Jeez louise. I guess I give up on my stop misusing the term Ponzi scheme rant. Doge is all sorts of terrible things but it does not meet the traditional technical definition of a ponzi scheme when all of the gains to investors are generated via sale of assets on the open market and they have been totally honest about the nature of the asset from day one (it's a joke, it's a toy, don't take it seriously), and there is no structure of payouts that ensures that money from specific investors gets funneled to other specific investors based on seniority. It literally meets none of the criteria except for the sole fact that people that bought early made money(which is true of literally any asset that has gained in value over a time period).
But I guess Ponzi has been officially redefined to "speculative asset that is in a bubble" at this point if that's what the regulators are going with.
Except what do you call the thing Bernie Madoff did now? Because that had nothing to do with "speculative asset in a bubble".
> The missing part is just the central administrator.
No, the missing part is the actual fraud.
Bernie Madoff for example literally lied about assets under management. Dogecoin is just a digitally scarce ledger, with all there is to know about it publicly and clearly available.
It's not fraudulent, just silly--it was built as a joke after all.
Exactly, it’s disingenuous to pretend we don’t know what people are talking about when they call it a Ponzi scheme. If on end of the value-creation spectrum we have a local, family-owned shoe factory and at the other we have Ponzi’s scheme itself where would you place Dogecoin? It’s not at the extreme, but it’s definitely closer to the latter. The question is how close it needs to be for it to be illegal.
No. The important distinction is that in a Ponzi scheme, the central administrator lies about the underlying product. Like all scams, it's based on maximizing information asymmetry between the seller and buyers. Cryptocurrencies are open-source and 100% verifiable, and thus no one is lying about them. Because of this, it's on the buyer if they don't understand what they are buying.
If you're an early investor in Facebook and sell, then a later investor is paying for your profits. That isn't a ponzi scheme. It's missing the fraud part where the money isn't really there. Investors may own doge coins that are in a speculative bubble, but they actually have the doge coins they bought. Bernie Maddof's clients didn't have the shares he said they did because he never bought the shares with their money.
Gold is a ponzi scheme according to your definition.
The only way to argue that it isn't but Doge is is based on your subjective opinion of "creating value" but if you take your subjective opinion out of it, they fit the exact same criteria you listed.
No, any kind of purely speculative investment meets that definition. That is exactly what the other poster is saying. It is a misunderstanding to say that such an asset is a Ponzi scheme.
> It's also a scheme in which early investors are paid by later investors, not by any form of value creation.
This is not correct, since a lot of people hodl. This is 100% buying something that might increase or decrease in value. If it decreases, is it then a "reverse ponzi scheme"?
Actually, we could create a real ponzi cryptocurrency, where older wallets get interest from newer wallets. Or that part of the value regularly gets transferred back to the previous transacted wallet. Now THAT would be a ponzi scheme!
It seems like a pyramid scheme, not a ponzi scheme. I thought one of the hallmarks of a ponzi scheme was faked financials and/or dividends being paid fraudulently.
It's worth noting that the quote from Kashkari isn't even included, so without looking at some other source we don't know whether he even used the word Ponzi. Or for that matter, whether he illiterately said "a Ponzi" like this article does, or please-for-the-love-of-god included the word "scheme." This article is kind of crap in other ways too, and I have branded it a shitty (sic). On Twitter so-and-so said this and then so-and-so said this (not quoted), and a year ago he also said this!
Someone on Twitter started a poll on how to pronounce Doge and Kashkari replied, "The right pronunciation is pon-zi." It's probably just an ill-considered joke and not intended to be taken literally. Someone in his position should be less careless though.
Seems like a narrow understanding of a ponzi scheme based on a particular execution of the concept.
I think Doge could still be correctly branded a ponzi scheme, since the returns for an investor is essentially tied to the number of suckers that buy into it after them. An early investor can take a "structured payout" by selling off the asset once the hype-cycle is creating more and more suckers who buy into the idea.
The fact that it was a joke has been diluted from the mass media, mostly due to irresponsible messaging by idiots like Elon.
>>I think Doge could still be correctly branded a ponzi scheme, since the returns for an investor is essentially tied to the number of suckers that buy into it after them. An early investor can take a "structured payout" by selling off the asset once the hype-cycle is creating more and more suckers who buy into the idea.
