Bitcoin - the "gold will save us" ponzi scheme

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Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:41 pm


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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:41 pm

@DataPlumber

You hit many good points. Thanks for giving me a chance to clarify.

Occam's Razor says to choose an explanation for any phenomenon that has the least number of assumptions.

I have stated what I believe are the facts with the least assumptions, based on the data and evidence.

I am asking if someone can provide an alternative theory or explanation that has less assumptions. Count your assumptions.

Mine has no assumptions.  ;)

1. It is a ponzi scheme (whether transparent or not), unless the rate of price appreciatioin slows to be not so many multiples of the rate of REAL transaction growth.

2. He chose the design that maximizes this outcome, because the debasement is declining and fixed, this pushing people into all sorts of emotion valuations and it can encourages "the price can only go up" and reinforcing BUY BUY BUY effects. If you try to argue that he was emulating gold, then why did he make the duration of the geometric decline nothing like gold's millenia? Surely he knows the ponzi effect of compressing that into 2 decades. He even says this will appeal to the gold community, so it was a marketing ploy.

3. He was well aware, very sophisticated, very thorough, and the design is complex, so no choices would have been random.

4. Nobody had heard of him, he changes the entire P2P encryption research, then he disappears. THAT HAS NEVER HAPPENED. The statistical chance is 0 (winning the lottery). Besides, programmers never do this to a successful baby. Also does he not have any teachers, relatives, friends, parents? Who can keep someone so secret other than the NSA?

No assumptions at all in my statement of the facts.

Thus it is irrefutable as far as I can see. But you can try.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:42 pm

wtfvanity wrote:
yucca wrote:
BTC can potentially serve great utility.

IMO already has great utility.

But the linked document is not arguing against that. It is stating the fact that the relative ratios of utility for transactional goods & sevices is the vast minority compared to holding for appreciation in FX value.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:44 pm

@yucca, if you say Occam's Razor can't apply then you don't understand its utility.

If you think compressing a millenia of gold debasement into 2 decades can't drive speculative fever, then what can I say except I think you have no clue.

You could read this:

https://bitcointalk.org/index.php?topic=158106.msg1674264#msg1674264

@remotemass, what do you think puzzles me? I think I have it figured out.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:45 pm

Korbman wrote:
After reading this thread, I have come to the conclusion that the OP has no idea what a Ponzi Scheme entails.

christop wrote:
Proof: Speculation ≠ Ponzi.

Does it make any difference what you call it, if you've got a majority of predicting $100,000+ prices and the FX price is being driven by later investors without sufficient fundamental matching value in transactions velocity for goods & services?

I don't care what you call it, it is the characteristics of an exponential bubble that matter to the point I am making.

Playing semantic games as Satoshi did will fool the bitcoiners though.

christop wrote:
Korbman wrote:
So what's with the continued skepticism?

I suspect the skepticism stems from an obvious misunderstanding of what a Ponzi scheme is and seeing an apparent "bubble" forming. While it is true that Bitcoin value could come crashing down (whether that is likely or not is a separate discussion), it would be due to demand dropping relative to its supply. Remember, it doesn't have to be a Ponzi scheme for it to crash. Tulip mania, for example, wasn't a Ponzi scheme (there was no central operator).


Good to see someone is astute here.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:47 pm

The long-term[1] and short-term[2] expectations polls, both show extreme ponzi valuations. And interestingly bitcoiners aren't as interested in the short-term 2017 time-frame. Their expectations skew is Bitcoin will overtake the world long-term. Speculative investments shouldn't be valued extremely long-term— too many variables change. Any seasoned investor knows this.

What you have here, is Satoshi cleverly hoodwinked goldbugs (knowing their psychological weakness) think that Bitcoin  has the properties of gold (but it does not!), and so these naive investors pile in long-term thinking it changes the world. This has NSA finger prints all over it.

Besides gold has never been a superior currency nor investment over long-term. Go dig into my links, I have all the historical data to proof of that claim.

