Crypto. Ponzi Scheme?

LoveTrees

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Can someone explain to me how any cryptocurrency can be given value please? Different companies can produce bitcoins etc and i don't see central regulators counting the bitcoins etc available in the World. To me this is a clear Ponzi Scheme or am I missing something?
 
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Steven Barrett

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There's a 30 page thread below which is a good starting point :)

 

DazedInPontoon

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Different companies can produce bitcoins etc
Companies can't produce bitcoins. bitcoins must be earned through mining or bought. Anyone can create their own alternatvie cryptocurrency if they like, but without a substantial network of users it's of no consequence.
and i don't see central regulators counting the bitcoins etc available in the World.
We don't need regulators to count them because the blockchain that contains the history of all transactions and thus balances of all bitcoin address is public. Right now there is exactly 18,682,542 bitcoin in circulation.
To me this is a clear Ponzi Scheme or am I missing something?
Some cryptocurrencies are scams, but bitcoin isn't. What you're missing is even a basic understanding of how it works.
 

LoveTrees

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Companies can't produce bitcoins. [...] {1}

We don't need regulators to count them [...] {2}

Some cryptocurrencies are scams, but bitcoin isn't. What you're missing is even a basic understanding of how it works. [...] {3}
Point {1}. Yes they can and it costs environmentally. I read an article in an italian newspaper that to produce a bitcoin it takes cpu-power and time

Point {2}. Why? Then let's all produce tulips like in Holland just a few centuries ago and forget about history

Point {3}. Don't offend please. I know you need to protect your investment.

I propose we re-read this thread in 30 years from now to check if it was ironic that the day in which Bernie Madoff died and Coinbase got into the Nasdaq was the same. Thank you.

@Steven Barrett thank you. 30 pages-thread (still being updated at present) to try and answer my same query? I notice many opinions and few certainties then
 
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NotMyRealName

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Coinbase hit the Nasdaq today, Tesla on the S+P 500, ........ we're all in bitcoin now by proxy.
Nothing wrong with a good old-fashioned pyramid scheme (think public sector pensions) as long as they're not short lived. Just ask an Irish bartender in Queens or the Bronx in '87...
The trick is to accept you've made a certain amount of return and then withdraw from the arena. There's no compounding in Pyramid schemes.
 

noproblem

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If you've a few thousand you can afford to lose, then have a punt. A far smarter person that myself told me that Bitcoin's going to €200k. Someone said the Bossman of this Ask About Money website is into it in a big way? :p
 

LoveTrees

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Personally I don't care about crypto as long as it's not another growing Ponzi Scheme like the subprime crisis we all suffered in 2008/9... That's my view and I prefer to stick to Warren Buffett and Charlie Munger instead thank you... I understand we all lost confidence in Banks when subprime went astray but giving too confidence on value creation in the hands of other few people that don't clearly show their cards is so bad... The creator of bitcoin is unnamed not by chance still to my opinion... Again: just my view
 
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DazedInPontoon

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You can wade through about 1000 pages of alt-coin announcements here https://bitcointalk.org/index.php?board=159.0 I presume the vast majority of them are pre-mined trash. It's a fairly simple concept - create a coin, award some to yourself up front, launch it, hype it, dump your bags. Repeat.

There are also bigger scams like Onecoin (https://www.bbc.com/news/technology-50509299) though I doubt that was even a cryptocurrency at all, just a straight up ponzi.

There are so many people who are both looking for the 'next bitcoin' but don't understand enough about it that it's a no brainer for scammers to find targets.
 

Sarenco

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Interesting article by David McWilliams on crypto -

“When something claims to be money but patently isn’t, is backed by nothing, generates no income, and promises you the sun, moon and stars, it sounds like a quick way to destroy wealth not create it.”
 

Duke of Marmalade

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Can someone explain to me how any cryptocurrency can be given value please?
You will get many armchair punters like myself to go on and on about this subject. In many ways its supporters resemble a cult. I recommend you refer to professional experts like Professor Roubini or Robert McAuley writing in the FT:
Robert McAuley in the FT said:
At today’s higher bitcoin prices, the hole is growing faster. About 900 new bitcoin a day require most of $45m a day in electricity. Thus, the negative sum in the bitcoin game is in tens of billions of dollars and rising at over a billion dollars per month. If the price of bitcoin collapses to zero, the gains of those who sold would fall short of the losses of holders by this growing sum. To liken bitcoin to a Ponzi scheme or a pump-and-dump scheme, both basically redistributive, is to flatter the cryptocurrency system.
To conclude, an economic analysis of bitcoin must recognise its uniqueness in the history of manias. As an object of speculation, bitcoin is unprecedented in the degree to which there is no there there. This post-modern mania features big prices for entries on nobody’s spreadsheet. A zero-coupon perpetual has arrived not as a joke but as a trillion dollar asset. Unlike a Ponzi scheme, bitcoin cannot end in a run. In a crash, the holders of bitcoin will collectively have lost what they have paid the miners for their bitcoin. This sum may be not far from the sum originally invested with Madoff, after accounting for inflation. But bitcoin holders will have no one to pursue to recover this sum: it will simply have gone up in smoke, a social loss. The holders of bitcoin would then only wish it had been a Ponzi scheme.
Different companies can produce bitcoins etc and i don't see central regulators counting the bitcoins etc available in the World.
There are 21m bitcoins and to all intents there will never be any more. The "system" releases these every 10 minutes and at this stage has released about 19m of them. Note that these are released on schedule by the system and are not somehow “mined” like precious metals. Cultists make a big deal of this scheduled limited supply. But if the experts are right and bitcoins are worth nothing, what does it matter how limited the supply is?
To me this is a clear Ponzi Scheme or am I missing something?
See the bit that I have highlighted in Robert McAuley's article above. It is actually much worse than a Ponzi scheme, in his opinion and who am I to disagree with him.

You seem to be safe from this mania (McAuley's description) but just to affirm you in that view, it has fallen 40% in price over the last month or so.
 
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Gervan

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I went to the cinema last week (hurrah) and saw an advert I hadn't seen before. It was quite long, and pictured someone (maybe famous, I'm no good at faces) walking through a display of all the exciting things that humans have done in the past that would have been thought fools for, from space exploration downwards. It was quite stirring to watch.
The final message was that anyone daring would ignore those critics who said a venture was too risky... and buy cryptocurrency !!

I was horrified by the way that this is being presented to people who may have very little money to lose. I think it speaks of desperation and seeking for "more minnows" to prop up the "investment".
 

LoveTrees

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My point is: why giving value to a currency when you can give value to teams/certain visions/certain balance sheets by investing on them? I just don't see the sense sorry...
 

Ciru75

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I went to the cinema last week (hurrah) and saw an advert I hadn't seen before. It was quite long, and pictured someone (maybe famous, I'm no good at faces) walking through a display of all the exciting things that humans have done in the past that would have been thought fools for, from space exploration downwards. It was quite stirring to watch.
The final message was that anyone daring would ignore those critics who said a venture was too risky... and buy cryptocurrency !!

I was horrified by the way that this is being presented to people who may have very little money to lose. I think it speaks of desperation and seeking for "more minnows" to prop up the "investment".
The Galileo fallacy.

People laughed at Galileo for thinking the earth goes around the sun.
People laugh at me for thinking x.
The earth goes around the sun.
Therefore x is correct.
 

Dublinbay12

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The Cryptocurrency and underlying technology as a whole is not a Ponzi Scheme or a scam.

Are there Ponzi Schemes and Scams that run within the market....Yes there are, just like there are scams and ponzi schemes in cash markets.
 

Dublinbay12

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