India Says Bitcoin as Risky as Ponzi Schemes

Aside from the fact that there are a steady stream of actual ponzis centered around bitcoin, many new coins and tokens are almost certainly hollow schemes designed to transfer wealth from the naive to the ICO creators.<p>Then you have the &quot;mining&quot; companies selling shares of mining power, but those sometimes turn out to be pure frauds - no mining nor equipment. Those behave just like ponzis.<p>It is probably in the average person&#x27;s best interest to avoid it all.

At the moment 50% of all Bitcoins are controlled by less than 2,000 people(assuming 1 wallet per person).<p>It is becoming exponentially more difficult to mine them, and there is only a finite number of bitcoins in that can be mined.<p>Buying bitcoins is making these 2000 people richer.<p>I really don&#x27;t understand people who put money into Bitcoin. Actually I don&#x27;t understand anyone that puts money in a cryptocurrency that is supposed to have &quot;intrinsic value&quot;.

How often was Bitcoin called a Ponzi scheme? When it was at 50, at 100 or at 1,000? Always.<p>If I look at my stock portfolio there are so many strange stocks and funds I once invested in. They feel much more like Ponzi schemes or pump and dump, especially the riskier funds.<p>If I look at my angel tickets into early stage ventures (done with FIAT) even worse.<p>And if I look at the countless ICOs based on Ethereum, this is the real pump and dump Ponzi Disney Land.<p>But Bitcoin? Seriously? I highly doubt that Bitcoin&#x27;s founder or its early adopters intended Bitcoin as a Ponzi scheme.

Well this was a long time coming. It is not reflection on bitcoin per se rather the use of the coin.<p>Let me try and explain why this is happening. In India, people don&#x27;t warm up to &quot;internet&quot; only companies easily. What this meant is while bitcoin and cryptocurrency FOMO has caught on, people don&#x27;t go and buy coins online. There are exchanges but none of them are household name like Coinbase.<p>So, a new industry has mushroomed - people offering &quot;investment&quot; opportunity in bitcoin &quot;funds&quot;. These guys are not authorized investment professionals. They collect any where between 25-50k and <i>promise a fixed return</i>.<p>No investment opportunity can claim fixed returns unless it is a Ponzi scheme. Hence, this announcement.<p>My personal take on these opportunities is that, if these &quot;funds&quot; are in trouble - prices increase or decrease lot - they can simply claim that they have hacked. So, it is not even a ponzi scheme rather outright fraud.<p>Even though I have tried convincing otherwise couple of colleagues have invested in such opportunities. They find the whole bitcoin process - wallets, keys, pass phrases etc very cumbersome but can&#x27;t miss out on the supposed gains. And these guys are software engineers.<p>Lastly, if a person with above average technology experience finds it difficult to use bitcoin, I think it shows how true cryptocurrency&#x27;s dream of banking the underbanked in 3rd world country is going to be.

It&#x27;s not a Ponzi scheme - it&#x27;s worse. At this point it only makes sense to call it a Nakamoto Scheme.<p><a href="https:&#x2F;&#x2F;prestonbyrne.com&#x2F;2017&#x2F;12&#x2F;08&#x2F;bitcoin_ponzi&#x2F;" rel="nofollow">https:&#x2F;&#x2F;prestonbyrne.com&#x2F;2017&#x2F;12&#x2F;08&#x2F;bitcoin_ponzi&#x2F;</a>

At least your Bitcoin isn&#x27;t going to be yanked out from underneath you overnight by the government:<p>For example, <a href="https:&#x2F;&#x2F;www.theguardian.com&#x2F;world&#x2F;2016&#x2F;nov&#x2F;08&#x2F;india-withdraws-500-1000-rupee-notes-fight-corruption" rel="nofollow">https:&#x2F;&#x2F;www.theguardian.com&#x2F;world&#x2F;2016&#x2F;nov&#x2F;08&#x2F;india-withdraw...</a>

Ponzi or not, there is a new phenomenon where the ecosystem has created more individual millionaires than the ones created by startups in the last few years. Many people are reinvesting their funds in new ventures, spending more money than angels or VCs in the typical startup world. It is obvious that this is connected to the high exchange rate of cryptoassets but it can have good historical consequences: there are good projects that the general community is not hearing about because they don&#x27;t follow the typical ICO marketing route.

IMHO the one and only thing a government is to do to protect the people from Ponzi and other schemes is to make sure everybody leaves school with conscious knowledge of the following:<p>1. Every investment is a risk, you may win or you may loose. 2. The chance of loss is usually proportional to the potential profitability estimated. 3. Never invest what you can&#x27;t afford to loose easily. 4. Don&#x27;t be mad on the friend who has introduced you to the business if he didn&#x27;t explicitly guarantee you will win - that was your choice. 5. Whoever says there is no risk and the success is guaranteed - lies, don&#x27;t believe them and don&#x27;t rely on them.<p>Actually, if a person doesn&#x27;t know this by the time they finish the school the time they&#x27;ve spent there has probably been wasted. As for me I&#x27;ve learnt about Ponzi scheme from a Khan Academy lecture (and yes, my time at school was a waste mostly, that&#x27;s a pity there was no Khan Academy back in those years).

What I can&#x27;t understand is why do people demonize Ponzi Schemes so much while lotteries and bookies of all kinds are legally available on every corner. I know quite a number of people who have consciously taken the risk of investing in an open (so I can&#x27;t logically agree it being scam&#x2F;fraud&#x2F;etc although legal authorities can insist it is) Ponzi Scheme and have quit it with rather serious profit some time later. And I don&#x27;t know anybody who has ever won more than a couple of bucks in a lottery. In my opinion a Ponzi Scheme (unless the potential investors are actually told a false claim that it is not a Ponzi Scheme but a low-risk high-profit enterprise) is not a scam but a game, similar to fishing, and even much more nice to people than classic chance games played in casinos. Why not just teach people basics of risk management, warn them 3 times and let them play if they want to?

Not surprising they say that since many Indians are taking interest in cryptocurrencies due to the Indian central bank being unable to control inflation. It was at 10% just a few years ago! Also it isn&#x27;t like something that has the potential of ever going up by any significant amount. Every year it drops 3-10%. Who wants to hold on to that to save their money? No wonder the Indians have so much interest in crypto. I don&#x27;t blame them. Their government has failed them. At least with crypto it has the potential to go up.

Well is this Orwellian double talk? To some extent, I think that&#x27;s wildly accurate. Buy stocks that are sort of a scam, but don&#x27;t buy into a new technology like BTC which has imo by now proven itself to be powerful and legit, unlike the next crappy IPO. Honestly it&#x27;s hard to take articles like this seriously when what&#x27;s going on is a lot of misdirection. Just my 2c.

The two motivators in this story: fear and greed.<p>The people have the motivation of greed, the government has the motivation of fear. Fear that the greed will lead to fear of losses and everyone exiting at the same time. It is a bit sad really as the governments should just let the people wanting to get burned in this harmless bubble lose all of their money.

On the other hand you have Estonia preparing to launch its own crypto currency[1] called estcoin.<p>[1] <a href="https:&#x2F;&#x2F;www.cnbc.com&#x2F;2017&#x2F;08&#x2F;23&#x2F;estonia-cryptocurrency-called-estcoin.html" rel="nofollow">https:&#x2F;&#x2F;www.cnbc.com&#x2F;2017&#x2F;08&#x2F;23&#x2F;estonia-cryptocurrency-calle...</a>

The government want to be able to control the currency minting new money in cooperation with private banks. With bitcoin governments does not have that control. What says government central banks with zero interest rate creating new credit money out of thin air is not also a Ponzi scheme?