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Business/Finance See other Business/Finance Articles Title: Bitcoin is a ‘pyramid scheme,’ says an economist Source: [The Block] URL Source: https://finance.yahoo.com/news/bitc ... -says-economist-070015526.html Published: Jan 2, 2020 Author: Yogita Khatri Post Date: 2020-01-02 11:38:36 by Ada Keywords: None Views: 2074 Comments: 22 Bitcoin is a ‘pyramid scheme,’ says an economist Tendayi Kapfidze, chief economist at Nasdaq-listed online lending marketplace Lending Tree, has said that bitcoin is a “pyramid scheme.” “You only make money based on people who enter after you,” Kapfidze told Yahoo Finance in an interview published Thursday. He added that bitcoin has “no real utility.” “They’ve been trying to create a utility for it for ten years now. It’s a solution in search of a problem and it still hasn’t found a problem to solve,” said Kapfidze. Bitcoin has earned many monikers in its 11 years of existence - a "scam" (by Bill Harris, founding CEO of PayPal); "rat poison" (by Berkshire Hathaway vice chairman Charlie Munger) and "rat poison squared" (by billionaire investor Warren Buffett), among others. Yet, a recent report from Bank of America names bitcoin the single best investment of the last decade. The report said if you invested $1 in bitcoin at the start of 2010, it would now be worth more than $90,000. Last year alone, the value of one bitcoin rose more than 85%, making it one of the top-performing financial assets in the world. Post Comment   Private Reply   Ignore Thread   Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 22. #1. To: Ada (#0) It's funny because the only finance experts news media can find to comment on bitcoin are those "deep state" people who've established their success in the world of fiat currency. They can't interview a 25 year vet from any crypto firm's board of directors because crypto was only created some 10 years ago and any businesses based on crypto are only 2-3 years old at most. So there are no pro-cypto voices in the media world to counter biased opinions like these. To say it's a pyramid scheme is laughable, as the qualification of that: “You only make money based on people who enter after you,” Kapfidze told Yahoo Finance in an interview published Thursday. ” That's true of gold too, and pretty much any commodity. Stocks at least pay dividends which doesn't rely on downline buyers but with the P/E ratios these days, that doesn't count for much. He added that bitcoin has “no real utility. Yes it does. It facilitates transactions worldwide with no intermediaries, is oblivious to sanctions, and at a fraction of cost. It's also a method of storing wealth that is very difficult for governments to seize. >“They’ve been trying to create a utility for it for ten years now. It’s a solution in search of a problem and it still hasn’t found a problem to solve,” said Kapfidze. That's hogwash. Bitcoin was devised in response to the 2008 financial crisis, which was a problem just short of being the "Mother of all Problems", that problem being fiscal irresponsibility and theft by Congress. Now Bitcoin does have its problems. Namely, transaction speeds, while far faster than bank wires, is woefully inadequate for retail, point of sale use. Transactions can take 30 mins to an hour which is far too long for paying for groceries at the checkout counter. There's also the number of transactions per second. Visa/mastercard services, being centralized, can handle 10's of thousands per second while bitcoin is maybe less than a dozen. For crypto to truly compete with CC's and cash, it needs to bridge those gaps. But it should, with time. How long, I don't know, but tech is always getting better. Pinguinite  posted on  2020-01-02   13:55:14 ET  Reply   Untrace   Trace   Private Reply   #2. To: Pinguinite, neoconsnailed (#1) How are bitcoins mined? Ada  posted on  2020-01-02   14:31:10 ET  Reply   Untrace   Trace   Private Reply   #3. To: Ada (#2) How are bitcoins mined? Bitcoin, and all free market crypto, is mined by solving puzzles. It's a race. You might picture a warehouse full of unsolved Rubik's cubes. They are available for anyone to solve, in sequence. So it's a race to solve each one. Everyone competes to solve it and whomever solves it first is, generally, winner of the 6.25 bitcoins that come with it, after which the next puzzle becomes available to solve. Lather, rinse repeat. I say "generally" because 2 parties could solve it at about the exact same time, which occasionally happens. In that case, the tie-breaking race is to essentially spread the news to other nodes on the blockchain/internet, and the one who spreads the news fastest wins. Each time a puzzle is solved, a new link in the blockchain is created and in that link, pending bitcoin transactions are permanently recorded for all time. So mining is directly tied to the ability to transact bitcoin. Puzzles are solved about every 15-30 minutes, on average. So "mining" bitcoin means having a computer competing to solve the bitcoin puzzles. An independent homeowner system could try this, but the competition is so big it could mean working this for a few years with nothing to show for it except for higher electricity bills. 6.25 bitcoin is about $45,000 at current market prices, but even so, some people give up as for some, it may be like trying to win the lottery. Pinguinite  posted on  2020-01-02   15:33:50 ET  Reply   Untrace   Trace   Private Reply   #7. To: Pinguinite (#3) Everyone competes to solve it and whomever solves it first is, generally, winner of the 6.25 bitcoins that come with it, after which the next puzzle becomes available to solve. Lather, rinse repeat. I thought the supply of bitcoins was frozen, i.e., there could never be any more of them created. Ada  posted on  2020-01-02   18:25:54 ET  Reply   Untrace   Trace   Private Reply   #8. To: Ada (#7) (Edited) I thought the supply of bitcoins was frozen, i.e., there could never be any more of them created. There is a cap currently in place in the mining software for a limited number of bitcoin. Some 80% have already been mined, but there is also in place a "halving" that occurs at various benchmarks where the reward for mining is cut in half. It's already happened a few times as it used to be 25 coins per puzzle, then 12.5. There is also auto provisions in place that make mining harder or easier depending on the collective amount of mining power in