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Comment by Anon1096 | Hacker News Reader

You're not describing a Ponzi scheme, you're describing wash trading and fraudulent accounting.

It is surprising that so far there haven’t been any legislation in Europe that prohibits CO2 emissions and energy consumption for crypto mining. Feels like a slum dunk to get it passed and get some nice political credit for it.

Europe doesn't have a large scale crypto mining industry. Energy prices aren't competitive enough there for it to be viable.

Europe's hashrate could disappear overnight and barely anyone would notice.

It would be a good statement and might set off a chain reaction for other countries. At any rate, a country that isn't very dependent on crypto mining would be a good place to start the bans.

> At any rate, a country that isn't very dependent on crypto mining would be a good place to start the bans.

Is there any country that's dependent on crypto mining? I think you may have meant the inverse--a country that crypto mining isn't dependent on (like it was on China... until China banned it a few years ago).

The chain reaction is that other miners get more profitable when EU bans it in their jurisdiction. Then some small countries with cheap energy will invite new miners to come in and tax them.

And an easy solution will be to prohibit exchange of proof-of-work coins, first in Europe and then, maybe ecologically-minded California would join.

Do they need to? At typical EU energy rates, is there a token in the world worth mining?

Yeah, seems like the carbon tax + high energy prices are already working as intended (ie. forcing non-productive energy consumers offline).

Too many loopholes.

I'm not mining, I'm heating my winter swimming pool with this ASIC based heating elements!

Tax any externalities and let the problem solve itself. Yes, you might end up with some heated sidewalks or other conspicuous consumption, but at least you end up with resources that can counter the problem.

Manufacturing these rigs and building infrastructure also results in CO2 emissions.

Why not simply prohibit proof-of-work coins and be done with it? There are so many disadvantages and no benefits, it seems.

Is this relevant? AFAIK, all these crypto tokens run on Ethereum blockchain, which recently switched to proof-of-stake.

people pay in, and that money is spent on (making the project look good|delivering a yield|paying execs|propping up a trading company|whatever) and then the money is not there anymore for withdrawals. That's the essence of a Ponzi scheme and this meets that criterion.

Sure, there's fraudlent accounting, and wash trading, and other bullshit, but that's all just the some and mirrors that allows the ponzi scheme to work.

thats not what a ponzi scheme is.

a ponzi scheme reports a profit, and pays out that profit to early investors. (the payout is actually later investors inflow.)

the only one of the ones you mentioned that is actually a ponzi scheme is the "delivering a yield." its the yield delivery, aka dividend, that makes it a ponzi scheme, not just fraudulently running away with the money. the scheme works because people get paid out regularly, and have no reason to believe their money isnt working for them.

You are wrong. In a ponzi people are often encouraged to reinvest their gains. You only take the money of new investors to pay out early investors if really necessary (that is to maintain the illusion that the money is still there) otherwise you use the money for something else or yourself.

exactly how crypto works.

Just because that is a common feature of ponzi schemes, that alone doesn't make it a ponzi scheme. A ponzi scheme takes some sort of initial investment from new investors and gives that back to old investors in form of "return". Meaning, the system itself doesn't rely on any sort of growth in order to return, only the sign up of new people into the scheme, which is why they can seemingly deliver such reliable returns to early investors. Eventually you run out of new people to sign up, and the entire house of cards falls apart very quickly.

Every self printed clown bucks scheme is a standalone Ponzi by definition. Early gamblers buy first batch of clown bucks, then hype the price, then next group of gambles buy slightly more expensive clown bucks, then hype, then then buy, in a loop, and each new buyer funnels his money onto enriching early gamblers. The only difference is that FTX has at least 3 Ponzis running - FTT, SRM, MAPS. We can call it a Ponzi CDO of sorts :) but it's still a Ponzi. Sure, they did some exchanging on the side, some investing or donating, but the main business was printing and selling clown bucks.

>Early gamblers buy first batch of clown bucks, then hype the price, then next group of gambles buy slightly more expensive clown bucks, then hype, then then buy, in a loop

That is not a ponzi scheme. The selling of the asset to the next sucker, and the price going up, and each person in line getting to shave some profit off the next person is not a ponzi scheme. (It's also exactly how non dividend end paying stocks work. The stock is only worth what the next person is willing to pay.) Youve described a pump and dump.

A ponzi scheme has a mechanism to give a fraudulent "RETURN" to investors that HOLD. That is the definition.

None of the clow bucks are claiming that the underlying product is producing its own profit, the only value is the holding of the asset itself.

Everyone is now using ponzi to mean any sort of scheme including ponzi, pump and dump, etc. But thats not what the word ponzi actually means. And when you say things like "by definition" we need to stick to the actual definition.

https://www.vanguardngr.com/2022/11/ftx-offers-up-to-8-apy-o...

""" You can now earn yield on your crypto purchases and deposits, as well as your fiat balances, in your FTX app! By opting in and participating in staking your supported assets in your FTX account, you’ll be eligible to earn up to 8% APY on your assets. """

How does one provide 8% yield on BTC I have no idea.

To me, FTX is a classic Ponzi scheme according to the most uncontroversial definitions of "Ponzi scheme".

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