Nutcoin: A great Cryptocurrency

[Kaelik]

It is a minor distinction. Are you claiming that it's a pyramid scheme instead?
If so, what group, exactly, is conspiring to commit what fraud, exactly?

Definition of Pyramid Scheme: "A pyramid scheme is an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public."

Yes, I am claiming that Bitcoin is a Pyramid scheme. No one is committing a conspiracy to fraud (probably) but that doesn't mean that it isn't a Pyramid scheme, because such schemes describe business models, not fraudulent action.

name_here - Not every disease is AIDS, not everything that makes you sad on the Internet is libel, not everything wrong is fallacious, and not every overvalued investment is a Ponzi scheme. If you use specific terms, you are making specific claims. Ifthose claims are not credible, you may get called on them.

Hey fectin. Hey fectin. Hey fectin. You are getting called on your improper use of the term Pyramid Scheme.

[fectin]

Eh, I guess you're right. I was trying to define pyramid scheme too tightly.

So if I get someone into BitCoin, BitCoin Inc. cuts me a check? Nice, I hadn't heard that part.

[DSMatticus]

You cannot buy a sandwich using your bitcoin wallet without telling everyone that you are taking money out of your bitcoin wallet in order to put it into their's.

Actually, no. You have to tell everyone that a wallet's owner (keyholder? Some other term?) transferred money to a different wallet. That's the distinction. Nothing ties your identity to either wallet.

If you're instead arguing that pseudonymity isn't the same as anonymity, I think you're splitting hairs, but you are correct.

The problem is that it's non-trivial. The correct way to think of a bitcoin wallet is a bank account whose bank statements are a matter of public record. Even if you could open such a bank account without attaching your identity to it, would you be comfortable that your identity was secure doing business out of that bank account? Of course not.

If you used the same bank account (or even bank accounts related by transparent and obvious laundering schemes, as in your wallet 1 -> wallet 2 example) to pay both rent and a prostitute, then if at any point it becomes known that the bank account of the prostitute belongs to a prostitute your landlord will immediately know you have hired a prostitute. If at any point it becomes known that the bank account of your landlord is the bank account of your landlord then the prostitute has considerably narrowed down your place of residence. And you know what? Anyone who does business with the landlord can do exactly the same thing the landlord can, because they have as much access to the landlord's transaction history as the landlord does. And anyone who does business with the prostitute can do exactly the same thing the prostitute can, because they have as much access to the prostitute's transaction history as the prostitute does. And so on and so on.

And if you really think you're safe behind multiple bank accounts (or even making new ones and discarding them all the time), I can find out that those bank accounts belong to the same person by looking at the relationships between them and use patterns across them ("Bob is claiming wallet X belongs to him and wallet Y belongs to someone else, but wallet X paid a bunch of money into wallet Y and wallet Y makes all the same transactions to the same people that Bob does on a routine basis - Bob couldn't be more full of shit"). Bitcoin is honestly super fucking traceable, and that means your entire bitcoin anonymity can be compromised by a single transaction. If you try to pay cash for something anonymously and I figure out who you are, I don't instantly learn everyone else you've paid cash to. But with bitcoin, I do. Unless you launder those bitcoins into something that is genuinely untraceable, like cash, and be careful not to fall into predictable and distinctive purchasing patterns once you turn them back into bitcoins (which isn't a problem right now, because people don't use bitcoins for the majority of their transactions and so can't create patterns).

[Username17]

Eh, I guess you're right. I was trying to define pyramid scheme too tightly.

So if I get someone into BitCoin, BitCoin Inc. cuts me a check? Nice, I hadn't heard that part.

Don't be more of an idiot than you've already been. Pyramid schemes very often involve nothing at all being sent from central. The most basic Pyramid scheme is "send a dollar to each person on this letter, then cross the top name out, put your name on the bottom and send out ten copies of the letter." Obviously, the model is unsustainable. Obviously if enough people follow the letter's instructions, the person following the instructions the first time will make a tidy profit. Obviously the people who got into the pyramid first paid nothing at all to start and it's pure profit for them.

