Hacker News new | comments | show | ask | jobs | submit login

> pyramid scheme that disproportionally rewards early participants and relies on new entrants

Only the miner who discovers new bitcoins gets "rewarded" by the system; every other person who receives the bitcoins later gets them in exactly the same ways that other people get currency -- by participating in economic transactions. So no, it doesn't rely on new entrants for anything; if people stopped joining tomorrow, or if people stopped mining tomorrow, current participants would still be able to trade with each other and get value out of it.

The system is designed so that coins are minted at a steady rate. There is some additional reward for early adopters in terms of less power required per coin for mining. But there is also risk for early adopters: If you're a miner you have to buy real equipment and electricity which costs real dollars today, without a guarantee that you'll be able to liquidate the Bitcoins it produces to recoup your investment (which may take years). A healthy market should have a reward premium built into the success payoff of a risky investment.

> Only the miner who discovers new bitcoins gets "rewarded" by the system

And that reward is really just compensation for keeping the whole system difficult to attack. Mining is not cheap, you need expensive hardware and electricity. I like to think of a miner as a transaction notarizer (e.g. like a notary public). Miner is definitely the wrong term, IMHO.

Wasn't mining really cheap when it first started? Who owns all those bitcoins now? The early-adopters have the lion's share of the wealth.

That's how it works, the difficulty scales with the amount of computing power in the network. If it didn't, the entire currency supply would have been mined already.


The real conspiracy theorists are the people who (seemingly without ANY experience and explanation) accuse Bitcoin of being a ponzi scheme or whatever else. Ask me a technical question about it and I can explain _anything_, after researching it casually for years.

This is open-source so you guys better be able to back up your accusations.

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact