Ponzi scheme is ok if you are in at the beginning of the scheme. That's what makes this interesting - it's basically a bet that other people will also believe this will go on.
I don't find it fun at all, I find it a bit tragic. Looking from the chat it looks like it's a bunch of kids who don't have the sense to not engage with this kind of site.
I love how people send over $1000 to this site. Why not play poker if you have that much money to spend on gambling? Or, you know, buy an instrument and learn something beautiful?
but you said exponentially growing... which typically means "doubling". You are now saying the 'exponent' could be < 1... then you aren't 'growing' anymore... so you refuted your own statement.
Wait, what? Replying to a comment that is clearly about mathematics, with a comment that is clearly about mathematics, is trolling?
The OP's comment, including " ... changing the common definition of exponential by saying the exponent could be 1 or less than one" is (a) mathematical and (b) wrong and misleading. The "common definition of exponential" accommodates any valid argument to exp(x), and to claim otherwise requires a mathematical correction to avoid misleading people.
This is a very disappointing comment line. I know not everyone here is a CS major, but if you're even CS-knowledgable you should understand what an exponential process is. It is not, as many laypeople assume, something that is "very big".
That said, I was not intentionally trolling. I do think it's possible for a SS-style benefit to sustain itself provided that an exponentially growing population, whose exponent is greater than 1, is obligated to pay in.
A country with a stagnant or declining population will probably have trouble.
You may disagree, that's fine.
Nevertheless, any population whose growth (or lack of growth) is defined by the average number of children per member will behave exponentially.
> If everyone has one or less children, the population does not grow exponentially.
False. An exponential function, and a growing exponential function, differ only in the value of the exponent.
Here's an equation that predicts future population based on the value of an exponential term:
The equation: pt - p0 e^rt
pt = population at time t
p0 = present population
r = rate of population growth, 1% = .01
t = time
A result at 40 years for a population rate of change of -1.7% per year:
e^(-.017 * 40) = .5066
This result says that, for a population growth rate of -1.7%, after 40 years the population will be about half its present size. It's an exponential result, it's even an exponential growth rate, but the growth rate is negative.
The red trace is an exponential rate of change for r = +1.7%, the green trace for r = -1.7%. Both are exponential results, and both reflect what a population would look like for given r values.
False. Put all your bullshit math aside because that's what it is, bullshit trying to move the goalpost. The statement I made is absolutely factually true. If everyone has one or less children, the population does not grow exponentially.
We're not talking about how to model population growth, or functions, we're talking about whether every couple having one child results in exponential growth and it simply does not. If the population decreases, that is not exponential growth. An exponential result != exponential growth. You are wrong and we are done.
And, everything else aside, all the described rates are exponential.
> We're not talking about how to model population growth ...
WHAT?? Here is what you said: "If everyone has one or less children, the population does not grow exponentially." How exactly is that NOT talking about how to model population growth?
Also, it's "one or fewer children," not "one or less children."
> An exponential result != exponential growth
False in a discussion about population and exponential growth rates, terms you chose.
It's sad that you can't admit that a population decrease is not exponential growth, but your ego clearly can't handle being wrong so troll somewhere else.
Quotation: "The formula for exponential growth of a variable x at the (positive or negative) growth rate r, as time t goes on in discrete intervals (that is, at integer times 0, 1, 2, 3, ...), is xt = x0 (1 + r)^t"
Let me emphasize that for you, in case your eyes are giving out:
"THE FORMULA FOR EXPONENTIAL GROWTH OF A VARIABLE X AT THE (POSITIVE OR NEGATIVE) GROWTH RATE R ..."
Now circle the word you're most unfamiliar with, raise your hand, and the teacher will administer a sedative.
You seem unable to read English. Let me make it clear for you, you're trying to make a lay conversation about population into a math problem which it is not, in doing so you are changing the meaning of lay words into their math definitions and misunderstanding the points being made to you in the same way a scientist means something different by the word theory than a lay person does. Stop talking, stop doing math, and listen, pay attention to context, this is not a math class and as I'm the commenter you replied to, I'm the one who sets the context and I've said not a math conversation; this is a lay conversation, use the lay definition of words.
You've been told numerous times to stop thinking about math and read the words but you clearly don't grok or can't remove your math head and have normal conversation. You're still talking about modelling growth, no one else is or was. Turn off your math head and read the English words using their lay definitions, a decline in population is not exponential growth as a decline in population is not any kind of growth because it isn't growth. If you can't bring yourself to admit that, you are beyond hope.