How is any of this different from BitCoin?

-Username17

[Kaelik]

@fectin, as Frank said, nothing about a bitcoin requires a check from someone in the company. A common pyramid scheme sells you a product that is basically useless for an absurd mark up (Oils and Herbs Package) and then tells you to sell it to someone else at an even larger fucking markup.

That is exactly how most people involved in bitcoin deal with bitcoins. They buy it high and sell it higher. But unlike stock, they have no actual anything to justify the value. It is literally just a pyramid scheme based on worthless piles of trash instead of cosmetics.

Actually, no. You have to tell everyone that a wallet's owner (keyholder? Some other term?) transferred money to a different wallet. That's the distinction. Nothing ties your identity to either wallet.

I understand what fectin is saying, and while he could have been clearer, you are missing his point.

He is saying that you create the second wallet, and then you transfer everything to it and claim publicly that you were hacked and have no connection with those bitcoins to get a free reset.

Of course, that makes no sense, because you would still have to do that and create a new wallet after every transaction to distinguish your current bitcoin pile from your previous transactions. And since each person is getting your fucking address to mail you something, you probably do in fact have to do that after every transaction to retain anonymity.

And of course, because these transactions are all tracked, attempting to use a hack claim to reset your identity will stop working after the second time you do it after one transaction.

[DSMatticus]

No, I get that that's what fectin is claiming. The problem is that even if you do that, people can see all the transactions between those wallets and all the transactions those wallets make to other people. Not only can I see the relationship between all of those many different wallets, I can build a functional identity by realizing that the person who supposably HAX'd you does all the same transactions you do. Money stolen from you will not be used to pay your rent, for example. So when the wallet that HAX'd your money moves its money to another wallet, which moves its money to another wallet, and so on for N steps, and then ends up paying your rent, I know all those wallets belonged to you all along (a little more complicated than that, but whatever).

And because I can build that functional identity by looking at transaction histories (and no matter how many wallets you add to this, you aren't really making my life appreciably harder), if any transaction you make gives someone details about your real identity, then that immediately compromises the anonymity of all your transactions in an amazing and hilarious domino effect. The only way to truly maintain anonymity while dealing with bitcoins is to cash out of them into something untraceable and then cash back in (taking advantage of the anonymity of some other commodity).

[name_here]

Well, if you threw in enough steps and elaborate merge-and-split games and artificially fiddled with usage patterns you could probably throw most observers off the trail. But that would be hard and apparently Bitcoin's user base is dumb enough to pay for completion of a hit without checking if anyone has been reported dead in the area. Really. So I have little faith in their ability to convincingly segregate their wallets.

[Grek]

It seems to me like the only way to actually be anonymous with your bitcoin purchases is to use a separate wallet for each merchant. Example:

I buy 50$ worth of bitcoins from Honest Bob. I then take those bitcoins and buy something illegal from Shady Jim. Shady Jim then sells 50$ worth of bitcoins to Honest Bob. Since the only transactions on those accounts are Bob-> Grek-> Jim-> Bob, that's pretty much indistinguishable from the fuckton of Bob1-> Bob2-> Bob3-> Bob1 transactions that Honest Bob is doing to throw off the police.

[K]

Here is an article about a new service where you can get your own cryptocurrency. Get on the ground floor of your own scam!

[dmx374]

Crypto currencies are NOT ponzy nor pyramid schemes.

And this is why:

1) New members can be richer than the initial creator
Bitcoin's value is now far more high than the $0.00001 something of the beginning.
Do not forget that the first miners are those who invested their time and money in the network.
Yes, they now may have lots of bitcoins, but at what cost?
They worked more, got more. Logical.

2) It is mathematically what we call a graph, not a tree.
no parent, no child, no hierarchy.
you do not need to recruit new members under you, to feed parent or something.
Every node is flat, with the same properties like any other node, with the same rules for all.
New members can be directly linked to the very first guys.