REALITY CHECK!

[1] https://bitcointalk.org/index.php?topic=158122.0
[2] https://bitcointalk.org/index.php?topic=158125.0

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:49 pm

DataPlumber wrote:
Shelby wrote:
Mine has no assumptions.  ;)

You can't be serious?  Read your post out loud to yourself.  Listen critically.

Shelby wrote:
It is a ponzi scheme.

You keep using that word.  I don't think it means what you think it means.

Enumerate what you think are the assumptions, then I will clarify your misunderstandings.

I don't care what you call it, I described the reality above. Name it what ever you want. You can call it "ZOOZOO" for all I care.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:50 pm

jing_troop wrote:
remotemass wrote:
I think you actually mean 'puzzle scheme'
You sound very puzzled  ;D

Ponzi scheme has a very specific structure and what we're seeing here, especially the appreciation and depreciation cycle of the BTC as an element of valuation and tradeability itself, makes BTC an element that COULD be part of a ponzi scheme the same way that fiat can, but no different than fiat in that regard.

Very different than fiat because of the debasement rate relative to the market cap.

This is why we are seeing $1 billion valuation expectations.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:50 pm

It makes no difference to me if there is a central operator or not (obviously there is not), because it doesn't affect any of my claims about outcomes or causes.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:51 pm

DataPlumber wrote:
New topic: Any counter-proof that Shelby did not design this thread as a massive troll?

Can you please stay on the facts?

I am waiting for you to enumerate what you claimed are my assumptions.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:51 pm

When you've lost the logic (al debate), you pull out the strawmen.

One of key attributes of a ponzi scheme (or call it exponential speculative bubble if you prefer, e.g. Tulip mania and South Seas Bubble), is the value portion is so tiny relative to the expectation, and the expectation of never-ending rise ("sky is the limit" type valuation).

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:53 pm

Sorry you lose.  ;)

christop wrote:
Shelby wrote:
When you've lost the logic, you pull out the strawmans.

One of key attributes of a ponzi scheme (or call it exponential speculative bubble if you prefer, e.g. Tulip mania and South Seas Bubble), is the value portion is so tiny relative to the expectation, and the expectation of never-ending rise ("sky is the limit" type valuation).

One of the key attributes of water is that it is a liquid at normal atmospheric pressures and temperatures. Oil is a liquid at normal atmospheric pressures and temperatures, therefore oil is water. LOGIC FAIL.

Maybe Bitcoin has one or more of the key attributes of a Ponzi scheme, but it does not have all key attributes of a Ponzi scheme (ie, a central operator).

Can we both agree that you believe Bitcoin is some type of scheme but not a Ponzi scheme specifically? We're getting hung up on you insisting on calling it a Ponzi scheme when it clearly is not one.

It has all of the attributes of a ponzi scheme as defined by wikipedia.

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

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going.

And Satoshi's very clever psychology ploy of making goldbugs think that Bitcoin is like gold (when in fact it has none of gold's qualities) and his designed system continues to act as a "hub" which is fooling the investors.

The promoter sells shares to investors by taking advantage of a lack of investor knowledge or competence

In a Ponzi scheme, the schemer acts as a "hub" for the victims, interacting with all of them directly. In a pyramid scheme, those who recruit additional participants benefit directly. (In fact, failure to recruit typically means no investment return.)

An economic bubble: A bubble is similar to a Ponzi scheme in that one participant gets paid by contributions from a subsequent participant (until inevitable collapse). A bubble involves ever-rising prices in an open market (for example stock, housing, or tulip bulbs) where prices rise because buyers bid more because prices are rising. Bubbles are often said to be based on the "greater fool" theory. As with the Ponzi scheme, the price exceeds the intrinsic value of the item, but unlike the Ponzi scheme, there is no single person misrepresenting the intrinsic value.

