >There's already substantial evidence that the crypto space is infested with frauds, scams and ponzis. But I would go further. The entire crypto ecosystem is ponzi. The whole thing depends on ever more people parting with their savings and wages to pay the lunatic returns promised by the platforms to people who can provide the liquidity they so desperately need. That's just not what a Ponzi scheme is!
      - 4y ago
cornholio 4y ago
The burden of proof is on the crypto promoters to demonstrate ability to create wealth. This was not the case up to now, the only thing crypto produced were speculative assets that have very little legitimate uses. For example, major cryptocurrencies like Bitcoin aim to replace state issued fiat currencies with privately issued currencies that have limited/fixed supply and no connection to the real economy. That's insanely stupid and detrimental. They also aim to preserve privacy when teleporting billions across continents - a dangerous and anti-social feature no society needs. The vast majority of ICOs and DeFi projects are just a way to do regulatory arbitrage - issue unregulated or lightly regulated securities that are excelent for speculation, but have close to non-existent real world utility. The same for NFTs, completely fictional wealth creation that was powered solely by the speculative search for greater fools. The field as a whole, despite probably hundreds of billions in real wealth dumped into it by now, produces close to zero value for society, or even negative if we consider the impact of resource burn and facilitation of money laundry. It has spiraled into a pure speculative mania that destroys the lives of many retail investors: https://twitter.com/coinfessions https://twitter.com/coinfessions
- rosnd 4y ago
  > This was not the case up to now, the only thing crypto produced were speculative assets that have very little legitimate uses. You're being straight up dishonest. Darknet Markets have been operating for over a decade now, they obviously have tons of legitimate uses and have created a plenty of wealth.
  - JumpCrisscross 4y ago
    > Darknet Markets have been operating for over a decade now, they obviously have tons of legitimate uses and have created a plenty of wealth If the only utility of crypto is in facilitating illegal transactions, then prima facie anyone in crypto should be charged with money laundering.
- everfree 4y ago
  > The burden of proof is on the crypto promoters to demonstrate ability to create wealth. For crypto to be financially successful, strictly speaking it doesn't need to create wealth, it only needs to attract it. Plenty of profitable businesses are arguably a net negative to society - tobacco, gambling, private prisons, ad agencies, data brokers - but that doesn't make them ponzi schemes.
nikanj 4y ago
Most people buy cryptos to become rich. The only way that happens is more fiat entering the crypto space, providing exit liquidity. Most tech stocks have a plausible explanation for future revenues, other than "the next investor will buy your chips for a higher price"
kordlessagain 4y ago
An ecosystem is a centralized entity. Sure, Bitcoin is useful when used in a decentralized manner. However, when it becomes consolidated in an exchange or other controlling entity, the risk associated to those values will move out of line with the common consensus. For example, there are whales that move the crypto markets in wide swings to their advantage, and those centralized controls risk everything (increase risk of loss) that has gone into building the technology and applications for using it. At the end of the day, crypto is likely only useful for one thing and that is an exchange of value and identity for AI/ML applications. Just like Splunk was search for machine data, crypto is payments for machine entities. Until that becomes a reality, the markets are just speculative and uninteresting. Ethereum especially, given no real thing occurs on that chain other than bad code and hacks that lose "investors" millions. Lightning has been the best thing that has happened to crypto in a long time and the reason why is because it can scale Bitcoin to the numbers we need for large amounts of transactions between machine entities... > CoinDesk reports: Just over 51%, or 24.6 million addresses of the total 47.9 million, are below purchase price on their investments, according to data provided by blockchain analytics firm IntoTheBlock. About 45% are in the money, which means they are boasting unrealized gains, while the rest are roughly at break-even.
- JumpCrisscross 4y ago
  > an ecosystem is a centralized entity This is the opposite of the canonical ecosystem [1]. [1] https://en.m.wikipedia.org/wiki/Ecosystem https://en.m.wikipedia.org/wiki/Ecosystem
deleted 4y ago
[deleted]
mym1990 4y ago
How convenient that this is obvious enough to only the people who understand how this relatively complex technology works, but not to bystanders. The fact that you think stocks are closer to a ponzi scheme just invalidates the rest of your post even further.

