[zanny]

It is a bit of a fraud to claim bitcoin can ever replace fiat currencies, though. Its deflationary, has a fixed coin limit, is incredibly centralized, and its tx rate is awful and costs a ton to move any of it around the chain.

The only value in bitcoin is in how much it exchanges for at this point, and that is definitionally a pyramid scheme, because current buy-ins need more adoption to drive the price up so they profit off their investment.

3% of all addresses control 97% of all coins. 0.01% of all addresses control 21% of all coins. And bitcoins mint rate is slowing every four years and almost 80% of all bitcoin that will ever exist already exists.

Its absolutely a pyramid scheme. Early adopters were incentivized with large quantities of limited coins to persuade them to mine and participate when the value was low. Those really early wallets (circa 09-12) amassed over half of all bitcoin ever and are now worth extreme fortunes. Those fortunes are based on demand for BTC, demand for the tiny amounts actually left circulating.

The real question is how much of that old money is actually dead - lost wallets and lost passwords - and how much is just waiting to cash out for absolute fortunes. All it would take is one early wallet carrying thousands of BTC to liquidate to cause a panic.

[SippinLean]

What you said still falls quite short of a literal pyramid scheme, which has a pretty specific definition. There is no central organization to recruit new members. People that buy bitcoin receive a real, usable product. Every person holding bitcoin profits when the price goes up. This is all in stark contrast to a true pyramid.

The way specific ICOs are structured, I could see an argument for some kind of pyramid; but "bitcoin is a pyramid scheme" is easily proved false.

[mywittyname]

Well, there are two components to a pyramid scheme: 1. returns to early investors are generated by contributions from new investors. 2. Each new investor attempts to recruit two or more new investors.

The "profits" for existing investors are paid with money from new investors. So it checks the first requirement to be a pyramid scheme. Now, this isn't explicit, but people still understand that the more BTC investors, the higher the price.

And BTC investors go online and evangelize. They talk about how BTC is a full-proof investment that can only go up-up-UP. Even this thread is full of them. So that checks the second requirement to be a pyramid scheme.

[coryfklein]

Point 1 applies to Apple stock as well

Point 2 has nothing to do with Bitcoin. Yes, there are bitcoin holders that evangelize the currency, but there are plenty that don't.

You are not analogizing correctly - just because you can find a similarity or two between two things doesn't mean one is a metaphor for the other. See Hume's response to the Watchmaker Analogy[1] for more.

[1] https://en.wikipedia.org/wiki/Watchmaker_analogy#David_Hume

[mywittyname]

No. Apple stock returns profits to investors. While it's possible to also profit on speculation of future profits, that's not the sole, or even primary reason for investing in it. The primary reason for buying Apple stock is for a share of profits.

> but there are plenty that don't.

Bull. The BTC community as a whole, are evangelists and will point out the multitude of reasons why the price of BTC will trend toward infinity. It's no surprise that, as the financial institutions get more invested into BTC, Bloomberg, et. al. report more on how the price keeps going up! Because the only way to make money on BTC is to find someone willing to pay more than you did for one.

Apple could literally pay a $50/share dividend. BTC could never do that.

I'm not saying a pyramid scheme is a metaphor for BTC, I'm saying it is an instance of pyramid scheme in action. It's just a more modern evolution. The creators were smarter and covered their asses: making it a brand, not a company, hiding their identities, making it pseudo-anonymous.

[coryfklein]

> returns to early investors are generated by contributions from new investors.

This is literally true about Apple stock. If I bought $10 of Apple stock 10 years ago I sell it for $84 today, my $74 return is generated by the contributions of new investors.

Yes, I would also have $104 of dividends paid out, but literally 40% of my "profit" comes from contributions of new investors. So does that make Apple stock a pyramid scheme? NO!

[mywittyname]

Your profit came from an increase in the profits of the company. The company chose to reinvest some of those profits instead of paying it to you, which further increases profits, thus increasing the inherent value of the stock.

That's the difference. Apple generates revenue, BTC does not. If every BTC generated money, then this wouldn't be an issue. But since BTC can't generate money, the only way to profit from it is to get someone else to pay more than you did for it when there's no fundamental reason to do so.

