Bitcoin Is a Ponzi Scheme
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Each generation chooses its bubbles. The younger generations have been told in no uncertain terms that they are locked out of investment in real estate and many other instruments that are controlled by the aging generations. So they create their own bubbles and they will keep supporting them because every generation wants to achieve some level of wealth. People keep underestimating the intrinsic value of bitcoin as a store of wealth and a means to devalue the unequal economy. Many things look like ponzi but are not, because they never burst. People putting themselves outside the bitcoin bubble are willinging missing the future.
> The younger generations have been told in no uncertain terms that they are locked out of investment in real estate and many other instruments that are controlled by the aging generations.
Sure, so they should petition for zoning reform not engage in Ponzi schemes.
> Many things look like ponzi but are not, because they never burst.
That's not really the definition, though.
> People putting themselves outside the bitcoin bubble are willinging missing the future.
The definition of the "future" isn't "Ponzi scheme that will never burst probably, because real estate is unfair."
Demographically, post-boomer generations can never win the vote
Voice does not work in this case, so they choose exit
I guess they are also sick and tired being told what they "should" do
You don't think the "boomers" will die?
> I guess they are also sick and tired being told what they "should" do
Petulance isn't a value proposition either.
The size of that generation and the great increase in lifespan ensures that "boomers" will stay dominant longer than any other. Millenials don't want to wait until they 're 50 to start making wealth
I'm a median millennial.
> The size of that generation and the great increase in lifespan ensures that "boomers" will stay dominant longer than any other.
I didn't realize wealth made you live longer. It actually doesn't by the way, it's not particularly correlated after a certain point. Charts available on request.
> Millenials don't want to wait until they 're 50 to start making wealth.
Good news is they're not. Adjusted for inflation they're exactly on track with previous cohorts. [1] But Ponzi schemes do not create wealth. Crypto redistributes wealth from new participants to old ones, and miners/validators, while not creating any value.
[1] https://economistwritingeveryday.files.wordpress.com/2021/08...
https://www.washingtonpost.com/business/2019/12/03/precariou...
i never said their wealth made them live longer, science did
You do know that life expectancy has been declining in the US for a while now right?
[edit] (In fact the WaPo article you linked mentions the same exact thing I'm telling you, and makes a half-hearted attempt to compensate - failing to also account for the total amount of wealth on a per capita basis. This article is clickbait.
> One important caveat to the chart above is that the three generations aren’t the same size, population-wise. In 1990, for instance, boomers accounted for 31 percent of the total U.S. population. In 2008, GenXers were only 22 percent of the population.)
Some things are a lot more expensive, some things are a lot less expensive, but even ones you pick are misleading. For instance, housing. 1 square foot of house in America on average costs the same as it did in the 1970s adjusted for inflation. [1] However the average house is twice as big and the average family smaller. With drastically higher interest rates back then, and most people on a 30 year fixed, housing is much more affordable on a square foot basis. It could be better, and zoning rules are at issue.
But a lot of things are cheaper too. Basically anything that doesn't require human labor to assemble. TVs. Computers. Tons of stuff.
> This clearly sets the dynamics of which generation will be working for whom.
The only dynamic you're seeing is time value.
> And while there is a temporary reduction of life expectancy due to various factors, incuding covid, millenials will most likely see extension of their own life expectancy within their lifetimes due to medical advances.
That's (a) not the current trend, though it may reverse and (b) the opposite of the argument you were making about boomers earlier.
> And while there is a temporary reduction of life expectancy due to various factors, incuding covid...
Also, COVID killed boomers not millenials.
[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...
In a capitalistic society, money is power - if a generation has 3% of the wealth they necessarily have less power than a different generation that had 22% of the wealth in their time.
The average house in America is not a very useful statistic today since a lot of those houses are in areas with no economic opportunity because of decisions taken to offshore labor - they used to have opportunity ~50 years ago, but that is now gone. You have to look at houses near urban areas (since those places retain the opportunity that was more spread out before). And then you'll see that costs have actually gone up.
