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Cryptocurrency Exchange Vircurex To Freeze Customer Accounts
Powercntrl (458442) writes "Vircurex, an online exchange for Bitcoin as well as other cryptocurrencies is freezing customer accounts as it battles insolvency. While opinions differ on whether cryptocurrency is the future of cash, a Dutch tulip bubble, a Ponzi scheme, or some varying mixture of all three, the news of yet another exchange in turmoil does not bode well for those banking on the success of Bitcoin or its altcoin brethren, such as Litecoin and Dogecoin."
are frequently criminals.
Don't complain about syntax, grammar, or spelling. There is no.hell like input on android.
I suspect the only reason no other comments are showing up yet, (at least for me) is that all the bitcoin fanboys are desperately trying to cash out their reserves before the bubble pops.
But it might just be another case of Slashdot being fucked up.
It's the people, goddammit!
In comments about the BitCoin exchanges in China, that this _is the norm_ for exchanges or wallets here, and if you're keeping any money in any BTC storage or transaction services in China, expect to get fleeced. Just another day another dollar for these sneaky bastards.
This is nothing new, the new thing is that the news is covering all the bitcoin exchange drama. Bitcoin is designed specifically so people have the choice of whether to trust 3rd parties with their funds, force of habit due to the fiat systems is causing people to put undeserved trust into these exchanges. They will learn as their fingers get burnt.
That's not the definition of a Ponzi scheme, jackass.
Vicurex is tiny. They only did US$30,822 of business in the past 30 days. The corner pawnbroker is probably a bigger business. The corner gas station definitely is.
Bitcoin may be a future currency (though I doubt it is The Future of Currency). It may be a very bad high risk investment (though calling it a Ponzi scheme would be giving the players far too much credit). Whichever it is, or wherever in between, it is no more or less what it was in the (nearly imperceptible) wake of Vicurex's failure.
Stop-Prism.org: Opt Out of Surveillance
They're relatively easy to come into possession of early on. But later, it will be very difficult to obtain these invisible objects and they total number of these objects is limited! So act now! Buy them up quickly before they are worth more than you can afford!
I have no vested interest at all in increasing the value of these invisible objects, save for the fact I have several thousand of them in my personal possession!
Please be sure to send me actual money for these as they most certainly will be more valuable than real money in good time!
Any organization that attempts to provide exchange services between 'hard' currencies and an inflating virtual currency is doomed to insolvency in terms of the hard currency. The operations of such an organization will always amount effectively to a Ponzi scheme when viewed from the hard currency point of view. A little thought experiment: an exchange takes in $100 for 100 v-coins valued at $1 each. The v-coin value inflates to $2 and the investors decide to exchange their v-coins back to dollars ... how many v-coins can be exchanged before the exchange is insolvent? HALF! DUH! The moment a virtual currency becomes established enough to be treated as a valid investment it is doomed to increase its pace of inflation and then collapse. This can only be avoided if the exchanges charge fees that are greater than the future inflation rate. However if they do this, the virtual currency's advantages will quickly be less than simply trading in the original currency ... so what's the point?
Saying that an exchange like this going going bad means Bitcoin is failing, is like claiming a small corner bank failing means the end of the U.S. dollar is nigh.
The exchanges dying is good for bitcoin, because the bad ones will be replaced by more solid and upright entities.
Dogecoin started as a joke, remains a joke, and should be treated as a joke.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
We're talking about problems involving drug dealers, drug addicts, and the currency of choice for criminals.
No surprises that it's been nothing but an endless chain of fuck-ups.
Nor does he seem to grasp what "scarcity control" is.
I'd note that the question of the solvency/stability of a Bitcoin exchange has as much bearing on the viability of Bitcoin as a currency as the question of the solvency/stability of say Bank of America has on the viability of the US dollar as a currency. I can keep Bitcoins in my own wallet on my own computer just like I can keep dollars in my own wallet, use both to pay for things, and never be worried about whether any particular exchange or bank will go belly up. And if I choose an unstable institution to store my currency for me, I run the risk of losing my money whether it be Bitcoins or dollars or yen. The only reason banks don't deal with cryptocurrency is that, unlike most currency, cryptocurrency has a mathematical underpinning that makes it difficult for them to loan it out to other people and make money off it while you aren't actively using it.
It's a trifle astonishing to watch how persistently people line up to make the same mistake with their crytopcurrency-of-the-moment again and again.
In theory, cryptocurrencies are secure-through-math and don't rely on flyblown banking institutions and so on, (and, in fairness, they have a decent track record as software goes); but their properties only apply if you use them correctly.
If you give the actual crypto keys that correspond to your cryptocurrency units to me, and I give you an account at First Bank of Fungus with 'X cryptocoins', guess what? From the perspective of all the neat math, I own the coins, and enjoy whatever properties they possess, and you own a not-particularly-distinguished private-label IOU, which offers absolutely no security by design, and probably quite limited security-by-legal-force.
Basically none of the special properties of cryptocurrencies extend beyond your personal grasp on them, and the surrounding institutions are... dubiously stable.
Copied and pasted from the Bitcoin FAQ, since the site seems to be broken at the moment:
Is Bitcoin a Ponzi scheme?
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.
A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.
So, basically the same as stock exchanges and future markets.
I am becoming gerund, destroyer of verbs.
making money without working for it
How many of them on the Congressional Hill work for the people who pay them their salaries ??
The last two POTUS also never had the interest of the Americans in their minds.
Muchas Gracias, Señor Edward Snowden !
Copied and pasted from the Bitcoin FAQ,
So, according to a website biased in favor of Bitcoin, it is not a Ponzi scheme. And you don't see any problem with that.
Although your analysis is completely accurate, it's not surprising to see so much criticism of Bitcoin whenever exchanges collapse, and the reason isn't hard to identify. The developers and leaders of the Bitcoin community are almost totally silent on the stupidly insecure architecture of the exchanges and how this harms Bitcoin's reputation, and their silence gives tacit approval to the continued use of such a broken exchange model.
Why are they silent? There must be a reason why they choose not to criticize the design of the exchanges in the very strongest of terms, and the most likely one is that they profit from the exchanges operating, and maybe even from their collapse. Not surprisingly, this fuels highly critical speculation about their motives.
This highly negative perception of Bitcoin is only going to get worse, unless respected Bitcoin leaders make it crystal clear that the exchanges are a disgrace and a liability to the Bitcoin community if they continue to operate as centralized proxies instead of adhering to the original distributed security model.
So, basically the same as stock exchanges and future markets.
Not really.
Yes, if you buy Bitcoins and then the price goes down you lose money, just like with stocks and futures. However, most of loses with Bitcoin has not been from normal trading activity. Almost all of the losses have been from the Bitcoin exchanges stealing people's money. That's very rare with stocks and futures due to regulation specifically designed to prevent that sort of thing. I'm not saying it never happens, but it's rare.
Not if it's not wrong -- and nobody who has ever said that to me has been able to explain why it was wrong.
Maybe you'll be the first. Can you explain why that FAQ entry is wrong, and explain what it is about Bitcoin that makes it a Ponzi scheme?
Do you really think there's no value in being able to move money around? To make payments to people who aren't in the same room as you?
If so, then I disagree; I believe that's useful. A lot of people use services to make payments online, so I don't think popular opinion is with you either.
By definition a true exchange should never lose your money. You can lose your money, but they won't. An exchange is a barter system, you trade X for Y. Legitimate exchanges charge for a "seat" on the exchange, a percentage of the transaction, or both. However, they never just take your money. They may require that you put money in escrow to cover your position but this is set aside, usually drawing risk free interest (or as near as you can get to it) unless you specify otherwise.
No one should be able to prevent you from putting your money into unregulated vehicles/investments but if consider it any more than gambling and expect any protection then you're an idiot. In the US, gambling is actually more regulated than bitcoin transactions (at this time). If you hand off your "wealth" (of any kind) to any unregulated, un-vettted nob who managed to register a TLD then I would like to discuss a long-term, can't lose investment in the Brooklyn Bridge with you.
Let me repeat this. If you just hand over your wealth to someone with no legal safeguards in place, you're a dumba$$. Clear?
Could someone explain why people put bitcoins in an exchange? I mean isn't the point of bitcoin that you have a copy of the blockchain on your own computer?
Used to be, some years ago now, you could go onto Ebay and sell those Wu's Fighting Gauntlets for $4-5. The difference between those gloves and bitcoins is: bitcoins are absolutely useless against giant spiders the size of small huts.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
or high frequency traders...