Secondly, I'm a computer programmer, I understand the math, so stop trying to lecture me on math when you're the one not listening. I can't help it you don't understand the point being made to you because you lack the ability to be aware of the context of the conversation you're in. I know what I'm trying to communicate and I've made it as clear as I can numerous ways; if your brain is unable to work in multiple contexts, that's your failing in understanding how to communicate with others.
If you try and prove your point with equations one more time, or reference them one more time, then you've utterly failed to understand what is being communicated to you and we're done because I don't talk to brick walls who can't think.
The difference between Social Security and an annuity is that Social Security charges too little and promises payouts of too much. It cannot sustain the payouts which are promised in 2014 from revenues available to it in 2014 or the investment returns reasonably possible as a result of those revenues (and its accumulated capital). It must therefore increase the amount of revenues it receives, by a) increasing the SS tax rate and b) increasing the number of people who pay into SS until c) it inevitably defaults on promises to some portion of beneficiaries, for example by adopting e.g. means testing and retroactively stating that people born after a certain day will get the payout they've been promised their entire lives iff they have less income/wealth than $INSERT_CUTOFF and, if they exceed that, they'll receive $CONSOLATION_PRIZE_FORMULA instead.
Did you know that Social Security taxes were once 2.25% of income? Before they were 4.5%? Before they were 6.9%? Before they were 8.1%? Before they were 15.3%? That's where we are in 2014.
To be fair, while Social Security is clearly not an annuity, as of 2014 it isn't yet in default of its obligations. There's some dispute about what year that will inevitably happen. It will not be described as a default when it does, but rather tweaking a few formulas to protect America's most vulnerable citizens.
Edit: Social Security also has some "constructive default" options which are available outside of the program, because it is coextensive with the taxing power of the federal government. For example, SS benefits were once untaxed but are now taxed. There exist plausible ways by which every dollar promised of SS benefits can be "paid" but in which many get immediately recaptured by the government, which avoids formally adjusting the terms of the promise but which is indistinguishable from default in its impact on e.g. your family's budgeting process in 2070.
Another option is inflating away the insolvency. Japan will probably do this. It will pay out every yen of the promised monthly 200,000 yen due to pensioners, but pay it with yen which buy half as many apples as they did back when the pensioners were working.
The similarity that Social Security has to a Ponzi scheme is that they are both ultimately zero-sum games. The difference is that the government can run a zero-sum game forever, because it's the government.
You have a standard lie in your screed above, which when revealed demonstrates exactly how the zero-sum game will shift during our lifetimes to keep Social Security solvent forever and ever, amen. You claim that Social Security has no investments. This is a blatant lie. Social Security has been running a surplus for all of my life, and investing the surplus in trillions and trillions of US government debt, partially because it's the safest investment in the world and probably mostly because it's really convenient for the government.
Ah-ha, I'm sure you're going to say. When the one hand cashes in the T-bills, the other hand will have to pick our pockets to pay for it with more taxation, you're going to say.
Yes. But which pockets the government picks to pay off our internal obligations is extremely important.
Social Security, you see, is funded by a more-or-less flat tax on the first $XYZ,000 of workers incomes. It is basically the most regressive a tax can be, short of it being a fixed dollar amount regardless of income, which usually only happens for licensing fees, but that's another story. On the other hand, the mature T-bills are going to be paid for out of the general fund, the taxation structure for which is honestly one of the more progressive tax bases in the world.
When you combine this with the most probable fixes for Social Security -- dropping the income cap on the tax -- the future of Social Security is quite clear. Social Security is going to quietly shift from intergenerational wealth transfers to intragenerational wealth transfers. Some people in a generation, the poorest, will get back more money from Social Security than they pay in. Some people in a generation, the richest, will pay in more money than they get back.
The difference between Social Security and a Ponzi scheme is that, in a Ponzi scheme, if every group did not statistically get back more than they paid in, they would stop paying into it. Social Security, being involuntary, can collect 15% of $250,000 from a man while telling him upfront and outright he's only getting back 15% of $150,000 after he retires. At this point, a Ponzi scheme would collapse. Social Security will just putter along happily, running exactly as it should.
The difference between a Ponzi scheme and Social Security is that a Ponzi scheme is an investment, while Social Security is an insurance. As an insurance, a statistical loss is expected, but it provides a guarantee, in this case that when you are old you will never be destitute, living on the street eating catfood, or cats and rats when you can catch them.
Since Social Security is clearly not an annuity, calculations based on treating it as if it was (or should be) don't really tell us anything. In particular, where does this idea come from that current revenues have to pay for future benefits? That's not the way Social Security works or ever has worked.
