India Says Bitcoin as Risky as Ponzi Schemes
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Then you have the "mining" companies selling shares of mining power, but those sometimes turn out to be pure frauds - no mining nor equipment. Those behave just like ponzis.
It is probably in the average person's best interest to avoid it all.
Similarly, now a large number of actual ponzi schemes have come up in this space (Bitconnect, Dekado, etc) and if you look at their websites it is very easy to tell (Dekado claims to use arbitrage buoyancy software to generate 1.5%+ return per day). The problem is logic doesn't apply here when your friend has made XYZ dollars in that coin. Greed gets the better of you and you invest knowing that it is not possible.
The real answer is the same with all investments: do your due diligence to know and understand what you are buying/investing in.
Most of these scams have been done in the height of the penny stocks days, and the SEC has (or had in the past) put a lot of effort into protecting less saavy investors.
Lastly, I work for a client in this space. My client is doing a legit business, but we constantly deal with customers who have made and lost money in dozens of these ponzis over the last couple of years.
Or replace gold with US dollars or tulips or Amazon.com stock or whatever.
How is this a Bitcoin issue?
Not all cryptocurrencies. Only the ones with "intrinsic value". Just because I print pieces of paper in my basement, doesn't mean that there is an intrinsic value in them.
> It's too bad, since there actually are some interesting technologies beginning to come out of the cryptocurrency sphere
100% agree with this. There are some interesting ideas and technologies.
> What I suspect is that many startup types have sour grapes over how they could have made nearly as much money speculating on digital tokens as they did building their web or app business
I can only speak for myself: No. No sour grapes. Since day 1 I thought Bitcoin was a pyramid/Ponzi kind of scheme. I would never have taken part in such a system.
Basement paper doesn't have a guaranteed fixed supply.
So, how well do you actually understand it?
> No. No sour grapes. Since day 1 I thought Bitcoin was a pyramid/Ponzi kind of scheme. I would never have taken part in such a system.
The point of the paragraph was to show that it is not sour grapes as suggested.
So skillfull...
Besides, let’s wait to heap laurels on investors until after the music stops.
It is becoming exponentially more difficult to mine them, and there is only a finite number of bitcoins in that can be mined.
Buying bitcoins is making these 2000 people richer.
I really don't understand people who put money into Bitcoin. Actually I don't understand anyone that puts money in a cryptocurrency that is supposed to have "intrinsic value".
Jeff Bezos is not the richest person in earth unless he sells.
> at which point the wealth is further distributed.
They basically exchange Monopoly money for real money. If that’s what you mean by wealth being distributed, then you are right.
This seems like an unreasonable assumption given that many people own bitcoins through custodians, such as exchanges and funds.
Have a look for yourself:
https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
https://letstalkbitcoin.com/blog/post/rise-of-the-zombie-bit...
You probably need to exclude those for your calculation... but how would you know for sure? If we filter the top 100 for only addresses created or used in the last 2 years, then 26% would get dropped. This amounts to 867,448 out of 2,958,041 coins gone, or ~30%.
I'd like to see how that distribution at the top of the page changes according to various filters like that. Is there a site where I can get a list of current addresses without needing to scrape, or do I need to download the entire blockchain?
This was planned and one of the greatest features (for a store of value): Limited supply. With limited supply you won't have inflation but deflation which is good for storing value but not good if you want to use it as a cash system. But for p2p cash use cases newer system like Stellar/XLM which integrate controlled inflation (1%/yr) are better.
> Buying bitcoins is making these 2000 people richer.
Guess you are confusing matters. Running a local wallet as a full node doesn't mean you make tons of money. You can run 20 nodes but your friend who is BTC trader could still have 100 times more BTC than you (so, running a node != holding a shitload of BTC).
> Actually I don't understand anyone that puts money in a cryptocurrency that is supposed to have "intrinsic value".
From another post: Bitcoin is a store of value. Moreover, it's one with a high liquidity, strong brand, limited supply, available in 180 countries, without banks involved and super reliable (gold doesn't have that features and please show me any other asset that has these features). So, it has a use and value.
