RE: Is Bitcoin a Ponzi too? A Simple Explanation about Where Does Money Come From for Dummies

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Is Bitcoin a Ponzi too? A Simple Explanation about Where Does Money Come From for Dummies

in steemit •  8 years ago 

What business model? Bitcoin does not produce anything. It is free, so it does not have earnings. It is a currency, or a open source bookkeeping platform. Steem can be a currency, too, but I suspect the high built-in inflation rate will hobble it as such.

That said, I think Steem works just fine for content curation. The model is quite ingenious, and could eat reddit's and hopefully even facebook's lunch. Just don't expect them to convert into hard cash forever.

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Bitcoin is not free. Don't forget the fee.

  ·  8 years ago (edited)

What business model? Bitcoin does not produce anything. It is free, so it does not have earnings.

That's the economic innovation that crypto-currencies have introduced: you don't need to have a profitable (in accounting terms) business model to be able to survive. You stay sustainable by expanding contentiously.

This very feature makes people think it's a Ponzi, but it's not. The key difference preventing crypto-currencies from being a Ponzi is the fact that the outcome of their existence is perceived as valuable - you can't say this regarding a regular Ponzi.

The point is, Bitcoin (or Ethereum or any other major crypto-platform) faces exactly the same problem as Steem: they need to contentiously expand to remain sustainable. Having transaction fees solves nothing and it just a hindrance for the user.