Can Cryptocurrency rapid growth be compared to ponzi scheme

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#1

The rapid growth in cryptocurrency is comparable to a ponzi scheme. People invest into these because they expect good returns. There is no identified source of generating revenue on the investment. A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. The Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. … Instead, they use it to pay those who invested earlier and may keep some for themselves.

Cryptocurrencies are essentially digital currencies that are not issued by any central authority and depend on the users of the currency for their validation. The validation is recorded on the Blockchain which is there for everyone to see. Since the currency is decentralized, there is no geopolitics involved. Since the transactions are publicly available, implementing counterfeit transactions is extremely difficult. Since the entire system is encrypted using cryptographic protocols, the transactions are secure. Most importantly, they are easily convertible into USD at the moment. Most “serious” cryptocurrencies, like Bitcoin, are limited in number protecting against inflation. Cryptocurrencies have been the darling of fin-tech observers since 2013 and we are presently in the midst of a cryptocurrency bubble with prices of every kind of cryptocurrency shooting through the roof.

What measures has 1hive put in place to prevent this happening here?

This surely discourages potential investors.

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#2

Every currency in the world is pretty much a Ponzi scheme in my opinion :slightly_smiling_face: And with the world printing money every asset is also pretty much in a bubble and will be until they stop or raise interest rates. Just my two cents stay well :v:

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#3

I don’t think so…not every crypto currency is a ponzi scheme I don’t agree with that

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#4

No. Cryptocurrency cannot be compared to a ponzi scheme. Well, some…

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#5

That’s ok I understand no big deal. My thoughts when reading it on the part where you mentioned what a Ponzi scheme is just made me think of how every generation buys into and builds upon what the generation before did. Now maybe Ponzi scheme shouldn’t of triggered that thought in me, but doesn’t money in general feel almost like a hoax? I mean we are sorta a socialist society anyways if you look at how it’s structured. I know in certain circles that’s a bad word, but we are all in the same boat and if one country fails from the looks of it the other countries follow or at least their markets do. From what I understand in the US our bond market was build to absorb the debt of people who borrowed money for ideas they thought where great and some end up failing. Which happens, so to keep a country where people take risks to innovate and build new things those more fortunate buy up bonds from the government who backed the banks who gave out the loans. With out this I think we wouldn’t see the innovation that we have seen since the tech boom started back in the 80s I think. Sorry if I’m a little all over the place on this topic I can clarify my thoughts more if your interested but don’t want to take up too much of your time or go on too long of a rant on the subject unless warranted :slightly_smiling_face:

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#6

Do you lean more towards the maximalist perspective of BTC? I have a bunch of friends who are maximalists is the reason I ask. I just got that vibe from your comment and wanted to check to see your perspective

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#7

Bitcoin maximalists believe that Bitcoin, which is the world’s most popular cryptocurrency, is the only digital asset that will be needed in the future. Maximalists believe that all other digital currencies are inferior to Bitcoin…I solely believe that’s not true…so many currencies started after Bitcoin started and are doing better … So that perspective I don’t agree with it.

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#8

It’s a very interesting topic for sure. Is the world better off with a fixed supply of money an elastic supply or no no money at all ? And if no money at all how would humans be able to tell their value? Or be able to compare their contribution to humanity vs their neighbors contribution.

#9

I really don’t get your point… please do elaborate

#10

The discussion seems to mainly be about a fixed money supply or an elastic one. I through in the other idea as an alternative perspective to both. Honestly I personally have no clue what happens when and if any of the above gets implemented.

#11

And sorry I’ll elaborate a little more. BTC has a fixed amount so there can never be any more made which is why people are attaching value. Which makes sense because of scarcity. With ETH there is no fixed supply so more can be created if needed to operate and fuel the system.

#12

Ok now I get that… Thanks for your enlightenment

#13

Thank you for the inspiration to think more about the topic

#14

Every bull run the space gets accused of being a ponzi scheme, that it has no real value, that its a bubble, etc. But every bull run I’m seeing giant leaps in technological and sociological leaps being made, which is a beautiful thing. We are in exciting times! This is the first bull run where there are many protocols actually ready to be built on top of (previous runs were mostly speculative), but every day I see amazing DeFi, decentralization, and P2P economy projects being utilized more and more.

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#15

True…I see sense in your layout

#16

I love it and great point! It’s grown beyond just monetary value and is now starting to shape the world around us. Thanks for bringing a deeper look into the subject :slight_smile:

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#17

What do you mean when you say “investors”?
1Hive has a dynamic supply.
If there’s too much free Honey some gets burned.

As it turns out the supply of Bitcoin could actually be changed, so we all need to get over that idea.
Also, Bitcoin isn’t used for anything but moving numbers around on a ledger.
Not all value comes from scarcity.
And definitely not all value comes from having a high price.
The goal of Honey has never been to moon.

How 1Hive protects “investors” is by providing a free, fair, safe, open, and humane environment in which to “invest”, ie, apply our talents and skills to increasing the use value of the 1Hive ecosystem.

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#18

In fact, a very big percentage of cryptocurrencies are a ponzi scheme, let me explain in my noobish way:

-most projects do not have a product except for the cryptocurrency so the price action is a ponzi scheme
-a lot of DEFI is a a scheme also, not a ponzi one, but where do you think that high APY comes from?

I suggest you read a little about:
-the network effect
-how DEFI works
-how money works

Have a nice day!

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#19

xDai actually has intinsic value as base infrastructure for exchanging value in decentralized, transparent and permissionless way.
I thought the debates about money as a tool that has no intrinsic but extrinsic value are a finished topic with a simple conclusion.
The usefulness of a particular DeFi dapps or NFT collectibles can be measured by the user’s subjective impression and needs. I personally started using Compound finance in early 2019 for the reason that I didn’t want to sell Ethereum when I needed to invest in new hardware. So my need was not high% yield, but better capital efficiency given the funds I have (Ethereum). In a traditional bank, they would certainly not give me a loan given the collateral and its purpose (development of decentralized infrastructure).
We can also take as an example the international exchange of values that brings with it unnecessarily high fees and paperwork or the services of financial institutions as intermediaries whose role is trivial in the exchange of values and the allocation of funds.
Most of us who now use decentralized infrastructure have suffered or still suffer from a “middleman syndrome” because we still can’t believe how much that service actually costs us.

I will agree with you in the part that there are users whose main goal is high APY or farming and protocols that base their value proposition on “value printing” but that part exists in any traditional sector with a positive trend.

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#20

Very well said and I get that vibe from this community, which is really refreshing. I’ve been caught up in Babylon chasing $ for too long :slightly_smiling_face:

@ZER8 Your right and I totally agree. Although I still like to farm a little it’s a good place to store trading profits and keeps liquidity in the system.

@domik Wow that was awesome, I’ve never heard that explanation for Dapps or NFTs. It’s a great way of describing value! How long did you all debate that subject to come up with such a clean definition? :wink:

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