How is bitcoin super reliable? Someone could buy it for 20k$ and next thing he is getting only 5k$ for it because of a crash. Or someone has hacked the exchange and it’s all gone.
How can it ever be reliable?
(Really) everybody knows that you should not keep your money on an exchange.
Gold can also crash and btw is a volatile asset as well.
If I look at my stock portfolio there are so many strange stocks and funds I once invested in. They feel much more like Ponzi schemes or pump and dump, especially the riskier funds.
If I look at my angel tickets into early stage ventures (done with FIAT) even worse.
And if I look at the countless ICOs based on Ethereum, this is the real pump and dump Ponzi Disney Land.
But Bitcoin? Seriously? I highly doubt that Bitcoin's founder or its early adopters intended Bitcoin as a Ponzi scheme.
As transaction costs increase and Bitcoin's usefulness diminish it is becoming more and more like a ponzi scheme, a pyramid scheme or a game of greater fools.
For what is the use of Bitcoin when other cryptocurrencies can be a store of value and peer-to-peer digital cash? I see none thus I see no value with Bitcoin.
Sure it's possible but we're already seeing a massive growth in altcoins which can actually be used for everyday payments while Bitcoin's relative marketcap is shrinking rapidly. For example Steam recently dropped Bitcoin support. BitPay, the payment processor Steam used, recently announced they will start supporting Bitcoin Cash (which have transfer fees of < $0.01) despite being Bitcoin maximalists until now.
This is why I predict Bitcoin will be surpassed by other coins with more user adoption.
How, exactly, has this “original vision” been abandoned? By supporting a maximum block size?
And yes forcing a 1MB blocksize totally destroys Bitcoin being usable as digital cash. When average and median fees are $30 - $100 it simply doesn't make sense.
So what? I value the use as store of value much higher than a cash system and I don't care if this was the initial use case. Go and find a better store of value (won't be easy) but it's easy to find another cash system (FIAT-based ones likes CCs or new upcoming ones like Stellar).
Monero is far superior as it's fungible and private.
Bitcoin Cash is also technically the same as Bitcoin while being cheaper to use and by virtue of being actually useful as cash has more uses which helps price growth and liquidity.
No, you mentioned it yourself: Bitcoin is a store of value. Moreover, it's one with a high liquidity, strong brand, limited supply, available in 180 countries, without banks involved and super reliable (gold doesn't have that features and please show me any other asset that has these features). So, it has a use and value.
That it has evolved to this is no one's fault and btw this might change (the cash part) with the lightning network again.
> more like a Ponzi scheme
That would mean that all operators of Bitcoin, so everybody who is just investing or running local wallets with full nodes deliberately intend Bitcoin as a Ponzi scheme?? This is utter nonsense. If I launch an ICO tomorrow. Just a landing page and a BS white paper, you could allege that I deliberately plan my ICO/coin/token to be a Ponzi scheme. But you can't allege millions of BTC investors that they intend a Ponzi scheme eight years after this things started. Maybe you should check the definition of a Ponzi scheme again.
However, do you own or did you ever own any BTC?
As I've said before Bitcoin is absolutely a garbage "store of value". It's not going to exist for decades, let alone for centuries, because of the nature of technology. As you yourself have pointed out there's nothing inherent about Bitcoin other than a network effect that's made it a brand. It isn't backed and guaranteed by a government, there are no organization that are demanding to be paid only in Bitcoin as America demands to be paid only in dollars.
Furthermore There will be better technologies that will emerge and supplant Bitcoin. Land, Dollar, precious metals all far exceed as stronger "stores of value", both because of their historicity, and also because of their technology, that is a technology that is stable.
Not to mention the complete and utter lack of privacy of Bitcoin because of it's public ledger. Everyone knows everyone else's entire transaction history, and any large enough actor can find that out. Traditional stores of value don't have that problem, or rather not nearly as publicly visible.