It's not nearly as simple of a comparison.
this is bullshit, it's the "why don't they eat cake" argument. the world is not going backwards, of course TVs have gotten cheaper, for millenials and boomers alike.
I don't think there is any sense of evenness in the fact that 21% of the US population holds 51% of the wealth, and a younger 21%, which naturally works harder controls 5%. What matters is not being merely able to buy 1 TV, but who can buy most of the TVs. What you 're saying is "Yeah they should be fine with breadcrumbs", and that they should tolerate this inequality until death meets the boomers. That's basically generational serfdom
Even without compounding returns (i.e. economy growing), and given a fixed spending/saving rates over time, you would expect the former to have vastly more saved money.
> I didn't realize wealth made you live longer. It actually doesn't by the way, it's not particularly correlated after a certain point. Charts available on request.
You must be kidding right? https://www.aarp.org/retirement/planning-for-retirement/info... https://www.nytimes.com/2020/01/16/science/rich-people-longe...
I would love to see your charts. Not just some random jpeg, but a link to an actual article from someone "authoritative".
[1] https://www.businessinsider.com/millennials-1-trillion-debt-...
I mean, read the article you linked, here’s some quotes:
> According to a 2018 report from the St. Louis Federal Reserve Bank, mortgage debt is about 15% lower for millennials and credit card debt among millennials was about two-thirds that of Gen X.
> Another marked behavioral difference between generations is the higher levels of retirement savings among millennials than any previous generation at the same age. While Gen Xers had acquired about $13,600 at around the same point in time, millennials have saved $15,500 in retirement accounts on average.
> Millennials are also more committed to higher education. Between 2001 and 2016, the number of people aged 25 to 29 with at least a four year degree grew by 25%.
Which is why they have more student loan debt. Something that definitely needs to be addressed.
It’s not the hair on fire crisis the title would have you believe.
Which is why the chart I showed you, restated on a per capita basis instead of “wealth share” (while not standardized against a rapidly changing population and a growing wealth pie) makes both intuitive sense and the math works.
Yes certain “the rich” may live longer but I was referring to the correlation between health care expenditure and life expectancy - which is weakly correlated and only to a point. I may have don’t a poor job framing that [1]. Given you linked AARP I suspect that has more to do with unequal access to care earlier in life when poor, amortized to the limit, a uniquely American problem among developed nations.
[1] https://ourworldindata.org/grapher/life-expectancy-vs-health...
The above study looks at it on a per capita basis adjusted for inflation. The conclusion is pretty straightforward and clear.
> Yes certain “the rich” may live longer but I was referring to the correlation between health care expenditure and life expectancy - which is weakly correlated and only to a point. I may have don’t a poor job framing that [1]. Given you linked AARP I suspect that has more to do with unequal access to care earlier in life when poor, amortized to the limit, a uniquely American problem among developed nations.
Of course, but there's also plenty of other countries, in fact most of the world, where there's no healthcare safety net and being wealthy could literally mean decades if difference in life span. If the year being being born influences that, it's an incredibly unfair advantage. Yes the bar is being raised, but you can't simply isolate it as a uniquely American problem. Most of the developing world has this problem too. As a quick example look at the cancer survival rates by country [2]. Being rich lets you live longer in most countries. Its not the case only in a few select countries.
[1] https://www.stlouisfed.org/on-the-economy/2021/march/millenn...
[2] https://worldpopulationreview.com/country-rankings/cancer-su...
We know that most of Americans' wealth today comes from the value of their home rather than retirement savings (and/or pensions before that). Look at this chart of housing prices (inflation adjusted) and see if you can tell a difference between when the boomers entered the housing market and today[2].
[1] http://www.equality-of-opportunity.org/health/
[2] https://inflationdata.com/articles/wp-content/uploads/2021/1...
And in the meantime?
I'm sure crypto will exist in the future, to me the big question will be how painful will a government make it for you to own crypto.
You are talking about things like equity and real estate which have actual utility. Sure they might be overpriced now, I agree with that. But their prices are backstopped by the utility they provide.
