[HN Gopher] All Ponzi schemes topple eventually
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All Ponzi schemes topple eventually
Author : srvmshr
Score : 31 points
Date : 2022-06-19 17:33 UTC (5 hours ago)
(HTM) web link (www.theguardian.com)
(TXT) w3m dump (www.theguardian.com)
| str3wer wrote:
| i'm really tired of seeing every single year the same shit told
| by people that don't know anything about crypto, every single
| year it goes down and people say "the ponzi died", after a few
| months it goes back again and after a year it happens again, but
| people that still don't know anything about how crypto works
| still try to talk about them like they've been studying them for
| years.
| str3wer wrote:
| with the same logic you can also consider gold a ponzi scheme
| because if people starts mass selling it the price crashes
| srvmshr wrote:
| My financial understanding is rudimentary but please correct
| me if wrong: Isn't gold eventually a tangible wealth (and
| currencies being linked to it) unlike crypto which is purely
| a digital construct. Gold is a rarer metal & historically
| attributed to wealth over centuries. If gold & its reserves
| become meaningless then we have no basis for monetary
| exchange. We go back to doing barter trade.
| cinntaile wrote:
| The term digital construct is hiding that the value of gold
| is, just like bitcoin, a social construct. The digital part
| about it is to create artificial scarcity.
| setr wrote:
| At the end of the day, the use of gold as a store of value
| and medium of exchange is simply a social agreement that
| this is the case. There's nothing inherent to gold, except
| perhaps some useful properties like rarity, that make it so
| -- and if we all decide to stop believing that gold can be
| used for further exchange, then its purpose is immediately
| lost. There's nothing really stopping us from choosing
| another subject as that medium.
|
| Currency is largely a case of our particular choice isn't
| that important, we just need to choose one, and everyone
| needs to agree on it. You have examples of other choices in
| prisons, where cigarettes and ramen are used, and the USD
| when it dropped the gold standard.
|
| Crypto is just another choice.
|
| Of course, there are certain things you want in a currency,
| that make some choices better than others, so you can't
| just pick anything and say it's the same as anything else
| (e.g. gold standard has a problem in that you can't fully
| control the supply -- if a new mine is found, then you just
| have to deal with the consequences of it's existence; but
| this is less likely than say seashells. It won't kill its
| wielder's either, like say the choice of lead. Etc.), but
| you're still left with quite a variety of choices, and
| certain properties have different impacts at different
| economic scales.
|
| From that perspective, there's nothing really stopping
| crypto from being a valid choice. The issue is largely in
| whether it's a _good_ currency (it has useful properties
| versus other choices), and whether it's better enough that
| you can convince enough people to make the switch (you need
| people to believe that they get crypto from you, they can
| use that crypto to exchange with others).
|
| The story however gets muddled because currencies can also
| be used as a speculative asset, driven by your belief in
| crypto being convincing enough to get people to make the
| switch. And you can also believe in other's believing that
| it will switch, and bet on that. Which is where most
| speculation comes from -- not the belief in crypto itself,
| but in that others will believe in it recursively.
| sokoloff wrote:
| The thing that fiat currencies have going for them is
| they're the instrument needed to pay taxes in. So, even
| if you went to a system where toothpicks were the
| functional currency of your business endeavors, you'd
| eventually have to go buy some dollars (sell some
| toothpicks) to pay your property, employment, income, and
| other taxes.
|
| This puts a floor of demand to prop up fiat currencies
| that doesn't exist for crypto.
| nr2x wrote:
| You can also build things with it.
| nytesky wrote:
| The Venn diagram of folks skeptical of crypto and calling it
| a Ponzi who are big gold investors is a dot.
|
| Edit: for erroneous autocorrect of Venn
| cuteboy19 wrote:
| This is not true, plenty of crypto sceptics are not
| goldbugs, especially in a tech oriented platform like hn
| mgamache wrote:
| but most (not all) Goldbugs _are_ crypto sceptics
| cirgue wrote:
| Yes, and gold based investment schemes are where most of the
| hucksters plied their trade before crypto.
| hn_throwaway_99 wrote:
| OK, then here's a request. The thing most bizarre to me about
| the crypto space over the last 5ish years (defi, staking, blah
| blah) is that it always appears to be a "circle jerk" for more
| crypto. E.g. crypto is borrowed in one currency to ... buy
| crypto in a different currency.
