Hacker News Reader

Comment by renewiltord | Hacker News Reader

So a Ponzi scheme works like this:

* You take money from investors

* You then claim that you are making money from some legitimate business

* You return money to earlier investors by just feeding them the money later investors put in

So who are the early investors here, what's the legitimate business, and how are we taking money from later investors to give to early investors?

EDIT: Guys, it's not a zero-sum game. You can breed new axies, etc. By the logic espoused by everyone in the responses, the stock market is a ponzi scheme because later participants buy stock from earlier participants. This may be my fault with the defn lacking some things, but clearly the stock market isn't a ponzi scheme, so something is wrong.

View on HN

> So who are the early investors here

"Gameplay requires the purchase of three Axies, which currently cost in the hundreds of US dollars each."

> what's the legitimate business

"By blurring the line between “player” and “worker”, the game has effectively built a Ponzi scheme with built-in deniability. Sure, some users will be net gainers and other users will be net losers, but who am I to say the net losers aren’t in it for the joy of the game?"

So I guess the "legitimate business" is making the game interesting for people who.. enjoy it?

> and how are we taking money from later investors to give to early investors

I don't know how the in-game mechanics work but later investors also purchase Axies and somehow that money ends up in the hands of the former investors. Maybe not automatically, I guess it depends on what in-game actions you take, but given that you first have to invest before you can play...

The investors are the players hoping to make money from the game. The players have to buy Axies to play the game.

The "legitimate business" is playing the game to get more Axies that you can then sell.

The later investors then buy Axies that the early investors earned by playing the game.

As soon as exponential growth stops the system collapses.

Early investors: people who “invested” hundreds of dollars to play. Legitimate business: “we’re a game studio.” Later investors: newer players who see the earlier ones making money.

The economy is zero sum. The early investors are the people that bought in early and they cash out by selling to the later investors. The “legitimate business” claim is Axie itself and the claim that it can both reward investors who hold and rent Axies as well as pay people to play the game. An idea that only works if more people keep putting money in. To further this claim Axies developers make an awful lot of noise about how they are going to introduce new mechanics which will supposedly fix this.

I'm not sure about this, but I think the correct term might be "negative sum." The winners gain less than the losers lost for the reasons you mentioned.

Thinking about it more and you’re right. In particular because the Axie devs levy a tax on each transaction and the cost of buying the tokens from another currency in the first place.

Read TFA. Your questions are all answered in it.

Reply on news.ycombinator.com