And he has run away with the initial money, as Wikipedia says:

The promoter vanishes, taking all the remaining investment money

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:53 pm

DannyHamilton wrote:
This guy has been running around bitcointalk for the past 24 hours shouting "Ponzi Scheme",  "Scam", "Designed to fail", etc.  He has his own crypto-currency he is pushing (AnonyCoin or something like that).  You are wasting your time responding to this troll.  Th best thing you can do is click "Ignore" and walk away.

Hey pumper, address the facts.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:54 pm

I see the three[1] STFU votes switched to Yes, ostensibly after I linked to this page from the bitcoin SE Q&A, pointing out the "fingers in ears, nananan" skew in the poll. Don't worry, I am still counting you as STFU.

----------------
[1] is 6 at time of copying here

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:56 pm

Korbman wrote:
Shelby wrote:
It has all of the attributes of a ponzi scheme as defined by wikipedia.

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

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going.

But Bitcoin doesn't pay a return to its investors, nor is there a central person/place/thing who "entices new investors by offering higher returns"...soooo how is this relevant? HINT: It's not relevant. That's why it's not a Ponzi..and also the reason everyone thinks you're trolling

Yes it does pay a return in the form of appreciating price which can be cashed out via FX, just as some investors were cashing out of Bernie Madof's scheme, but he tried hard to promote and keep them fooled, just as you are doing now by perpetuating Satoshi's clever "gold is better" delusion (given Bitcoin doesn't even have gold's debasement schedule nor other properties).

There is a hub, it is the single copy of the longest block chain.

And troll is what you call someone who you are losing the argument against.



Korbman wrote:
Shelby wrote:
Hey pumper, address the facts.

...Coming from the guy who registered his account yesterday.. ::)

Is promoting to change bitcoin to make it more stable a pumper?

You can search the developer area for "StableCoin". I am not the first to propose this.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:58 pm

christop wrote:
Shelby wrote:
In a Ponzi scheme, the schemer acts as a "hub" for the victims, interacting with all of them directly. In a pyramid scheme, those who recruit additional participants benefit directly. (In fact, failure to recruit typically means no investment return.)

People who buy into Bitcoin for whatever reason do not interact with Satoshi or other early adopters directly (except when Satoshi or other early adopters buy or sell Bitcoins to other people).

They are still interacting with his "gold" promotion:

http://bitcoin.org/bitcoin.pdf#page=3

It hasn't moved since the day he announced it on the cryptography mailing list (wow was he well organized!) I admire the guy, except for the bad outcome coming.

christop wrote:
Shelby wrote:
And he has run away with the initial money, as Wikipedia says:

The promoter vanishes, taking all the remaining investment money

If the promoter has already vanished, then by your logic of calling it a Ponzi scheme, Bitcoin should have collapsed already. But has it collapsed? No? Well that's because Bitcoin doesn't need a central promoter to sustain its value.


He has vanished physically and due to the anonymity of Bitcoin (damn this guy was clever!) he can still be around without being around.

His promotion lives on without his physical presence.

This is the first case of someone doing an anonymous extension of the ponzi.

I ADMIRE HIM, but as I said, I suspect the NSA is behind this, not only one person.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 1:59 pm

wtfvanity wrote:
christop wrote:
Proof: Speculation ≠ Ponzi.

Excellent point.

Were people calling gold, silver, and google stock ponzi schemes while their values sky rocketed?

Gold, silver, and google aren't/weren't 100 to 200 times their floor value.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:00 pm

christop wrote:
Also from that Wikipedia article that you are relying on:

Similar Schemes:

An economic bubble: A bubble is similar to a Ponzi scheme in that one participant gets paid by contributions from a subsequent participant (until inevitable collapse). A bubble involves ever-rising prices in an open market (for example stock, housing, or tulip bulbs) where prices rise because buyers bid more because prices are rising. Bubbles are often said to be based on the "greater fool" theory. As with the Ponzi scheme, the price exceeds the intrinsic value of the item, but unlike the Ponzi scheme, there is no single person misrepresenting the intrinsic value.