A lot of crypto does not have any utility and never will. Nobody is supporting the beanie baby bubble or the tulip bubble. The idea that bubbles are not just ok, but should be encouraged, is very troubling.
If that's not useful, I don't know what is. When the State deliberately debases its own currency year on year, and suddenly there is a useful option for saving, which nobody can debase, then it has provided something quite profound.
And this is also why it is unlike any other 'bubble'. Whenever the perceived value of an asset increases quickly, many people scramble to produce more of that asset in order to take advantage of the higher prices. This overproduction then leads to prices dropping, or the bubble popping. What makes bitcoin different, is no matter how much work they put in to create more bitcoin, they cannot release more than the amount that was pre-determined for that ~10 minute period. The supply of bitcoin is completely decoupled from its demand. There has never been a 'bubble' in history with this property.
People are now only buying it as an investment, investment in what? It inherently doesn't have any value or utility.
The fact that people see bitcoin as an investment is really a testament to just how awful fiat money is. Is bitcoin going up, or is fiat going down? It's probably both, but the reason people expect bitcoin to continue going up is precisely because the fiat money is being expanded and their purchasing power is being robbed via the inflation caused by that expansion.
The expectation to continue going up isn't just guesswork or gambling either. If you study the history of money, then you learn that almost any time two monies are competing, the harder money displaces the easy money.
All value is subjective, and always has been. If it the case that historically, people subjectively prefer to save the harder money (Gresham's Law), then what reason do you have to think this time is any different?
I'd interpret that differently. The fact that people see bitcoin as an investment is really a testament to just how awful it is as money and how awful fiat money is as an investment. Basically what I'm saying is that majority of people view crypto as an investment not because fiat money is awful but because in its short lifespan crypto has had crazy returns.
People see bitcoin as an investment because that is what it is to them and they invest in it because they hope they'll become crypto millionaires with a small investment.
> The expectation to continue going up isn't just guesswork or gambling either. If you study the history of money, then you learn that almost any time two monies are competing, the harder money displaces the easy money.
There is something wrong here. Gresham's law is about good and bad money not hard and easy. People prefer to save in good money and use bad money. Meaning that bad money displaces good money not the other way around. This applies when both currencies are considered legal tender. It is the other way round when there is no legal tender. Considering that USD is legal tender and BTC is not there is little point in invoking Gresham's law.
> All value is subjective, and always has been. If it the case that historically, people subjectively prefer to save the harder money (Gresham's Law), then what reason do you have to think this time is any different?
I'd argue, in this instance, that it is not about bad/good money here but about bitcoin being unusable as a currency so it pivoted in to being a "store of value".
This is absolutely not what causes most bubbles to pop. Pick any major bubble, it did not pop because suddenly we produced more of some thing.
This is, and always has been, wishful thinking.
To the extent that it could be true, it is near-guaranteed that, given enough time, the State will ban the use of Bitcoin and other cryptocurrencies—whether "to maintain their monopoly" or "to protect people from scams", depending on your point of view.
But there was never even a realistic possibility of Bitcoin becoming currency in a real sense. Its two biggest downfalls (that I can recall off the top of my head) are:
- It cannot act as a reliable store of value. Because it is used extensively by speculators, its value is extremely volatile. Because its legal status is still unclear or in flux in many jurisdictions (including major ones), its value could fall to zero or near-zero with very little warning.
- It has high transaction costs. This makes it prohibitive to use for everyday transactions without some kind of central authority to batch the transactions—and then you've just invented a new State, but with extra steps.
There are other problems with it, but these two are more than enough to make it utterly unsuitable as currency.
It's been great at making money for those who got in early, though. What do we call those kinds of schemes again...?
Edit to add: All of this also presupposes that "separating money from the State" is actually a good thing. Most of us are not hardcore libertarians or anarchocapitalists, so we don't actually believe that it is.
Leaving real estate empty changes then utilization rate, not the utility function.
If I have a loaf of bread that I haven’t eaten yet, that bread still has utility to me or other people.
