BITCOINERS, please help me to understand.

[Dan O]

28 minutes ago, ozimoron said:

You simply don't understand what the concept of a ponzi scheme is. It isn't any asset that you can buy or sell once. A ponzi scheme pays a regular return on investment. Like interest in a bank.

I understand perfectly well. What you fail to understand is the concept behind it. Your fixating on the word Ponzi not the concept of it. Maybe you should read up on what a Ponzi scheme is as what you just described is not completely accurate. 

It is based on a non existent enterprise or "investment" that has no asset base. The original scheme based on the man named Ponzi used money's paid in from later investors to make it appear the nonexistent enterprise was profitable and would continue to increase in value causing others to continue to invest based on that perception of continued increasing value, based on nothing. Bitcoin is a non existent enterprise without an asset base to back it up.

 

As I mentioned earlier bitcoin is very similar to a combination of Ponzi Scheme and Pyramid Scheme. If you don't like those words change them to something else but maintain the meaning behind the concept. That's my opinion, sorry but we'll just have to disagree on this. 

 

There's really nothing more to explain or discuss on this. 

[eisfeld]

2 hours ago, Dan O said:

it's extremely close to being a combination of a Ponzi scheme and Pyramid scheme

Bitcoin is even further removed from a Pyramid Scheme than a Ponzi Scheme. Please write which exact features of Bitcoin make it either of these. I really don't see it. Also if it's "close to" then by definition it is not. Can't be a little bit pregnant. It either is or it isn't. We can discuss it being a mania, I can also entertain the idea that it doesn't have intrinsic value but lets not label it as something which it is not. Ponzi and Pyramid have clear definitions and they don't apply to BTC. I'm not trying to hype BTC, I'm just trying to present a *factual* view on it.

 

2 hours ago, Dan O said:

This is a circular discussion and isn't easily discussed and explained in a forum like this.

I'm pretty sure Bitcoin can be explained in a forum like this. Don't see why not. Text is text.

 

2 hours ago, Dan O said:

I believe I gave you the credit in your explanation but now your trying to mix different types of investments as a comparison leaving out the one main factor you even mentioned yourself.

You say I am contradicting myself but how can you say I left out the main factor that I even mentioned myself? Now *that* is a contradiction.

 

2 hours ago, Dan O said:

There is no asset behind it other than perception. With art, gold, land, stocks bonds etc.... any other item you pick there is an asset that is supporting that value, rightfully or wrongfully value wise, ie: my idea of what a painting is worth is different than you BUT there is still a painting involved. Granted the value may fluctuate but there is still an asset their of some value. 

But that's the crux of the matter right there! With water or fruits there is some clear value in the asset for myself outside of trade and we can establish a rough baseline on it. What's the value of some painting? Who the frick knows! Maybe it has some sentinmental meaning to one person and maybe it's complete rubbish to another. The value is decided by how much another person is willing to pay for it and that's completely up to them - they make up a number out of thin air according to how they feel about it.

 

2 hours ago, Dan O said:

With bitcoin you have NO asset to back it worse case other than the perception implied in the bitcoin\digital market as long as the next guys in line are convinced it's a great investment. so we'll just have to disagree about it.

The value of Bitcoin would go *up* if the next guy always thought it's a great investment. The price of an investment is factoring in future gains and risks.

 

I think you didn't see my point. My point is that the price of *any* asset, be it some made up virtual fantasy NFT crap or of a bar of gold is decided by supply and demand. Some assets have a minimum residual value and some don't. Bitcoin has none. That does not mean that Bitcoin *right now* has no value, clearly it has because people are buying it.

 

2 hours ago, Dan O said:

Not quite true as banks are insured at least to some limits and have assets on their books that carry value even if they fail whereas crypto does not.

I think you missed what I said again. I didn't say Bitcoin and traditional finance are the same in every way, clearly they are not. I said some aspects are shared between the systems, aspects that many overlook in the latter one. Note how I am not saying your last statement is wrong, just that it does not make mine not true. PS: you can get insurance for some crypto currencies as well.

[eisfeld]

51 minutes ago, Dan O said:

I understand perfectly well. What you fail to understand is the concept behind it. Your fixating on the word Ponzi not the concept of it. Maybe you should read up on what a Ponzi scheme is as what you just described is not completely accurate. 

