BitCoin doesn't promise any returns, and doesn't distribute anything to new people who sign up. It is only a Ponzi scheme if the real world's economy is a Ponzi scheme. I don't know if it is.
You're right. While bitcoin has certain similarities to Ponzi schemes (i.e. the fact that the people who start the scheme get rich while the folks who come later lose their money) I think it's really more accurately described simply as an asset bubble.
Except, y'know, without any actual underlying asset. I don't think I've ever seen an asset bubble in something that was literally worthless before. Even the tulip bulbs of the Dutch tulip mania (http://en.wikipedia.org/wiki/Tulip_mania) could be planted in your garden and would look quite pretty, even if not ten years' salary worth of pretty.
The worth is in the design, adoption, and utility. Anonymous currency has MUCH utility. And this currency, unlike the paper issues by states, is backed by math.
Money is just a tool, and BitCoin is a particular variant of that tool. It has unique properties that can be used for lots of things. Therefore I wouldn't say that they are worthless.
It has unique properties that can be used for lots of things
Well, no, it doesn't have any unique properties. For instance, as I've said before, I'm running an alternative currency called "bitcoin prime" which has these two properties:
1. Every string of bits that is a bitcoin is also a bitcoin prime, and
2. Every bitcoin prime extant as of April 1, 2011 belongs to me (all subsequently mined bitcoins prime belong to whoever mined the relevant bitcoin).
Mathematically there's no difference between bitcoin and bitcoin prime. And that's just one of an infinite number of possible bitcoin alternatives which can be arbitrarily declared, at any time, to exist.
You can also arbitrarily launch a new search engine at any time, but that doesn't mean that you will become the next Google. Likewise launching a new social network won't automatically make you the next Facebook. BitCoin already has a strong network of nodes securing the transactions behind it.
Your algorithm only piggybacks on BitCoin, you wouldn't be able to run your scheme without the existing BitCoin infrastructure. Also, the existance of bitcoin prime wouldn't enable you to send bitcoins, so bitcoins would still be unique.
In fact I would like to see you run your scheme. How would you transfer 1000 bitcoin prime to somebody else? Since you don't have the private keys of the real owners of the bitcoins, I don't think you could do it.
Hrrrm. This redefinition, while trivially possible, seems irrelevant. Possession of assets is first and foremost a practical matter. (I think you understand this, but for the benefit of the discussion…)
In the case of primary real-world goods, possession comes from being able to physically access the state of various matter and energy: I physically own a house to the extent that I can reliably live in it and make modifications to it and so forth. I physically own food to the extent that I can make use of it by eating it. Other people can alter the game by acting as environmental forces to change the set of available interactions.
In the case of fiat currency and economic goods, practical ownership (including but not strictly identical to theoretical legal ownership) is similarly determined, but with more of a focus on laws of people rather than the laws of physics; the former are backed by the latter, but usefully form a separate conceptual layer.
The case of Bitcoin is also analogous, but there is now a focus on the laws of mathematics as they apply to the state space in which the Bitcoin system operates, and in particular to the practicalities of computing—a strong cryptographic attack could still destroy the system.
So the reason that owning all the early Bitcoins prime is not useful is the same reason owning all the virtual dollars in a parallel system to the US banks is not useful despite being able to invent whatever such system you want. Because no one will recognize this, the amount this changes your set of available physical interactions with regard to primary goods is very small. (I haven't taken weird social goods into account in the above, but I think a similar argument applies since they also require external recognition.)
That said, I think the GP poster would do well to clarify what ey meant by “unique properties”, and perhaps whether (as I interpret it) “unique” is meant to be “of the set of currently active systems, for some fuzzy activity threshold”, thus excluding Bitcoin prime and the infinite variations thereof.
I know you're being facetious, but just to clarify it for everybody: no, stock in a company never counts, because pets.com was an actual company with actual assets. For instance, they owned that sock puppet.
Actually, while the Bitcoin system itself does not arbitrarily distribute any money to new clients, there does exist a Bitcoin Faucet[1] to help newcomers try the system out, allowing various people to acquire a few free cBTC once.
Real world economy is a kind of a ponzi scheme, in my opinion. With the central bank being at the top, and other banks below it, followed by the financial sector, and all the people who become rich by "speculating" on money instead of actually producing something useful
EDIT:
Please read this in context before you downvote. We're talking about bitcoin. If bitcoin is a kind of a Ponzi scheme, then it's no different from the "scheme" present in the current monetary system.
That's not really how the real world economy works. The real world economy is all about people producing and consuming things. Banks, even central banks, are just a thin layer of icing on top of the cake.
That is not true. They get to issue new money and decide who gets to spend that new money before the circulation of that new money causes general prices to raise.
Those who get the new money first live at the expense of those who don't.
The central bank doesn't need to produce anything to create this new money.
Sure it is about producing and consuming things. No one can argue about that. But remember that we don't exchange goats for cows, and milk for banana juice anymore. You produce things because you believe you will make enough money so you can then buy something else with it. So you can regard money as an intermediary economic good which everybody wants. The problem however is that some participants to this market, like the central bank for example, get to have access to virtually unlimited supplies of money, which puts you at great disadvantage.
I agree with you. However you have to realize that whenever you make such controversial statements (controversial with respect to mainstream view) you will get downvoted, because people don't like to have their worldview shaken, and their orderly views disrupted. For most people it is much easier to accept something based on what it appears to be than to think of what it truly is.
Also, unlike the current monetary system in USA and most of other countries, the bitcoin network has no central control and after a certain point no more currency will be produced. In contrast, in the current monetary system more money gets pumped as needed.
