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Comment by simonw | Hacker News Reader

This is the key to the crypto scam. It looks like it's complicated, and you have to be really smart to understand what's going on!

But it's not complicated at all.

Buy some crypto. Convince more people after you to buy it too - price goes up. If more people are selling than are buying, price goes down. Time your exit.

In the end, everyone loses - because there's always going to be more money going out (to pay the electricity bills and suchlike) than there is coming in.

If you're lucky, you might be able to get more money out than you put in. But it's pure luck in gambling on the timing, it's not about being smarter than other people.

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As was pointed out in a podcast I listened to this week, you’ve essentially described a Ponzi scheme. Fundamentally, making gains on crypto requires someone else showing up and putting money in so you can get yours out. It’s more obvious with NFTs because they’re not pretending to also be money.

He’s describing a speculative bubble, not a Ponzi scheme. By your definition any enterprise where money flows in and out and involves more than one party is a Ponzi scheme.

Nah.

1. If bitcoin didn't have transaction fees and you have unrolled every bitcoin transaction ever made, everyone would have the same amount of money they started with. This is called a zero sum game.

2. But it does have transaction fees so if you did the same in the real world then the miners would be ahead and everyone else would lose. This is called a negative sum game or a scam.

3. If you were to do the same to, say, every Intel stock, then you'd be ahead because of the dividends paid.

This is just true if you assume the transactions have zero value which seems unlikely given that in general most transactions/commerce creates a lot of value.

This is silly. Way too many things would meet this standard for "scam"/"ponzi". Gold for example: it costs money to dig it out of the ground, and critically to keep it stored securely, insured, tested for purity, etc. Consider how much money the USA must spend keeping its gold stockpile safe! Those are pure drags on the system so indeed the total amount spent on gold must always be more than net proceeds from gold sales after accounting for cost of ownership.

I'm sure there are many such examples.

A ponzi scheme can turn into a roughly zero sum game if there isn't a rush but instead stable behavior over hundreds of years. Which is exactly what you describe with gold.

Plus, gold actually does have some industrial uses so its value is actually somewhat greater than zero even if people one day woke up and didn't think it looked good for jewelry :P

This is a shallow and narrow way to view crypto, and describes the typical incurious HN view that crypto is just a big ponzi.

Another way to view it, is as a digital economy running on a different set of technologies. You don't need to "invest" or "time the market" or anything, you just buy ETH to use it as a gas token.

Buy some ETH, an amount you are OK to write to zero like you would a hamburger or movie ticket purchase. Move the ETH off a CEX into your own self custody wallet to understand what it means to hold an asset with nothing but a private key. Convert it to stable coins with DEX like Uniswap, to avoid thinking about price. Send them to and fro, use DeFi, buy a ENS domain. It might cost you $10-50 total but you will probably come out of the experience with a better understanding of crypto, and you might also start to see traditional banking infrastructure differently, maybe slower or less verifiable or less secure or too centralized or too hard to build programmable interfaces on top of.

This is too cynical of a take for me. I fell down the rabbit hole after reading/watching some of Vitalik's writing years ago. I think it's worth spending a small, insignificant amount to play around with some apps that have a genuine purpose. These days I'm most interested in gitcoin.co grants and the use of quadratic funding to support public goods (eg: open source software). You can read a summary write-up of a previous round [here](https://vitalik.ca/general/2020/10/18/round7.html) if curious.

I can't tell if your response is satire or if we've really hit this level of insanity and lack of self awareness.

Sounds sensible to me. Can you please elaborate? Otherwise your reply is of 0 value

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