It is based on a non existent enterprise or "investment" that has no asset base. The original scheme based on the man named Ponzi used money's paid in from later investors to make it appear the nonexistent enterprise was profitable and would continue to increase in value causing others to continue to invest based on that perception of continued increasing value, based on nothing. Bitcoin is a non existent enterprise without an asset base to back it up.

Here are the charecteristics of a Ponzi Scheme from Wikipedia:

 

Quote

In a Ponzi scheme, a con artist offers investments that promise very high returns with little or no risk to their victims. The returns are said to originate from a business or a secret idea run by the con artist. In reality, the business does not exist or the idea does not work in the way it is described. The con artist pays the high returns promised to their earlier investors by using the money obtained from later investors.

Bitcoin is *not* promising any returns. Some crypto gurus, some youtube bros might do that. But Bitcoin itself does not. Neither its inventor nor the core devs did. And so it is *not* a Ponzi.

 

It is *you* who is hung up on calling it a Ponzi and now Pymarid scheme.

 

51 minutes ago, Dan O said:

As I mentioned earlier bitcoin is very similar to a combination of Ponzi Scheme and Pyramid Scheme. If you don't like those words change them to something else but maintain the meaning behind the concept. That's my opinion, sorry but we'll just have to disagree on this. 

 

There's really nothing more to explain or discuss on this.

Ponzi and Pyramid schemes have clear definitions. Something is such a scheme or it's not. If you like to say it has no value then fine. If you like to say it has a lot of shills and fraudsters, fine. I'd also agree that it is a high risk asset and most people should probably stay away from it.

 

If you explain which characteristics from the definitions of a Ponzi or Pyramid scheme Bitcoin fullfils then I will concede. Until then I'll continue to discuss on this topic and try to explain things in a factual matter to the best of my ability, thank you very much.

 

Edited April 18, 2023 by eisfeld

[Dan O]

I've already explained it well enough and if the concepts are not ringing with you then fine.

 

If you choose to view it differently then by all means go right ahead.

Your arguments are circular so you are obviously well enough versed to make your own decisions

[lkn]

On 4/13/2023 at 6:28 AM, eisfeld said:

Nothing is directly backing Bitcoin in terms of physical assets. This is also the case for the Baht, Dollar, Euro or pretty much any other fiat currency since the backing with gold was abandoned

This is not really true. Banks have balance sheets, when they issue money it is a liability and they need a corresponding asset to balance it.

 

For example if the ECB “prints” 100M euros, what they actually do is buy bonds for 100M and pays with money they “printed”, but this money is now a liability for them, but as they now hold 100M worth of bonds, it is effectively backed by those bonds. These bonds could be mortgage backed securities, so effectively they hold 100M worth of real estate to back the 100M euro they issued.

 

Central banks will hold a mix of assets, such as government bonds, mortgage backed securities, and foreign currencies.

 

Bitcoin on the other hand is nobody’s liability.

Edited April 18, 2023 by lkn

[ozimoron]

29 minutes ago, lkn said:

This is not really true. Banks have balance sheets, when they issue money it is a liability and they need a corresponding asset to balance it.

 

For example if the ECB “prints” 100M euros, what they actually do is buy bonds for 100M and pays with money they “printed”, but this money is now a liability for them, but as they now hold 100M worth of bonds, it is effectively backed by those bonds. These bonds could be mortgage backed securities, so effectively they hold 100M worth of real estate to back the 100M euro they issued.

 

Central banks will hold a mix of assets, such as government bonds, mortgage backed securities, and foreign currencies.

 

Bitcoin on the other hand is nobody’s liability.

Gold is nobody's liability either. There is no difference between the way bitcoin and gold are traded in terms of the market forces which make them move. In fact they tend to follow each other in price action. The fact that you can touch gold but not bitcoin is an irrelevant difference.

[eisfeld]

1 hour ago, Dan O said:

I've already explained it well enough and if the concepts are not ringing with you then fine.

 

If you choose to view it differently then by all means go right ahead.

