[cryptography] Digital cash in the news...

Ian G iang at iang.org
Mon Jun 13 09:55:38 EDT 2011

On 13/06/11 5:54 PM, Adam Back wrote:
> Bitcoin is not a pyramid scheme, and doesnt have to have the collapse and
> late joiner losers. If bitcoin does not lose favor - ie the user base grows
> and then maintains size of user base in the long term, then no one loses.

Um, Adam, that's the very definition of a pyramid scheme :)

No-one need lose as long as the size of the user base grows, long term!

So everyone is incentivised to bring in new victims^H^H^H^H^H^H users :P

That's why they're illegal, typically.

> I think in the current phase the deflation (currency increasing in value)
> helps increase interest and number of users.

Um, yeah, whatever.  Look, whatever you do, don't tell anyone of your 
friends or family to invest in it.

> Say that in the next phase bitcoin stops rapid expansion and reaches some
> stable number of users, the deflationary period stops, and the remaining
> users use it for transactions only (not speculation). I dont see the losers
> in that scenario.

No, but the scenario is incomplete:  Those speculating on an increase in 
value will realise it has reached stability.  So they'll sell.  Which 
will cause a reduction in value.  Which will cause a run, as those that 
didn't understand the mechanics of a pyramid scheme get their rude lesson.

>> However. Unless the laws of financial conservation have been repealed
>> by the design, those who follow have to invest a lot and come out with
>> less...


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