play. If miners give up mining and the "hash power" drops, then the puzzles automatically get easier to solve, and vice versa. So bitcoin has a self-governing supply and demand regulation built in to ensure mining will always be profitable to someone, somewhere, but also guarantees there won't be a runaway situation where added computer power won't suck all the future bitcoin supply dry in a short amount of time. The final coin is expected to be mined some 30 years or more from now. Even so, yes that is a problem because after the last coins are mined, no further transactions in bitcoin will be possible. My expectation is that when that day inevitably approaches, the cap will be lifted. It has to be. There's no other choice. It can be lifted when the software is upgraded, and it is upgraded periodically. Pinguinite  posted on  2020-01-02   19:03:51 ET  Reply   Untrace   Trace   Private Reply   #17. To: Pinguinite, StraitGate, Ada, HAPPY2BME-4UM (#8) The final coin is expected to be mined some 30 years or more from now. Even so, yes that is a problem because after the last coins are mined, no further transactions in bitcoin will be possible. My expectation is that when that day inevitably approaches, the cap will be lifted. It has to be. There's no other choice. It can be lifted when the software is upgraded, and it is upgraded periodically. I appreciate your expertise in this, Ping. Why will people no longer be able to trade in BC at that time? And who will life the cap? ;-) NeoconsNailed  posted on  2020-01-08   22:16:50 ET  Reply   Untrace   Trace   Private Reply   #19. To: NeoconsNailed (#17) I appreciate your expertise in this, Ping. Why will people no longer be able to trade in BC at that time? And who will life the cap? ;-) The best explanation is provided in the youtube I posted in my previous comment. It's an excellent presentation, not boring at all. But the short answer is that the mining of new coins is directly linked to the operation of recording transactions. When new coins are mined, a new block is added to the blockchain, which simultaneously awards new bitcoins to the successful miner AND records pending bitcoin transactions. If mining discontinues for any reason, such as when all miners stop mining or after all coins are mined, no more blocks can be added to the blockchain, and without that, no more bitcoin transactions can be effected. Watch the video for an illustrated example of how things work. The cap can be lifted by modifying the software that is the bitcoin framework. The decision is made by general consensus. Once the bitcoin mining software is modified to raise the limit, miners are free to start using it or not. If all miners accept the new software, then the change is uncontested. If there is a substantial number of miners that reject the new software, such that some miners use one version and others use a different version, then it's a situation known as a "hard fork" where both the old and new versions are valid and start competing in the market against each other. Anyone having bitcoin before that event will have coins in both versions. In the case of running out of bitcoin, however, any not accepting the new software lifting the cap on bitcoin generation cannot mine anything. Though in reality, the cap will be lifted long before the final coin is mined. Pinguinite  posted on  2020-01-08   23:41:08 ET  Reply   Untrace   Trace   Private Reply   #20. To: Pinguinite, HAPPY2BME-4UM, Ada (#19) The cap can be lifted by modifying the software that is the bitcoin framework. The decision is made by general consensus. So the person who hatched all this is mere history, like a pill you take. His ownership, leadership or whatever was purely temporary -- nobody knows who he is, when he left it, how he feels about anything at all? Did we hear that he was found and arrested a few years ago? Hope not. This pure democracy you describe -- hope it works!!! NeoconsNailed  posted on  2020-01-09   3:04:42 ET  Reply   Untrace   Trace   Private Reply   #21. To: NeoconsNailed (#20) So the person who hatched all this is mere history, like a pill you take. His ownership, leadership or whatever was purely temporary -- nobody knows who he is, when he left it, how he feels about anything at all? The person who wrote the original paper back around 2008 that describe the theory of a crypto currency goes by the name Satoshi Nakamoto. It's widely believe to be an alias and not a real name. One person claims to be Satoshi, a Dr. Craig Wright. He was involved with the bitcoin project and disagreed with how it was going, so he and a number of followers did their own fork of the bitcoin software nd the name of the new crypto was "BitCoin Cash". Later he had a falling out on further changes Bitcoin Cash was making and another fork occurred and he went with his preferred version which acquired the name Bitcoin SV ("Satoshi's Vision"). To this day it is not known if Wright is Satoshi. The claim is neither proven but neither is it contested by anyone else claiming to be Satoshi. His claim could be proven outright, I believe, but that's not been done. Wright is also in litigation regarding a past partnership related to bitcoin. Did we hear that he was found and arrested a few years ago? Hope not. This pure democracy you describe -- hope it works!!! Yes, bitcoin, and all free market cryptos, are completely decentralized. In place of central control is market consensus. Everyone involves votes with their feet and hands, and those that correctly second guesses what the public wants make money. But no, Satoshi committed no crime whatsoever in conceptualizing crypto and inventing bitcoin. His ID has never been confirmed and to my knowledge there is no arrest warrant or criminal investigation whatsoever related to the creation of bitcoin. Pinguinite  posted on  2020-01-09   21:23:16 ET  Reply   Untrace   Trace   Private Reply   #22. To: Pinguinite (#21) I know this chick who keeps trying to get me to open a digital currency account in my name. The first one they kept sending links which would expire too fast. Now the next one I am not even going to deal with. Screw it. ;) BTP Holdings  posted on  2020-01-09   22:16:12 ET  Reply   Untrace   Trace   Private Reply   Replies to Comment # 22.         There are no replies to Comment # 22. End Trace Mode for Comment # 22. Top • Page Up • Full Thread • Page Down • Bottom/Latest

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