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Comment by RyanZAG | Hacker News Reader

I'm trying to work out if this is some grand statement on the similarities of Bitcoin to a Ponzi scheme in the way it's deflationary, or just a quick way for someone to make a few BTC. Maybe it's designed as a way to teach people about Ponzi schemes?

Got to say, I pity the person who eventually deposits too much money at once, causing the payments to pause while they build up enough to cover his large deposit, in turn causing everyone else to think that the money has stopped paying out and causing no further money to be deposited. That seems like the likely end of this eventually...

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It's less of a statement about bitcoin as a statement about people. It shows that people will willingly deposit money into a scheme that they know is broken.

Just like with Bitcoin Savings and Trust, people essentially knew it was a ponzi scheme but they still deposited 263024 BTC. It was offering 7% a week which is 3373% a year. There are also debates about whether the people who profited are morally obligated to send their profits to the people who lost money. Are the people who profited considered to have stolen from the people who lost?

>There are also debates about whether the people who profited are morally obligated to send their profits to the people who lost money. Are the people who profited considered to have stolen from the people who lost?

The same could be asked of state lotteries and other forms of betting. Not sure there's much difference from a moral standpoint.

I think the key difference there is that when you participate in a lottery you know - or can obtain - the odds of a payout up-front.

Ponzi schemes by definition hide the fact that there's any risk of non-payment, that's why it's fraud, and illegal, and immoral.

>Ponzi schemes by definition hide the fact that there's any risk of non-payment

Ponzi schemes in general, yes. But, I was referring to this one, wherein it was out in the open.

>when you participate in a lottery you know - or can obtain - the odds of a payout up-front

Technically, yes. But, the odds in some games are so astronomical that knowing them is basically a non-factor. That is, people play completely hoping to get lucky, but not really expecting to win. I think the same applies with a Ponzi scheme like this one, wherein it's known that the music could stop playing anytime and the participants are simply hoping to get lucky.

Even if it's not one person depositing a large amount, the backlog must grow larger and larger as time continues, this site actually has to grow exponentially to keep payout times constant.

Indeed, the liquidity here is the popularity of the site itself so as soon as the media buzz fades out the last ones to invest are going to lose everything; just like it always happens in ponzi schemes.

Poor Kevin Bacon didn't know what hit 'em.

IMO, this was built to demonstrate one of the unique characteristics of Bitcoin. The ability to track transactions linked to addresses not owned by you, in this case, lets all participants see in realtime whether the owners are living up to their promises. Had Bernie Madoff used Bitcoin, his reign would have been over in a few minutes.

Minutes? Really? Because that's how most people measure their investments. The only way you could see if 'he was living up to his promises' was if he just speculated on more bitcoins, which would be dumb.

The point was that you could see where the money was going. If there were a Bitcoin based stock exchange and it published its addresses for stock purchases, when money from pooled funds started going to addresses outside of those known addresses, people would immediately know that the money has gone somewhere it shouldn't have.

>money from pooled funds started going to addresses outside of those known addresses

What? It's a stock exchange. By definition the money is immediately going to go to the counter-party in a trade. So it's going to be an unknown address. Stock exchanges aren't the ones selling stock...

Yeah, no kidding. But you're saying the counterparties couldn't register those addresses publicly with the exchange so that everyone knows where the money is going? Alternatively, the exchange itself (a trusted party) couldn't receive the coins first and then send them to the counterparties?

This transaction is where everything went wrong. I think after the shutdown they tried to start paying out the largest investors manually and missed a decimal place:

1 BTC In and 10 BTC back https://blockchain.info/address/1CeGvbrAuLJYyKxX7T2KD3358dWo...

Someone made 10x their money.

Ponzi.io (1ponziUjuCVdB167ZmTWH48AURW1vE64q) --> Ponzi.io Change (14ji9KmegNHhTchf4ftkt3J1ywmijGjd6M) --> Big Winner (1CeGvbrAuLJYyKxX7T2KD3358dWoLmAohR)

maybe thats where the site got their return.

This makes me wonder if a bank could operate with Bitcoins. Not everyone would withdraw the money at once and there would be a way of publicly verifying the degree that they're leveraged. If the bank wanted to lend out part or all of a person's money, it could require their approval such that both them and the bank get a percentage of the interest rate the borrower pays. So many questions.

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