Being sarcastic and ignorant at the same time...a powerful combination. Fiat currency has much utility over gold, which is the reason we left the gold standard. First of all, the money supply is much more flexible with a fiat. Secondly, storing thousands of tons of gold is expensive and insecure. Thirdly, currencies are somewhat at the control and mercy of those countries with large gold reserves (imagine what a dollar attached to a barrel of oil would look like). Fourthly, fifthly, sixthly...and so on. Many such reasons!

Of course if you weren't just a blind proselytizer you would readily know and admit this stuff; alas....

We are in agreeance. Fiat is much better than gold. My point is, what good is gold? Why does it have such large value? I'm having a hard time deriving 8 trillion dollars worth of use cases for gold, which is why it must be a ponzi. Because if the use cases don't amount to the value, then the only reason people put money into it is as speculation because they think others will buy later and put in more money. I think that's the in thread definition of ponzi or bubble. One or the other.

You seem to be thinking that 1. gold is currently overvalued and 2. that overvaluation means gold itself is a ponzi scheme. I can't tell if you're trolling or not, but pretty clearly that deduction is silly.

Gold has enormous value as something used for ornamentation. People like to buy it, wear it, look at it, give it to people, use it to add attractive decorations to buildings and goods. It is scarce relative to to that use, very scarce. Most gold is not bought because orders of magnitude larger numbers of people will buy it in future.

Thus gold is not a ponzi. Nor are stocks. Stocks (like bonds) are bought because they return dividends from large scale economic activity. Sure there are speculators around the edges - there are in anything of value - but the core of it not a pyramid scheme. Bitcoin is precisely a pyramid scheme - most of the ones buying in now are buying in because think they're buying into the lower levels of a pyramid. I mean, these forums are full of that belief, openly stated as a reason to buy.

Exactly. When most of the posts on r/bitcoin and elsewhere are about how the value of bitcoin is sure to go up because eventually everyone will use it because its the perfect currency yet in the same breath to hold hold hold because the price is going to go up, something is amiss. The two thoughts are in perfect contradiction to each other, meaning bitcoin is a speculative asset with no actual value whatsoever and the only thing keeping the price up is the speculation of current investors---->ponzi.

I predict a spectacular crash of bitcoin to exactly its real worth....zero. Can't say when that will be but it's inevitable. You'll be seeing a lot of whining from people in those days about the difficulty of liquidating their position in bitcoin, I assure you.

This is exactly how you defined ponzi in post #22.

As for gold's uses and it's scarcity, I would imagine the ratio of gold held in reserves and unused (speculative) to gold used for ornamentation (utility) than the ratio of bitcoin held by people (speculative) to bitcoin used by people (utility).

I'd like to see a stat on worldwide gold holdings.

I'm confused you think I defined ponzi scheme in post #22. If you mean this

then I am really confused. This is the reason people invest in ANYTHING, including ponzi schemes. Does that make every investment a ponzi scheme? Lol?

The difference between companies listed on a stock index and bitcoin or other ponzis is that those companies most often produce things of real value and scarcity, and they have to go through a vigorous process of being listed, so as to PREVENT ponzi schemes being listed on the markets. Do some still get through? Absolutely. But most don't.

Bitcoin has the scarcity thing down I suppose, with its maximal production limit but it doesn't have the value. It doesn't DO anything well except, as I have admitted, remit across borders quickly and easily, and of course act as an excellent way of buying illegal things pseudonymously.

However, the reason it is valued so high is because people believe it will be widely used as a better currency at some point in the future than what we have now, and there is absolutely no evidence that it has, or ever will be. It is pure speculation. I don't know how long it will take for the majority of investors to see this; it could be 20 years and it could be 6 months, but it will happen. The most important point about bitcoin though, is that historically it has not been used as a currency. The vast majority of people invest in it because they believe one day it will be widely used as one. Ironically, the higher the price is, the less it will be used as a currency and the lower the price the more people will disinvest in it. This reason alone makes it doomed to failure, unless it finds some other widespread use to maintain its valuation.

bolded and underlined to aid you.

Here are the flaws in your post:

1) "People invest in it because they think they are buying a % of the worlds future reserve currency (lol) and that one day it will be so widely used and impossible to not use that it will be worth 500000, or 1000000 a coin or whatever"

Why does it need to be a reserve currency? How do you know this is why people invest in it? Bitcoin in it's current state is sh*t at being used as a currency. It doesn't scale. Off-chain solutions may exist, but as it is now, it is terrible.