Your arguments are circular so you are obviously well enough versed to make your own decisions

I've asked you to list the characteristics of Bitcoin that match the definition of Ponzi/Pyramid schemes. You haven't. You just explained repeatedly that you think it is such a scheme but not exactly why. I've listed the definition for a Ponzi and showed that they don't apply to Bitcoin. If you have actual arguments why I'm wrong then please go ahead. I'm open for them, really. I don't think it's a matter of opinion or seeing things differently. There's clear definitions and something matches them or doesn't. I also don't understand which of my arguments are circular. Clarifications welcome!

[ozimoron]

8 minutes ago, eisfeld said:

I've asked you to list the characteristics of Bitcoin that match the definition of Ponzi/Pyramid schemes. You haven't. You just explained repeatedly that you think it is such a scheme but not exactly why. I've listed the definition for a Ponzi and showed that they don't apply to Bitcoin. If you have actual arguments why I'm wrong then please go ahead. I'm open for them, really. I don't think it's a matter of opinion or seeing things differently. There's clear definitions and something matches them or doesn't. I also don't understand which of my arguments are circular. Clarifications welcome!

I gave up after he insisted the wiki definition was mine. You can't reason with that sort of logic.

 

Then there was this piece of word salad

 

"Block chain software and mining equip mean nothing to it's value. That's about as close to a Ponzi scheme as you can get."

Edited April 18, 2023 by ozimoron

[eisfeld]

1 hour ago, lkn said:

This is not really true. Banks have balance sheets, when they issue money it is a liability and they need a corresponding asset to balance it.

 

For example if the ECB “prints” 100M euros, what they actually do is buy bonds for 100M and pays with money they “printed”, but this money is now a liability for them, but as they now hold 100M worth of bonds, it is effectively backed by those bonds. These bonds could be mortgage backed securities, so effectively they hold 100M worth of real estate to back the 100M euro they issued.

 

Central banks will hold a mix of assets, such as government bonds, mortgage backed securities, and foreign currencies.

 

Bitcoin on the other hand is nobody’s liability.

Right. Your *deposit* at a bank might have assets backing it but at that point you have lent the money to the bank. It's not your money anymore. Your bank book is basically an IOU where the bank promises to pay you that amount on demand. That's the exact same thing when someone deposits Bitcoin in some exchange. At that point it's not their Bitcoin anymore and the exchange has a liability and asset as you correctly stated. To be clear: it's not the currency that you deposited that is backed up. It's the loan you gave the bank that is backed to some degree by some kind of assets.

 

I would agree that central banks are usually much more trustworthy and stable than crypto exchanges. The system of fractional reserve banking though also means that a lot more fiat money can be put into circulation than is actually backed by hard assets like cash. It can be a low single digit percentage.

 

Note also that the liability to you as a depositor is in that currency. If the currency tanks than what do you get back? And that's what I mean by the currency itself not being backed by anything. The government or central bank doesn't guarantee you that for $1M in deposits you will get 1 standard house.

 

Let's take the Argentine Peso as an example. It lost something like 90% I think? What does it mean that the central bank of Argentine has some mortgaged backed assets behind this? It just means that those mortgages got massively devalued. It did not help bank depositors in a meaningful way.

Edited April 18, 2023 by eisfeld

[lkn]

29 minutes ago, eisfeld said:

To be clear: it's not the currency that you deposited that is backed up. It's the loan you gave the bank that is backed to some degree by some kind of assets […] Note also that the liability to you as a depositor is in that currency. If the currency tanks than what do you get back? And that's what I mean by the currency itself not being backed by anything. The government or central bank doesn't guarantee you that for $1M in deposits you will get 1 standard house.

What you write is not wrong, but I am talking about creating money, not just simple deposits in a regular bank, which you are correct, would be no different than depositing/lending bitcoins to a third party (which is subject to solvency requirements, i.e. the need to have assets valued at least the same as their liabilities).

 

Money (very simplified) is created when we lend money, for example I want to buy a house, so a mortgage backed security is created, this is (indirectly) “sold” to a central bank that prints the amount of money I need to buy this house, but in return gets security in my house.