Right, so when our population follows in the footsteps of Japan and Korea, we can just stop paying the benefit/kill all the old people/enslave all the young people.
My default is to suspect arguments that support dismantling social programs now because they might be insolvent in 60 years. Especially when insolvency here means not paying out as much as people expect to receive right now.
Social Security isn't a vehicle that attempts to return your principle + interest. Regardless of how many contributors there are, SS benefits would pay out at a % of the target if it could not cover the complete benefit. Ponzi schemes have no such provisions and are not transparent about it.
I suppose they are similar in that neither are actual investment vehicles, despite what many contributors tend to think.
What is amazing is that (at the time of this writing), they've had 205 BTC deposited. At today's value, that's $140,000 USD. For a site that looks to be just over one week old.
In a way, this is almost sort of like gambling. You either get 1.2x your money, or lose it all. Odds depend on the hype of the site.
What do you mean a joke? Looking at the blockchain, it seems to be a full fledged, serious, Ponzi scheme. They're taking in BTC and paying it out again to the early investors.
Even though it is a functioning ponzi scheme, it could still be classified as a joke. I'd go so far as to say if you don't see humor in it there might be something wrong with you.
Although there is the legal question. I'm not sure it would be so funny to tell it to a judge.
The greater fool theory says there are fools who know their purchase is either worthless or overpriced but purchase it anyway in order to sell it to greater fools at a profit.
There have been a few Bitcoin sites like this, I think the original one was Bitcoin Gem. Most of them turned out to be scams (and I don't just mean that they were Ponzis).
But regarding pyramid schema, you mean hierarchical structure, right? I have the same concern, but flat tagging does not help much as we can observe from many sites.
Let people browsing from multiple levels of the category is fun. The rule of thumb is: don't expect perfect structure and don't need to have everybody agree on that. Ad hoc hierarchy should be good enough like Amazon product list. Also keep it away from people who don't need to browse it.
- the difficulty of finding available addresses is quadratic to the number of unspent transactions
- someone can slightly change the transaction so it's still valid, but have a different transaction ID - that can mess up clients and break chains of unconfirmed transactions
The official bitcoin client (and all its alt forks) runs as a JSON-RPC server. It also runs as a graphical and/or command-line client for said server. You can thus communicate directly, or you can script calls of the command-line client (which gives back the direct JSON responses.) There are also plenty of language libraries that wrap the JSON-RPC calls.
How does that work exactly? I pay in X BTC and two other people pay in say 0.5 X and 0.7 X then I get these BTC back? How exactly will my X BTC be distributed among other gamblers?
my thought process is:
one large BTC pool. all transactions are feed into the pool. the order of the deposits dictate priority of withdrawal. Owner does not skim the transactions, only makes a large initial deposit and then markets the site like crazy.
Big assumption here is that he is running an "honest" ponzi operation.
Only if you ignore that the 3rd person would get the 0.8 BTC (as long as the scheme goes on). At some point he stops, but how much money he made depends exactly on how many people he didn't pay back. So, in the simplest case:
Time | Event
1 | First person pays 1 BTC
The creator makes 1 BTC in this case. Even better return.
Why would there be any leftover? If creator isn't flat out stealing (which is a possibility, but obviously illegal and risks penalty), all payins would go to payouts.
This was tried out about a year ago: https://bitcointalk.org/index.php?topic=138749.0. The rules were originally very similar to the website above; then the owner modified them so that the gem randomly "reset".
If they are operating as they say, the balance should always be less than 1.2 times the amount put in by the first entry on that list (or so, they could be combining payments or what not).
This is quite possibly the worst post to ever hit #1 on Hacker News. Why are you people voting it up? Just because it admits that it's a scam (and "get your money plus 20% back for nothing ALWAYS ENDS UP A SCAM") doesn't mean that it should get posted here.
"On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity." - I maintain that a "good" hacker wouldn't find a blatant scam interesting. Especially not "just because it uses bitcoin".
It's beyond blatant; it's unabashed and self-aware. That's interesting - who would make such a thing? Who would pay into it? Will it still work even when people know what it is?
"Every time you send money to the Ponzi address, you'll get back 1.2x what you put in." - honestly, it sounds like a normal Ponzi scheme to me. It's probably targeting people who don't realize that Ponzi schemes by their nature always end up as scams.
"All of our activity is is open and public on the blockchain. It's impossible for us to cheat anyone out of their payout without everyone knowing." - completely ignores the point. 15% of the people who put money in WILL lose all of it. Period.
> "Every time you send money to the Ponzi address, you'll get back 1.2x what you put in."