Cryptocurrencies, and digital currencies do have place, but I don't think we've come to any sort of equilibrium as to what its role will be in society, which is why I don't think Bitcoin will succeed as "store of value", or currency.
How do you know, did you found a time machine??
> It isn't backed and guaranteed by a government
Even better. So many countries (basically 70% of all countries) have governments I wouldn't trust a single cent.
> there are no organization that are demanding to be paid only in Bitcoin as America demands to be paid only in dollars.
Exchanges?
> precious metals all far exceed as stronger "stores of value"
Go and try to buy some gold, it's not that easy and also, oh which surprise, also volatile.
> Everyone knows everyone else's entire transaction history,
Pipe it through exchanges and it get anonymous again. Not that I like this feature but if you need it...
You didn't really convinced me.
With that said are you saying that there will be no other competitors, or technological advancements that will improve on Cryptocurrency technologies, and supplant Bitcoin? If so, I think that's a more irrational position.
If Bitcoin gets large enough you'll just have cryptocurrency legislation that will regulate it to oblivion, and make what are relatively private transactions today into Big Brother is watching. Perhaps that's the goal anyways.
Physical cash is still king in terms of privacy, but a poor long term store of value if that cash isn't invested.
Metal is difficult to buy, and it is tracked, but that information isn't public. The value of a precious metal isn't in its liquidity, but rather its theoretical long term value so volatility isn't necessarily a factor. Land is better because it actually has uses, but similarly it too is volatile, and as such viewing it as a long-term 20+ year investment is better. Again the current value of it doesn't matter so much.
I'm not saying Cryptocurrencies have 0 value, just that we haven't reached a consensus of what exactly the value of a cryptocurrency is, or its role in society, let alone having achieved a technological stasis to make a cryptocurrency a long term store of value. There are in reality no true long-term store of value, just that some are better in way than others.
In general though, I think, the problem is what we as humans consider "value". So far I think the only real value of anything is what a State actor demands, and enforces as valuable. Not land, not precious metals, not cryptocurrencies, or dollars, but whatever a government deems officially as valuable becomes magically valuable.
If tomorrow congress makes Bitcoin the official currency of the USA, and buys up all the Bitcoins then Bitcoin will become infinitely valuable in comparison today. On the other if it's made illegal to make Bitcoin transaction it won't be worth a penny.
I said Bitcoin's usefulness is diminishing by becoming less useful due to the high transaction time and price. Other coins are taking over the exact use case you're refering to.
> Maybe you should check the definition of a Ponzi scheme again.
It's more a greater fools game at this point and I only mentioned ponzi scheme as it was what I was responding to.
> However, do you own or did you ever own any BTC?
Yes I've owned and used BTC a while but recently stopped using it since it doesn't make sense for me anymore as it's too expensive.
If I want to store my assets I don't care about high transaction prices.
> It's more a greater fools game at this point and I only mentioned ponzi scheme as it was what I was responding to.
But you still used it in the wrong context. Bitcoin can't be a Ponzi scheme because the founder and the early adopters clearly didn't have this intent.
For now Bitcoin is valued higher and has better liquidity than other coins but with use cases quickly moving away from Bitcoin this is changing. The only thing Bitcoin has going for it by that point is FOMO and selling to greater fools.
Re other coins: There are just two which are scalable because of their semi-central nature (XRP, XLM) but they have to get there first which will take time. The other millions of coins are usually decentral (and slow) tech and often they are shaky not working or don't have any own blockchains while valued in the billions (eg EOS). And you should not forget the upcoming lightning network for BTC.
But why do I try to convince you, at the end of 2018 BTC is at 100K, you missed another opportunity and you come again here and tell us the same FUD.
I don't have strong opinions either way on this entire thread but I find the back and forth extremely entertaining (although the repetitive nature of both of your arguments I wish would be replaced by more creative replies at times). But I will point out that, at the end (almost the very end) of 2017, it's not even 20,000 -- BTC is at 13,000.
BTC just hit 10K a month ago and the mainstream end-of-2017-forecast through summer and fall 2017 was ~5k. Then 13K is a fine number (13x in 2017).