The problem with this "definition" of a Ponzi scheme is that any transaction with a future payout directly or tangentially related to people buying into it qualifies. Homeownership is a Ponzi scheme. Employment is a Ponzi scheme. Software is a Ponzi scheme. Investing is a Ponzi scheme. Life itself is a Ponzi scheme. What GP is getting at is there should be a more specific definition that properly identifies the required element of fraud (as defined by the law) in a Ponzi scheme but doesn't demonize mass risk taking and losses that come with it. Very few people being l end up winners any endeavor. Loss alone doesn't make Dogecoin fraudulent anymore then it does the lottery.
"I think Doge could still be correctly branded a ponzi scheme"
No, the essential element of deception is absent. A Ponzi scheme involves deceiving investors. Doge isn't deceiving anyone. It's upsetting people, especially celebrity establishment types looking to make headlines, but that's not deception.
Naturally when the bubble pops the losers will claim they were deceived. They'll be fools and their claims will be specious but in a world where most 'problems' are self-inflicted they'll find an ample number of said celebrity establishment types to indulge that narrative and invent new regulators and criminalize more things...
>I think Doge could still be correctly branded a ponzi scheme, since the returns for an investor is essentially tied to the number of suckers that buy into it after them
Seems like most of the responses ignore the fact that there's actual value creation in every other market, that is completely lacking with doge. It's a joke with no real-world utility.
Did you know terms evolve in English and often come to mean similar though not exactly the same thing after some decades or centuries? Of course it doesn't exactly match the original scheme of Charles Ponzi (even Madoff didn't), but there are enough similarities for it to be an apt comparison
Probably worth highlighting that I could not find a single direct reference to Neel Kashkar (the person who apparently said that, actually saying that it's a Ponzi scheme.
He used "dumpster fire" in past, which is quite different.
He knows that it's not a Ponzi scheme, because there is no fraud. It's like the dollae, stocks, interest, money printing and some VC investments, etc. which aren't usually Ponzi scheme either because it's not illegal.
> Except what do you call an actual ponzi scheme now?
Yeah, that's the problem with bandying words around without care to their meaning.
This is happening with fascists/ Nazis more often lately in society. I feel that's a bad thing because there are still torch carrying Nazis out there, they're dangerous, and now we don't have a word for them that carries the same weight. It gets watered down when you use it to refer to anyone center or right of center politically.
Jordan Peterson is a Canadian, mostly liberal, left of center academic and the press frequently refers to him as fascist. That just doesn't work.
Speaking of bandying words, when Peterson refers to himself as a classical British liberal, he means free market and not progressive. The NYTimes rates him as conservative leaning.
Went looking for the press labeling Jordan Peterson a fascist. I found this article, associating him with intellectual foundations of fascism but not outright calling him one. This is the article Peterson flipped out about on Twitter, saying he would "slap" the author.
Please dude, Peterson is a conservative and is in no way left of center except that he claims that so he can argue with other right wingers as the “liberal” of the group.
That said, there are a lot of fascists in the mainstream right now. And the number of swastikas (of a non-religious nature) is the highest its been since about 1945...
> Dogecoin branded as Ponzi by the president of the Federal Reserve Bank of Minneaopolis.
Important to note that this is the president of the Federal Reserve Bank of Minneapolis (misspelled in the article), not the Chair of the Federal Reserve, who leads what we generally think of as the "fed."
While true this is rather important in the finance world. Firstly, that one of the 12 regional reserves would call it thus, is something. Secondly, Kashkari (sidebar: best name ever for a banker) is considered the most soundly minded amongst those bankers, and incredibly well respected - even in these circles. If Kashkari is branding it thus, it means there's something to watch here.
I think the point is that if you want to name the office in four words without being misleading, you should go with something like "Minneapolis Federal Reserve President", not just "Federal Reserve Bank President". I'm familiar with the FRB structure and I did not pick up on that "president" was used and not "chair".
I don’t need to be a federal reserve chairman to reason that Doge is a Ponzi scheme. The problem is that people want to participate in Ponzis, for the most part, it turns out.
I noticed that too, but I don't think it really matters.