HFT is much less profitable than it used to be. They made money by squeezing inefficiencies out of the system, but once everyone else was doing the same thing, that doesn't work anymore
Are there other inefficiencies within the trading system that are still awaiting to be ironed out ?
If so, what ?
Do you really think there's no value in being able to move money around? .
Actual bitcoin transactions are extremely small when compared with the hype. Any look at any bitcoin forum proves that nearly everyone is involved as speculators. They're all looking for a bigger sucker to come along and buy their "investment". It might not be a classic ponzi scheme, but it reeks of a huge pump=n=dump.
In any case, bitcoins need only to be of minimal value to support the amount of network transactions needed. If they were $1 each, it would still work fine. The value (theft potential) is entirely based on hype and speculation.
Cryptocurrency is a platform and the exchanges are an app built on the platform. The security problems have been with the apps built on the platform. The peer to peer architecture is not what is being exploited. Its reckless abandonment of P2P for client server.
Seastead this.
The (purely virtual and irrational) value of bitcoins are highly dependant on demand. More than normal currencies.
Bitcoiners remind me of religious cultists pretending that everything is alright, nothing ever wrong and you should be enlightened by buying into Bitcoins. All while everything around them burns and falls apart.
While its not a classic ponzi scheme, it certainly is stupid to buy and invest in bitcoins these days.
And to compare early cult members (bitcoin syphon anyone?) with investors is laughable at best. Without recruiting news believers those bitcoins would be the worthless bits they are.
All this can be done with real money. And contrary to bitcoin trash, real money is accepted everywhere.
Contrary to nerd tunnel vision, most people don't have bitcoins, don't know what bitcoins are and most shops do not accept bitcoins. For a very good reason.
Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
It depends on this sentence being true and so far it does not seem stable nor widely accepted.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
I wonder if that FAQ says anything about pre-mining.
Bitcoin became popular in no small part because many people believe government-backed currencies are overregulated or poorly managed. Because there was a market demand for a non-government-controlled currency, Bitcoin took off. Other things definitely played bigger roles, but being unregulated was a feature, not a bug.
To an extent they were right. It's very difficult to handle money electronically without a middleman, and there are few enough middlemen that the costs can be prohibitive. That's just one thing that an unregulated currency could do better - there are dozens more, but they would be a bit complex to explain even though they boil down to "a managed currency can be ruined by bad management".
But an unregulated currency is also inherently risky, at a much lower level. Nobody with brains is saying that Bitcoin isn't risky to use. Bitcoin exchanges and banks will continue to fail, or be scams, or so on. While never good, they are a sign at least that the currency is working as designed - uncontrolled by any governing body. And eventually things may stabilize - the intense speculation is likely the driving force behind many recent failures and scams.
Is it worth it, to have a currency that is beyond the reach of all but the most oppressive of governments? I think it is, but that's a question that's subjective enough that there is no wrong answer.
That's a biased source and I disagree. Look up Ponzi scheme on wikipedia (or anywhere) then compare it to Bitcoin for an unbiased perspective.
Personally I see it as a scam baited for geek - deliberately preying on people like us and those we work with. However I'm biased just as a sheepdog being asked about wolves would be biased.
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.
So they're not promising anything, therefore they can't break their promises. This does not affect anything about how the scheme actually works.
A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
This assumes that the "usefulness" actually exists and is beneficial. So far, Bitcoin hasn't been stable, fast, or widely-accepted, so the win-win scenario they propose isn't actually possible. I can just as easily say that by everyone giving me all of their money, society will benefit because I will donate everybody's money all at once to a charity, reducing the charity's overhead costs.
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.
This is true, because the FAQ writer doesn't seem to understand what a Ponzi scheme is in the first place. In a Ponzi scheme, the investment capital of latecomers is used to pay the returns of the early investors.
When you invest in a company, your money is pooled with everyone else's to run the company. The company also has a pool of profit, which is often split proportionally for dividends. You can also get a return by selling your stake in the company to someone else who wants to be involved. At no point are investments used to pay out returns to earlier shareholders.
Bitcoin as a whole fits the Ponzi scheme pattern, because at the exchanges the money used to pay off the early miners comes directly from people now buying coins. Since the Bitcoin market is so much smaller than the price of the Bitcoin supply, the main mechanism that external value comes into the Bitcoin economy is by investors trying to get into the scheme for its high (not-guaranteed) returns.
The only real distinction between a Ponzi scheme and Bitcoin is that Bitcoin has no single master, that we know of. Ponzi schemes usually have a single person or small group promoting the investment. Bitcoin doesn't have any organized leadership, but rather relies on the self-sustaining marketing buzz of zealots. That makes it a better fit for an economic bubble, rather than an actual Ponzi scheme.
You do not have a moral or legal right to do absolutely anything you want.
Are you attempting to claim that Bitcoin is a scam because there are people pulling scams with it? (In so much as "gambling on something with a volatile price" is a scam.) This is like arguing that US dollars are a scam because Charles Ponzi pulled his eponymous scam using them.
Bitcoins can actually be of any value and Bitcoin will still function just fine. The price is completely irrelevant, which means it doesn't matter if there's hype, speculation or whatever driving the price up (or down). Your $10 transaction is still a $10 transaction, whether it happened to use 10 BTC or 10 mBTC behind the scenes.
Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
It depends on this sentence being true and so far it does not seem stable nor widely accepted.
interestingly it actually fails all its own tests. It isn't stable, certainly isn't fast or inexpensive and it most definitely isn't widely accepted. and assuming the early people will benefit from rise in value sounds dangerously close to being a Ponzi, the only thing saving them from being one is they aren't making a guarantee on the rise.
and exactly what is stable about bit coin? Certainly not it's value, and that one fact makes it almost useless as a currency today.
Sorry, teleporters just kill you and then make a copy. A perfect, soul-less copy.
Do you really think there's no value in being able to move money around? To make payments to people who aren't in the same room as you?
If so, then I disagree; I believe that's useful. A lot of people use services to make payments online, so I don't think popular opinion is with you either.
and what does bitcoin add that isn't already possible with the existing system? I can do all of that without bitcoins, don't get me wrong I see plenty wrong with the existing monetary systems and the way they are manipulated, but bitcoin adds absolutely nothing while taking away plenty of the benefits and safeguards.
Precisely. The BitBelievers cannot actually defend (and in most cases I am finding, don't actually understand it enough to be able to do so), so they mire down in semantics trying to talk about everything but the facts of the matter.
Just the fact that a pro-BitCoin site has that question up as a FAQ is pretty telling on its own, written with slick marketing tricks, to boot.
I guess we need to start being ultra-specific for the BitBelievers. It is a Ponzi-like scheme. Broken down to its fundamentals, ignored in that FAQ question, a Ponzi scheme is generally understood to be a money making venture that is wholly dependent on new folks coming into the scheme in order to continue to fund the upper levels. If folks stop buying into the bottom, then things dry out all the way back up the chain until it fails.
That is precisely how BitCoin operates. It's just a new twist on it because it masquerades as a currency. Instead of trying to convince you that you are buying into something, it is quite up front about the fact that it's based on nothing. If folks stop bringing in legal currency to the BitCoin system by using it to purchase BitCoins, BitCoins become worthless. While the BitBelievers insist that it can be spent quite readily, it's a joke and everyone knows it - one can spend a dollar at literally millions of places, you can spend BitCoin directly at what, a few hundred? Maybe a thousand? The BitBelievers will then tell you about BitCoin ATMs, which, again, ignores the fact that when you use a BitCoin ATM, you are using it to pull legal tender out in order to be spent. It's worthless if one cannot turn it into legal tender (one way or another).
That's what makes it a Ponzi-like scheme, because if no one continued to exchange legal tender for BitCoin for people who have BitCoin, they have no intrinsic value on their own. It's based on nothingness. That's why that FAQ is so disingenuous - if people stopped trading Apple stock tomorrow, Apple stock is still worth money because people still buy Apple products. You would be stuck with the stock itself but you would collect dividends based on the performance of the company and the percentage of profit you get as a stockholder. BitCoin's only product is itself, and is wholly dependent on the willingness of people to give someone legal tender for the right to own a virtual property. Since BitCoin doesn't produce income aside from more people buying into the scheme, they can wrap it up any way you like, but it's still based on nothingness.