You're cherry picking a quote from the FAQ section answering what the payout ratio is. All prior mentions of the 120% payout are clear that the payout occurs only if people invest after you. Such as the "How does this work?" section:
>Send bitcoin to 1ponziUjuCVdB167ZmTWH48AURW1vE64q, and you'll get back 120% of the deposit. The returns on your investment come from other investors, so as long as people invest after you, your payout is guaranteed!
Man who started well known Ponzi scheme in 1990's Russia is at it again, this time with full disclosure. People already lost money on the new one.
They will continue, it's like gambling. You're probably better off gambling on crypto dice sites like https://doge-dice.com though. Bet on 80% odds for a 1.2% payout. Results are instant, so you can develop an addiction.
Just because it is [a naked/unabashed Ponzi scheme] is precisely WHY readers are interested. You obviously know this and are feigning I-don't-know-what...
I'm trying to work out if this is some grand statement on the similarities of Bitcoin to a Ponzi scheme in the way it's deflationary, or just a quick way for someone to make a few BTC. Maybe it's designed as a way to teach people about Ponzi schemes?
Got to say, I pity the person who eventually deposits too much money at once, causing the payments to pause while they build up enough to cover his large deposit, in turn causing everyone else to think that the money has stopped paying out and causing no further money to be deposited. That seems like the likely end of this eventually...
Even if it's not one person depositing a large amount, the backlog must grow larger and larger as time continues, this site actually has to grow exponentially to keep payout times constant.
Indeed, the liquidity here is the popularity of the site itself so as soon as the media buzz fades out the last ones to invest are going to lose everything; just like it always happens in ponzi schemes.
It's less of a statement about bitcoin as a statement about people. It shows that people will willingly deposit money into a scheme that they know is broken.
Just like with Bitcoin Savings and Trust, people essentially knew it was a ponzi scheme but they still deposited 263024 BTC. It was offering 7% a week which is 3373% a year. There are also debates about whether the people who profited are morally obligated to send their profits to the people who lost money. Are the people who profited considered to have stolen from the people who lost?
>There are also debates about whether the people who profited are morally obligated to send their profits to the people who lost money. Are the people who profited considered to have stolen from the people who lost?
The same could be asked of state lotteries and other forms of betting. Not sure there's much difference from a moral standpoint.
>Ponzi schemes by definition hide the fact that there's any risk of non-payment
Ponzi schemes in general, yes. But, I was referring to this one, wherein it was out in the open.
>when you participate in a lottery you know - or can obtain - the odds of a payout up-front
Technically, yes. But, the odds in some games are so astronomical that knowing them is basically a non-factor. That is, people play completely hoping to get lucky, but not really expecting to win. I think the same applies with a Ponzi scheme like this one, wherein it's known that the music could stop playing anytime and the participants are simply hoping to get lucky.
This makes me wonder if a bank could operate with Bitcoins. Not everyone would withdraw the money at once and there would be a way of publicly verifying the degree that they're leveraged. If the bank wanted to lend out part or all of a person's money, it could require their approval such that both them and the bank get a percentage of the interest rate the borrower pays. So many questions.
IMO, this was built to demonstrate one of the unique characteristics of Bitcoin. The ability to track transactions linked to addresses not owned by you, in this case, lets all participants see in realtime whether the owners are living up to their promises. Had Bernie Madoff used Bitcoin, his reign would have been over in a few minutes.
Minutes? Really? Because that's how most people measure their investments. The only way you could see if 'he was living up to his promises' was if he just speculated on more bitcoins, which would be dumb.
The point was that you could see where the money was going. If there were a Bitcoin based stock exchange and it published its addresses for stock purchases, when money from pooled funds started going to addresses outside of those known addresses, people would immediately know that the money has gone somewhere it shouldn't have.
>money from pooled funds started going to addresses outside of those known addresses
What? It's a stock exchange. By definition the money is immediately going to go to the counter-party in a trade. So it's going to be an unknown address. Stock exchanges aren't the ones selling stock...
Yeah, no kidding. But you're saying the counterparties couldn't register those addresses publicly with the exchange so that everyone knows where the money is going? Alternatively, the exchange itself (a trusted party) couldn't receive the coins first and then send them to the counterparties?
This transaction is where everything went wrong. I think after the shutdown they tried to start paying out the largest investors manually and missed a decimal place:
This would be cooler with one of those other cryptocurrencies that feature a Turing-complete scripting language: the code of the scheme could be public and run in the blockchain so that everyone would know the system is fair.
