Comment by shabbatt | Hacker News Reader

Comment by shabbatt | Hacker News Reader

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I wonder what will happen now that the ponzi structure is now gained new velocity as energy constraints have shut down proof of work mining. PoW creates centralized collusion between those who can afford the best miners and this helped the velocity of the chain itself since it is only as good as the last mined block.

Now that layer is gone, its this proof-of-stake which is a bit funny since, Ponzi schemes are also proof-of-stake, where the previous investors stake's performance signals the next until the order books flip to a highly skewed with a very long til, it results in the last group who were late to the party, get caught with the bags.

I wouldn't be surprised if there are many whales dumping as they would know (and I hope so) what the new paradigm shift is in this digital ponzi gold rush.

Also rather anxious for these fellas who promoted securities written on ethereum. The SEC flat out came out and said almost all cryptocurrencies passes the howey test recently. This PoS seems perfectly timed for the occassion.

You're confused, in a ponzi earlier investors are paid from the investments of future investors. That's not how PoS works. In Ethereum, everyone is diluted to pay stakers and the time of their investment does not matter.

> You're confused, in a ponzi earlier investors are paid from the investments of future investors.

so you mean like pre-mine token sales? wait aren't those securities because there is an expectation of returns from the work of others?

what you write here could be used against you, consult your lawyer before you admit anything!

A pre-mine might make it a security, but it's basically the opposite of a ponzi. Not everything is a ponzi. I think you're just confusing different financial constructs with one another

It's worse than ponzi, its securities fraud.

You're confused. In The Ethereum Ponzi, early token holders 'stake' their tokens and are paid by future transactors.

But here's the funny thing that no-one gets: all assets are a ponzi scheme (stocks are only worth something now because future rubes will buy them for more later), what makes bad ponzi schemes is when the underlying asset that everyone is speculating on doesn't do anything useful.

But no, that's not the same. If the owners of a stock received a fee when somebody used the company's product, that wouldn't be a "ponzi". It lacks the key element that earlier investors are paid via the investments of future investors. That's just not what happens on Ethereum.

Edit: Was replying to comments too fast, misread what I was replying to.

The people paying a fee are not investors. This is like saying the grocery store is a ponzi because customers pay the shop owner, who was an early investor.

The people paying a fee do not expect to make a profit off of holding ethereum. (Some of them do, but that's a coincidence in the same way that a shop owner might shop at their own store).

> It lacks the key element that earlier investors are paid via the investments of future investor.

Are you under the impression that you can buy Ethereum without paying transaction fees to stakers?

I am, because it's true. For example I own a lot of Ethereum and didn't pay any transaction fees to obtain it. Most ETH transactions work this way because they happen on centralized exchanges.

>Most ETH transactions work this way because they happen on centralized exchanges.

Well then what does Ethereum do actually? And why exactly can't those centralized transactions be denominated in "Coinbase points" without all the crazy "Proof-of" code?

Because if Coinbase did that, nobody would use them, but people do use Ethereum.

Btw, Binance has done this with BNB and their USD stable coin, and they are top ranked coins by market cap, so in fact sometimes it is the case that having a highly centralized and liquid coin backed by a major player is good enough.

>Because if Coinbase did that, nobody would use them, but people do use Ethereum.

And that doesn't feel anything like a ponzi scheme to you? Because, again, as you state, people are not using Ethereum (that would require paying fees to old investors) they are buying it (in hopes that they aren't too late to become an old investor themselves).

Or are you literally saying that the value of ETH is that "Aesthetically, it's nicer to see 'ETH' at the end of an account balance than it is to see 'USD'"?

What? No that's not what I said at all.

People are using Ethereum, they are paying transaction fees to use it. Those fees mostly do not go to stakers, they are mostly burned. Even if that weren't the case, it's not even close to a ponzi because the stakers aren't paid out by future stakers, they are paid out by diluting everyone and via fees for usage.

Also to address your second point, I'm not saying that, but that would not make it a ponzi at all. Art has this property, art isn't a ponzi.

> People are using Ethereum, they are paying transaction fees to use it. Those fees mostly do not go to stakers

Why exactly are people staking then? How are they being rewarded for slashing risk? Who do you think gets the gas fees? You know ETH2 still has them, right?

> the stakers aren't paid out by future stakers, they are paid out by diluting everyone and via fees for usage.

Again, you’re absolutely misinformed here, but aren’t crypto maximalists supposed to be all about how bad inflation in fiat is? Or is that old news?

> Also to address your second point, I'm not saying that, but that would not make it a ponzi at all. Art has this property, art isn't a ponzi.

You’re the one who said “most ethereal is bought on centralized exchanges”! You can’t have it both ways.

> stocks are only worth something now because future rubes will buy them for more later

Stocks are valuable because they are a claim on the assets and future profits of a company, as well as a claim on the ownership and control of the company.

Some people buy stocks just in the hope that a Greater Fool will buy them for more money later, but that's not the same thing as calling stocks in general a "ponzi scheme".

>what makes bad ponzi schemes is when the underlying asset that everyone is speculating on doesn't do anything useful.

Also, what's your comment on the multiples expansion that all stocks have seen since the 1990's?

> in a ponzi earlier investors are paid from the investments of future investors.

Also, a Ponzi scheme requires fraud, where the earlier investors are being lied-to about where the money comes from in order to paint a false financial picture of the company.

Not directly related to your point, but I wanted to put that out there since it's a pet-peeve of mine that "Ponzi" gets frequently misused as a label for anything the speaker thinks is unsustainable.

By the OP definition, pension funds would be ponzis.

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