Just look at the curt, pithy replies from BitBelievers - they know this train has gone off the rails, so that's really all they can say. With MtGox they proclaimed that it was just a poorly run business, and their talking points (I swear they must distribute them like Fox News does) were "it hadn't been the go to exchange for quite some time". Now that another one has fallen into insolvency, and another domino has hit the table, it's already becoming harder to defend, hence the growth of childish retorts because it's getting increasingly difficult to deny that the motion behind the fall of MtGox wasn't the start of the domino chain falling, but an isolated incident.
Now it's clear that MtGox may have been the first to go because indeed it was run poorly, but that it didn't fall solely because of how poorly it was run as the BitBelievers would like to think.
I'll be very curious how history looks at this very strange episode - in some ways, it's quite predictable that something like this would happen as it's happened over and over throughout human history (if prostitution is the oldest profession, parting a fool from their money must run a close second), but on the other hand things like this usually target the weak, the old, the infirm, those who are easy prey. In this case, a lot of very educated, erudite folks were taken in - I guess that will just go to show that the lure of a quick buck is more deeply imb
If you said "real money" to mean bank notes or coins: yes, except not really. Giving some notes to somebody on another continent is an expensive business that involves flying over to them. I guess you could mail them through the post, but I don't see many people doing that.
Yeah, you're right, people don't have bitcoins and don't know what they are. That's how things should work; most people won't interact with bitcoins themselves, they'll do so via payment processors. For instance, these guys will take payments for you, and deposit dollars or euros into a bank account of your choice. On the customer side, the payment will be done by a similar provider who takes a credit card, bank transfer or whatever and makes the Bitcoin payment for you. Neither the customer or the merchant need to know anything about the protocol used to move money between their respective processors. This is similar to e.g. bank payments, where you can pay a bank account belonging to a different bank without knowing anything about the interbank protocol.
Bitcoin has no read backing. So far, the bitcoin exchainges have done nothing but "shut down" and take what you think is money.
It's decentralized. There's no controlling entity that can tell you who you can or cannot pay.
Another thing it allows you to do is change which company you use for payments, and yet still make payments to all the same people you could before. If you want to buy something from somebody that uses Paypal to take payments, then you're kinda stuck with using Paypal. With a Bitcoin-based system, you could pay them via a different company.
This is like asking "what's the point of SMTP when we have Gmail?"
It's actually just about stable enough, but okay... if I make an investment in a company and the company hasn't become successful yet, was I scammed? Personally, I don't think the answer to this question is "it hasn't made me money so far, so yes" -- I think the answer depends more on whether the company was scamming me or not, and just because a particular investment hasn't been profitable so far isn't enough to make it a scam. In fact, even if the investment never becomes profitable, it doesn't necessarily mean the investment was a scam, it just means the investment failed.
"It hasn't reached its goals so far" isn't enough, by itself, to make Bitcoin a scam.
So I'm not a capitalist or anything, but as I understand it HFT provide a market for people who wan't to buy or sell trades. Back before HFT, people had to go to established market makers, which would be large entities that hold on to large amounts of stock. This would not be held speculatively, but rather to harness the arbitrage opportunities in the difference between selling and buying price. These guys used to "skim" 10% of the price every time people traded, and they were old white guys, established players that could leverage their reputation and historical position to print money. HFQ now takes the place of market makers in many trading venues, and take much less off the top, as the rely on the frequency of trades.
So like I said I'm not a capitalist and I don't think that HFQs are really good. But they are no different than other elements of the capitalist system, and seem much fairer than what they replaced. This is kinda like when people complain about short selling. In a market, pricing is a mechanism to ensure the efficient production of goods across society. Without short selling, there is no mechanism to drop prices in capitalism. It isn't making money off of failure (well no more so than any element of the capitalist economy) it's providing a necessary pricing function.
They are ACTING BEFORE Alice or Bob can which is why it is a TIME BASED man in the middle attack.
There is another significant distinction between Bitcoin and a Ponzi scheme. In a Ponzi scheme, you put money into it with the expectation of getting more money out than you put in. In Bitcoin, you don't do this -- or rather, nothing in Bitcoin will tell you that you can.
If you can point to the bit of Bitcoin that attempts to give you this expectation, then great: please do so. However, please don't point at a person pulling a scam involving Bitcoin -- that would be like pointing to Charles Ponzi to explain why the US dollar is a scam. Similarly, please don't point to all the speculators: they are essentially the same thing as Wall Street day traders, and they don't make the US dollar a scam either.
Bitcoin is a payment network. To make a payment using Bitcoin, you buy some bitcoins on an exchange, then you send them to the seller, who sells them on an exchange. Where is the scam in all this? You paid your $x, the seller got his $x. That's not a scam, that's mission accomplished.
Can I send you a string I claim to represent a currency and you give me US-dollars or GBP for it? Just believe me. I will find others who believe me too. It's a real currency then isn't it?
As a currency Dogecoin's a joke, but as a community they've done some pretty cool things. Like donate their mined coins for resale to the tune of 30,000 dollars in a day for an animal rescue.
That was pretty impressive.
Hitler started as a joke, was treated as a joke by the German political establishment of the time, but didn't remain a joke. If enough people take Dogecoin seriously, then what's to prevent it from overthrowing the reign of Bitcoin...which isn't to say that Bitcoin already rulez.
Classifying something as a Ponzi scheme, usually involves outright fraud. ie someone is claiming that there is a huge pile of cash somewhere that doesn't actually exist.
There may be individuals committing fraud using bitcoin. And bitcoin may be a speculative asset bubble with very similar outcomes to a Ponzi scheme. But it isn't *technically* a Ponzi scheme.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
As we have seen, keeping any amount of money at an exchange's account is a recipe for disaster. They can still be used, but only if you take care to move your money out of it as soon as possible.
So in other words, it has no protections from you being screwed over by banks, exchanges, other people etc and hence is a REALLY bad currency for the general population.
It's decentralized. There's no controlling entity that can tell you who you can or cannot pay.
Another thing it allows you to do is change which company you use for payments, and yet still make payments to all the same people you could before. If you want to buy something from somebody that uses Paypal to take payments, then you're kinda stuck with using Paypal. With a Bitcoin-based system, you could pay them via a different company.
This is like asking "what's the point of SMTP when we have Gmail?"
WTF are you smoking. Companies DON'T accept paypal, they accept money. Bitcoin doesn't change that, if bitcoin was an accepted currency it would STILL be done via paypal. everything you describe their is basically why bitcoin is destined to never be adopted, decentralised = no authority to protect people from their own stupidity or other peoples malice /negligence. You really don't seem to have any understanding of economics or currency, perhaps do some research before trying to espouse the benefits of one over the other.
Just the fact that a pro-BitCoin site has that question up as a FAQ is pretty telling on its own, written with slick marketing tricks, to boot.
What it is telling about is that there are legions of numbnuts running aronud yelling "pozi scheme!!111one!1oneONEleven omglol" without having the faintest idea abut what a ponzi scheme is or what bitcoin is.
What your describing adequately describes not a ponzi scheme, but more or less anything tradable (i.e. anything). Even with gold, if people lose interest and stop buying, the last people in are left with something worthless. Same with dollars. In fact it has happened many times, one famous recent example being Zimbabwean Dollars. It works that way with shares too. If a company tanks, the ones in last are left holding worthless bits of paper.
Yet none of these things are ponzi shemes.
SJW n. One who posts facts.
The general population won't interact with the bitcoin network at all. They'll make and receive payments via payment processors.
People will have the same protection from being screwed over by those payment processors as they currently do being screwed over by Paypal. (As I understand it, that's actually not very much protection at all... yet people still use Paypal.)
Amway will tell you Amway isn't a pyramid scheme, too. It's "multi level marketing".
So as I said, what does bitcoin Add? Not a bloody thing. To be successful it will need to be regulated, once it is regulated it loses its one differentiator. The currency is an interesting experiment, but it certainly has failed pretty badly in its attempts to become a currency.
PayPal is not directly regulated by the US federal government, yet they seem to be fairly successful. I think this suggests that regulation isn't necessary for Paypal-like services to be successful.
paypal is not a bank or exchange, nor do they issue a currency, they are just a business (even so they do operate under MANY regulations). So why are you using them as an example. Use The US Dollar and banks or any other currency and their associated financial institutions. You have basically singled out a business rather than part of the financial system to try to build your strawman.
"if people stopped trading Apple stock tomorrow, Apple stock is still worth money because people still buy Apple products. You would be stuck with the stock itself but you would collect dividends based on the performance of the company and the percentage of profit you get as a stockholder."