 

This increases the money supply, and over the next 20 or so years, I will pay down my mortgage, which in theory decrease the money supply again, and eventually the central bank’s liability (to me) will be zero (the money they issued to pay for my mortgage backed security), and I will be the full owner of the house (so the asset is removed from their balance sheet, but so is the liability, as I paid back the loan).

 

You are right that nobody can go to the central bank and demand a fraction of a house for a 100 dollar bill, even though the dollar bill (amongst others) is backed by real estate. However, you can demand foreign currency for your dollar bill, and also, the Federal Reserve and ECB both have as their goal to keep price stability, so in that sense, a 100 dollar bill does have sort of a fixed value based on their inflation targets and basket of goods that are used to measure inflation (and yes, I know inflation is currently higher than their target).

 

You can’t demand foreign currency for a bitcoin (but if you are lucky, someone will buy your coin for foreign currency), nor does anyone work to ensure price stability.

 

46 minutes ago, eisfeld said:

Let's take the Argentine Peso as an example. It lost something like 90% I think? What does it mean that the central bank of Argentine has some mortgaged backed assets behind this?

Central banks also buy government bonds, so in the case of the Argentine Peso, this was backed more by the government’s ability to service their debt, i.e. pay the interests associated with these bonds bought by their central bank.

 

But even though some central banks do a terrible job at keeping price stability, or staying solvent for that matter, does not mean that regular fiat money is not backed by anything, it is, just, if your money is backed by bonds issued by a government that doesn’t have enough tax revenue to pay the interests on these bonds, then the value of this money is headed toward zero.

 

Also worth mentioning here that the Peso losing 90% of its value (or whatever it lost), has a good explanation, small currency fluctuations are hard to explain, but larger moves can generally be explained by the actions of the issuing party, or the credit worthiness of those who issued the assets held by the issuing party (and which back the currency).

 

Many crypto proponents think that crypto is the next step in currency, but in many ways, it is really taking us back to a bartering system where the crypto coins you hold are no longer credits, but instead just commodities that you hope to be able to sell in the future.

[lkn]

1 hour ago, ozimoron said:

Gold is nobody's liability either. There is no difference between the way bitcoin and gold are traded in terms of the market forces which make them move. In fact they tend to follow each other in price action. The fact that you can touch gold but not bitcoin is an irrelevant difference.

There is the difference that gold does have demand beyond pure speculation, i.e. gold will never drop to $0 because it can be used for electronics, jewelry, and fillings.

 

But as an investment, yes, gold and bitcoin are pretty much the same thing, and I would put neither in my investment portfolio.

[pomchop]

On 4/12/2023 at 1:45 PM, 2baht said:

It's like horse racing, sometimes your horse wins, sometimes it loses!

and for 99% most often your long shots will not finish in the $$.

[Neeranam]

15 hours ago, BobBKK said:

I'm still a believer  ????  the court case will give it a pump whatever happens. Good luck in all things. 

Gensler has to go. What a complet utter, corrupt idiot.

 

 

[Dan O]

7 hours ago, eisfeld said:

I've asked you to list the characteristics of Bitcoin that match the definition of Ponzi/Pyramid schemes. You haven't. You just explained repeatedly that you think it is such a scheme but not exactly why. I've listed the definition for a Ponzi and showed that they don't apply to Bitcoin. If you have actual arguments why I'm wrong then please go ahead. I'm open for them, really. I don't think it's a matter of opinion or seeing things differently. There's clear definitions and something matches them or doesn't. I also don't understand which of my arguments are circular. Clarifications welcome!

You apparently get hung up on the use of the words Ponzi and Pyramid without understanding or grasping the concept behind them, which is that in both scenerios there is no value asset supporting them (key and primary similarity) other than a perception they have value and the hope that everyone purchasing behind you continues to have that same perception.

 

Since that's the case I can't help you and there is no purpose to try. You continue to try to make comparisons of other asset bearing investments as your justification which is completely off base. That shows if you don't see the stark difference between an asset based investment having value connected to the assets and it's hopeless to explain any spatial concept to you. 

 

That's your world and you can live there I don't. End of story.

 

If you cannot grasp that simple concept of no asset supporing value then I cannot explain it in a manner acceptable to you (which I've already done more than once) I am over this conversation on this.  Have a great day 

[Seppius]

6 hours ago, Neeranam said:

Gensler has to go. What a complet utter, corrupt idiot.