lamontcg 4y ago

> Most tech stocks fit the definition better. The fact that the stock market has almost forgotten about dividends and bubble mechanics have taken over the tech sector isn't a real counter example. That is also bad.

everfree 4y ago
If that is also bad, then why don't we see more news pieces about how tech stocks are a ponzi?
- lamontcg 4y ago
  Because the editors of rags like businessinsider hold considerable amounts of tech stocks in their portfolios, as do their readers. And actual businesses with cash flows are obviously not pure Ponzis and some of them will undoubtably be actually successful. The ones where people are investing in the stock, without any dividends, on the hope of growth, selling to the next highest bidder, hoping that the economy doesn't hit a sharp recession and a crash is very Ponzi-like. Early buyers do well, late buyers lose it all, none of the cash from the business ultimately leaves to the stockholders through dividends. And I'm just responding to the parent post who defended crypto by claiming tech stocks looked like more of a Ponzi than crypto. If you can see the bubble/ponzi-like behavior in the stock market, that isn't a defense of crypto (if you can't see the similarities in behavior between either of them, then I can't help you at all).

_uhtu 4y ago

If the idea was to do away with the centralized institutions but overwhelmingly people use centralized institutions which frequently act like ponzi schemes, perhaps the "idea" no longer matters and the actual real-world situations matter more.

ohgodplsno 4y ago

Classic crypto-enthusiast denial. Your dreamt of, decentralized system that was imagined by Satoshi is gone. It will either never exist anymore and be gangrened by said centralized exchanges (which are the only things that are artificially prop up the value of your coins), or it will go back to the days where you can pay 10 000 BTC for a pizza because someone decided it would be fun. ETH would be worthless without exchanges (because its current value is only propped up by "what bullshit can I sell that mimics real world services but without any legal repercussions when I commit fraud and exchange it for cash, disappearing in the Bahamas in the process?"), doge would be worthless, USDT would be worthless, etc. A system that has no real world value will not exchange anything, unless scammers like Binance and FTX come in to sell get-rich-quick dreams to suckers and artificially bring in money and "volume". When 99% of your volume is just big traders sending money to one another and keeping the price high (because it makes cryptobros feel good when they see their big number go bigger), you don't have an economy, you have at best a really shit game of Monopoly.

rosnd 4y ago
> Your dreamt of, decentralized system that was imagined by Satoshi is gone What do you mean? There are tons of decentralized exchanges I can use to acquire cryptocurrency to buy drugs with.
yieldcrv 4y ago
I don't get the impression that you two are talking about that same thing, like, you didn't really give a rebuttal to what they said, how do you feel what you wrote is related? the best I can tell is that you are saying that centralized institutions having extremely large influence is necessary? in which case I would disagree
- ohgodplsno 4y ago
  Having large, centralized institutions is necessary if you want your obscure, no-application-in-the-real-world funny coin to have value. They'll bring in money by suckering in people in believing it has value.

chinathrow 4y ago

If regular banks would fail with the same rate Crypto venues fail, then you might have a point.

lrvick 4y ago
Early banks failed all the time. Give it another decade or so for regulation to start mandating accountability.
- ifeeltriedboss 4y ago
  Banks failed because they weren't regulated. If we regulate crypto, whole crypto premise is lost. So what's the point?
  - lrvick 4y ago
    We only need to regulate crypto-banks that are holding other peoples assets. We should not regulate those that wish to hold their own assets.
    - deleted 4y ago
      [deleted]
  - Ztynovovk 4y ago
    The only way crypto works is if it had stayed niche. If (old) people loose money, they will complain, legislators will notice, regulating policy will be implemented. There is no point. Crypto is a fantasy.
  - hanklazard 4y ago
    There’s an important subtlety here though: Centralized entities (ie businesses) that are holding people’s funds absolutely should be regulated, and certainly more than the current state. The scammers in this space don’t have any real connection to the tech per se, they’ve just identified a relatively friction-free way to scam people. “Crypto” itself (the tech) can’t be regulated, short of coordinating all countries to confiscate mining rigs/validators and make them seriously illegal, thus breaking the network. So regulating the businesses does not invalidate the premise—it just protects people as they onboard funds.