Plus, it can't last forever, like gold can. It has no use like corn does. You literally just buy bits in a distributed database, tell people how it's will be worth infinity dollars because there's only 21 million of them, then sell them for more than you paid. And repeat until you have infinity dollars or the bits are worth less than you paid for them.

[SippinLean]

There are many more components to a pyramid scheme, you've purposefully left out the ones that clearly don't apply to bitcoin and gone with a definition that is too broad to fit.

Further, your first component leaves out the necessity of a purposefully fraudulent bad actor to redistribute the new investors' "investments" to old investors, instead of investing them. This is clearly impossible with a distributed ledger. Returns (and losses) to all investors, new or old, are equally distributed.

Your second part is clearly much too broad, in a pyramid scheme new members are promised a share of the money taken from every additional member that they recruit.

Simply saying "hey, this could be a good investment" doesn't make something a pyramid scheme, unless Apple is a pyramid because my financial advisor told me and one more client to buy shares of it.

[coryfklein]

> literally the only way to earn a profit is to get someone else to buy it for more than you paid.

Don't you mean figuratively? An individual who bought $10 of bitcoin a year ago would have made a profit without bringing anybody else to Bitcoin. In a pyramid scheme, the ONLY way to make money is to bring others in.

[mywittyname]

Actually, I looked up the literal definition of a pyramid scheme before posting, to ensure I hit all the points.

> Returns (and losses) to all investors, new or old, are equally distributed.

No, old investors can profit while new investors lose money. Or, the new investors paid the old ones. Original BTC investors got them for free, the next generation paid pennies for them, the next paid dollars, then hundreds, and the current generation is paying thousands each.

So should the price collapse, the old generation still stands to make massive profits, at the expense of current investors.

> Simply saying "hey, this could be a good investment" doesn't make something a pyramid scheme, unless Apple is a pyramid because my financial advisor told me and one more client to buy shares of it.

Apple earns a profit, of which a share is provided to owners. That's why it's a good investment.

BTC is a purely speculative investment and literally the only way to earn a profit is to get someone else to buy it for more than you paid. It will never pay you a dividend, it will never generate any revenue.

[SippinLean]

Why were you throwing the term around before you knew what it was? Again, you left out MANY aspects of pyramid schemes--the ones hardest to twist into fitting bitcoin.

And you glossed right over this: the necessity of a purposefully fraudulent bad actor to redistribute the new investors' "investments" to old investors.

>So should the price collapse, the old generation still stands to make massive profits, at the expense of current investors.

Nope, the old generation suffers the same losses as the new if the price crashes. A pyramid scheme is just that, a scheme with a central organization controlling the flow of income. That is impossible with a distributed ledger.

The last part of your answer is a rant about Apple vs Bitcoin, I think you missed my only point: in a pyramid scheme new members are promised a share of the money taken from every additional member that they recruit. "Evangelizing" by itself is not proof of a pyramid scheme.

I suggest you continue to look it up and learn what a pyramid scheme is. It's different than speculation, it is different than a Ponzi scheme.

[mywittyname]

I knew what it was, but looking it up helped ensure my argument was complete. I know what a Volvo P1800 is, but if I saw one on the street, I'd still compare it to a picture on my phone to be certain.

> And you glossed right over this: the necessity of a purposefully fraudulent bad actor to redistribute the new investors' "investments" to old investors.

I did not, but here:

Any person who currently own BTC, and publicly state that it will continue to rise in price indefinitely are bad actors intent on defrauding the public. This applies doubly to individuals with technical or financial backgrounds that claim their are an authority on the subject.

There. You may not agree, but you can't continue to argue that I'm ignoring this point.

> in a pyramid scheme new members are promised a share of the money taken from every additional member that they recruit. "Evangelizing" by itself is not proof of a pyramid scheme.

When evangelizing crosses into market manipulation, then it is.

I feel that people are making claims about the price of BTC can rise, for the purpose of attracting more investors and increasing the price. Thus, attempting to profit from each member they recruit. The margin can be small per recruit, as the audience is literally worldwide.

I do feel that there are evangelists that are primarily motivated by political principals. But I also think nearly every investor is motivated, in some part, by greed.

[mrhappyunhappy]

Bitcoin is highly divisible so I think your point regarding it being fixed is unjustified.