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Comment by drcode | Hacker News Reader

I find it rather annoying how the word "ponzi" is being redefined to just mean "shady business".

Tether is definitely shady af, but I don't understand the obsession people have for calling anything they don't like (bitcoin/gamestop/nfts/etc) a ponzi.

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Well the thesis per the article is that unless more cash keeps piling into tether in order to handle withdrawals then tether could collapse, which is pretty much the practical definition of a ponzi - don’t be the last one without a chair when the music stops

A Ponzi scheme is an investment fund whereby older investors are paid returns from newer investor principle.

Tether does not promise any returns. It’s not an investment. It’s a stable coin. It’s traded near $1 to 1 tether. Most traders don’t redeem tethers. They sell them on an exchange when they need to go back to dollars.

I’m not saying it is or it isn’t. The thesis of the article is that it is, and the reasoning they provide is consistent with the definition of a ponzi scheme. So it’s consistent and your reasoning is no better than theirs until we have more evidence (ie it fails or it becomes the cornerstone of a long lived vibrant ecosystem)

Bitcoin is a ponzi in the classic sense though. There is no underlying value and the price only goes up if more people buy in. A lot of people see the parallels: https://www.cnbc.com/2021/04/23/bitcoin-a-gimmick-and-resemb...

More people -> Higher Market Cap. -> ??? -> Profit.

"Gold is a ponzi scheme in the classic sense though. There is no underlying value[1] and the price only goes up if more people buy in."

[1] it's literally a shiny yellow rock. You can argue that there's some intrinsic value for use in jewelry or electronics, but given the demand breakdown (https://www.statista.com/statistics/299609/gold-demand-by-in...) and the current price, anyone buying right now is going to experience massive losses should a collapse happen

except gold has been valuable for thousands of years and retains value without electricity and internet, none of which are true for BTC.

In other words, gold is a more proven/resilient ponzi scheme

Gold has plenty of use besides speculation - jewelry, decoration, electronics, healthcare.

Covered in the GP comment.

>[1] it's literally a shiny yellow rock. You can argue that there's some intrinsic value for use in jewelry or electronics, but given the demand breakdown (https://www.statista.com/statistics/299609/gold-demand-by-in...) and the current price, anyone buying right now is going to experience massive losses should a collapse happen

I know that only about half of the demand for new gold is for investment, but this means gold is in much better position than Bitcoin. Bitcoin can go to zero because it has no intrinsic value, unlike gold.

Well, everything in the economy is a ponzi scheme in a loose sense of the word. The real question is whether it provides a value that allows its price to be set on a market. A classic ponzi scheme has no value beyond its commitment to yield a return. There are several arguments for why crypto might have a priceable value, and one has to decide if they're persuasive. I think the comparison to gold isn't actually that bad for a coin with a predicable increase in supply, like doge.

No, ponzi means that proceeds from later investments pay returns to earlier investors, this is not what is happening with Bitcoin. It might be what's happening to tether (in a sense that they pay withdrawals out of recent deposits and rely on having more deposits that withdrawals). Bitcoin might be a bubble like tulips, but it's certainly not a ponzi scheme in any "classic sense."

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