2) "The problem is, it will never be widely used as a currency because it has virtually no utility over ACTUAL currency...No one within bitcoin of course realizes this yet, or is ready to admit it, because the fever of speculation is still running hot. Give it a while, pretty soon the fever will dissipate and bitcoin will crash. "

You decide because it will never be used as a currency and therefore will crash. Store of value, eg. gold, is a great use case for bitcoin and it is much better at it than gold.


3) All the late baghodlers will lose their shirts and the guys who got in early and out late will either make a ton or lose a little ==== ponzi.

Because it will crash based on your assumptions, it is a ponzi in your mind.

Gold obtains value from its desire to be used for ornamentation. Speculation and holding as an item of money/worth is a fraction of that use.





As another data point - from we know of central bank holdings, we know that they form a small fraction of the above ground gold in the world.

Right, the people at the top of ponzi schemes make money and lose a little lol. What's your point? That you know you are involved in a ponzi scheme with bitcoin but you're glad you were first into it? Guess I'm done here.

One thing to keep in mind with all of the bubble name calling is that a true bubble requires leveraged money and/or snowballing stakes. It's not until banks start loaning money to people to buy crypto that a burstable entity exists. Until then you can call it a Ponzi scheme, but not a bubble. Madoff ran a Ponzi scheme, the 2006 housing market was a bubble.

I don't think a dedicated crypto forum makes any sense at all. It would make more sense to combine BFI with another forum than it would to split it into sub forums.

I think the crypto market is just beggining. Of course the best time to get in here was 5 years ago, but the 2nd best time is now.

Neither bubbles nor ponzis nor pyramid schemes require leveraged money.

But don't believe me. 538 discusses this here:

https://fivethirtyeight.com/features...-bubble-didnt/

A bubble is merely a highly enthusiastic allocation of resources to something which fundamentals don't support. They can happen with or without debt, and given the sizes involved, usually without. The tech bubble is an example in which debt played no to negligible role.

As another example, many are arguing that Silicon Valley startup valuations are in a bubble as rich VCs and their investors are flush with cash to throw at a small number of viable ideas. There's no debt involved there.

People (no specific %, just has to happen?) have to be accruing debt to invest for something to be a bubble? This is total nonsense. Half the stocks on the market are bubbles waiting to pop after 7 years of extreme growth. Bubbles happen when market participants drive prices above their value in relation to some system of valuation. It is absolutely not contingent on indebtedness.

Behavioral finance theory attributes market bubbles to cognitive biases that lead to groupthink and herd behavior (sounds familiar to me).

When I hear bitcoin proselytizers talk out of both sides of their mouth, and then a select few (who obviously got in early) being honest about attempting to drive the price up so they can make loads of $, I can see bitcoin is not only a bubble, it's a ponzi scheme as well. Understand when I say ponzi scheme, I don't mean it was intended or created to be one, that it is a pure one, or that it is inevitable that bitcoin will never do anything in reality (it could do a few limited things, or in parallel universe # 6789446 circumstances could change enough that it would become widely used), it just so happened to morph into one, so you could call it a pseudo-ponzi, or a bubble with ponzi-like characteristics.

I'm pretty sure bitcoin was intended to be a ponzi/pyramid right from the beginning.
Nearly all viable ponzis and pyramids have some level of legitimate use, just hugely overhyped by the early buyins to get later naive money to keep buying.

+1 to OP

Ornamentation is just a flashy way of store of value, you can buy things that look like gold for a fraction of the price.

Generally in ornamentation gold is only 30-40% of the retail price. So I would say that is a terrible way to store value.

I think the more important reason is that it is shiny, and doesn't rust. And people generally wear jewelry because it looks expensive as a status symbol. This is why a watch with zero gold in it can sell for a huge price. Or why emeralds are popular as well.

Has anyone in this thread who believes that Bitcoin is a ponzi and/or pyramid scheme provided any such evidence for this argument? If anyone has actually done any studies on this, please show your homework, because if Bitcoin is in fact a ponzi and/or pyramid scheme I believe that the research you may provide would stand to make a tremendous amount of financial and professional gain from governments and regulatory bodies interested in possessing, for instance, mathematical (even if empirical) evidence that Bitcoin is a ponzi scheme.