The overwhelming majority of people are interested in bitcoin and crypto due to speculative properties. The utility of being able to interact with these blockchains right now (which is the utility provided by the L1 tokens) is drastically reduced if the bubble bursts. We see this with Ethereum gas fees. There is a positive feedback loop, which of course cuts both ways.
In real estate, the utility is overwhelmingly the shelter provided, and the price is backstopped by this utility.
In equities, price appreciation is the dominant utility, but is backstopped by the underlying business (as the business returns capital to shareholders). The price is a function of utility, as opposed to the utility being a function of the price (as is the case in crypto).
(to the tune of "Everybody Wants To Rule The World")
Maybe I'm beating a dead horse, but it seems to me that if bitcoin investors care about its status as a Ponzi scheme or its greater merits at all, they certainly don't care as much as they do for its potential to multiply their investment.
Any rebuke to this will work for bitcoin as well: yes, there are people who like a. Van Gogh painting, as well as there are people who like to have weird crypto money.
Off course, this does not mean that I would recommend buying bitcoin. But I would not recommend anyone investing in Van Gogh either.
However, i slightly disagree with the author because Bitcoin does provide some value: The ability to digitally facilitate transactions (albeit rather slowly, with huge environmental damage and with high fees - clearly if this attribute were to be seen as the major contribution to its value, more advanced coins ought to be more far more valuable).
Personally i think 50% of the interest of peopne invested in cypto, especially early investoes' is because they are nerds who love the appeal of the techbology.
For them, crypto is as close as art as van gogh.
P.s. thz 50% other is speculation.
Throughout history there have been stores of value which had little intrinsic value except their scarcity and tradeability - rai stones, certain sea shells, (...). Just like Bitcoin.
Gold is just another of those. It has some industrial value, but it's current value FAR surpasses the value that comes from there. Most of gold's current price/market cap comes from being a good store of value.
Now you have Bitcoin which has exactly the same characteristics as every other store of value humanity has ever used, but two more that we never had before:
1- it's immaterial. This can be seen as good or bad. But the fact that it's immaterial means you can trade it with anyone in the world, at lightning fast speed (with layer 2 at least), you don't carry weights if you want to "carry" it with you, and you can split into millions of pieces.
2- it's scarcity is hardcoded. Every single store of value that stopped being one, at some point stopped being scarce. And thus lost it its ability to store value. Caravel sailors used their huge ships to transport the heavy Rai stones much more easily than by the previous method the tribes that used it (by hand through a laborious process) and were able to transport dozens of them at a time. Sea shells either had to be found, and those they used were rare, or in other places they had to be minted in a special way to make them "worthy". Kind of proof of work. Suffice to say, explorers started using nets to get hundreds of them from high depths and immediately they lost their value. Now we can only have 21M BTC and that's it. There's no way around it, for now at least.
that is your (and my) oppinion, it may well be different for someone with a lot of money.
But it doesn't.
Art (and most collectibles) are a type of social signaling (kind of like peacock feathers). In the end they are done for the same reason that someone buys a Ferrari or McLauren: to show to other people that they have achieved material success and to attract a better mate (in the end almost everything comes down to genetic incentives, whether conscious or not).
As long as there is a contingent of people who believe that art is a social signifier and it will help people in the mating game, it will continue to be valuable (also tax evasion - but that's a different story).
Its a bad faith argument. Art does not create $100m worth of "entertainment value". Its a store of value asset with some social cachet.
1. People invest into it because they expect good profits, and
2. that expectation is sustained by such profits being paid to those who choose to cash out. However,
3. there is no external source of revenue for those payoffs (gold sitting in a vault, or hanging on jewelry doesn't produce revenue). Instead,
4. the payoffs come entirely from new investment money, while
5. the operators (miners, refiners, etc) take away a large portion of this money.
It's really interesting to discuss Bitcoin with critics, because, as in this case, it often exposes that critics don't understand WHY and HOW financial systems work. Obviously gold or precious metals aren't Ponzi schemes, so this guy doesn't understand what makes or doesn't make a Ponzi scheme.