|
| "Real world" finance exists, at least nominally, to fund real
| business activities. People put their money in banks, who in
| turn loan it out to real businesses that need capital to build
| shit and provide services. Speculators provide at least a
| useful counterparty to real businesses that need to hedge, e.g.
| farmers selling their product in the future or airlines that
| need to buy jet fuel.
|
| With crypto "finance", I don't hear about or see any of these
| types of activities - it's always just plowing money into a
| different crypto scheme.
|
| I would be more than happy to admit I'm out of the loop and
| just unaware of the real business value that crypto provides.
| If you have any examples I'd love to hear them.
| 88913527 wrote:
| Nobody is stopping you from using cryptocurrencies from
| funding legitimate business activities.
| cirgue wrote:
| Exactly. No one is stopping me or anyone else, but no one
| does because crypto is a shitshow full of opaque risk, and
| the whole point of a financial system is to make risk
| explicit.
| nytesky wrote:
| I assume the volatility of crypto work against it being used
| for real world finance?
| thfuran wrote:
| Well, it makes it great for use _by_ real world finance.
| hi5eyes wrote:
| all anyone needs to know is that bitcoin is the perfect ponzi.
| every 4 years it gets pumped, people forget about the ponzi,
| then they come back
|
| the ever diminishing supply and narratives, technical or
| otherwise, only serve the greatest ponzi with the simplest
| ponzinomics.
|
| dont have to overcomplicate a simple idea
| mgamache wrote:
| Then you should invest and reap the 4 year reward, what's the
| problem?
| jjtheblunt wrote:
| why do you think negative sentiment implies not knowing
| anything about crypto?
|
| some of us have crypto backgrounds of one or another type (NSA
| for example), and think it's overhyped.
| permo-w wrote:
| How long before the banks topple, then?
| mgamache wrote:
| Here's the punchline -- Robert Reich thinks something is a Ponzi.
| Can't keep a straight face.
| timoth3y wrote:
| I know it's a losing battle, but I'm going to tilt at this
| particular pedantic windmill.
|
| Not all financial scams are Ponzi schemes. Most are not. Ponzi
| schemes involve the operator deceptively using incoming funds to
| pay out early investors. Ponzi schemes are based on deceptive
| manipulation of cash flow not on price appreciation.
|
| If Bitcoin were an actual scam (and I'm not saying it is is) it
| would be a pump-and-dump. Most ICOs and shit-coins are clear
| pump-and-dumps.
|
| There is a huge variety of financial scams, and it would be a
| fiscally safer world if more people knew about them and could
| discuss them.
| hourago wrote:
| > "In the murky world of crypto DeFi, it's hard to know who
| provides money for loans, where the money flows, or how easy it
| is to trigger currency meltdowns. There are no standards for risk
| management or capital reserves. There are no transparency
| requirements. Investors often don't know how their money is being
| handled. Deposits are not insured."
|
| This should be a red flag for any investor.
| nr2x wrote:
| And green flags for a gambler. ;-)
| labrador wrote:
| And so castles made of sand
|
| Fall in the sea eventually
|
| - Jimi Hendrix
| dehrmann wrote:
| > It's time for the Biden administration and Congress to regulate
| crypto.
|
| I'm not too concerned one way or the other on regulating crypto,
| but the key difference between today and 1929 or 2008 is that
| crypto isn't a foundation of the economy. Regulation is probably
| at the right place right now because regulators are looking at it
| closely, but the blast radius of a collapse is (probably)
| limited, so they haven't acted on it.
| 3a2d29 wrote:
| I always find it funny when people call for regulation in
| crypto.
|
| I just spent the past few years having crypto bros explain that
| decentralized finance is better in every way. Now they are
| decentralizing it and letting the government control it?
| digianarchist wrote:
| I live in Ontario and all my crypto accounts bar Coinbase
| have been closed.
|
| Regulation working I guess.
| dehrmann wrote:
| There are a lot of reasons people get into crypto. A lot want
| to get rich quick and aren't concerned with if it's bitcoins
| or tulips. Some are smarter money trying to make money off
| dumber money. Modern bitcoin miners opportunists. Some use it
| for illegal transactions. Then there are the true believers.
| I think only the get rich quick crowd will the be one
| clamoring for regulation after see how much money they've
| lost.
| Proven wrote:
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