onethought 4y ago

I mean communism looks pretty cool on paper too, the actual idea. But we seem to have had a real hard time implementing it. Could crypto be like that?

lrvick 4y ago
Except crypto actually works for its intended use cases. I use it constantly. Maybe it works poorly for traders but those of us actually using cryptoassets for privacy, inflation resistance, and censorship resistance ignore the scams and traders. Scams and traders dominate the conversation of most new technology. Same things happen in traditional markets. Cults of personality and false promises by corporations inflate stock prices all the time. Takes a while to find the real price sometimes.
- mym1990 4y ago
  Inflation resistance is meaningless for a currency that has wild fluctuations, and not just sometimes, but on a daily basis. You have to be joking to say that something that went from basically 0, to 61k, down to 16k and wild swings in between that is "inflation resistant".
  - lrvick 4y ago
    Not joking at all. Inflation hits you the most in the long term. If you acquire deflationary but volatile assets like Bitcoin for long term holding, you use dollar cost averaging so the swings become meaningless. Buy a little every month. I was buying at $10, $1k, $10k, $60k, and everywhere between. I will be buying at 100k too. Deflationary assets trend to be short term volatile, but long term up. https://inv.riverside.rocks/watch?v=XbZ8zDpX2Mg https://inv.riverside.rocks/watch?v=XbZ8zDpX2Mg
- vesinisa 4y ago
  > those of us actually using cryptoassets for [...] inflation resistance Heh, gotta say cryptos have weathered their first real test as a hedge against rising global inflation (since early 2021) really well. Meaning, the rising interest rates have almost decimated dollar valuation of cryptos as the tech gold rush imploded. Please do not mistake this article's author's concern as an attack on the libertarian fundamentals of cryptocurrency. The article is about how crypto has been marketed as an investment to retail consumers, and this space is simply wrought with terrible scams.

bb88 4y ago

Proclaiming that your intellectual opponents are ignorant without pointing out where they're wrong is a pretty common response from bitcoin maximalists these days.

rosnd 4y ago
Did you reply to the wrong comment? > Obvious enough to anyone who actually understands how bitcoin, or eth work, it does not fit the definition of a ponzi scheme. This is indeed obvious to anyone who knows what both of those things are. He very clearly explained where they got it wrong.
- bb88 4y ago
  I don't believe I did. And he doesn't. The article is pretty clear in it's thesis and argumentation. Saying "you don't understand something" is not an argument.
  - rosnd 4y ago
    If you know what a "car" and a "bicycle" are, it's obvious that a bicycle is not a car. It would be silly for anyone to waste their time by explaining you the difference between the two. Same applies here. > Saying "you don't understand something" is not an argument It's a statement of fact. Edit: I can't reply below due to HN ratelimits, so I will do so here. >Saying "it's not" is not an argument, particularly when a good argument has just been laid out in front of you. It's pretty clear that you haven't actually read the article we're discussing, it does not at any point attempt to explain how cryptocurrencies would meet the definition of a Ponzi scheme. The part which comes closest is this, but you'd be delusional to call it a "good argument" >There's already substantial evidence that the crypto space is infested with frauds, scams and ponzis. But I would go further. The entire crypto ecosystem is ponzi. The whole thing depends on ever more people parting with their savings and wages to pay the lunatic returns promised by the platforms to people who can provide the liquidity they so desperately need. That's just not what a Ponzi scheme is!
    - 4y ago