If he were to tweak his definition so it no longer applies to gold, it would automatically no longer apply to Bitcoin.
Right.
> By that definition, gold too is a ponzi. No, gold clearly fails to satisfy that definition on two counts.
> First, few if any gold investors have expectations of profits. They generally invest in gold as a hedge -- a "store of value" -- that they hope will retain its value in case other assets go sour.
> Second, as a commodity, gold HAS a source of revenue besides the investors; namely, the purchases by consumers like jewelers and industry, who take gold out of the market (2/3 of the production) for uses other than re-sale. When one buys 1 oz of gold, one gets a chip of a metal that one can sell to those consumers, and thus obtain some money that does not come from other investors.
Talk to any gold investors and they will tell you the opposite: they generally expect to at least beat inflation, ie. making profits in real (not nominal) dollars.
"by consumers like jewelers and industry"
Purchasers and manufacturers of gold jewelry buy or build with this material primarily because it's valuable, not because of its physical properties. If they cared about physical properties above value, they would use many of the other metals that have similar or better properties at a better price.
That leaves industrial use of gold, which accounts for only 10% of global gold production. It could therefore be argued, from this blog post perspective, that 90% of gold is part of the "Ponzi scheme", or that 90% of gold's value relies on a "Ponzi scheme" completely disconnected from gold's industrial use.
> The investors are all those who have bought or will buy bitcoins; they invest by buying bitcoins, and cash out by selling them.
Who says I want to 'cash out'?
Why would I 'cash out' of the hardest money man has ever conceived for one of the easiest monies man has ever conceived?
What the author does not get, is people are buying bitcoin not to 'make fiat gainz', but to protect their savings from debasement. They don't need to convince anyone that they will 'profit'. People only need convincing that their purchasing power will not be decreased due to the policy of the easy money creators.
When you adjust your unit of account to satoshis instead of dollars, you only profit if the number of satoshis on your balance sheet increases. This doesn't happen by 'selling bitcoin'. The idea that I would spend bitcoin on depreciating fiat is preposterous.
There are many good arguments against Bitcoin but claiming it's a Ponzi scheme by definition is not one of them.
The explanation for why gold is not a Ponzi holds true for Bitcoin itself too. At the very end, Bitcoin has a (tiny bit of) value as a means to establish the global ledger. Just like with gold that value is just the smallest fraction of its market value.
I think if the author would have included gold and stocks in their definition of a Ponzi scheme their argument would actually be sound. Of course they would be branded a lunatic then so they wouldn't.
I guess that's where the power of the Ponzi scheme lies. How do you argue against the thundering horde if people making money hand over fist?
Sure they have some utility. The current block reward of Bitcoin is 6, with a market value of 60000 that means every 10 minutes of ledger is valued at 360000 dollars worth of utility, or 52 million per day.
>> A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors
Early investors in bitcoin were people who never expected it to cost anything at all. They mined or bought it solely for the idea.
Also if it wasn't created with purpose of fraud it is not a Ponzi scheme.
Someone makes something - people like it - prices goes up. Ponzi scheme? Nope.
No one is saying anything that goes up in value is a Ponzi scheme, that's an absurd statement.
You're not making a good case for your cause. Maybe mention some more important points that the author misses?
No central actor. There is no profits paid. Only increase
The later would mean that pretty much anything going up in price is ponzi. Were beanie babies ponzi? Arguably they were cuddly so they offered some value...
Satoshi made this absolutely clear when he released the software and final version of the whitepaper, and he mentions it twice in the whitepaper.
https://satoshi.nakamotoinstitute.org/posts/p2pfoundation/1/...
1. People invest into it because they expect good profits, and
2. That expectation is sustained by such profits being paid to those who choose to cash out. However,
3. There is no external source of revenue for those payoffs. Instead,
4. The payoffs come entirely from new investment money, while
the operators take away a large portion of this money.
Many other things fit these. Art, Start Ups, Collectable Watches, Non dividend paying stocks, Real estate and many others.
