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Comment by jcranmer | Hacker News Reader

It is not completely irrelevant: it is how you distinguish productive investment schemes from scammy Ponzi schemes.

Please stop calling it Ponzi. A Ponzi scheme is a well defined scam with structural hierarchy. People lower in the hierarchy are obliged to pay the upper level money in order to stay in the game. They also try to recruit others in order to get paid themselves. Bitcoin is traded in the free market just like a stock. You are not calling Apple stock a Ponzi scheme because some people bought at 1$ a piece am I right?

You're referring to a pyramid scheme, not a Ponzi scheme. (Enough people mix the two up that the Wikipedia pages on both articles have sections on the differences between pyramid and Ponzi schemes).

Ponzi schemes are where you pay investors using the contributions of new entrants, so investors only make money so long as new entrants are joining. It's not exactly a new tradition for people to be referring to financial markets and bubbles as Ponzi schemes, although whether or not this appellation is appropriate is somewhat contested.

That is correct, my mistake. Anyway, Bitcoin is neither of them.

As long as the vast majority of Bitcoin owners are HODLing and not using it, it's behaving as a Ponzi. Bitcoin has a few uses, but getting rich speculating on it isn't one.

Bitcoin bubbles burst all the time. Everyone have the opportunity to buy "cheap". Why do you care if some people take the risk to "hodl"? You can still get in (and take the same risk) without buying _their_ coins.

That's not what I meant, and that you're thinking this kinda proves my point. People holding onto Bitcoin hoping to get rich don't contribute to Bitcoin as a technology. They're making Bitcoin a speculative asset.

Bitcoin is supposed to be used as currency. The vast majority of Bitcoin owners don't do that.

Of course they don't contribute to Bitcoin's technology, they are not coders. Using Bitcoin as a speculative asset is part of the adoption process. It is not yet a currency, it will take many years to be completely adopted. It's a natural process, I cannot imagine any other way for a decentralized currency like Bitcoin to become a global reserve currency. Can you?

>it is how you distinguish productive investment schemes from scammy Ponzi schemes.

That'd be true if economic actors were rational (and had total access to relevant information).

News at 11: they aren't (and they don't).

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