cornholio 4y ago

The burden of proof is on the crypto promoters to demonstrate ability to create wealth. This was not the case up to now, the only thing crypto produced were speculative assets that have very little legitimate uses. For example, major cryptocurrencies like Bitcoin aim to replace state issued fiat currencies with privately issued currencies that have limited/fixed supply and no connection to the real economy. That's insanely stupid and detrimental. They also aim to preserve privacy when teleporting billions across continents - a dangerous and anti-social feature no society needs. The vast majority of ICOs and DeFi projects are just a way to do regulatory arbitrage - issue unregulated or lightly regulated securities that are excelent for speculation, but have close to non-existent real world utility. The same for NFTs, completely fictional wealth creation that was powered solely by the speculative search for greater fools. The field as a whole, despite probably hundreds of billions in real wealth dumped into it by now, produces close to zero value for society, or even negative if we consider the impact of resource burn and facilitation of money laundry. It has spiraled into a pure speculative mania that destroys the lives of many retail investors: https://twitter.com/coinfessions https://twitter.com/coinfessions

rosnd 4y ago
> This was not the case up to now, the only thing crypto produced were speculative assets that have very little legitimate uses. You're being straight up dishonest. Darknet Markets have been operating for over a decade now, they obviously have tons of legitimate uses and have created a plenty of wealth.
- JumpCrisscross 4y ago
  > Darknet Markets have been operating for over a decade now, they obviously have tons of legitimate uses and have created a plenty of wealth If the only utility of crypto is in facilitating illegal transactions, then prima facie anyone in crypto should be charged with money laundering.
everfree 4y ago
> The burden of proof is on the crypto promoters to demonstrate ability to create wealth. For crypto to be financially successful, strictly speaking it doesn't need to create wealth, it only needs to attract it. Plenty of profitable businesses are arguably a net negative to society - tobacco, gambling, private prisons, ad agencies, data brokers - but that doesn't make them ponzi schemes.

nikanj 4y ago

Most people buy cryptos to become rich. The only way that happens is more fiat entering the crypto space, providing exit liquidity. Most tech stocks have a plausible explanation for future revenues, other than "the next investor will buy your chips for a higher price"

kordlessagain 4y ago

An ecosystem is a centralized entity. Sure, Bitcoin is useful when used in a decentralized manner. However, when it becomes consolidated in an exchange or other controlling entity, the risk associated to those values will move out of line with the common consensus. For example, there are whales that move the crypto markets in wide swings to their advantage, and those centralized controls risk everything (increase risk of loss) that has gone into building the technology and applications for using it. At the end of the day, crypto is likely only useful for one thing and that is an exchange of value and identity for AI/ML applications. Just like Splunk was search for machine data, crypto is payments for machine entities. Until that becomes a reality, the markets are just speculative and uninteresting. Ethereum especially, given no real thing occurs on that chain other than bad code and hacks that lose "investors" millions. Lightning has been the best thing that has happened to crypto in a long time and the reason why is because it can scale Bitcoin to the numbers we need for large amounts of transactions between machine entities... > CoinDesk reports: Just over 51%, or 24.6 million addresses of the total 47.9 million, are below purchase price on their investments, according to data provided by blockchain analytics firm IntoTheBlock. About 45% are in the money, which means they are boasting unrealized gains, while the rest are roughly at break-even.

JumpCrisscross 4y ago
> an ecosystem is a centralized entity This is the opposite of the canonical ecosystem [1]. [1] https://en.m.wikipedia.org/wiki/Ecosystem https://en.m.wikipedia.org/wiki/Ecosystem

deleted 4y ago

[deleted]

mym1990 4y ago

How convenient that this is obvious enough to only the people who understand how this relatively complex technology works, but not to bystanders. The fact that you think stocks are closer to a ponzi scheme just invalidates the rest of your post even further.