Why bother with a faceless ponzi scheme? Send your bitcoin directly to me, and I will invest it by hand, making sure to maximize your return: 1HbNxRhrv5Jocr7Q9ZqbbqCwuNNy4UsR77
No one finds this repulsive? People will lose money to this. Yes, they are dumb, yes it is obvious. But those who participate are still morally complicit. Enabling others who suffer from serious issues (addiction, gambling) seems like a pretty shitty thing to do.
How so? No one is being deceived. Everyone who participates does so of their own volition. Is individual volition repulsive?
Are they really dumb? Is the guy in the middle of the scheme who makes out with a profit dumb? There's known risk - some will decide they'll risk it. It may not be wise (I wouldn't participate, myself), but I wouldn't be so bold as to assume they're dumb.
> But those who participate are still morally complicit.
Who are these morally complicit participants if not the "obviously dumb" persons whom you just described? Are they victims with "serious issues" or are they morally corrupt enablers?
You may mean that the morally-corrupt-enabler(s) are whomever set this up, but that's not really what's suggested by such a broad phrase as "those who participate".
Humans are not robots, we make mistakes and often do things that we later regret. I don't have the concept of morality worked out perfectly. However, it feels wrong to influence people in a way that increases the frequency of said regretful events, especially when potentially large sums of money are involved. It looks like over 200k went through the site before it shut down? Nothing to sneeze at.
You are right, there is a distinction to be made between those who created the site, and those throw money at it.
Some who throw money at the site are well off and are essentially using the scheme as entertainment. They likely would not be too upset if the money didn't come back. One could make the argument that these people are morally entangled to a degree, as they increase the volume of funds flowing through the site, which draws in additional people, and makes it more likely that someone who actually has financial or gambling problems is tempted to bet on the site. However, this is argument is somewhat weaker than the one against the actual creators of the scheme.
Just because your expected return is negative doesn't mean it's dumb to partake in it. Nor is the outcome obvious.
The site wasn't created for the purpose of hooking in gambling addicts, so I see no problem with it. Also, you have no evidence that an explicit bitcoin ponzi scheme draws in gamblers who put in more money than they can afford to lose.
Things created for one intent often have unintended side effects.
And you are right, I don't have any hard data or evidence off the top my head. I have read many accounts about gambling in general though. It can be quite insidious. Putting money into the scheme from the OP is virtually the same thing as gambling. If the site actually ran for any decent length of time, I think it is extremely likely that some people who are struggling financially would have made bets on this site that they would then later regret. I also doubt you have evidence that implies otherwise ;)
Personally, I think that facilitating such events is morally dubious. I understand that not everyone shares this view.
Well, this is how folks get rich in the smartist era, by creating schemes like this. Or buying facebook & google stock. Or creating/investing in the next web 2.0 billion dollar company. A 9-5 chump would have to work for years to make this kind of money, assuming he paid off all his college loans.
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[ 3.2 ms ] story [ 273 ms ] threadDo you not understand how gambling works?
Social security, now that I think about it, does sound much like a Ponzi scheme.
No it isn't. If everyone has one or less children, the population does not grow exponentially.
That's not trolling. It's called "mathematics."
The OP's comment, including " ... changing the common definition of exponential by saying the exponent could be 1 or less than one" is (a) mathematical and (b) wrong and misleading. The "common definition of exponential" accommodates any valid argument to exp(x), and to claim otherwise requires a mathematical correction to avoid misleading people.
That said, I was not intentionally trolling. I do think it's possible for a SS-style benefit to sustain itself provided that an exponentially growing population, whose exponent is greater than 1, is obligated to pay in.
A country with a stagnant or declining population will probably have trouble.
You may disagree, that's fine.
Nevertheless, any population whose growth (or lack of growth) is defined by the average number of children per member will behave exponentially.
Behave exponentially != grow exponentially, still utterly missing the point; still trolling.
False. An exponential function, and a growing exponential function, differ only in the value of the exponent.
Here's an equation that predicts future population based on the value of an exponential term:
The equation: pt - p0 e^rt
pt = population at time t
p0 = present population
r = rate of population growth, 1% = .01
t = time
A result at 40 years for a population rate of change of -1.7% per year:
e^(-.017 * 40) = .5066
This result says that, for a population growth rate of -1.7%, after 40 years the population will be about half its present size. It's an exponential result, it's even an exponential growth rate, but the growth rate is negative.
In this image:
http://i.imgur.com/LW6bk8t.png
The red trace is an exponential rate of change for r = +1.7%, the green trace for r = -1.7%. Both are exponential results, and both reflect what a population would look like for given r values.
We're not talking about how to model population growth, or functions, we're talking about whether every couple having one child results in exponential growth and it simply does not. If the population decreases, that is not exponential growth. An exponential result != exponential growth. You are wrong and we are done.
