Should You Play the Ponzi Game?
I don’t think it’s ever been easier to create or participate in ponzi schemes. The average individual might think that every ponzi scheme is bad, but I always try to look for the silver lining in situations. As far as I can tell, there are just 2.
We know more about how they work and thus can talk about their mechanics within the umbrella of “Ponzinomics” — The economics of Ponzi Schemes
You can take massive risk and make money off of them in the short term.
In this letter, I’m going to talk about my experience of taking part in ponzi schemes. This includes both the times when I’ve lost, and made money.
Ponzi Scheme — A form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the earlier investors from money invested by later investors.
There is actually a lot of ambiguity in the above definition. For example, how do you know if you’re early or late to a ponzi scheme? Also, what differentiates a non-existent enterprise from one that does exist?
I’ve pondered the definition of “ponzi scheme” when considering investing in new cryptocurrencies because truth be told, a lot of cryptocurrencies are ponzi schemes.
Are All Cryptocurrencies Ponzi Schemes?
Some would say yes. I would definitely say no. I only need to point to and prove that Bitcoin is not a ponzi scheme to falsify the above statement. Bitcoin is not a ponzi scheme for the following reasons.
Bitcoin is not trying to sell you something. It doesn’t care if you buy it or not, nor does it have the ability to convince you to obtain it.
There is no central actor in charge of bitcoin, or the unit of it (BTC). Therefore there is no central benefactor that would/could extract profits from later investors.
Another way to think about this point is that those who got into gold, silver, or even corn “early” have implemented a ponzi scheme around those commodities.
This is satire and obviously false. Bitcoin is like those things.
All other cryptocurrencies
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