It's also a scheme in which early investors are paid by later investors, not by any form of value creation.
The missing part is just the central administrator.
A actual ponzi scheme could be called "classical ponzi scheme"
The missing part is just the central administrator.
A actual ponzi scheme could be called "classical ponzi scheme"
No, the missing part is the actual fraud.
Bernie Madoff for example literally lied about assets under management. Dogecoin is just a digitally scarce ledger, with all there is to know about it publicly and clearly available.
It's not fraudulent, just silly--it was built as a joke after all.
The overwhelming majority of the liquidity and price action is driven by Tether which of course is backed by thin air. This fake money is used to pump up the price to drive in real money which can then be used to pay off the earlier investors. Taken in isolation no part of the system individually forms a classical Ponzi scheme. However, put the pieces together and it start to look awfully suspicious.
> The overwhelming majority of the liquidity and price action is driven by Tether which of course is backed by thin air.
Would you please elaborate on the connection between Doge and Tether?
I can get Doge without ever using Tether. Not that I have any Doge.
That's not really how the financial system works. Money enters circulation when someone takes out a loan. It leaves circulation when that loan is repaid. It is low interest rates that cause an increase in asset values.
> Would you please elaborate on the connection between Doge and Tether?
Tether is 65% of the liquidity in the entire crypto space. Check out the chart for Bitcoin, I think it's even higher for alts but the DOGE coinlib chart isn't right today. [1]
> I can get Doge without ever using Tether. Not that I have any Doge.
That's my point, USDT is printed - unbacked - pushing the price of Doge up, which drives retail enthusiasm, and retailers then purchase Doge with real dollars.
There's other schemes too, I mean, at one point in 2017 99% of all of the world's Litecoin trading volume was two bots at Coinbase trading back and forth between eachother. [2]
[1] https://coinlib.io/coin/BTC/Bitcoin
[2] https://www.complianceweek.com/regulatory-enforcement/cftc-f...
But unlike me and my credit lines, the US Gov has no credit limit. It's akin to printing, since it takes out new loans to service its current debts and operational expenses.
The FED is mandated to purchase US bonds.
I do think you make a good point about Tether artificially inflating the price, but I do see that as Tether's issue. Not that it won't tank crypto prices, just that it's not Doge that's fraudulent.
I think that's partially true. For the most part debt isn't held at the Fed, and in steady state the Fed unwinds their balance sheet over time. They hold $4.5T - a lot by any measure - but not out of the $28T total outstanding. The majority of that is held domestically by US entities. The next major holder is Japan.
The Fed isn't mandated to purchase bonds, per se, they have the ability to should circumstances necessitate. Their mandate is to maximize employment in the United States and to maintain a low, predictable rate of inflation. They have this tool in their chest to achieve these goals.
The US government has "no credit limit" in the same way your Amex charge card has "no credit limit." It's limited in how much it can borrow by its ability to service debt and also its ability to find new holders of its debt. That's not limited per se, but it's certainly not unlimited either.
After all a loss in confidence would lead to buyers demanding higher interest rates which could be catastrophic.
And, it has nearly been reached quite a few times causing fun things like furloughs and government shutdowns of various degrees.
Doge is a joke, and that’s not a secret.
It attracts pump and dumb schemes, but it’s not a Ponzi scheme, those are very different things.
I’m not saying they have been lied to, but it definitely wouldn’t surprise me if they have?
You know, I'm not sure its so crazy to disregard that part if you're a regulator. Wouldn't scams just use this as cover? "Oh it's a joke, but people are making real money off of it. wink wink. It's silly but it's going up and up!"
but they don't, if you bought doge at multiple points in its history you wouldn't have gotten anything and would have lost money.
This is just _speculation_, if you call it a Ponzi scheme then buying any precious metal is a Ponzi scheme.
It's popular on HN to complain that companies like Facebook or Amazon destroy value. Or do you mean, create value for shareholders? Facebook and Amazon have never paid a dividend. If you buy stock and hold it all the way to bankruptcy (all companies die, eventually), you will have received no value.
