Bitcoin is too volatile to be taken seriously

[Hoi]

Quote from Pekelo:


8. I haven't mentioned in the earlier post, but bitcoin is essentially a ponzi/pyramid scheme, and once new users stop coming in, growth stops, and once users leave, the system fails.

Stopping users from buying an Apple IPone, doesn't make Apple a Ponzi scheme....Apple will just fail as business model, as will be the case with Bitcoin when something better emerges.

Here a good explanation, why the word "Ponzi" isn't applied to Bitcoin:
http://www.youtube.com/watch?v=7u4F8cpzqao&list=PLzctEq7iZD-7-DgJM604zsndMapn9ff6q

 

[Pekelo]

Quote from Hoi:

Here a good explanation, why the word "Ponzi" isn't applied to Bitcoin:
http://www.youtube.com/watch?v=7u4F8cpzqao&list=PLzctEq7iZD-7-DgJM604zsndMapn9ff6q

The guy is an idiot. His first argument is, that there is nobody who is the owner of bitcoins. Well, everyone who has coins are owners!!!

Bitcoiners always get upset about the ponzi thing. First, not every ponzis are bad, the US social security system (or any national retirement system) is a ponzi/pyramid too. Second, if the characteristics of a ponzi fit, then it is a ponzi, nothing to argue about.

Here is a quote from the inventor:

"Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up" - Satoshi Nakamoto, 2009

Sounds just like describing a pyramid scheme. Speaking of the inventor, is there any good reason why the very first 1 million coins are just sitting in a wallet collecting dust, instead of being in circulation as a good currency would do??? Well, maybe he lost the password...

Check this out and see how many fits bitcoin:

http://en.wikipedia.org/wiki/Ponzi_scheme#Characteristics

 

[stevegee58]

No. Pyramid schemes and "Ponzi" schemes are very specific processes that do not apply to Bitcoin at all. Picking and choosing characteristics that things have in common doesn't prove they're the same thing.

 

[Pekelo]

Quote from stevegee58:

Picking and choosing characteristics that things have in common doesn't prove they're the same thing.

Hehe, that's how you decide if X is an Y. If the dictionary fits you must insist!

 

[stevegee58]

It seems like ever since Bernie Madoff got outed any financial thing people don't like gets labeled a Ponzi scheme.
I guess we can thank the MSM for that.

 

[Hoi]

Quote from Pekelo:

The guy is an idiot. His first argument is, that there is nobody who is the owner of bitcoins. Well, everyone who has coins are owners!!!

http://en.wikipedia.org/wiki/Ponzi_scheme#Characteristics

You may don't like this guy, I think he explains it much better than I can (and this with that same Wiki-link you are pointing to....)

His first argument, is about the Bitcoin-protocol (nobody owns it). So there is not ONE central Ponzi-guy on the top of the scheme who can scam every one else (which is by definition needed for a Ponzi).

 

[sle]

Quote from Pekelo:
"Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up"

This statement is equally applicable to gold. Even without reading the wiki page, I could tell you that one of the key characteristics of a ponzi scheme (unlike any other "perscieved" value product) are the unlimited "on-demand" nature of the asset in question. In case of a limited-supply asset, there is no opportunity to payoff the initial investors by creating and selling more of the asset.

A limited-supply asset could have a bubble, but it's not going to be a ponzi scheme. Gold is not a ponzi scheme, while a start-up that keeps issuing more stock as the prices are going up could certainly be.

 

[Pekelo]

Quote from Hoi:


His first argument, is about the Bitcoin-protocol (nobody owns it). So there is not ONE central Ponzi-guy on the top

I will admit that certain aspects of bitcoin doesn't fit the ponzi description. But it is very ponzi-esque, and certainly people getting into this not for the advancement of new technology or stick it up to the man, but for the quick 100% per month return doesn't help the case.

The problem is evaluation of the coins. It can be 50 cents or 5K dollars and anything in between. With a stock we at least have revenues, profits, or P/E ratio or whatever. Here we have people's feelings....

 

[Pekelo]

Quote from sle:

1.This statement is equally applicable to gold.

2.A limited-supply asset could have a bubble, but it's not going to be a ponzi scheme.

1. Why do I care? People keep bringing up gold, like that is the standard. Fiat is the standard what bitcoin is against. On the other hand, in the zombie apocalypse, you can hit someone on the head with a gold bar, but bitcoins will be completely useless.. (absolutely no intrinsic value)

2. Actually, the limited supply enforces the "get in while you can" feeling, what lots of ponzis are using. It is just human nature, that we value more something that is limited...

 

[Hoi]

Quote from Pekelo:

The problem is evaluation of the coins. It can be 50 cents or 5K dollars and anything in between. With a stock we at least have revenues, profits, or P/E ratio or whatever. Here we have people's feelings....

I give up....

Now you introduce "Security-properties" in our discussion.... While Bitcoin is a Currency (like the Euro) and a Commodity (like Gold) and a payment-Protocol (like HTTP). There is nothing Security-like present.

Valuation is done by valuing the 3 properties above. But currently the Commodity-property prevails for the Chinese who currently drive the market. We all hope that one day the Currency-property and Protocol will take over.