Um, that is 100% incorrect. If people stopped trading Apple stock it would go to 0, no matter how much money Apple was making. OK, you might still get dividends, but that is worth 0.0001% of the price you paid for the stock. No one buys Apple stock for dividends.
I believe in BitCoins..I think they have potential of eventually being a viable payment system/currency. But I have never owned a single one. They are too volatile. Don't denigrate those that believe in a useful system.
There is another significant distinction between Bitcoin and a Ponzi scheme. In a Ponzi scheme, you put money into it with the expectation of getting more money out than you put in. In Bitcoin, you don't do this -- or rather, nothing in Bitcoin will tell you that you can.
If you can point to the bit of Bitcoin that attempts to give you this expectation, then great: please do so. However, please don't point at a person pulling a scam involving Bitcoin -- that would be like pointing to Charles Ponzi to explain why the US dollar is a scam. Similarly, please don't point to all the speculators: they are essentially the same thing as Wall Street day traders, and they don't make the US dollar a scam either.
Bitcoin is a payment network. To make a payment using Bitcoin, you buy some bitcoins on an exchange, then you send them to the seller, who sells them on an exchange. Where is the scam in all this? You paid your $x, the seller got his $x. That's not a scam, that's mission accomplished.
Bitcoin is in fact a clever Ponzi scheme, in that the founders can profit without even being identified. (It makes sense that they don't want to be identified now, doesn't it?)
Bitcoin's fundamental problem, and why it has all the hallmarks of a Ponzi scheme (if it walks like a duck...) is that it is a deflationary currency by design due to the deliberate reduction in the supply of bit coins over time and the consequent artificial scarcity. No, being able to divide bitcoins into smaller parts does not solve this problem! It remains deflationary. One can assume one of two things about the designer(s) of Bitcoin:
a. He/she/they did not understand economics well enough; or
b. He/she/they did understand economics well enough.
If (a), then the dangers of a deflationary currency (which encourages hoarding and not spending / investing) were unknown to him/her/them. If (b), then these consequences were understood and were therefore considered desirable.
Assumption (a) makes this an accidental Ponzi scheme, but a Ponzi scheme nevertheless. Assumption (b) makes this a deliberate Ponzi scheme. Either way, the net result is the same. The original miners (which will have included the founders) make a whole lot of money. Late entrants provide them the money and in so doing lose theirs.
Bitcoin cannot be used as an alternative currency because it is deflationary. End of story. If you think it can be, then please provide your new theory of economics, and we can all go back onto the gold standard.
I suggest getting out of Bitcoin now.
Short selling.. it is a scam especially 'naked' shots - where you bet on the price before you have the contracts in place.
Short selling is not a scam at all. In fact it is arguably very important to price discovery, providing a counterweight to excessive bullishness, ex-ante identification of asset bubbles and providing incentives to find fraud. Short selling in an of itself is just fine. That doesn't mean there aren't practical concerns that have to be addressed but the mere act of short selling certainly is not a scam.
Shorting is simply the act of selling something before you have bought it. Usually people buy something before they sell it but there is no fundamental reason it has to be done that way. In a short transaction you borrow the asset, sell it and then buy it back later and return it to the lender. The second order consequence of selling before you buy is that you tend to do it when you expect the price to fall because you want to sell high and buy low. Stock prices fall almost as often as they rise and there is no principled reason not to allow people to to bet on the directionality of stock prices. In fact when someone ends a long position, very often they are simply betting that the stock is going to fall. It's the same sale for the same reason, the only difference is that the buy occurred in the past instead of the future.
Now there are some practical issues that have to be addressed with short selling in order to have an orderly and reliable market. You are correct that an exchange whose procedures allow naked shorting to occur is asking for trouble because they can easily end up with a transaction that cannot be completed. It also opens a door to certain types of fraud. Naked short selling isn't illegal per-se because in some cases it isn't actually a problem but it's a type of transaction that tends to carry more risk than allowing it is worth.
Classifying something as a Ponzi scheme, usually involves outright fraud. ie someone is claiming that there is a huge pile of cash somewhere that doesn't actually exist.
What, like MtGox? I will say this. BitCoin in and of itself may not be a Ponzi scheme, but it sure is a mighty fine developers kit and sandbox for one. It has way too much in common for it to be used by much of anyone other than as a mechanism to create a Ponzi. Plus, add the fact that it is unregulated and you add a dimension for nefarious activity nonexistent in any other legal financial instrument today. The foundation of this wanna-be currency is flawed and fracturing. It just wasn't as good an idea as it appeared to be in someone's head. Try again.
It's decentralized. There's no controlling entity that can tell you who you can or cannot pay.
Another thing it allows you to do is change which company you use for payments, and yet still make payments to all the same people you could before. If you want to buy something from somebody that uses Paypal to take payments, then you're kinda stuck with using Paypal. With a Bitcoin-based system, you could pay them via a different company.
This is like asking "what's the point of SMTP when we have Gmail?"
I have a bank account and bill pay. The bank account comes with a Visa debit card that is accepted everywhere Visa is for payment and my bank offers bill pay services via ACH transfer. BitCoin cannot do either without additional hoops or places that could add attack vectors to my finances. You're twisting yourself in knots trying to justify something that just isn't better for payments unless you're buying illegal goods. Cash is also perfectly anonymous.
Track record this far is ... can I use enron as an adjective?
Perhaps you can, but perhaps not in regard to the Bitcoin. Enron used (and I mean used like a rented mule) accounting firm Arthur Anderson to audit and sign off on their creative bookkeeping to cover $billions (US) in losses to keep their operation afloat. They were able to corrupt a key step in the securities and exchange' system of checks and balances. Without A. Anderson's complicity, that house of cards would've fallen much sooner.
Bitcoin's strength and popularity rest with it's kinship to virtual cash with no ties to government. This is also it's weakness, as there is zero oversight.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
I agree with you on most points, and what you say about its insubstantial basis is correct. However, BitCoin (of which I own none, and have never mined) does have a legitimate use, albeit one that is "dubiously legitimate".
BitCoin allows for anonymous purchases that are, essentially, untraceable. This is where a curiosity of BTC arises: it could be based on the semi-translatable real-world value of anonymity, however, the value of anonymity is still ephemeral because it is has varied value. The value is then subjective to every owner--this makes every owner a kind of speculator.
It is perhaps even worse than it sounds, because every owner of BTC is also expecting the value of BTC to go up, so owners want to hold on to BTC instead of spend it. As such, BTC is going to be subject to a liquidity crisis when any of the following criteria are met:
A. The perceived utilitarian value of anonymity is undermined (when and not if it is cracked by the NSA, et al., or if the powers of the NSA are restrained)
B. When BTC can no longer be produced in any meaningful quantities.
C. When the next cryptocurrency comes out that is "better" than BTC.
They are ACTING BEFORE Alice or Bob can which is why it is a TIME BASED man in the middle attack.
You are framing the issue in a way that isn't supported by the facts. What you are describing is EXACTLY the role a market maker plays. Market makers provide liquidity to the market by providing bid and ask (buy and sell) quotes and profiting on the difference between the two. Market makers are middle men who serve a useful role. There is nothing morally, practically or legally wrong with this. It is a practical action to create a liquid market. When it comes of market making HFTers who use market making strategies actually tend to reduce bid-ask spreads through competition which benefits Alice and Bob because both get better prices due to competition. It used to be that market making was provided by specialist firms but with HFT the role of specialist market makers is sometimes reduced.
There are some very real concerns regarding HFT but their (sometimes) role as a market maker isn't one of them unless we are talking about front running. Competition in market making demonstrably benefits buyers and seller by reducing spreads though competition. You WANT this to occur. Most high frequency trading has nothing whatsoever to do with market making and is really a form of statistical arbitrage based on news events and/or pricing models. They don't have or need privileged information the trade information and even if they do have such information so does everyone else engaged in HFT so any advantage they might have would be short lived and would benefit the traders at the end of the day anyway through reduced prices.
Late entrants provide them the money and in so doing lose theirs. ... I suggest getting out of Bitcoin now.
See, this is a misconception that I've been trying to correct in this thread. You don't "get into Bitcoin" by buying up a bunch of bitcoin and sitting on it. You don't "get out of Bitcoin" by selling a bunch of bitcoin that you've been sitting on.
Bitcoin is a payment network. You use it to make payments. You don't buy bitcoin and sit on it; you buy it and then immediately send it to the person you're paying. They then sell it to convert it to whatever their normal currency is. I attempted to explain this in the post you responded to.
