

Why Bitcoin Is a Ponzi Scheme - pionar
http://kernelmag.dailydot.com/issue-sections/staff-editorials/11338/bitcoin-ponzi-scheme/

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rskar
Sigh, yet another misapplication of the term "Ponzi scheme". Even the author
almost admits that "Bitcoin is not a Ponzi scheme. It is simply a ["George
Goodman"] supermoney scheme."

Carl Menger's definition of money ("money is the most marketable commodity")
rings true enough, although I would also suggest adding that it must have a
rather long (if not indefinite) shelf-life, and some sort of recognizable
quality to it (such as purity, authenticity, whatever). But it seems everybody
overplays the notion that money must be something material that is valuable
for its own sake. Clearly that is not always the case, else why is fiat
currency still regarded as money? There is - dare I say? - now a spiritual
aspect to money, also valuable for its own sake. That immaterial thing is
"faith".

"Faith" in the money-sense is about what the money represents. Money is now
just a token for something given up as part of a long chain of on-going
deferred barters. It certainly helps if a hegemonic force declares these
tokens as legal tender, but it's the faith that make them useful beyond
settling tax bills and law suits. Strangely, it is about putting faith into
special forms of metal, paper, and plastic over having to have any faith in
people.

A "Ponzi scheme" is a confidence trick, a deliberate lie, an unfaithful
venture; it's a swindle that masquerades as an investment. That is not
Bitcoin. Bitcoin has more in common with tulip bulbs and Beanie Babies than a
Ponzi scheme; and, even then, it's not quite the same as bulbs or Babies,
except that it is yet another opportunity at speculation.

Just because a government won't accept Pieces-of-Eight, spices, or tobacco
leaves as legal tender doesn't make them not money. Bitcoin doesn't, however,
have any hegemonic backing, and it certainly doesn't have any materiality to
it. It's not even obvious if it can be said to be valuable for its own sake.

Yet the Bitcoin project has long aspired to be money, and it can succeed at
that so long as there is sufficient faith in it. In this way, it's the same as
any national fiat currency. What's new and different is that it's all hash-
code, and time will tell if people can put their faith into that.

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codewritinfool
Is this guy quoting the same Gary North of Y2K fame?