If Bitcoin were overvalued, it would be an economic bubble rather than a Ponzi scheme. Bitcoin is an open market. A Ponzi scheme is not. Bitcoin has "no single person misrepresenting the intrinsic value." A Ponzi scheme does.

If you want to gain any credibility, stop calling it a Ponzi scheme.

Why do I have to repeat myself are you blind?

They are still interacting with his "gold" promotion:

http://bitcoin.org/bitcoin.pdf#page=3

It hasn't moved since the day he announced it on the cryptography mailing list (wow was he well organized!) I admire the guy, except for the bad outcome coming.

And don't tell me that investors in Bernie Madoff where not bringing in other investors for him.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:01 pm

christop wrote:
Shelby wrote:
wtfvanity wrote:
christop wrote:
Proof: Speculation ≠ Ponzi.

Excellent point.

Were people calling gold, silver, and google stock ponzi schemes while their values sky rocketed?

Gold, silver, and google aren't 100 to 200 times their floor value.

In your mind, what is the threshold for something to be called a "Ponzi scheme"?

It requires some white lie. The pseudo-lie is that bitcoin is anything like a commodity currency or gold.

Then it requires some level of exponential valuation where it can't possible happen due to the law of nature that large things grow slower.

I think people will have to dig into details and justify that case.

The key here is the trajectory. With a currency, we know that if dormancy is not decreasing while the price is exponentially increasing, then the greater fool effect is kicking in.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:03 pm

Peter Lambert wrote:
Shelby wrote:
The long-term and short-term expectations polls, both show extreme ponzi valuations.

I see links to two very unscientific, self-selecting polls with small sample sizes. Basically useless.

Agreed except not totally useless when factored in with other information, such as the lower-bound of 60% dormancy, which means it is in reality much higher do to sending to self and FX not being goods & services.

Peter Lambert wrote:
The short term and long term expected value of bitcoins is currently 75 USD per BTC. That is what the market is telling us. Some people may be overexcited and expect to make 1000% returns, but if the overall consensus was that the price would be over $1000 in a couple years, then the price would quickly correct to over $1000 now.

That is not correct. Try to cite a reference on that, you won't find it. You can't project the current market price as the future market price, you need discounting, such as a future's market. Geez, learn what an option is.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:03 pm

DannyHamilton is one of those guys who can only see his nose.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:04 pm

Peter Lambert wrote:
Except bitcoin does not pay any returns. Therefore, it does not fall under the definition of a ponzi scheme you are trying to shoehorn it into.

I already refuted that. Go back up thread and read.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:05 pm

Holliday, if you want to make a valid point, try again plot a relative chart [of Bitcoin Days Destroyed] to marketcap (M x P) rise. Then you will see it going the wrong direction.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:06 pm

Peter Lambert wrote:
Shelby wrote:
Peter Lambert wrote:
Except bitcoin does not pay any returns. Therefore, it does not fall under the definition of a ponzi scheme you are trying to shoehorn it into.

I already refuted that. Go back up thread and read.

You didn't refute it though. Ponzi schemes pay out some amount to those invested in the fund, like a dividend type payment. Bitcoin does not do anything like that. Buying bitcoin is only a ponzi in the same way that buying gold is a ponzi.

I wish you would bother to read Wikipedia:

returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent

Where is the profit of Bitcoin?

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:07 pm

GCInc. wrote:
OP has a point for theorizing that an authoritative agency may have designed Bitcoin in order to relieve the fools [people] of their money.

This is an advanced conclusion not without merit. When one gets his bitcoin out of his ass, it would actually make as much sense as a super genius Satoshi devising world-changing monetary system by himself for the benefit of society, and then disappearing for good.

Thinking NSA, however, is naive in an obnoxious US-emphasized way. It would be something way larger. Just as naive is debating about the definition of ponzi. That's where the OP is wrong, and he's losing his own red thread because of that.

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