What you're describing is how you get into speculating on the bitcoin exchange rate. That's something completely different, and I won't stop you from getting involved in that if you want, but it's just like speculation on anything else: you might get burnt. However, if you just want to make a payment (which is what Bitcoin is for), then you don't need to do that.
So then, please explain to everyone all those quick bids with most of them cancelled before a human being could react? Nothing to do with manipulating the price by subverting the communications channel?
I'm using them as an example because they do the same general thing Bitcoin is intended to do: move money around.
Bitcoin is not intended to replace the dollar -- it's intended to move your existing dollars around.
Bitcoin is a payment network. To make a payment using Bitcoin, you buy some bitcoins on an exchange, then you send them to the seller, who sells them on an exchange. Where is the scam in all this? You paid your $x, the seller got his $x. That's not a scam, that's mission accomplished.
Not really. A viable payment system lets you get real money in exchange for something; with Bitcoin there is no assurance you will be able to get anything beyond some bits and bytes. You are at the mercy of the exchange and if they don't have the cash you don't get paid. One huge red flag is the seeming arbitrage opportunities with Bitcoin process varying exchgane to exchange. If Bitcoin were a viable transaction system those opportunities would disappear as people took advantage of the free money. That they don't says a lot about the liquidity, or rather lack of it, in the Bitcoin market. A currency that is touted as being easy to use for transactions anywhere with no transaction costs would quickly erase any arbitrage if it really was that easy to buy and sell.
All this noise about Ponzi Scheme: Yes or No? masks the real issues with Bitcoin. It is an illiquid, volatile commodity that lacks any assurance you will ever be able to get real money for it; as a result almost no one really takes Bitcoin, they simply let you "Pay" in Bitcoin by assuring they can immediately convert them to real money. While that may work for a handful of deals the lack of liquidity makes them unusable as a real payment system to take on PayPal or other electronic payment systems. Unlike Paypal, which mostly just moves money for a fee or holds it in a form that is easily turned back to cash as needed; Bitcoin "exchanges" take short positions that they can't cover since they lack the cash reserves to payout all the withdrawals.
As a result, Bitcoin became a nice place for speculators and people who are hoping to cash in on the "next big thing" and now the bubble is starting to burst. I wouldn't say it is a scam as much as one more chapter in the mass hysteria of crowds.
I'm a consultant - I convert gibberish into cash-flow.
Right, they accept money via Paypal... or via Bitcoin. That's the position Bitcoin occupies: not a replacement for the e.g. dollar, but a way to move your dollars around.
What BitCoin is, is a money laundering vehicle. You buy bitcoins electronically with funds in a country, you sell them two seconds later in other country, for more or less the same price. You have not only extracted the money from the country, but deleted most traces of property. You probably have made a payment without looking like that, just with an e-mail.
The wild changes of valuation help you explain your sudden wealth, which is a problem when you get money from drugs or bribery. Hint: most bitcoin millionaires are really money launderers at big scale, their wealth suddenly legal by way of the bitcoin wizardry. They are taking advantage of the computer illiteracy in governments, but as the scheme is used by more and more people, the loophole is being slowly closed.
As for the closed exchanges, they most likely are stealing the bitcoins themselves, safe in the difficulty of anybody proving anything within such convoluted software schemes, specially when the damages are to people of so many different countries, with their own reasons not to raise too big a fuss about it.
Rome taught me patience and assiduous application to detail. Virtues which temper the boldness of great, general views.
Such irony, coming from the slimy Brit that doesn't have the faitest idea about X and Wayland, yet trolls, spreads FUD, and slanders anyone who supports the development of Wayland and the much needed replacement of X. It's not a suprise you're a BitBeiliver. You clearly fit the mold.
Alice, Bob and Speedy all know exactly where their transaction is going. It's classic arbitrage: whoever can identify an inefficiency and figure out how to place him/herself in a place to exploit it, wins.
No kidding!!! What do you say at this point?
The question I always like to ask about HFT is - If we ask ourselves what the economic function of exchange platforms is, what value does it add to the system?
That's a very good question for which all the answers are not yet clear. HFT does clearly provide some pressure in some cases to reduce bid-ask spreads which reduces costs for traders. It also may act to correct pricing inefficiencies more quickly which is demonstrably beneficial in some ways. In principle HFT is not doing anything that doesn't happen without it, albeit at a much slower rate. Arguably if it is fine slower the speeding things up should, in principle, not be a problem. In practice the jury is still out. Personally I think that HFT needs to be watched VERY carefully though I'm not optimistic this will happen until some disaster occurs. I don't see a problem with it in principle but there are some potential practical and fairness issues that worry me.
It seems to me that the fact that HFT is possible at all is a bug in the system. It is exploited by nefarious quasi-criminals, destabilising and creating distortions in one of the fundamental tools of our current economic system.
I think you are losing your objectivity here. You hint at some unspecified "nefarious quasi-criminals" but that's just FUD. There are practical arguments you can make against HFT but vague assertions of some criminal cabal engaged in unspecified activities to "distort" the economy is pointless scaremongering with little to back it up.
Most HFT is simply a sort-of clever attempt at arbitrage based on news or statistics. Nothing wrong with that in principle. That happens in pretty much every market even without HFT being involved. The relative speed of it in and of itself isn't objectively a problem. The question is whether the actions required to engage in HFT are causing practical or destabilizing problems for the marketplace. There is some evidence (such as flash crashes) that HFT might be introducing some new risks to the system which is certainly worthy of concern. There also are concerns that some parties are being given a privileged position in the market that they do not deserve since you or I as investors obviously cannot engage in HFT.
The same argument could be made for any currency. US dollar, Bitcoin or otherwise. All tender is based on faith much like religion. But it doesn't make it a Ponzi scheme.
It is common knowledge that whoever OWNS a currency, becomes insanely rich or powerful beyond measure. Bitcoin being deflationary in nature and the nature of mining, IS a get-rich-fast scheme by its very own nature.
Bitcoin and cryptocurrencies will suffer from their own success, only until they become more POWERFUL than the PTB.
In short: Stay away, unless you see a real benefit with low risk. Frankly, Bitcoin is most interesting to shady activities, making it much less interesting for ordinary use.
Gold = physical masses of metal. It has intrinsic value. You can still use gold for bartering, melting, jewelry, etc.
Currency = belief in a nasion's solvency. As long as the economy is healthy and the leaders interested in people's well being, it should be stable enough to hold. If not, sell.
Shares = ownership in a company. As long as the profits keep rising, it should be fairly profitable to hold. If leaders are corrupt or incompetent, or the company fails for any number of reasons, sell.
Bitcoin = fair attempt at creating a digital currency, but without the infrastructure required to dominate everything else. Bitcoins have no intrinsic value. It can be forked indefinitely, and therefore abandoned overnight. It is deflationary over time in nature due to limited mining capabilities. There is really no other reason to buy, other than from a belief that it will go up in price as more people want to go in. Beware of tulips!
ALL of these can become ponzi schemes when demand unjustly exceeds supply. Generally, if something is prized way too high, it is probably a good idea to get out.
Bitcoin being based on NO INTRINSIC VALUE, being limited and deflationary over time in nature and possibly abandoned overnight, very much sums up the definition of ponzi scheme. If something walks like a duck...
Bitcoin by itself has no intrinsic value. It only has value because people decide it should.
No currency has "intrinsic value" and every asset only has value because people decide it should. Intrinsic value in finance refers to the value of something independent of its market value. Currency has no value independent of its market value and therefore by definition cannot have any intrinsic value. Doesn't matter if it is bitcoin, dollars or gold when used as a currency it cannot have intrinsic value.
In a ponzi scheme, you give me your investment and I give you 120% of your investment back using the funds of later investors. In bitcoin you buy bitcoins for the market price and then if the price goes up you can profit. There is no conman guaranteeing that everybody that buys a bitcoin will be able to sell it for more than they paid.
PayPal is not directly regulated by the US federal government, yet they seem to be fairly successful.
PayPal is successful because it's required to use eBay. That's pretty much the only reason. A lot of people have run into trouble with it and wish they could get away from it permanently, but as long as eBay continues to have a monopoly in the online auction business, PayPal will continue to exist. This is why we used to have antitrust laws. (They're still on the books, but are essentially never enforced.)
That this "Speedy" expends effort to know about the desires of "Bob" and "Alice" is not something to condemn. It might be that without them both Bob and Alice might lose.