 

 

Funny, I was just going to post and ask you if you had been following this.

 

They destroyed him, They are getting worried he is driving the industry out of America, sorry to harp on, but can only be good for xrp/ripple case

 

[Hummin]

The two most important questions to be answered is, who made BTC and why? 

[Seppius]

 

[Pink Mist]

A troll post has been removed.

[eisfeld]

10 hours ago, Dan O said:

You apparently get hung up on the use of the words Ponzi and Pyramid without understanding or grasping the concept behind them, which is that in both scenerios there is no value asset supporting them (key and primary similarity) other than a perception they have value and the hope that everyone purchasing behind you continues to have that same perception.

I think I understand them well, they are very simple. The issue is that you take only some part of the necessary requirements for something to be a Ponzi or Pyramid scheme and then say it is one. There are more requirements than having no residual value or legit business behind it and that later investors hope of later investors supporting the price.

 

A key requirement in the Ponzi case is that there is a fraudulent promise of future gains. That does not apply to Bitcoin.

 

A key requirement in the Pyramid case is that a investor needs to sell it to 2 or more other investors. Again this does not apply to Bitcoin.

 

I'm not hung up on the words, you are hung up calling Bitcoin these words. Just stop and I wont have to point out that you are wrong on this point. Simple as that. I hope the above made it finally clear.

 

I really don't understand why you are so stubborn. Look, I agreed with you that Bitcoin has no residual value should a panic occur. All I'm interested in is to provide fact based view on that. We don't need wrong terms to make Bitcoin look bad, there's enough proper ways to do that.

 

It's like you are calling a thief a murderer while I point out he's not a murderer but you then saying I am missing the point and I don't understand the concept because he is a criminal and I should not be hung up on words. We can agree he's a criminal but we really can't call him a murderer if he hasn't killed anyone.

 

10 hours ago, Dan O said:

Since that's the case I can't help you and there is no purpose to try. You continue to try to make comparisons of other asset bearing investments as your justification which is completely off base. That shows if you don't see the stark difference between an asset based investment having value connected to the assets and it's hopeless to explain any spatial concept to you. 

You keep saying my comparisons are off base or wrong. But please tell me *why* they are wrong. Don't just say I am wrong, I don't understand yada yada. If you don't bring forth fact based arguments then I can't take what you say at face value.

 

10 hours ago, Dan O said:

That's your world and you can live there I don't. End of story.

 

If you cannot grasp that simple concept of no asset supporing value then I cannot explain it in a manner acceptable to you (which I've already done more than once) I am over this conversation on this.  Have a great day

But I have not argued that there is a what you called supporting value behind Bitcoin. I have just argued that Bitcoin is not a Ponzi or Pyramid scheme. Not sure what's unclear about that. I wish you also a great day ????

Edited April 19, 2023 by eisfeld

[eisfeld]

4 hours ago, Hummin said:

The two most important questions to be answered is, who made BTC and why? 

I don't think these two questions rank very high. Who cares? If Hitler invented Bitcoin does that make Bitcoin intrinsically evil? What if it was invented by Ghandi? Would that make it intrinsically good?

 

The thing is: Bitcoin is a rather simple concept. If it were a really complex one then maybe I'd agree one should look at hidden agendas but it's so simple that there really can't be anything hidden in it. And so we just need to look at its mechanisms and effects to judge if it's good or bad or anything in between.

[ukrules]

21 hours ago, Dan O said:

That's my opinion

Your opinion is wrong but noted.

[lkn]

3 hours ago, eisfeld said:

A key requirement in the Ponzi case is that there is a fraudulent promise of future gains. That does not apply to Bitcoin.

There seems to be no shortage of people claiming bitcoin is a great investment, there were even superball ads like “fortune favors the brave [so invest in crypto]”.