But what most people don't understand is that Bitcoin is NOT an investment scheme, you can speculate on its price, But it not designed to be an investment scheme.
Bitcoin was meant to be a utility (a peer to peer cash system as Satoshi described), like Oil i.e a platform for anarchist banking.
Speculation should be seen only as a by-product use case of bitcoin.
Mostly of these angry "Bitcoin is a Scam" blog posts surface when the price skyrockets. From this, I suspect it has more todo with the jealousy of watching people more stupid than you getting rich. Not what Bitcoin actually is.
The legacy financial system is rotten beyond repair. We need alternatives that are not run by crooks in good suits.
I work in investments and I feel like you could broadly place opportunities into two buckets. One which has current or the potential to produce cash flow. Second which produces no cash flow such as currency, crypto, gold, oil…the price of these assets depend on supply and demand. Oil is different since it is consumed where as crypto isn’t.
"The miners' massive hashing work does not go into creating the bitcoins, but into stamping the ledger to (allegedly) secure the record of past transactions."
This part is false. Each new mined block brings into existance new bitcoins. So hashing power is not just used to validated the new block on the ledger.
Anyway, the article argues that it fits the moniker because it has no value besides senseless speculation. It just ignores the one legitimate use it has, and it's one that should be hard to miss because it's right in the name: payments, like coins.
That's not to say it's a particularly good tool for that, you can argue all you want about it, but that's what it's for. International reply coupons are of really limited use as well, but they're not a ponzi scheme, the ponzi scheme used them.
When you buy assets like a house, you are speculating, that someone else will buy it at a higher price or pay rent to you, because they think it has value. All 5 points apply here, too. I would say rent is basically the same instrument as buying a house (for a short period of time), but even if you think of it as something different, as some external source of inherent value: You can rent out Bitcoin as well.
When you buy stocks, you are speculating, that someone is going to buy the stocks at a higher price from you. You can base that speculation on the fact, that the company behind it is using your money [1] to buy something from a third person [2], that some fourth person [3] is going to buy back from them. And since they have done it in the past successfully and overall companies are doing that, you call that inherent value.
I would call it the same, but in the end, "inherent value" is just a concept created through abstraction. It is turtles all the way down. There is no difference. Some investments are just a bit more complex, but in the end it comes down to whether you think something has value or not.
It comes down to whether human nature makes enough people feel the thing you are ultimately betting on has value.
There are many businesses, whose value really depends on similiar mechanisms as Bitcoin. E.g. you might think Bitcoin is a scam, but companies like Adidas or Nike are serious established businesses solving problems for humanity and are therefor inherently valuable. Well, those two companies can sell shoes at their prices, not because of the desire of people to go running, but really because of their desire to own a shoe with these brands printed on them.
And who is to say that the desire to go running is something better than the desire to own something called "Nike" or "Bitcoin"? I know where I want to base my retirement on,
[1] simplification, only true at IPOs, reality adds a layer of abstraction here
[2] employees, business partners, a government
[3] customers
Same applies to houses (they provide shelter) or gold (industrial applications or jewelry). Speculative value is only one part of their value.
Bitcoin by comparison has no value beyond speculative. You can't build anything with a Bitcoin, and it won't ever give you a revenue stream, or shelter, or make pretty jewelry. It's just a bunch of numbers recorded on some computers. If nobody think those numbers have values then they are as good as some old JPEG ad in your browser cache.
> I would disagree with your analogy: you buy a stock because it gives you a claim to the profits of the underlying company. Even if it became impossible to find a buyer for the stock you own, so long as they pay dividend, you still have something of value. And the company has tangible assets (factories, offices) and intangible (patents, the skills of its employees, brand) that allow it to produce things of general value.
What is general value? Those dividends are based on selling products and services. As I tried to explain: There are companies, which are about putting names on things. People seem to find value in that. With Bitcoin you are controlling part of a list. I do not think that is very valuable, but OPs arguments can be applied to everything.