I saw no labeled spot to say who I was.
Is it news because the final Goxing finally came, and Slashdot editors have an agenda to keep bringing up articles on the smallest negative event happening to anyone somehow related to Bitcoin?
The agenda of the slashdot editors is simple. To attract readers and comments. Articles on bitcoin seem to accomplish that agenda.
interestingly it actually fails all its own tests. It isn't stable, certainly isn't fast or inexpensive and it most definitely isn't widely accepted. and assuming the early people will benefit from rise in value sounds dangerously close to being a Ponzi, the only thing saving them from being one is they aren't making a guarantee on the rise.
That and the fact that a rise also benefits the latecomers. and that the latecomers are not dependent upon even later-comers in order to benefit. And the fact that making money is not one of the purported benefits of using bitcoin, although it has turned out to be an unexpected bonus for some.
If you are not allowed to question your government then the government has answered your question.
Bitcoin as a whole fits the Ponzi scheme pattern, because at the exchanges the money used to pay off the early miners comes directly from people now buying coins.
Wrong, nobody is paying off miners based on latecomers. Miners already got paid by the bitcoin they mined, and the same would happen if a latecomer started mining today. Miners also get some percentage of transaction fees for verifying transactions.
If you are not allowed to question your government then the government has answered your question.
Depends. Bitcoin seems to operate on the idea that the early adopters could mine tons of bitcoins, then sell them to later adopters. Constant inflation is built-in: it becomes more expensive to mine bitcoins over time, and there is a theoretical limit. So early adopters can sell to later adopters, who can sell to later adopters.
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Bitcoin's fundamental problem, and why it has all the hallmarks of a Ponzi scheme (if it walks like a duck...) is that it is a deflationary currency by design due to the deliberate reduction in the supply of bit coins over time and the consequent artificial scarcity. No, being able to divide bitcoins into smaller parts does not solve this problem! It remains deflationary. One can assume one of two things about the designer(s) of Bitcoin:
Wrong, there is no reduction in the supply of bitcoins. In fact, the supply is increasing daily, up to a set limited amount.
It is deflationary, however, in that usage of bitcoin is increasing faster than the supply, and of course once they stop being mined the supply will be constant. However, there is nothing particularly evil about being deflationary. Gold is deflationary, for example.
If you are not allowed to question your government then the government has answered your question.
Based on your determination, gold is a ponzi scheme. Care to explain how it is not? Or, if it is, care to explain why your currency was likely once backed by a ponzi scheme, and why you continue to use it?
The closest I can come is Eisenhower but even that's a stretch.
my local bakery shop went bankrupt because of employee fraud. Is it time to rethink the institution of purchasing bread?
Any guest worker system is indistinguishable from indentured servitude.
Also, gold isn't worthless, it's a very good conductor and highly malleable and would probably see more wide-spread use in electronics, if it weren't so expensive. Bitcoin on the other hand...
This Sig does not Exist.
MtGox, Vircurex or any other exchange getting hacked is a tragedy, but those are problems with their code rather than the underlying technology. Pointing at dead exchanges and proclaiming it to be the downfall of bitcoin, is like pointing at IIS when a new exploit comes out and yelling that HTTP is doomed.
Cryptocurrency is a genie that's out of its bottle, you would do well to try to understand it for what it is, rather than the get rich quick scheme you're interpreting it to be, because it really is a revolutionary technology, and it's not going away.
No, if people stopped trading shares of Apple stock it would still be worth a percentage of the assets that Apple owns. Shares in a company represent ownership of any assets the company owns. Which is why back in olden times there were stocks that were guaranteed to show a profit because they had more assets on hand than was accounted for by the cap.
The price for Apple stock would remain at whatever the last trade was until such a time as somebody traded some shares.
As for believers, they're morons. I mean quite honestly, the whole thing is set up in such a way that it was never going to work. It's designed to be massively deflationary, the people advocating for it are mostly people that got in early and have a vested interest in getting suckers to buy in so that their bitcoins don't become worthless.
Bitcoin is not a payment network. A payment network is actual infrastructure.
Bitcoins are nothing else than designed encryption strings. You actually believe some 0 and 1 are worth money. Only bitcoin cultists believe in bitcoins. Outside your jerkcircle they are worthless.
Here have a free catcoin fjcff478tjbdey37geyh
I just invented catcoins. Must be worth something, right?
Quote : "Miners also get some percentage of transaction fees for verifying transactions."
Thanks for proving it is a ponzi scheme.
Early adopters make their money purely from people coming in later on,
Wrong, early adopters made money by mining and spending or converting to another currency. If they held on to their coins, they made money as well, by happenstance. But bitcoin is not intended to be an investment, so the fact that they made money by holding on to the coins must be dismissed.
the generation curve is skewed to give them a huge profit for much less work.
Wrong. When they did the work to mine these coins, the price point was such that the ROI is very similar to what it is now.
When combined with the facts that there's no value being created and that the currency is designed to be massively deflationary, you wind up with really only the conclusion that it's a type of Ponzi scheme.
Wrong. Ponzi schemes have nothing to do with deflationary currencies. They have to do with investments where incoming new investors directly pay off early investors.
If you are not allowed to question your government then the government has answered your question.
Practitioners of fractional banking have screwed up lots of currencies, not just Bitcoin... don't throw the baby out with the bathwater.
"and it's not going away."
According to participating bitcoin cultists.
It's neither technology nor revolutionary. They didn't invent a fuck. Generated crypto strings are not new. They only thing new is that brain dead and gullible people think they are worth something.
</b>
I think you dropped this...
Were able to kill this with ease.
It is even worse:
Speedy looks at Alice's trading and thinks she might be wanting to buy, right at this moment. Speedy buys from Bob, and offers the shares to Alice at a markup. If Alice's order did indeed go through, she won't ever know about Bob and Speedy makes a small profit. But, if Alice's order didn't come through (didn't finalize, or whatever) then Speedy gets a rough deal as the shares bought from Bob are now a risky position. Well, no matter, because Speedy is right inside the transaction system and he just backs out of the transaction with Bob! Yes, Speedy now never did buy the shares from Bob, in fact, Bob knows nothing of this "Schrodingers Transaction".
So, by being the fastest trader in the exchange, Speedy takes a profit on the right transactions, and turns back the clock on failed transactions.Sounds like free money? It is, as long as you are the fastest one. When that new kid Zippy comes along with even less latency he quickly takes over the 'hood, and Speedy gets taken to the cleaners until he forks over a couple hundred million for a shorter connection to the exchange.
That, in a nutshell, is HFT.
If you think you're such a special snowflake that you would have timed it perfectly, then you're the one living in a fantasy world.
Fact of the matter is you're jealous and are now venting your rage to the (virtual) world.
Protip: no matter how loud you shout, no one cares.
Then why not create a paypal alternative aka ePayment?
Oh wait. There are already lots of them like UKash, Google Wallet, Skrill,etc.
All of them don't require a pseudo-currency for the gullible. You know what they do? They do actually move currencies. Real ones.
There is absofuckinglutely no need for bitcoin. None.
Not even for anonymous reasons. Even your precious little cult you desperately try to convince people here is necessary and benign admits that on it's own site.
There are already lots of them like UKash, Google Wallet, Skrill,etc.
All of them don't require a pseudo-currency for the gullible. You know what they do? They do actually move currencies. Real ones.
There is absofuckinglutely no need for bitcoin. None.
Not even for anonymous reasons. Even your precious little cult you desperately try to convince people here is necessary and benign admits that on it's own site
Exactly. What people are missing is that this is still relatively new technology. With the big boom in mining over the past few months, we can consider this to be the true shakeout period. The exchanges that have problems will fall, and the ones that don't will be the cream rising to the top. This isn't something new. The fact is, a lot of vendors like cryptocurrencies because they don't require processing charges outside the occasional transaction fee when the transaction exceeds a certain size.
You really have no idea how bitcoin works, do you?
Pyramid schemes aren't ponzi schemes. They're different things, with a few similarities.
Right now I can name about 4 local vendors who accept bitcoin because they prefer it to the 3% transaction fee charged for credit cards. And they're pulling in still more vendors. They're not involved as speculators, they're involved as people who want to accept it because it makes their cost of doing business lower.
All currency, whether it's bank notes, hunks of gold, bitcoins, goats, glass beads, or anything else, is a commodity. The only thing that determines price of that commodity is demand and supply. If people think it has utility, it has value. If people stop thinking any of these items have value, then they become worthless. All of these are speculated on as well; that's what foreign exchange markets are, that's what commodities markets are. None of them have intrinsic value until we decide to put a price tag on them in order to exchange them for other things.
