I read an article of a man that had many thousands of dollars of bit coins on
his hard drive then mistakenly disgarded the hard drive and unless the drive was
found the bit coins were unrecoverable.I don't understand them.
I'm curious to learn how they actually work.
The reason you think Bitcoin looks like a Ponzi scheme is because you don't
understand Bitcoin, and apparently you don't understand what a Ponzi scheme
is either. Point #1 could be any financial opportunity. Is the internet a Ponzi
scheme? Was Apple stock a Ponzi scheme? Why not? Early investors made big gains.
Point #2 isn't even a point really, unless it's meant to be a point
about groups in general. Yes, groups tend to do things together...as groups.
Points #3 and #4 are essentially the same point reworded, and neither applies to
Bitcoin. The Bitcoin protocol is open-source. Anyone can view it, use it, or
modify it however they wish to. The fact that no one knows the exact identity of
the person who first came up with the idea is meaningless to the question of
Bitcoin's usefulness or honesty. Do you know who invented the wheel? No?
Yet you can take a wheel, verify that it is indeed round, and test for yourself
that it rolls. The same applies to Bitcoin, only it is more complex and
therefore requires more effort in understanding.Please look up
"Ponzi scheme", because you are grievously abusing the phrase.
re: 2 bitsA pyramid scheme you say? Like Fractional Reserve banking
used by the Fed & US financial institutions?
The wealthy Chinese trying to avoid the communist government will make it the
@: bits"It's not a 'Ponzi scheme'... it's a
'pyramid scheme'..."It's also illegal. Only the
government (federal) can create money. This per the US Constitution.
How much is it in Canadian?
It's not a "Ponzi scheme"... it's a "pyramid
scheme"... there's a difference. One is legal, the other
isn't.It's kinda like the stock market. The value of the
stock certificates are base only on what people are willing to pay for them
today (no intrinsic value).
It smells exactly like a Ponzi scheme to me. If Bitcoin wanted credibility, they
should tie each unit to a specific unit of currency, e.g., a serial number on a
dollar bill. Then they could exchange money at will and make something off the
float. What they're doing now is simply a scam.
The difference we seem to be losing sight of is that, in spite of the hype, we
need not have anything to do with it, and will not be any the worse for it.
The hallmark of a Ponzi scheme is the use of new investor money to pay old
investors. The other factors listed sometimes accompany a Ponzi scheme, but they
do not define it.
Those involved in finance and investment often completely misunderstand Bitcoin.
It is an experiment in a decentralized consensus system. The consensus of the
public ledger is done with no central authority which is a fundamental change in
the way things have been done. As for Bitcoin itself it is a currency, payment
system, and a commodity. All these things have to be taken into account when
evaluating Bitcoin as well as the fact that it is still experimental. Also,
whatever happens at Bitcoin exchanges really have nothing to do with Bitcoin
itself as they are just private companies and do not issue Bitcoin. As for the
investment part, you are dealing in a mostly unregulated experimental system and
most of the major players repeat over and over that people should not invest
money that they cannot afford to lose completely.
"Almost no information is available about how the scheme is generating
gains."Good point. With coinage there is what's called
Seigniorage which is the value of a minted coin over the cost to mint. If if
costs one cent to mint a nickel, the seigniorage is four cents.With
bitcoin the seigniorage seems to be one hundred percent since there is not cost
'mint' the 'coin.' So, who gets to retain that value? With
the nickel the US government retains the four cents in net value.