3) All members have the same chance to earn or loose money
It's like a strategy game. You can get more by working more, or by convincing people to give you coins in exchange for goods or services. Not by recruiting people under you that will work for you.
That's it: you do not earn by the work of other people, but by your own work and intelligence. You work for you, and for the entire system (this is what we call a Nash Equilibrium in Game Theory, what is good for me is good for the others). It's perfectly at equilibrium.

4) Mining is almost done
Now with bitcoin, fees are mandatory. You must pay a little something attached to the transaction.
And the network will continue with this.

5) And, if you do not understand all the above ...
... do you really think there is only noobs in the government?
do you really think "they" will let a $10 billion ponzy scheme goes public and con all the planet?

It is here to stay, this is good for the government, for people, for you, for me, for everyone in this "giant game" (again, Game Theory, look for Nash Equilibrium on wikipedia)

[fectin]

[Username17]

Oh noes! We have Econotrolls!

Now a pyramid scheme is simply an unsustainable business model where money is sent back up the chain such that people on the ground floor have higher profits and lower risks. A ponzi scheme is a fake investment proposal where the returns are provided from the other investors stakes rather than from profits of the supposed venture. That's seriously all they are. BitCoin is both of these things.

The structure of BitCoin promises no transaction fees because the people validating the transactions are paid in newly minted BitCoins. This is unsustainable because the enforced scarcity ensures that as time progresses it will become less and less economical to validate the transactions - more coins to track and less coins paid per validation. The no transaction fee promise is already out the window and now they are promising merely "low" transaction fees. But that's going to get eroded too, because the number of coins paid out is going to continue to fall and the amount of processing power required to track all the coins is going to continue to rise. Eventually they must retreat to promising "reasonable" transaction fees or "not too unreasonable transaction fees."

Meanwhile of course, the people who got in on the ground floor had to put up very little processing power and got a relatively lot of coins for their trouble. So it's an unsustainable system which concentrates profits in the people on the ground floor and concentrates risk in the people at the tail end. So it's a fucking pyramid scheme, because that is what a pyramid scheme is!

Now it's also a ponzi scheme. You know it's a ponzi scheme because the venture has no profits at all. Zero. Nada. Zilch. All they do is is trade BitCoins for dollars and dollars for BitCoins. It is completely zero sum. So every time anyone cashes out, 100% of that money is coming from a new investor buying in. 0% is coming from profits because there no fucking profits. So the fact that anyone at all has cashed out of the system means that not everyone can cash out. A considerable number of people are sooner or later going to be left with worthless BitCoins and the dollars they spent into the system will be in the hands of people who have already cashed out. That is how a ponzi scheme works. As long as the system is up and running, the investors can take their money out at any time. But once it collapses, which it inevitably will do, everyone with money left in the system gets a goose egg because there isn't enough money left in the account to pay out everyone's supposed stake.

BitCoin is actually one of the most audacious ponzi schemes I have ever heard about, because unlike Bernie Madoff they aren't even pretending to have enough money to pay out all the investors. In fact: they explicitly have zero dollars set aside to pay out to the investors. If you want to cash out, you have to do so by selling your stake directly to a new sucker investor. As soon as the exchanges shut down, everyone who hasn't already cut and run loses everything. Not "almost everything," literally everything. Because Because BitCoin is a ponzi scheme which is very specifically operating at 0% reserves.

Crypto currencies are NOT ponzy nor pyramid scheme.

And this is why:

1) New members can be richer than the initial conceptor

Pyramid schemes can very plausibly funnel more money to people in secondary or tertiary levels than the people at the top. If you're in one of those multilevel marketing scams and you happen to sell more shampoo or juice or whatever than the rest of the company, you make more money than the rest of the company. Congratulations. It's a pyramid because it concentrates profit towards the top and risk towards the bottom.

-Username17

[Lago PARANOIA]

I wonder how rich Satoshi Nakomoto is going to become from this.

[Kaelik]

You work for you, and for the entire system (this is what we call a Nash Equilibrium in Game Theory, what is good for me is good for the others). It's perfectly at equilibrium.