Yup, just like all of those people had protections from being screwed over by banks in 2008. Real dollars are so much better, you've convinced me.
You think normal currencies are stable? Google "forex." They're absolutely not stable.
Explain the technicals of bitcoin to me, specifically how the network protocol works.
If you can do that, and still say the above is true then I will not argue with you.
I guess we need to start being ultra-specific for the BitBelievers. It is a Ponzi-like scheme. Broken down to its fundamentals, ignored in that FAQ question, a Ponzi scheme is generally understood to be a money making venture that is wholly dependent on new folks coming into the scheme in order to continue to fund the upper levels. If folks stop buying into the bottom, then things dry out all the way back up the chain until it fails.
This is your fundamental premise and it's wrong. BitCoin is not a money making venture. It was never intended to be an "investment". It was intended as a medium of exchange. And that's all currency is.
Places like Mt. Gox and Vircurex are similar to the money markets of other fiat currencies. You could buy, sell, and trade amongst the currencies. THAT is a money making venture, but that is completely independent from the currencies itself. And since there are no central or regulating authorities on the currencies any such exchange should be treated with extreme caution.
Bitcoin is not a ponzi scheme. Ponzi schemes can be perpetrated using bitcoin, but the same can be said for any currencies. Bitcoin and related cryptocurrencies are not regulated, nor are any business associated with them. As usual, people are the problem.
~X~
So almost everyone that is commenting really doesn't understand bitcoin at all.
Interesting given that this is Slashdot.
Would have thought there would be some critical thinkers here who would apply some of that mental prowess and research skills to learning what bitcoin is and isn't.
I have a hard time understanding why a supposedly bright group of individuals can't see the benefit of a friction less financial network.
I mean the bitcoin network is to finance what the internet is to the flow of information ... friction less, free, open .. open development at the edge. No barriers to entry into the network. I mean it literally is The internet of finance. I would think of all places that people on Slashdot would get it .. but I guess you guys get duped by the MSM too...
No they don't, they are a business, paypal have no say how financial transactions are regulated, nor do they issue or control a currency system. You may as well start comparing bitcoin to a corner store. If you want to do a monetary comparison then you need to compare to an actual financial institution that is responsible for issuing a currency. The reason you are using paypal is that bitcoin compares VERY badly to any real insititution with government backing. You are now going completely against what bitcoin is supposed to be about by directly saying bitcoin is not a currency and that it is merely an unregulated business entity.
Okay, let's take a look at this. A Ponzi scheme is one where the schemer persuades investors that they'll profit, and is a zero-sum game. No institution is pushing Bitcoin as an investment, but plenty of people who own Bitcoins seem to be. There is a possible winning outcome for Bitcoin, but the FAQ simply says it's possible. This is technical nitpicking, rather than a repudiation of the concept.
Is Bitcoin "stable, fast, inexpensive, and widely accepted"? Its fans hope for widely accepted, and concede that that's necessary for it to fulfil its potential, so we'll go ahead and allow that. I have no idea what "inexpensive" means in a currency; if it means inexpensive to make transactions in, it's got a long way to go to be as inexpensive as most major national currencies. Any transaction requires that people process it into the block chain, and they aren't going to do that for free. Currently, those people are getting a few extra Bitcoin for their work, but eventually they'll get nothing but transaction fees. Similarly, it isn't "fast", for the same reason. I can walk up to a counter holding a book, slap down a paper rectangle, and consummate a transaction with dollars immediately with no data connection necessary, and I don't see how Bitcoin will ever be able to do that. As far as "stable" goes, well, it's showing no particular signs of stability at the moment.
Suppose I had owned Apple stock back when it was first publicly traded. Apple became successful because they made stuff people wanted, regardless of its stock market status. There were other companies, but they didn't make Apple IIs or Macintoshes or iDevices..For Bitcoin to be successful, it itself has to be popular, and giving the impression that it's similar to a Ponzi scheme isn't going to help. I've read that there are a large amount of Bitcoin suspected to be possessed by the really early adopters, and that will hang over Bitcoin like Damocles' sword. Moreover, there's no distinguishing feature of Bitcoin. It may well be an unusually well done cryptocurrency, but given the choice of Bitcoin and a cryptocurrency that doesn't look like a Ponzi scheme, say one that can produce more of itself to match takeup, I'm going with the other one.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
A rise benefits Bitcoin holders, which includes the latecomers. This happens as even later-comers dump more dollars/euros/etc. into the Bitcoin economy, which mean the latecomers profit from the even later-comers. If you take a look at world M0 money supply, and visualize it replaced with Bitcoin, each Bitcoin would have to be worth an incredible amount of money, and people who bought in at $1K/Bitcoin and hung onto their Bitcoins will be fabulously wealthy. Do I want to encourage that by buying into Bitcoin?
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
>Bitcoin is not intended to replace the dollar -- it's intended to move your existing dollars around.
I don't think so. If this were true, the price of a Bitcoin would not be so incredibly volatile. Furthermore, if Bitcoin were merely a system for moving existing dollars (or any other sovereign currency) around, you could not reasonably have a situation where a $1 input can become a $1,000 output.
Bitcoin is intended to be a currency that either replaces or is parallel to sovereign currencies. I am saying this from the perspective of a person who believes that Bitcoin will ultimately go the way of Dutch tulip bulbs.
I think the fact that the winning outcome is possible is pretty darn significant. That's enough by itself to make it not a Ponzi scheme.
As to the rest of your post... the use of absolutes in that FAQ answer was a terrible choice. It really should say "stable enough, fast enough, inexpensive enough".
bitpay.com exist and they charge a 1% transaction fee, which has to cover volatility in the exchange rate. That suggests that it's stable enough for them to do business without massive fees. Fast? Definitely not fast enough for immediate in-person transactions, especially without an internet connection available. Just use cash for those. Bitcoin doesn't have to be useful in every situation to be useful (for instance, Paypal wouldn't work well without an internet connection either, but people still use it.) If you're buying something online, the delivery time is often measured in days, so what's 20 minutes for the payment to go through?
Inexpensive... well, I can't predict miner fees, but miners will be competing for the fees, which will push them down as far as possible.
I've read that there are a large amount of Bitcoin suspected to be possessed by the really early adopters, and that will hang over Bitcoin like Damocles' sword.
What could those early adopters possibly do with all that bitcoin to stop Bitcoin from working? About the best they could do is tank the exchange rate, which would be really bad news for any day traders trying to gamble on the rate, but wouldn't actually mean anything at all for people using it for its intended use as a payment network.
If you take a look at world M0 money supply, and visualize it replaced with Bitcoin, each Bitcoin would have to be worth an incredible amount of money, and people who bought in at $1K/Bitcoin and hung onto their Bitcoins will be fabulously wealthy. Do I want to encourage that by buying into Bitcoin?
Umm....yes?
If you are not allowed to question your government then the government has answered your question.
Quote : "Miners also get some percentage of transaction fees for verifying transactions."
Thanks for proving it is a ponzi scheme.
I'm sorry, but I was unable to prove it was a Ponzi scheme, because it isn't. ANY miner is compensated transaction fees for verifying transactions, whether they started mining bitcoins from the beginning or started yesterday. As a bonus, if the early adaptors STOPPED mining, they would NOT get transaction fees, while the latecomers would. Some Ponzi scheme.
Also, bitcoin is a currency and is not intended as an investment. In order for something to be a Ponzi scheme, it must first be an investment.
If you are not allowed to question your government then the government has answered your question.
You miss the entire fucking point. Calling it a currency is the scam, because without exchanges BitCoin is worth nothing because no one has any use for it unless you can exchange it for real currency. The onky reason anyone takes it at all is because it can be exchanged for real money. Do you think overstock.com pays their bills, taxes, etc with BitCoin? No, they take it so they can exchange it for real money and accept it as a novelty so bitfools will go there.
Well, in spite of a few "overrated" and "troll" ratings, my post is still strongly sitting there with a +5, so yeah, a few people seem to care what I am saying.
And I do apologize that it turned bold, typing on a tablet sometimes it changes the p tags to b tags.
Regardless, now that we have that out of the way, Anonymous Coward, you didn't read properly so it's probably good you didn't use your actual account to post.