 

That said, more commonly, I think ponzi is “defined” as the gains coming from new investors, rather than underlying economic activity, which is true of bitcoin, i.e. if you made $200 in profit from bitcoin, it is only because a new investor bought your coin for $200 more than what you paid, hence your profit is from a new investor, and if that new investor also wants to make a profit, he needs to find a greater fool to buy his coin for more than what he paid…

 

It’s true though that it is not a 1:1 with your typical pyramid or ponzi scheme. It’s much closer to something like the Beanie Babies fad. I think people start to call it a ponzi is because so many claim it is a good investment, not realizing it is (at best) a zero sum game.

Edited April 19, 2023 by lkn

[eisfeld]

6 minutes ago, lkn said:

There seems to be no shortage of people claiming bitcoin is a great investment, there were even superball ads like “fortune favors the brave [so invest in crypto]”.

 

That said, more commonly, I think ponzi is “defined” as the gains coming from new investors, rather than underlying economic activity, which is true of bitcoin, i.e. if you made $200 in profit from bitcoin, it is only because a new investor bought your coin for $200 more than what you paid, hence your profit is from a new investor, and if that new investor also wants to make a profit, he needs to find a greater fool to buy his coin for more than what he paid…

That some people are shilling an asset does not make the asset a Ponzi scheme. If some people run a Ponzi scheme using gold then gold itself is not a Ponzi scheme. It's the scheme that these people run.

Most Ponzi schemes use for example USD. Is USD now a Ponzi scheme? Obviously not.

 

By your second definition of a Ponzi (the same definition Dan O uses), Rolex watches are a Ponzi scheme as well. The value of limited edition models only goes up because a new investor pays more for it than you did. And he invests in it because he thinks he can get more from a future buyer. Therefor future investors pay earlier investors gains. There is no economic activity by the Rolex while an investor sits on it. Is Rolex running a Ponzi scheme? Nope.

 

In order for something to be classified as a Ponzi scheme, *all* criterias have to be met. Just fulfilling a main one is not enough.

[lkn]

2 hours ago, eisfeld said:

In order for something to be classified as a Ponzi scheme, *all* criterias have to be met. Just fulfilling a main one is not enough.

Where are you getting this from? The term originates from Charles Ponzi and is commonly used about schemes where “investors” think their gains are from some underlying enterprise, but in fact, their money is from new investors.

 

Countless of people do not realize that gains from selling crypto is from new investors, so if it walks like a duck… though if you have some authoritative definition of ponzi, do tell.

[Pink Mist]

Bickering posts removed. Please continue on-topic.

[thaibeachlovers]

On 4/13/2023 at 11:28 AM, eisfeld said:

Also the only way for bitcoin to lose value is by people losing "faith" in it. Some kind of panic. Now, Bitcoin itself can't have something like a bank run because your coins can't just disappear like in a bank unless you keep them in an exchange (just don't). What could tank the value possibly is if governments were to ban it. There is also the eventually deflationary aspect to it that guarantees that over long timeframes the price has to go up as it becomes more scarce. This is the core reason why many think it's value will go up, and that in turn brings in all the other "investors" that don't understand much but don't want to miss out either.

Sooooo, something that can just vanish because the government bans it?

Wow, I should go spend all I have to get into that!

[eisfeld]

13 hours ago, thaibeachlovers said:

Sooooo, something that can just vanish because the government bans it?

Wow, I should go spend all I have to get into that!

Fair point. There definitely is a risk of governments banning it though at this point probably not very high anymore. In the US the government has moved to regulate it. In Thailand we've seen support from the government to establish a regulated cryptocurrency trading market. Anyways even without a possibility of the government banning it I'd never suggest to spend all one has into a risky investment like that. Most people are better off with a S&P500 dollar averaged strategy over a long timeframe or something similar safe and less volatile.

[Rimmer]

Another Bickering baiting post removed

[Sametboy2019]

On 4/18/2023 at 3:58 PM, BobBKK said:

Suppressed - but I could be wrong - let' see I have a bucket load

Myself also. Maybe not a bucket but at least a cup

[BobBKK]

16 hours ago, Sametboy2019 said:

Myself also. Maybe not a bucket but at least a cup

We won't know until after the case is settled. If it does not get up to at least $3 within days I will reduce to a cup as it's not worth having a bucket full (100k). It's a punt but it seems logical to me that as they cannot be bought easily in USA and have been delisted on many exchanges that it won't fly after that changes. That's on top of the utility.