...

It is here to stay, this is good for the government, for people, for you, for me, for everyone in this "giant game" (again, Game Theory, look for Nash Equilibrium on wikipedia)

Point of Fact: You have absolutely no idea what a Nash equilibrium is.

[Josh_Kablack]

Crypto currencies are NOT ponzy nor pyramid schemes.

Right on one of those

[dmx374]

You work for you, and for the entire system (this is what we call a Nash Equilibrium in Game Theory, what is good for me is good for the others). It's perfectly at equilibrium.

...

It is here to stay, this is good for the government, for people, for you, for me, for everyone in this "giant game" (again, Game Theory, look for Nash Equilibrium on wikipedia)

Point of Fact: You have absolutely no idea what a Nash equilibrium is.

Go learn this: http://en.wikipedia.org/wiki/Nash_equilibrium

[Kaelik]

You work for you, and for the entire system (this is what we call a Nash Equilibrium in Game Theory, what is good for me is good for the others). It's perfectly at equilibrium.

...

It is here to stay, this is good for the government, for people, for you, for me, for everyone in this "giant game" (again, Game Theory, look for Nash Equilibrium on wikipedia)

Point of Fact: You have absolutely no idea what a Nash equilibrium is.

Go learn this: http://en.wikipedia.org/wiki/Nash_equilibrium

No see, I have an Economics degree from one of the top 20 universities in the country, so I know what a Nash equilibrium is. For example, in the Prisoner's Dilemma, the Nash Equilibrium is both defect, a result strictly worse for both parties than both cooperate.

A Nash equilibrium is not a situation which is good for everyone, it is one in which no one wants to change.

To whit, from your article: " The prisoner's dilemma thus has a single Nash equilibrium: both players choosing to defect.

What has long made this an interesting case to study is the fact that this scenario is globally inferior to "both cooperating." That is, both players would be better off if they both chose to "cooperate" instead of both choosing to defect. However, each player could improve his own situation by breaking the mutual cooperation, no matter how the other player possibly (or certainly) changes his decision."

Nash equilibria say absolutely nothing about what is best for everyone and instead only say that people don't want to do shit differently.

Like I said, you know nothing about Nash equilibrium, because even if you were describing a situation that was in Nash equilibrium (you weren't by the way) it would still not be an argument that it is the best position.

[Chamomile]

Nothing good ever comes from someone who registers to a forum to make a post in the off-topic section.

[...You Lost Me]

Nothing good ever comes from someone who registers to a forum to make a post in the off-topic section.

I enjoyed his post. The diplomacy thread was getting old.

[Avoraciopoctules]

http://www.antipope.org/charlie/blog-st ... -in-a.html

[Starmaker]

Lol no. It is super fucking traceable by design.

Since this got bumped, @DSM re: tumbling:
With sufficiently large 'coin volumes and large nominal and effective fees over a sufficiently prolonged period tumbling is all but untraceable from the outside within the practical time limit. However, by using a tumbling service, one is entrusting their identity to the tumbling service.

As in, the very much centralized and eminently hackable service knows that Creepy Pete the child porn dealer forwarded 50 coins to the service, and on account of that Wholesome Jack who is totally not the same guy and who tends to buy sandwiches from Honest Sam the legitimate sandwich seller is owed 50 coins. And yes, you personally could run a reasonably secure service where each tumbling request is erased as soon as it arrives and only the aggregate "amount due" is stored for each wallet, but how can anyone be sure of a service run by someone else?

[Chamomile]

Word on the internet is that the Jamaican bobsled team raised $25,000 in donations...Of dogecoins.

[fectin]

Word on the internet is that the Jamaican bobsled team raised $25,000 in donations...Of dogecoins.

I just can't believe, that Jamaica got a bobsled team.

[Maxus]

Word on the internet is that the Jamaican bobsled team raised $25,000 in donations...Of dogecoins.

I just can't believe, that Jamaica got a bobsled team.

There's a movie about it. Cool Runnings.

[Maj]

That is hilarious. Go, Jamaica!