A blind, deaf, armless, monkey toddler would have "timed it right" if they weren't so enthralled with the BitCult. I said, the second MtGox fell, if I didn't lose BitCoin with them totally, I would have pulled out because it clearly was the first domino to fall, not an isolated incident. It doesn't take a "special snowflake" to see what was happening.
The only thing that has propped it up so far is that the BitBelievers keep dumping in more of their legit currency into BitCoin as folks are fleeing, thinking they are getting in on some fire sale. No one new is coming into BitCoin at this point, and once those folks who are so into the BitCult run out of real currency to keep dumping in, it's just a matter of time before the entire bottom falls out.
I freely admitted that sure, I wish I'd bought a bunch when it was $20, but to think I'm venting "rage" by pointing out how delusional folks are who think it's going to continue, that folks who now pay $700 for one will ever make any profit on it, is laughable. I'm not raging, I'm simply gobsmacked that there are still folks who are so enamored with BitCoin they simply cannot see reality. There is a reason you see folks repeatedly referring to it as a cult now, because the folks who are still BitBelievers exhibit all the signs that one is a member of one.
The fact that you "believe" in it is why people are beginning to equate it as a cult-based money-making scheme. It takes a religion-like belief. The tired "it's just like every other currency" talking point is just that - a talking point, which folks believe if you say enough somehow becomes truth. It's not. Sure, at it's base level, conceptually, all currency is based on faith, yadda, yadda, but since I can take my dollars and walk into any store in the country and purchase their products without question, I don't need to have "faith" - it's reality.
And as another reply someone made pointed out, you missed my Apple comparison - a stock owned in Apple is a portion of ownership of the company, which produces items which people desire/buy. So even if you cannot resell your share, you still own something. With BitCoin, you don't "own" anything but a virtual number. It's like an augmented reality MMO currency. (Though at least MMO currency can buy you gameplay fun.)
Oh, I forgot to mention the other "talking point" in my post - the "it's just like every other currency" fallacy. It's like you guys think if you say that enough times it somehow becomes true.
Forget about the academics behind currency and look at the reality. The dollar, for instance, is beyond "faith" at this point in practical use. I don't have to have faith that every store in the United States will take my legal currency and give me goods in exchange for it. They just do. And the chances of that suddenly not being true are extremely remote.
BitBelievers are so wrapped up in theory that they cannot see the practical realities of BitCoin - it is not a "currency". Although I found it rather crass, a really good example was made by another poster. Why can't he make his shit a "currency" - it's in limited supply, it's unique to him, no one else can make his shit, and someday, his supply of shit will be depleted and no longer available. That makes it a valuable currency, right? The only thing missing is the digital component - he'd have to actually ship it around. Other than that, it fits the definition of what folks say makes BitCoin a currency to a T.
Actually, I didn't add it in the first place, intentionally, LOL. I was using a tablet which auto-corrected some p's to b's. And the version of /. that shows up on tablets doesn't have preview. My apologies.
Intended or not, it is what it has become. Take a reality check here.
Money Markets are an off-shoot of legit currency. But I don't need to care about the money market when I go to the store to buy groceries with my dollars.
With BitCoin, the entire thing is dependent upon them, because without them, the BitCoin is worthless. Why do the (very few) businesses that accept them accept them? As a marketing ploy, and because they can exchange them for legit currency to pay their bills, buy wares to sell in their stores, etc.
Without exchanges, BitCoins can do nothing and are nothing. The "every other currency" fallacy is just that. You are talking about academic theory, not reality. The dollar would still work if money markets didn't exist. If BitCoin exchanges didn't exist, no one would purchase the virtual rights to a virtual coin to begin with.
If you invest in a company who has as a sole product strings of numbers and a plan that they'll become more in demand and due to the strings of numbers being limited they'll go up in value, I'd say that you've invested in a scam. Scams do make people wealthy occasionally, especially the early investors, but it doesn't mean it is not a scam.
I'd guess you're an early investor and need more demand for your strings of numbers so they'll go up in value so naturally you're all in favour of the scam.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
One of the aspects of currency is that sometimes you do sit on it. I have an American $20 bill that someone gave me a year ago for payment. I haven't bothered to use it for payment anywhere and by chance that bill is now worth about $22 in local currency. Being accepted as currency most places, I can go into almost any store etc and trade it for goods. They'll take a couple of percent for the hassle of dealing in currency that is not legal tender but it works as currency and it is worth close to the same after a year.
Sounds like with bitcoin, better spend it quick as its value is not stable, but where do I spend it, I can't use it to buy food or gas at any of the local businesses and without being connected to the net it is useless.
The American dollar, even though not legal tender around here is currency. Bitcoin, not so much.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
The problem with this reasoning is, you have no choice BUT to "speculate". At some point, Bitcoins must have a value relative to fiat currencies, either implicitly or explicitly, in order to be used as a "medium for exchange". Otherwise, they aren't anything. The value is either explicit (how many dollars a Bitcoin exchange will give you for a bitcoin) or implicit (how many dollars it costs to buy X vs. how many bitcoins it costs to by X). It doesn't matter which it is (in reality, it is both, and in a way they are the same thing). With a reducing supply of bitcoins, they remain a depreciating "currency". This is fatal for an economy based on such a currency, as I stated above. Of course there is infrastructure surrounding Bitcoin which allows it to be used as a "medium for exchange", i.e. a "payment network". That is only part of it, and is not the relevant part. The other, relevant part is its supply (generation). This is what is broken, whether deliberate or not.
Most people won't deal with Bitcoin directly, and so won't need to do any speculation. Payments will be handled by people like bitpay.com. Those people will need to speculate, but they'll only need to do it for short periods (because they only need to hold enough bitcoin to cover transactions for the next N hours) and they can cover any loses from transaction fees.
I don't think the deflationary aspect (the coin generation behavior) is a problem for its use as a payment network. The total number of bitcoins is arbitrary, and the only thing that happens when you change it is that the exchange rate changes to match.
If you reduce the total number of bitcoins available for transactions (either by destroying them, or by taking some out of circulation to speculate with them), all that happens is the exchange rate goes up, as people conduct transactions with the remaining coins. Similarly, if you increase the number available (e.g. via the per-block reward), the rate goes down as people do transactions using a larger pool of coins.
At no point does that make any difference for transactions. You can still do them just fine regardless of whether there's 21M or 210M or 0.21 BTC available for them. Who cares what number is attached to your $10 BTC transaction? It's still $10.
Deflation may well be bad for an economy, but Bitcoin is for making payments, not for being an economy.
Does the company claim there's a reason for the numbers to go up in value? Perhaps, for instance, the numbers can be used to do the same thing as an existing service that's pulling in lots of money? And is the design and behavior of those numbers appropriate for doing that service?
If so, that's not a scam. If they hid info about the design of those numbers, and it turns out they actually aren't appropriate for providing the service the company claimed they were appropriate for, then yeah, they'd be scamming you. But if that's not the case?
The Bitcoin p2p network is its infrastructure. It tracks who owns what, prevents people from spending bitcoin they don't own, or from spending it twice, prevents counterfeiting and provides compensation for the people who run it.
Do your catcoins have any of that?
The point of Bitcoin is to make a payment network. It doesn't work very well as a currency, because it's not meant to be a currency. Its goal is to be a way to move dollars around, not to replace them.
You won't deal in Bitcoin directly, you'll go via somebody that handles it for you. So you don't need to worry about any complications arising from holding it for a long time, because you won't be holding any. (They won't need to worry much either, because they'll only be holding onto it for short periods and they can cover any losses from their transaction fees.)
I don't get why Bitcoin is useless without a net connection. Paypal requires an internet connection to use, and tons of people still use them -- that requirement hasn't killed them.
You do not know the differences among Ponzi schemes, speculative investment, and currency.
You lack the elementary comprehension of the matters you so vehemently lecture others about.
You keep describing speculative investment and calling it a Ponzi scheme. A Ponzi scheme involves paying returns to earlier investors from the contributed capital of later investors, while misrepresenting the returns as new funds generated by the successful performance of financial investment. Bitcoin does not pretend to be a performing investment. It holds itself out as a marker in limited supply worth whatever equilibrium of value it holds among the collective traders who independently adopt it as a currency. You might think this scheme mad. You might argue that it could only be a fraud. But it is not remotely a Ponzi scheme.
By pretending to know what you're talking about when describing a Ponzi scheme, you are just shouting down others while you have nothing worthwhile to say on the subject.
You might eventually have something of value to say, but not until you stop polluting your analysis with false claims of superior knowledge.