You need to learn mathematics (as well as grammar). Also learn "negative growth rate" while you're about it:
http://wiki.answers.com/Q/Is_it_possible_to_have_a_negative_...
And, everything else aside, all the described rates are exponential.
> We're not talking about how to model population growth ...
WHAT?? Here is what you said: "If everyone has one or less children, the population does not grow exponentially." How exactly is that NOT talking about how to model population growth?
Also, it's "one or fewer children," not "one or less children."
> An exponential result != exponential growth
False in a discussion about population and exponential growth rates, terms you chose.
I posted the proof of my position, you posted your ignorant opinion.
Here is another reference that makes the same point in the same way:
Source: http://en.wikipedia.org/wiki/Exponential_growth
Quotation: "The formula for exponential growth of a variable x at the (positive or negative) growth rate r, as time t goes on in discrete intervals (that is, at integer times 0, 1, 2, 3, ...), is xt = x0 (1 + r)^t"
Let me emphasize that for you, in case your eyes are giving out:
"THE FORMULA FOR EXPONENTIAL GROWTH OF A VARIABLE X AT THE (POSITIVE OR NEGATIVE) GROWTH RATE R ..."
Now circle the word you're most unfamiliar with, raise your hand, and the teacher will administer a sedative.
You've been told numerous times to stop thinking about math and read the words but you clearly don't grok or can't remove your math head and have normal conversation. You're still talking about modelling growth, no one else is or was. Turn off your math head and read the English words using their lay definitions, a decline in population is not exponential growth as a decline in population is not any kind of growth because it isn't growth. If you can't bring yourself to admit that, you are beyond hope.
Secondly, I'm a computer programmer, I understand the math, so stop trying to lecture me on math when you're the one not listening. I can't help it you don't understand the point being made to you because you lack the ability to be aware of the context of the conversation you're in. I know what I'm trying to communicate and I've made it as clear as I can numerous ways; if your brain is unable to work in multiple contexts, that's your failing in understanding how to communicate with others.
If you try and prove your point with equations one more time, or reference them one more time, then you've utterly failed to understand what is being communicated to you and we're done because I don't talk to brick walls who can't think.
Did you know that Social Security taxes were once 2.25% of income? Before they were 4.5%? Before they were 6.9%? Before they were 8.1%? Before they were 15.3%? That's where we are in 2014.
To be fair, while Social Security is clearly not an annuity, as of 2014 it isn't yet in default of its obligations. There's some dispute about what year that will inevitably happen. It will not be described as a default when it does, but rather tweaking a few formulas to protect America's most vulnerable citizens.
Edit: Social Security also has some "constructive default" options which are available outside of the program, because it is coextensive with the taxing power of the federal government. For example, SS benefits were once untaxed but are now taxed. There exist plausible ways by which every dollar promised of SS benefits can be "paid" but in which many get immediately recaptured by the government, which avoids formally adjusting the terms of the promise but which is indistinguishable from default in its impact on e.g. your family's budgeting process in 2070.
Another option is inflating away the insolvency. Japan will probably do this. It will pay out every yen of the promised monthly 200,000 yen due to pensioners, but pay it with yen which buy half as many apples as they did back when the pensioners were working.
You have a standard lie in your screed above, which when revealed demonstrates exactly how the zero-sum game will shift during our lifetimes to keep Social Security solvent forever and ever, amen. You claim that Social Security has no investments. This is a blatant lie. Social Security has been running a surplus for all of my life, and investing the surplus in trillions and trillions of US government debt, partially because it's the safest investment in the world and probably mostly because it's really convenient for the government.
Ah-ha, I'm sure you're going to say. When the one hand cashes in the T-bills, the other hand will have to pick our pockets to pay for it with more taxation, you're going to say.
Yes. But which pockets the government picks to pay off our internal obligations is extremely important.
Social Security, you see, is funded by a more-or-less flat tax on the first $XYZ,000 of workers incomes. It is basically the most regressive a tax can be, short of it being a fixed dollar amount regardless of income, which usually only happens for licensing fees, but that's another story. On the other hand, the mature T-bills are going to be paid for out of the general fund, the taxation structure for which is honestly one of the more progressive tax bases in the world.
When you combine this with the most probable fixes for Social Security -- dropping the income cap on the tax -- the future of Social Security is quite clear. Social Security is going to quietly shift from intergenerational wealth transfers to intragenerational wealth transfers. Some people in a generation, the poorest, will get back more money from Social Security than they pay in. Some people in a generation, the richest, will pay in more money than they get back.