Even if Jerome Powell came out every day just to say "Fuck Doge, it's a scam", the response from crypto enthusiasts would be "That's exactly what you would say"
While the conclusion that "Doge pumping is a scam" is very likely correct, the sentiment that an adversary can't give an unbiased opinion is also correct. I'd value the opinion of an expert with no skin in the game more.
It is overall very interesting. And accurate in my opinion. Current batch of cryptos are very much an MLM. And I am saying this is a quiet sympathizer of crypto ( you know - actual crypto currency intended to bypass old gatekeepers with all the benefits and threats coming with it ). As it stands right now, the ridiculous push for centralization and greater control is everything crypto was trying to undermine.
It is possible that is emblematic of how we approach systems as a species, because everything seems to tend towards one or two major players.
Right now only monero, and to a much lesser extent bitcoin, still resemble the original promise of crypto.
Ethereum and smart contracts blockchain in general have real potential and utility imo. The use cases are still niche, but it's not a ponzi/MLM, not even close.
I’ve been on a deep dive into crypto and Ethereum in particular for a while now, and I’ve yet to find any actual utility for the technology other than currency. And even that one is as yet unproven.
The vast majority of smart contracts seem to rely on a trusted external source for their operation. Others seem not to benefit from the decentralized solution at all.
There is also a serious question of whether the excessive democratization will lead to tyranny of the majority. In the case of Ethereum, the majority has gone along with each of the hard forks proposed so far.
I find the technical aspects of crypto compelling, but I still remain highly skeptical of its applications.
Smart contracts don't have any utility beyond the utility already achieved by cryptocurrencies in general. The use cases are indeed "niche" and they will always remain that way due to the fundamental limitations of how a smart contract works.
I think the ETH network and the idea of smart contracts is extremely potent, but its primarily being utilized to furnish scams at the moment. The crypto bull market brings out all sorts of scam artists and actively stifles innovation.
Crypto would be a much healthier space if it wasn't tied so heavily to the Bitcoin halvening cycle. That causes asset prices to inflate every few years, and every big run up attracts awful people. Projects that come up in the bear market are always so much more interesting.
>“Maybe five years from now or 10 years from now or 20 years from now something useful will emerge from this, but so far, all that’s emerging is burning garbage,” Kashkari said.
I would love to hear Vitalik Buterins take on this. After listening to him for a while, I got very humble with respect to the ideas of crypto, the abstraction of value etc. - of course the world of crypto is dominated by pump and dumps at the moment, but I'm not convinced that that's all there is to see. I think that crypto will reshape the world of money, just not in the terms that money is being thought off right now. If that assumption holds, most people would be unable to see the forest for the trees.
> If that assumption holds, most people would be unable to see the forest for the trees, maybe even the president of the fed of minneapolis.
It reminds me of living through the early www.
We went from "who would ever buy books online?!", to DotCom euphoria, to market crash, to a long-term recovery, to a thriving internet economy. Some of the largest companies on the planet were created during the initial heyday period. Their trajectory was very non-linear, but they've had tremendous impact.
The usefulness of the web was immediately apparent to a certain group of people, even if it was poo-pooed by the mainstream. The difference is that even crypto evangelists who are deeply immersed and invested in it will openly tell you that no, bitcoin is not a useful currency and we never expect it to be (and some will tell you it was never intended to be).
This is just a bunch of bluster. The FED isn't the SEC. They don't have a law enforcement division or anything like that with guns and badges.
Some guy got in a car accident(Lewis v. United States)[1] with some Federal Reserve employee and tried to sue under the Federal Tort Claims Act, which allows the federal government to be sued for certain things, like car accidents, as they are normally subject to sovereign immunity. The judge said this didn't apply to the Federal Reserve because they aren't a federal agency. There is actually a long interesting argument in the case by the judge about why the Fed is not a federal agency. They can hire and fire employees at will, their workers are not in the civil service pension program, they get workers compensation, they receive no appropriated funds from congress, they can sue and be sued under their own name, etc.
The Fed absolutely has regulatory authority over a pretty big piece of the banking system much the same way the SEC has authority over the investment industry.[1] But more importantly, the Fed has leverage over most of the financial system: any institution that wants acccess to the discount window is going to have to do what the Fed says. And if they all have to comply, their clients will have to, too. OCC, FDIC, and the Fed also work closely with one another. Police force or not, if you want to be a bank you’re going to have to comply with their requirements.
