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Comment by ebbv | Hacker News Reader

All cryptocurrencies are ponzi schemes. The early adopters get richer because more people come into the market later. Eventually the increasing values due to more interest will have to stop, whether because people lose interest or because everybody's already in the pool. At that time whether the late comers are totally screwed or just don't make a profit like the early adopters depends on what exactly happens.

Cryptocurrencies are the baseball cards of a new generation of wealthy libertarians (they have no inherent value like a useful commodity, and they have no backing of a powerful government. They just have value because some people decided they are valuable.) How badly the next financial crisis effects those people will determine how much cryptocurrency values are adjusted.

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> They just have value because some people decided they are valuable

This is the basis of any currency. Backing of a powerful government is a mixed blessing.

Is it though? All the meaningful currencies in use today, that I can think of at least, are blessed and regulated quite heavily by governments. Maybe this is a bit of a theory vs real world question.

Bitcoin is a meaningful currency.

(If those downvoting would care to explain in what way I'm wrong, it would be appreciated.)

I'm not downvoting, but I'd imagine they'd argue the amount of goods and services transacted in bitcoin is incredibly small.

Yes, of course. I buy things with paper. One paper can be worth 500€

The part where a government manages a currency can be bad because it can be mismanaged, which could lead to things like hyperinflation.

The good part of the government management is the part where they investigate instances of counterfeit, but that part's already taken care of with cryptocurrencies.

A major good part of management (whether by the government or a semi-public reserve bank) is that it can have adjustible monetary policy (add/remove currency to/from circulation to promote growth or prevent inflation).

Bitcoin is more like Gold, not USD.

With USD, the government can print as much as they want.

Gold, on the otherhand, is finite, and NOT backed up by a government. And, like bitcoin, is basically worthless except as a speculative asset. (gold is not worth even close to the actual price that it is sold at.)

You can also perfectly argue that early adopters get first mover advantage with cryptocurrencies. It is, in the end, the same economic effect - if you get in early you can amass much more money / influence for much less than if you get in late, but your early participation accepts more risk. The later you join the more believable the idea is. The first 100 people to mine bitcoin had low probabilistic reason to think it would be worth $2500 in 8 years than be worth $0.

I do think if we want a cryptocurrency that can also function as money we need one that inflates, rather than deflates, its money supply. It should grow dynamically as a function of the monetary base rather than with fixed payouts (that gradually, due to the amassment of money, mean you are influencing the economy less and less each payout).

For example, you would strive to maintain 1% inflation, and when the velocity of the currency drops you increase that inflation, and when it speeds up you slow or even stop printing money. Its basically automated central banking with an algorithm rather than a commissioner.

dont all early adopters usually win out? except of course for the multitudes that fail.

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