The difference between Social Security and a Ponzi scheme is that, in a Ponzi scheme, if every group did not statistically get back more than they paid in, they would stop paying into it. Social Security, being involuntary, can collect 15% of $250,000 from a man while telling him upfront and outright he's only getting back 15% of $150,000 after he retires. At this point, a Ponzi scheme would collapse. Social Security will just putter along happily, running exactly as it should.
The difference between a Ponzi scheme and Social Security is that a Ponzi scheme is an investment, while Social Security is an insurance. As an insurance, a statistical loss is expected, but it provides a guarantee, in this case that when you are old you will never be destitute, living on the street eating catfood, or cats and rats when you can catch them.
Think harder, it's nothing like a Ponzi scheme, it's just like any other insurance; payout is not guaranteed.
I suppose they are similar in that neither are actual investment vehicles, despite what many contributors tend to think.
In a way, this is almost sort of like gambling. You either get 1.2x your money, or lose it all. Odds depend on the hype of the site.
Cute whois information too: Owner : Charles Ponzi
EDIT: +1 to ryanjshaw for showing the blockchain: https://blockchain.info/address/1ponziUjuCVdB167ZmTWH48AURW1...
I just glanced over and saw all the automated responses and figured it's a joke. I'm actually still not convinced it's not an elaborate joke
Although there is the legal question. I'm not sure it would be so funny to tell it to a judge.
The human stupidity in one web, from the same Carlo Ponzi to Bernard Madoff. All Ponzi scheme portrayed in a web.
I love it.
That's what they all say
The greater fool theory says there are fools who know their purchase is either worthless or overpriced but purchase it anyway in order to sell it to greater fools at a profit.
On the other hand, this is going for just a few days, it might go south quickly.
Income: 751.63949374 btc Deposits: 692.04538439 btc Donations (ads): 59.59410935 btc Expenditure: 748.05864780 btc Withdrawals: 739.21264780 btc
I copy-pasted from the site.
BTW, any pyramid scheme is bad and should be prohibited, right?
But the site is cool though.
Sorry, I meant Pyramid scheme: https://en.wikipedia.org/wiki/Pyramid_scheme
But regarding pyramid schema, you mean hierarchical structure, right? I have the same concern, but flat tagging does not help much as we can observe from many sites.
Let people browsing from multiple levels of the category is fun. The rule of thumb is: don't expect perfect structure and don't need to have everybody agree on that. Ad hoc hierarchy should be good enough like Amazon product list. Also keep it away from people who don't need to browse it.
There are a lot of people like to participate in the BTC game, it's not bad. But if people take it seriously, it may impact on BitCoin's credibility.
I would write it myself, but there is far better explanation here on reddit
http://www.reddit.com/r/Bitcoin/comments/1x93tf/some_irc_cha...
basically:
- the difficulty of finding available addresses is quadratic to the number of unspent transactions
- someone can slightly change the transaction so it's still valid, but have a different transaction ID - that can mess up clients and break chains of unconfirmed transactions
https://en.bitcoin.it/wiki/Original_Bitcoin_client/API_calls... https://en.bitcoin.it/wiki/API_reference_(JSON-RPC)
I find the naming of the API a little peculiar, but it's simple enough.
https://blockchain.info/address/1ponziUjuCVdB167ZmTWH48AURW1...
plus
https://blockchain.info/address/14ji9KmegNHhTchf4ftkt3J1ywmi...
their "debt" - meaning, what other people have to bring into the system - is their balance + 20%. Right now, their debt is about 42 bitcoin.
(Or perhaps that's what you meant?)
I am not sure what the balance actually represents.
If they are operating as they say, the balance should always be less than 1.2 times the amount put in by the first entry on that list (or so, they could be combining payments or what not).
I didn't think it will reach #1 spot, but here we go.
"All of our activity is is open and public on the blockchain. It's impossible for us to cheat anyone out of their payout without everyone knowing." - completely ignores the point. 15% of the people who put money in WILL lose all of it. Period.
You're cherry picking a quote from the FAQ section answering what the payout ratio is. All prior mentions of the 120% payout are clear that the payout occurs only if people invest after you. Such as the "How does this work?" section:
>Send bitcoin to 1ponziUjuCVdB167ZmTWH48AURW1vE64q, and you'll get back 120% of the deposit. The returns on your investment come from other investors, so as long as people invest after you, your payout is guaranteed!
Or the main page:
>Get 120% back when the next person sends.
http://en.wikipedia.org/wiki/MMM_(Ponzi_scheme_company) http://en.wikipedia.org/wiki/Sergei_Mavrodi
Man who started well known Ponzi scheme in 1990's Russia is at it again, this time with full disclosure. People already lost money on the new one.
