What is a Ponzi scheme?
From Wikipedia:
"A Ponzi scheme (also a Ponzi game or a Ponzi) is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources."
Similarities
On the Steem platform, the rewards for using the system depend on the value of the Steem currency. The Steem currency value depends on the people who purchase it with other currencies. These people have done so as an investment rather than in exchange for the content. They are here because they themselves hope to make money as the process continues. This is analogous to "pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources." In contrast, a site such as YouTube makes money by providing content in exchange for the viewing of adverts. This is a "legitimate source" because third-parties are willing to pay for the advertising service, as opposed to investing into YouTube itself in the hope that its value increases.
The obfuscation of Steem
The principle of the Ponzi scheme is cleverly obscured by some of the features of Steem. The founders pretend that the value comes from the content and user interactions. The problem is that these things only have value if you can exchange them for something, such as an independent currency. Steem's content isn't even monetised. It's just data on a blockchain. The user is not making money from ads or people paying for content. Instead the payment is determined by a system of rules, which is essentially redistributing the wealth of new investors. This means that the entire system is dependent on new investors who want to make money from it, rather than genuine users who actually want to buy content or provide ad-revenue. Ironically, the actual market value of the content is being ignored, subverted and replaced with value that depends on the Ponzi-mechanism!
Hallmarks of a Ponzi scheme
At the time of writing, most of the trending content is about the Steem platform itself, making money from it, or entrepreneurship in general. It seems most people are here to make money, rather than for the content. This is a huge red flag, and strongly illustrates the unsustainable foundations of Steem.
Prediction
When investment dries up, and eventually it must, all that is left is a dynamic currency which inherently redistributes itself according to unfair rules that defy the free market. The USD may not be perfect, but at least it doesn't pay itself to people for clicking on things.
Its pretty clear you don't understand what a pozi scheme is.
The exact same thing could be said of any stock or commodity. If i buy stock in IBM, then other people decide they don't want to buy as much stock in IBM as usually sells, does that make ibm stock a ponzi scheme?
Your argument centers around the notion that that two very fundamentally different things are "analogous"
1.In a ponzi scheme, new investor money is paid directly to old investors.
2.In your scenario, while the value of old investor money might effected by the amount of new investors, new investor money does not go directly to them.
New investor money is not how blogging and curation rewards are funded. Those steem come from mining.
not that youll listen, but here are 2 posts from two different attorneys explainging this to you two different ways
https://steemit.com/steem/@sigmajin/an-actual-relevant-analysis-of-steem-and-why-its-really-not-a-ponzi-scheme
https://steemit.com/steemit/@joelkatz/steemit-is-not-a-ponzi-scheme
partial credit. what you describe is a huge red flag, and it mostly comes from bad curation decisions. but that doesnt change the fact that it doesnt meet the definition of a ponzi scheme.
I said "essentially" a Ponzi scheme because all of the money is coming from new investors as opposed to legitimate sources. The difference with IBM is that they do work and have income from contracts.
Something isnt "essentially" a ponzi scheme. It either is or it isn't. The reason you have to equivocate to make your point is that it isnt.
"Essentially"
used to emphasize the basic, fundamental, or intrinsic nature of a person or thing.
So while not literally a Ponzi scheme according to various technicalities, it is essentially a Ponzi scheme because it conforms to the important concepts - early adopters earning money from late adopters who lose out, with a pretend product in place.
Are you saying making videos about make-up or writing about their holidays isn't work!?!?
How dare you!!!! Everyone, put down your vegan rolls and get this guy!!!
I upvoted You
Excellently put.
Too many people on this site are ignoring facts and giving in to their emotions - of course we want all of this to be real, but usually when something is too good to be true, it just isn't!
I'm not saying anyone should completely give up on Steem, but be wary...
Thanks.
I'm not saying people should necessarily quit the platform; Just that they should be prepared for the value to crash.
The same could be said for when Twitter and Facebook first started. They had no idea how to monetise their contents but now they are generating a lot of solid and steady revenues.
The benefit of Steem is that we have the aforementioned to learn from AND MORE! Steem in itself could be used as the currency for its own online markets. And if Steemit truly takes off then major establishments would want a presence on the Steemit, turning it into a very lucrative social media real estate!
This is just off the top of my head and before an revolutionary utilisation comes into play!
All of this really assumes that the site and the content have no value whatever. Is that your assertion?
Bitcoin doesn't monetise either. There are no ads on Bitcoin. Is Bitcoin a Ponzi scheme? Is the entire system of Bitcoin dependent on new investors who want to make money from it? Or is the price of Bitcoin actually dependent on the demand of people who already own bitcoins, who have perhaps held them for many years?
Good questions.
"All of this really assumes that the site and the content have no value whatever. Is that your assertion?"
The content has value, but in order to actualise that value, it must be traded for something. In other words, value is relative. Existing sites actualise the value of their content with ad-revenue or subscription models. On Steem, content isn't traded for anything, instead new currency is issued from thin air as payment. The only connection between Steem and the physical economy is through new investors coming in.
"Bitcoin doesn't monetise either. There are no ads on Bitcoin. Is Bitcoin a Ponzi scheme?"
Had Bitcoin been pre-mined and immediately dumped, it would be best described as a Ponzi scheme. However, through consensus, it acts as a store of value and may eventually turn into a stable currency. In order to represent value, it needs to be impartial and fair, so that value can be tracked reliably. The key difference is that Steem uses an algorithm that artificially reward users with currency for specific actions that fit a certain agenda, defying free market economics, whereas Bitcoin is a neutral, independent store of value based on proof of work, which is rooted in free market economics.
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