> public disclosure requirements
Dogecoin, stupid as it is, is far more transparent than the machinations of any corporation.
Many of the tech companies do share buybacks, which increases the ownership of the shareholders who hold the stock.
The value of a share is predicated on the belief that the company will start to pay dividends at some point. Apple, Cisco, Intel, Microsoft all pay dividends at this point.
If the executive team at Amazon or Facebook came out to say "we will never pay a dividend"; firstly, there would be a shareholder revolt and the board of directors would be removed and replaced; secondly, there would also probably be a massive shareholder lawsuit against the directors personally for violating their fiduciary obligations.
If you buy a share, you generally buy (a) a vote that you can use to kick out the board and replace them with someone who will pay a dividend, and (b) a share of the assets of the company if it’s dissolved.
Those are both tangible rights, the crypto ponzi scheme offers nothing of the sort.
Should Beanie Babies have been illegal? Were Beanie Babies a ponzi scheme? If you answer yes to those questions, just understand that your evaluation of how the US legal system should work is not even in the same ballpark as where it currently stands, regardless of merit.
But those are all totally irrelevant to whether it meet's a specific set of criteria to be a Ponzi scheme. I'd be curious for you to lay out your specific definition of a ponzi scheme under which specifically both this and madoff are ponzi scheme but doesn't include every other asset that is in a bubble and doesn't involve your subjective assessment of if it is good or bad.
To be blunt I don't think you can do it.
The quantity of paid promotion for cryptocurrencies is unrivaled by each of those examples save, perhaps, for art.
The only way to argue that it isn't but Doge is is based on your subjective opinion of "creating value" but if you take your subjective opinion out of it, they fit the exact same criteria you listed.
Well, hey, there is this material that is soft (so you can nondestructively rub off a bit of it) that has a unique color (due to some wierd relativistic quantum mechanics), so that you can have a series of standards that you can test against to evaluate the purity of the material and verify how much of it you have:
https://en.wikipedia.org/wiki/Touchstone_(assaying_tool)
you can verify the quality of the THING, you don't need a mass spectrometer, you don't need analytical chemistry, you don't need a blockchain or GPU computations.
And that's why gold was smart.
So, no, not necessarily stabby.
This is not correct, since a lot of people hodl. This is 100% buying something that might increase or decrease in value. If it decreases, is it then a "reverse ponzi scheme"?
Actually, we could create a real ponzi cryptocurrency, where older wallets get interest from newer wallets. Or that part of the value regularly gets transferred back to the previous transacted wallet. Now THAT would be a ponzi scheme!
If I'm reading this right, then land ownership is a ponzi scheme?
(which it has more than justified)
crypto has none of this
It's pretty easy to think of a counterexample to this..
Cross border payments, collateralized loans, drugs, gambling, prediction markets, inflation/instability hedge.
Whether or not you disagree that crypto is a good solution for any of these, it's pretty wild to claim "zero utility" in 2021.
As long as I do transactions within the EU they are easy and cheap. Which is s good thing the EU forced the banks to do.
I kind of understand what you mean, but I still feel like that situation would be different than cryptocurrencies. If you are buying stocks you have an ownership stake in the underlying asset. For example, you have the ability to affect change in the policy not to pay dividends/buybacks. So in a sense even in this case you still have something of value.
But with cryptocurrencies you can't affect others in this way. You are all entirely independent actors and the value of your currency is really what someone will pay. It's just a medium of exchange no more no less.
Dogecoin doesn't generate any value, it consumes it. It's fully dependent on market sentiment. It's a negative-sum game.
I don't think you can describe a "typical" investment in this way. Many investments lose value in the long run. Many investments value go to 0 in the long run. Your time horizon being long enough doesn't help here. In fact, it is actually what hurts you.
All crypto
>The missing part is just the central administrator.
tether, including the pre-mining debacle