They will continue, it's like gambling. You're probably better off gambling on crypto dice sites like https://doge-dice.com though. Bet on 80% odds for a 1.2% payout. Results are instant, so you can develop an addiction.
Got to say, I pity the person who eventually deposits too much money at once, causing the payments to pause while they build up enough to cover his large deposit, in turn causing everyone else to think that the money has stopped paying out and causing no further money to be deposited. That seems like the likely end of this eventually...
Just like with Bitcoin Savings and Trust, people essentially knew it was a ponzi scheme but they still deposited 263024 BTC. It was offering 7% a week which is 3373% a year. There are also debates about whether the people who profited are morally obligated to send their profits to the people who lost money. Are the people who profited considered to have stolen from the people who lost?
The same could be asked of state lotteries and other forms of betting. Not sure there's much difference from a moral standpoint.
Ponzi schemes by definition hide the fact that there's any risk of non-payment, that's why it's fraud, and illegal, and immoral.
Ponzi schemes in general, yes. But, I was referring to this one, wherein it was out in the open.
>when you participate in a lottery you know - or can obtain - the odds of a payout up-front
Technically, yes. But, the odds in some games are so astronomical that knowing them is basically a non-factor. That is, people play completely hoping to get lucky, but not really expecting to win. I think the same applies with a Ponzi scheme like this one, wherein it's known that the music could stop playing anytime and the participants are simply hoping to get lucky.
What? It's a stock exchange. By definition the money is immediately going to go to the counter-party in a trade. So it's going to be an unknown address. Stock exchanges aren't the ones selling stock...
1 BTC In and 10 BTC back https://blockchain.info/address/1CeGvbrAuLJYyKxX7T2KD3358dWo...
Someone made 10x their money.
Ponzi.io (1ponziUjuCVdB167ZmTWH48AURW1vE64q) --> Ponzi.io Change (14ji9KmegNHhTchf4ftkt3J1ywmijGjd6M) --> Big Winner (1CeGvbrAuLJYyKxX7T2KD3358dWoLmAohR)
1P6yGa6nerZZ7jFDVPtFuXUPvLSfku4kWj
This is totally legit. Seriously.
I expect you to honor your word.
Return address: 1JEGu8qiaKbLgheAWCjRkeZNyEqhhaFVY3
https://blockchain.info/address/1HbNxRhrv5Jocr7Q9ZqbbqCwuNNy...
So far, no such honor has been extended from the OP:
https://blockchain.info/address/1JEGu8qiaKbLgheAWCjRkeZNyEqh...
This is one of the beauties of Bitcoin - complete transaction transparency.
Give me my money back.
The expected return to entrants, over all entries through its collapse, is likely even better than lotteries.
At least this isn't advertising on TV and YouTube to attract even more vulnerable and unsophisticated players!
What activities do you think I don't like?
Are they really dumb? Is the guy in the middle of the scheme who makes out with a profit dumb? There's known risk - some will decide they'll risk it. It may not be wise (I wouldn't participate, myself), but I wouldn't be so bold as to assume they're dumb.
> But those who participate are still morally complicit.
Who are these morally complicit participants if not the "obviously dumb" persons whom you just described? Are they victims with "serious issues" or are they morally corrupt enablers?
You may mean that the morally-corrupt-enabler(s) are whomever set this up, but that's not really what's suggested by such a broad phrase as "those who participate".
You are right, there is a distinction to be made between those who created the site, and those throw money at it.
Some who throw money at the site are well off and are essentially using the scheme as entertainment. They likely would not be too upset if the money didn't come back. One could make the argument that these people are morally entangled to a degree, as they increase the volume of funds flowing through the site, which draws in additional people, and makes it more likely that someone who actually has financial or gambling problems is tempted to bet on the site. However, this is argument is somewhat weaker than the one against the actual creators of the scheme.
The site wasn't created for the purpose of hooking in gambling addicts, so I see no problem with it. Also, you have no evidence that an explicit bitcoin ponzi scheme draws in gamblers who put in more money than they can afford to lose.
And you are right, I don't have any hard data or evidence off the top my head. I have read many accounts about gambling in general though. It can be quite insidious. Putting money into the scheme from the OP is virtually the same thing as gambling. If the site actually ran for any decent length of time, I think it is extremely likely that some people who are struggling financially would have made bets on this site that they would then later regret. I also doubt you have evidence that implies otherwise ;)
Personally, I think that facilitating such events is morally dubious. I understand that not everyone shares this view.