I don't think Dogecoin is scared of losing access to the discount window!
They are more like a public utility that is private, but has some amount of government oversight. Controlling the ability to create money is pretty impressive and they can cut people off from that, so that is a lot of power. They can't arrest people or criminally charge people like the SEC can though.
> They don't have a law enforcement division or anything like that with guns and badges.
What's interesting is that they're probably one of the only few federal entities without at least a small attached police force. Even NASA and the Department of Education have their own police.
Don't ponzi shemes need to pay out early investors (usually with the money from latter investors)? No-one is paying out Doge buyers, except those who choose to buy their coins from them.
Readit News
But I guess Ponzi has been officially redefined to "speculative asset that is in a bubble" at this point if that's what the regulators are going with.
Except what do you call the thing Bernie Madoff did now? Because that had nothing to do with "speculative asset in a bubble".
The missing part is just the central administrator.
A actual ponzi scheme could be called "classical ponzi scheme"
No, the missing part is the actual fraud.
Bernie Madoff for example literally lied about assets under management. Dogecoin is just a digitally scarce ledger, with all there is to know about it publicly and clearly available.
It's not fraudulent, just silly--it was built as a joke after all.
but they don't, if you bought doge at multiple points in its history you wouldn't have gotten anything and would have lost money.
This is just _speculation_, if you call it a Ponzi scheme then buying any precious metal is a Ponzi scheme.
The only way to argue that it isn't but Doge is is based on your subjective opinion of "creating value" but if you take your subjective opinion out of it, they fit the exact same criteria you listed.
Deleted Comment
This is not correct, since a lot of people hodl. This is 100% buying something that might increase or decrease in value. If it decreases, is it then a "reverse ponzi scheme"?
Actually, we could create a real ponzi cryptocurrency, where older wallets get interest from newer wallets. Or that part of the value regularly gets transferred back to the previous transacted wallet. Now THAT would be a ponzi scheme!
If I'm reading this right, then land ownership is a ponzi scheme?
All crypto
>The missing part is just the central administrator.
tether, including the pre-mining debacle
1. https://www.linkedin.com/posts/paul-grewal-288978b4_grabbing...
I think Doge could still be correctly branded a ponzi scheme, since the returns for an investor is essentially tied to the number of suckers that buy into it after them. An early investor can take a "structured payout" by selling off the asset once the hype-cycle is creating more and more suckers who buy into the idea.
The fact that it was a joke has been diluted from the mass media, mostly due to irresponsible messaging by idiots like Elon.
The problem with this "definition" of a Ponzi scheme is that any transaction with a future payout directly or tangentially related to people buying into it qualifies. Homeownership is a Ponzi scheme. Employment is a Ponzi scheme. Software is a Ponzi scheme. Investing is a Ponzi scheme. Life itself is a Ponzi scheme. What GP is getting at is there should be a more specific definition that properly identifies the required element of fraud (as defined by the law) in a Ponzi scheme but doesn't demonize mass risk taking and losses that come with it. Very few people being l end up winners any endeavor. Loss alone doesn't make Dogecoin fraudulent anymore then it does the lottery.
No, the essential element of deception is absent. A Ponzi scheme involves deceiving investors. Doge isn't deceiving anyone. It's upsetting people, especially celebrity establishment types looking to make headlines, but that's not deception.
Naturally when the bubble pops the losers will claim they were deceived. They'll be fools and their claims will be specious but in a world where most 'problems' are self-inflicted they'll find an ample number of said celebrity establishment types to indulge that narrative and invent new regulators and criminalize more things...
Dreary is the word that comes to mind.
Is social security a ponzi scheme?
Probably worth highlighting that I could not find a single direct reference to Neel Kashkar (the person who apparently said that, actually saying that it's a Ponzi scheme.
He used "dumpster fire" in past, which is quite different.
He knows that it's not a Ponzi scheme, because there is no fraud. It's like the dollae, stocks, interest, money printing and some VC investments, etc. which aren't usually Ponzi scheme either because it's not illegal.
Neel Kashkari: The right pronunciation is pon-zi.
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Deleted Comment
It's all in the intent, which is sometimes hard to prove, but easier when it involves lots of lying.
Yeah, that's the problem with bandying words around without care to their meaning.