Let me try and explain why this is happening. In India, people don't warm up to "internet" only companies easily. What this meant is while bitcoin and cryptocurrency FOMO has caught on, people don't go and buy coins online. There are exchanges but none of them are household name like Coinbase.
So, a new industry has mushroomed - people offering "investment" opportunity in bitcoin "funds". These guys are not authorized investment professionals. They collect any where between 25-50k and promise a fixed return.
No investment opportunity can claim fixed returns unless it is a Ponzi scheme. Hence, this announcement.
My personal take on these opportunities is that, if these "funds" are in trouble - prices increase or decrease lot - they can simply claim that they have hacked. So, it is not even a ponzi scheme rather outright fraud.
Even though I have tried convincing otherwise couple of colleagues have invested in such opportunities. They find the whole bitcoin process - wallets, keys, pass phrases etc very cumbersome but can't miss out on the supposed gains. And these guys are software engineers.
Lastly, if a person with above average technology experience finds it difficult to use bitcoin, I think it shows how true cryptocurrency's dream of banking the underbanked in 3rd world country is going to be.
So scammers are using the Bitcoin brand to attract customers?
Sounds exactly like what ICOs are doing here in the West. Except they use the word “blockchain” instead.
For example, https://www.theguardian.com/world/2016/nov/08/india-withdraw...
Contrary to the popular belief that BTC purports money laundering, it can actually mitigate the problem of black money and money laundering. The governments all around the world should try to keep up and they should themselves establish a separate think tank/research arm/department for blockchain and cryptocurrency space.
To be clear I’m not saying that things can’t change, but I am saying the change has to take place in reality and not your imagination.
I mean people are acting as if governments in past haven't faced similar problems. The only real value of currency is if a STATE actor accepts it as payment. Otherwise international trade, commerce, taxes, etc. would all be moot. So Bitcoin can never be a large scale, nationwide, let alone international currency. Even though currently it is large, and getting recognition from State actors, but it's not large enough to enter the domain of legislation.
1. Every investment is a risk, you may win or you may loose. 2. The chance of loss is usually proportional to the potential profitability estimated. 3. Never invest what you can't afford to loose easily. 4. Don't be mad on the friend who has introduced you to the business if he didn't explicitly guarantee you will win - that was your choice. 5. Whoever says there is no risk and the success is guaranteed - lies, don't believe them and don't rely on them.
Actually, if a person doesn't know this by the time they finish the school the time they've spent there has probably been wasted. As for me I've learnt about Ponzi scheme from a Khan Academy lecture (and yes, my time at school was a waste mostly, that's a pity there was no Khan Academy back in those years).
Another difference is that there’s no requirement to bring more and more people into the game, so there’s no risk of widespread adverse effects.
There are people who make a living "playing ponzis", estimating which ponzis will be big, how long they'll last, and when to enter and exit.
What does make ponzis particularly bad is that they are almost always promoted as something else - some kind of magical investment (and now using tech terms that are either nonsensical or will otherwise confuse their potential investors). That is the fraud aspect, and is no different than promoting some investment fund as being typical while privately just deciding who to pay dividends to.
If you bought a McDonalds franchise, and the next day the world decided that fast food made them fat and ceased buying it, you would experience the same outcome as if you had joined a very expensive ponzi. But you know that going into it, and you believe that is not a likely outcome. With a ponzi, unless you know who's operating it and how good the promotion is, you're going to have a much harder time determining entry and exit timings. (I don't recommend playing at all!)
By the way can you please cite sources for your stats around inflation?
Last I read a Bloomberg article quoted Indian economy to be no. 3 behind China and US by 2030.
The people have the motivation of greed, the government has the motivation of fear. Fear that the greed will lead to fear of losses and everyone exiting at the same time. It is a bit sad really as the governments should just let the people wanting to get burned in this harmless bubble lose all of their money.
[1] https://www.cnbc.com/2017/08/23/estonia-cryptocurrency-calle...