I am not personally aware of any such reputable studies, academic, economic or otherwise that have argued from a philosophical or theoretical, or mathematical perspective that Bitcoin is unequivocally a ponzi/and or pyramid scheme. My research shows that the vast majority of actual studies, some of which I link below, appear to argue that at worst there are elements within the structure of how Bitcoin is exchanged between users as indicative of a ponzi scheme, but most eventually conclude with inconclusiveness.

Thus, I believe that it would be of high interest if any of you could produce such studies that can conclusively argue that Bitcoin is indeed such a scheme.

below, I show my homework. Links to papers, academic, policy et al. whove discussed and touched on whether or not "Bitcoin" is a ponzi and/or pyramid scheme. I deliberately do not show any links to "blogs" and "twitter economists" and "forum economists"

https://www.ecb.europa.eu/pub/pdf/ot...es201210en.pdf
http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.29.2.213
http://documents.worldbank.org/curat...df/WPS6967.pdf
https://www.sec.gov/investor/alerts/...currencies.pdf


I have CC'd this message to the posters in this thread who've claimed that Bitcoin is a ponzi.

Ye that's a good point.

Most people just use their heads. From page 2, of third one down...

Was bitcoin intended to act this way? I doubt it. Does it act this way? Go to /r/bitcoin and see for yourself lol.

Bitcoin is not a ponzi. Maybe you can argue it is a partial ponzi, but there is no mathematical way to show this for sure. Is gold a ponzi? Is the dollar a ponzi? Were tullips during the tullips bubble a ponzi? Is a stock that has value 100$ but is trading at 1000$ due to hype a ponzi?

Bitcoin has uses for the world, these uses give it a certain expected value. How high is this expected value? Nobody knows for sure. Some people think it is 50$, some people think it is 50000$. In the current world, if you look at people using bitcoin for its purposes it will be closer to 50$ than to 10K. However a lot of people whom bitcoin might be usefull dont know about it yet, and there are a lot of usecases that are not there right now, but might be there in the future. So there are a lot of speculators in the market right now that hold bitcoin as an investment. Are these speculators hyping up the price? Yes, for sure. Will they sell their bitcoin at some point and return to fiat money? Some of them will, but how many? Nobody knows (Personally I will keep some % in cryptos forever, as its the most convenient option for me that exists atm). If bitcoin crashes to 100$ tmrw and keeps trading at that prize forever would you classify it as a ponzi? I wouldnt classify it like that, I would call it a overvalued stock, or a bubble.

There are elements of ponzi schemes for sure , particulary in altcoins. People buy a coin, hype it up to their twitter followers and sell when the prize increases. However these coins still have a long term EV that might be way lower or way higher then the temporary bubble. Anyone can look up the whitepapers and decide for themselves what they think the EV is. Many of them are trading for 20X their true value but that doesnt make it a ponzi

from

It can be a ponzi without any intention whatsoever. Lots of people got super rich selling supplies to gold rushers. Was that a ponzi? It depends on your definition, but cryptocurrency, especially contemporarily, is acting very much like a ponzi. The people who got in early sell out when the price is high to people getting into it when the price is high, because they believe the price will go 'to the moon.' The earlier you got in, the better off you are. Nakamoto is currently worth a couple billion in bitcoin. Doesn't this sound absurd to you? Do you really believe that his coins are worth billions of real dollars? Honestly? How big of a selloff would it take to crash the price? What amount of bitcoins are even realistically liquidatable?

The thing is, its a growing piece of property. What if Alibaba or Amazon starts accepting Bitcoin? This bubble will get much bigger. People were doubting Bitcoin years ago when the price was $1 - $100 saying "OMG this is market is worth millions it has to crash hurry get out with profits."

The truth is its too big to dissapear, and overtime the graphs will uptrend due to people trusting it more, hearing about it, and just plain not wanting to park thier money in a bank trying to eek out %2 a year. Also we are progressing to a virtual world, eventually we WILL be able to transfer money with our minds! Haha.

The best time to invest in this ponzi was 5 years ago, ok. But the second best time is now. Now put everything aside and ask yourself DO YOU BELIEVE?

What if they accept ethereum instead, and diverge their marketplace to do contract transactions on top of purchases? What if they accept neither/never? People have both doubted and believed in bitcoin since the beginning, and people have also changed sides.

This is nonsense. Nothing is too big or trendsetting to disappear (betamax/8track/VHS/CDs/DVDs), nothing is too big (Myspace), and the fact that you say this makes me believe the bubble it at or near its peak and will crash soon, and that I should probably short bitcoin. (is there a way to do this?)