This is happening with fascists/ Nazis more often lately in society. I feel that's a bad thing because there are still torch carrying Nazis out there, they're dangerous, and now we don't have a word for them that carries the same weight. It gets watered down when you use it to refer to anyone center or right of center politically.
Jordan Peterson is a Canadian, mostly liberal, left of center academic and the press frequently refers to him as fascist. That just doesn't work.
https://en.wikipedia.org/wiki/Jordan_Peterson#Political_view...
https://www.nybooks.com/daily/2018/03/19/jordan-peterson-and...
https://twitter.com/jordanbpeterson/status/97594153761910784...
If this happens frequently, surely you could link to a few more instances? I can't find any others.
That said, there are a lot of fascists in the mainstream right now. And the number of swastikas (of a non-religious nature) is the highest its been since about 1945...
Important to note that this is the president of the Federal Reserve Bank of Minneapolis (misspelled in the article), not the Chair of the Federal Reserve, who leads what we generally think of as the "fed."
That title belongs to Emilio Botín, who used to lead Spain’s largest bank and hid several hundred millions in a secret account in a Swiss bank.
Botín is spanish for pirate booty :)
Deleted Comment
Even if Jerome Powell came out every day just to say "Fuck Doge, it's a scam", the response from crypto enthusiasts would be "That's exactly what you would say"
It is possible that is emblematic of how we approach systems as a species, because everything seems to tend towards one or two major players.
Right now only monero, and to a much lesser extent bitcoin, still resemble the original promise of crypto.
The vast majority of smart contracts seem to rely on a trusted external source for their operation. Others seem not to benefit from the decentralized solution at all.
There is also a serious question of whether the excessive democratization will lead to tyranny of the majority. In the case of Ethereum, the majority has gone along with each of the hard forks proposed so far.
I find the technical aspects of crypto compelling, but I still remain highly skeptical of its applications.
Crypto would be a much healthier space if it wasn't tied so heavily to the Bitcoin halvening cycle. That causes asset prices to inflate every few years, and every big run up attracts awful people. Projects that come up in the bear market are always so much more interesting.
I would love to hear Vitalik Buterins take on this. After listening to him for a while, I got very humble with respect to the ideas of crypto, the abstraction of value etc. - of course the world of crypto is dominated by pump and dumps at the moment, but I'm not convinced that that's all there is to see. I think that crypto will reshape the world of money, just not in the terms that money is being thought off right now. If that assumption holds, most people would be unable to see the forest for the trees.
It reminds me of living through the early www.
We went from "who would ever buy books online?!", to DotCom euphoria, to market crash, to a long-term recovery, to a thriving internet economy. Some of the largest companies on the planet were created during the initial heyday period. Their trajectory was very non-linear, but they've had tremendous impact.
Bitcoin: January, 2009 (12 years, 5 months)
In two more years, we'll be just about halfway there. I think the internet had far more apparent uses at 12 years (2005) than bitcoin has now.
https://www.linkedin.com/posts/paul-grewal-288978b4_grabbing...
Some guy got in a car accident(Lewis v. United States)[1] with some Federal Reserve employee and tried to sue under the Federal Tort Claims Act, which allows the federal government to be sued for certain things, like car accidents, as they are normally subject to sovereign immunity. The judge said this didn't apply to the Federal Reserve because they aren't a federal agency. There is actually a long interesting argument in the case by the judge about why the Fed is not a federal agency. They can hire and fire employees at will, their workers are not in the civil service pension program, they get workers compensation, they receive no appropriated funds from congress, they can sue and be sued under their own name, etc.
[1] https://openjurist.org/680/f2d/1239/lewis-v-united-states
Edit- More info about the Fed’s supervisory authority here: https://www.federalreserve.gov/supervisionreg/enforcement-ac...
[1]Fed enforcement actions: https://www.federalreserve.gov/supervisionreg/enforcementact...
They are more like a public utility that is private, but has some amount of government oversight. Controlling the ability to create money is pretty impressive and they can cut people off from that, so that is a lot of power. They can't arrest people or criminally charge people like the SEC can though.
What's interesting is that they're probably one of the only few federal entities without at least a small attached police force. Even NASA and the Department of Education have their own police.
(this is a joke)
I also don't trust an article about Minneapolis that spells it "Minneaopolis"
Speculation bubble =/= ponzi scheme.