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Comment by bradjohnson | Hacker News Reader

I really like the idea of going through the list of common warning signs for a Ponzi scheme and still having to weasel around like "well technically if you squint, this one doesn't apply to every cryptocurrency."

Unfortunately cryptocurrency and NFTs fit exactly the definition of a Ponzi scheme and it's quite easy to see why:

> Pon·zi scheme

> noun

> a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

Literally the entire basis of deflationary speculative "currency" is a Ponzi scheme. It has no value if new people don't buy in.

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"It has no value if new people don't buy in." is a statement that evaluates to true for any currency ever minted. You also ignore the "nonexistent enterprise" bit.

> You also ignore the "nonexistent enterprise" bit.

What is the enterprise? Cryptocurrencies themselves have no governance or accountability. They don't have any responsibility to continue to exist beyond the efforts of the participants that are propping them up. This is evidenced by the massive number of rug-pulls that constantly happen in crypto.

> is a statement that evaluates to true for any currency ever minted.

Except not really. Let's talk about USD. If there were no new participants introduced to United States currency at this point it doesn't become valueless because it is not a deflationary speculative currency. It exists as an agreed upon representation of value, it doesn't need to continue to consume new participants to justify its valuation, or continue to exist.

Let me ask you, is there a good or common reason to buy etherium today besides hoping that it increases in value? How would it increase in value if no new people were introduced to the system? How does crypto justify its existence in any way beyond convincing the next biggest sucker to buy in? Bonus points if you don't mention stocks.

> Let me ask you, is there a good or common reason to buy etherium today besides hoping that it increases in value?

A classic use case is engaging in commerce (whether it's with ETH, DAI, USDC, etc), without needing to trust a middleman like PayPal to not freeze or steal your funds. For this one needs ETH to pay gas.

Primarily, the problem with that is I don't know anywhere that I would choose to spend money that also takes ETH. I also don't really think that what you're describing is good or common.

Common: The middleman is still there in the most common case since most wallets are custodial. There are a ton of recent examples of exchanges freezing accounts, including the very article that we're commenting under, so I don't really get what you're talking about.

Good: It doesn't make sense to use a wildly volatile deflationary token as currency. Deflation discourages spending which is why there is no real currency that restricts the supply of money to a fixed amount, because it encourages hoarding.

> most wallets are custodial

I wouldn't argue that everyone should self-custody. If many users have access to convenient custodians who they can trust not to steal their funds, that's great; it's just that not everyone does.

I don't really have a stance on Eth's monetary policy, I was just trying to address your point about a use case.

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