Quote from: fxsurfer on February 06, 2018, 08:28:28 AM

When I presented arguments like the one in the the video below, people just ignored them. Now, they will learn the hard way what it means to be a part of a Ponzi scheme.

I will assume you are arguing from a point of good faith, and want to have a discussion on this matter. I will address your points before I explain why bitcoin is not a Ponzi.

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Bitcoin And Cryptocurrencies - Ponzi Schemes Dressed Up And Sold As Money
https://youtu.be/gcNngl8fCUY

EDIT:

okay I watched it, it is oversimplified to the point of being wrong. numbers are abstract concepts not physical things. 2 apples are apples, the thing is the apple.

The numbers stuff at the start is over simplified and misses a lot of extra information. for example it does not cover the number zero. this number represents two completely different mathematical concepts. first - it represents nothing. as in 6 - 6 = 0. second (and this is why we dont use roman numerals) it represents a place holder amount of some multiple of 10. i.e. 1, 10, 100, 1000. Then you have 0/0, or 10/0, or 0/10 these are all different mathematical objects. (this list is not exhaustive, just some examples)

It does not cover negative numbers. these are even more abstract and harder to understand than 0, yet essential to their argument of debt. however they get around this with their ledger example by using headings labelled "assets" and "liabilities"

seeing as their premise is twisted to suit their narrative I am going to ignore the video and address your points instead.

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Why bitcoin is a Ponzi scheme:

In a banking system all money comes from debt. So when new money, dollars for e.g., are created, in the same time, some individual, company, or organization became legally obligated to pay these dollars back.

Can you explain who is obligated to pay back monies printed by quantitative easing? This is a very important point and a fundamental of bitcoin. so much so it is in the coinbase of the first ever mined block. - rule 1 of bitcoin

Also, how does fractional reserve banking work..? where do those dollars come from? they 100% do not exist, they are just numbers on a screen. yet real dollars have to be made to pay them back. can you see the issue with this? you understand this is rule 2 of bitcoin.

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That's the nature of debt - it must be paid. In other words, every dollar that is currently in circulation, must eventually be returned to FED or commercial banks.

again, who has to pay the dollars for the subprime loans? those dollars don't exist. that money can never be returned. more money is owed than is in circulation.

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That means that those who received dollar loans and put dollars into circulation are forced to get these dollars back by selling their goods or services to people who have dollars.

not sure of your point, I think you are misunderstanding the "dollars must be accepted as settlement for debt" part of legal tender. Dollars have to be accepted otherwise the government would not have control of its own economy. you can accept other things, but you must accept dollars, or instruments representing dollars. but I might be misunderstanding your point

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Otherwise they will fail to make necessary loan payments and as a result they will be taken to court and the banks will seize their property.

where did the money to pay back the loan defaults on the sub prime market come from? what about securities (ie a house) that become negative equity? just because a property is seized doesn't mean dollars magically appear, especially when they never existed in the first place. like I said before your premise is false.

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So due to the fact that dollars come from debt and debt must be paid, people who have dollars do not have just a piece of paper with some numbers on it, but instead, they have legally enforceable rights to goods or services of people who received the loans.

No, you must accept dollars as a minimum for repaying debt. I could ask for skittles... Also note cheques, postal orders and postage stamps are all legal tender for settlement of debt. are they Ponzi schemes?

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Fiat is therefore a legal instrument that grants its holder with legal path to restore the intrinsic value in some economic goods.

we don't use the gold standard anymore, or am I missing your point? What is the intrinsic value of a dollar bill and where/who can I reclaim that from? [I'm from the uk, and it says on our notes "I promise to pay the barer on demand the sum of x pounds" This is a direct reference to its gold value. in theory I could go to the bank of England and demand 10gbps worth of gold. obviously this is now just tradition.]

isn't gold a strong counter example to your point about debt and fiat? Is gold a Ponzi too?

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Cryptocurrencies on the other hand, didn't originated from debt, so nobody is legally obligated to use them to repay the debt, which is why cryptocurrency holders have nothing but empty numbers. And if a situation occurs where nobody wants to accept cryptocurrencies in exchange for goods and services, no legally enforceable right exist upon which they can get some kind of value out of them.

Does gold originate from debt? your paragraph here is completely true, but I have never seen anyone ever claim otherwise with bitcoin. you cant force someone to accept bitcoin as settlement for debt, but so what? you cant force someone to accept gold as settlement for debt.

How about if someone DOES want to accept cryptos in exchange for goods, how does that make anything bad? do you own any alpaca socks? just because it is not government based and not debt based doesn't mean it has no value. Barter is still legal. again I think you are conflating "you must allow debts to be settled in dollars" with "debts must be settled in dollars." they are not the same. The second statement is a false statement.

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Hence, all that these people have is hope and faith that someone will exchange their numbers for fiat money or economic goods, which is by definition a Ponzi scheme.

What? really? No that is investment, and risk. I have hope and faith that someone will exchange my computer skills and cryptography skills for fiat money or economic goods. Is working a job by definition a Ponzi scheme? you don't know what a Ponzi is or you don't know what the word definition means.... Now I am starting to think you are arguing in bad faith. Still hopefully this post will help someone.

https://www.merriam-webster.com/dictionary/Ponzi%20scheme

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Definition of Ponzi scheme
: an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks

Can you please show how bitcoin fits this definition of a Ponzi...

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Why cryptocurrencies never were and never can be money: cryptocurrencies don't have value on their own and as such they cannot serve as a measure of value.

again utility can be used as a measure of value, like toothpicks. just because I may not see that value, or it may not have any direct bearing on my life it does not mean it doesn't for someone else.

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A measure of value is pretty simple concept. It expresses the value of one thing in terms of another. In principle anything that has value on its own can serve as a measure of value. For example a toothpick. Although the intrinsic value of a toothpick is very small it is not zero since toothpick has practical utility.

cryptos have very high utility, just because you cant see it or understand it, it doesn't stop it from being there. I don't know how to fly a plane, I can still understand that it has value.

Have you ever managed to buy a meal with toothpicks?

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On the other hand, in the case of cryptocurrencies, besides having zero intrinsic value they are not legally connected to property. In other words there are no enforceable contracts or collateral behind them. There is no legal claim that is measured with them. There is no right which is granted to their holders. All there is, is open source software which generates stores and transfers empty numbers between members. Given the fact that number is an abstract mathematical object thet has no value on its own it is impossible in principle for cryptocurrencies to serve as a measurement of value. This is the reason why crypto currencies never were and never can be money. Also this is the reason why their price is so volatile unstable and can jump from few cents to several thousand dollars. Since they have zero intrinsic value and no legal connection to property their price depends entirely on the number of people that enter into the scheme.

cryptos are not a zero sum game. ponzis are. stocks can have volatility, why is that proof it is a Ponzi?

and there can be enforceable contracts, you are just making stuff up now. The main purpose of a government is to enforce private contacts. those contracts can be about cars, houses, bitcoin, sheep, who will win the football, etc

So the whole point of this is "I don't understand why people value cryptos, therefore they are a scam!". All the stuff you outlined above is true, but it doesn't stop it having utility. and utility has intrinsic value (think work has value), it is just not the same a fiat. this is the whole point of crypto.

im not claiming anything magic about bitcoin in this i am just showing how you are wrong with your claim. im open to discussion though.

edit: despite what a lot of bitcoin and crypto advocates say, crypto is meant to compliment the banking system, not replace it - imho.

cheers,

steve

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