> Same applies to houses (they provide shelter) or gold (industrial applications or jewelry). Speculative value is only one part of their value.
If gold was about the industrial applications, its price would be way lower. It is really mostly about people thinking it has value. And with houses: Yop, we generally think these have value. But a house in London has way more value than a house in Sibiria. Just as Bitcoin has way more value than if I would start my own distributed list and sell entries.
> You can't build anything with a Bitcoin
As I said, just an abstraction. If something is valuable, because you can build something valuable with it, you have to follow the path. You will end up at some human desire or just simple believe in value. I don't get many of those desires, so how do I know being part of a blockchain isn't also one of them?
As I said, I doubt it. I am just making a technical argument, that the authors analogies can be applied to everything.
This is only true if you look only at things through an economic lens—which is a mistake, because inherent value is, fundamentally, what something is worth separate from its economic/trade value.
Remove the economy from the equation entirely, and you will see which things have true inherent value.
Gold has value because it can be used to manufacture electronics, and because it is pretty and people like to look at it.
Art has value because it is a medium of expression, and again, because people like to look at it.
Stocks, at least in their earliest form (before they became primarily an economic engine), have value because they give you part-ownership in—ie, part-control of—a company.
Remove the economy from the equation, and Bitcoin has nothing. It is purely an economic construct. Thus, it has no inherent value.
Edit: probably just a biased opinion because because the minority who care are most vocal. It would seem that general public does not really care.
It evokes an emotional response in communists and socialists, because it forever puts a thorn in their ability to just steal people's property and claim it as belonging to everyone.
So here you have a bunch of people that seem to be getting rich "at the expense" of others, and maybe don't fully understand why, therefore they put up a fight. Very natural tribal behavior identifiable in a variety of different ways in the history of human kind.
Also people think of themselves as naturally intelligent (ego), so if something is creating wealth but they don't fully understand why, the instinctive reaction is to dismiss it because the other option is to essentially admit lack of knowledge which hurts their ego, therefore it is again a natural "self preservation" reaction. Also this more naturally creates an emotional response, since ego is a highly emotional subject to begin with.
To be against Bitcoin is also a generally safer bet: dismissive opinions are almost always small easy wins in the unpredictability of the future of Bitcoin. But Bitcoin maximalist only have to be right once eventually. We saw this with every major invention, electricity (will kill people!), internet (just a fad!), etc.
Now with that said I am not expressing an opinion on the eventual success of Bitcoin, it could very well fail.
The Problem with Calling Bitcoin a “Ponzi Scheme” - https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/
Regardless; a fool and his money are soon parted
Some more background here:
https://www.google.com/amp/s/www.wsj.com/amp/articles/an-ohi...
The situation is pretty extreme. To be honest, these really _do_ look like Ponzi schemes.
> Honestly index funds and cash from retirement savings is a ponzi scheme as well then
The comment was pretty clear: index funds, and cash.
Defined benefit pension funds are absolutely ponzis and should be outlawed. But this is not what OP said.
there is no external source of revenue
for those payoffs.
If Tim sold some of his bitmoney to lend to Josy, and then josy bought it back, then no new money entered the scheme.
Now Josy needs to pay him ₿0.01
That is what gives Bitcoin value. That Josy needs it to pay Tim.
Ponzi schemes have an element of dishonesty/fraud.
Bitcoin does not.
Find some new material.
Arguably, when monetary supply increases are publicized, then there is no dishonesty, so not a ponzi scheme.
They have another component though: legal tender laws that force people to accept them for debts, and capital gains laws on other assets that give them an unfair advantage.
So ponzi or not -- probably not what the free market would choose in the absence of such laws.
I’m convinced having read the comments here that nobody actually knows what a Ponzi is.
- USD is needed in order to pay taxes on the US, but can be printed arbitrarily by a centralized mint.
- Bitcoin has no fundamental demand driver, but does have a truly capped supply.
Why is it so obvious that USD is a preferable scheme?
On the other hand, the current economy model which relies on continuous growth, might reasonably fit some definitions of a Ponzi.