This video is an animated conversation that explains what is Bitcoin and how it works. This is the part 3 of Bitcoins Office Series.
Transcript
Transcript generated by YouTube auto-captions. May contain errors.
good morning how's the Bitcoin mining operation coming smashing actually I'm processing at 7 gashes per second which means I'm producing five bit coins per day at the current difficulty wow that's pretty good so what are you going to do with all of those Bitcoins well I will probably keep most of them because I believe when Bitcoins gain a wider audience they will be worth thousands of dollars a piece really that's insane aren't you worried that the prices will collapse there are a lot of people saying that Bitcoins are a Ponzi scheme Pony scheme haaha ho ho ho ho he that's the funniest thing I've heard all week do you know what a pory scheme is well no not really what is a Ponzi scheme a pory scheme is an investment scam which fraudulently promises abnormal returns but actually uses new money to pay off older investors and must grow exponentially or it collapses okay so how do Bitcoins fit that definition why don't we take a look at the elements of the definition first off a porn C seam is an investment scam so what is an investment an investment is a vehicle for generating Returns on money it could be the purchase of a stock or a bond or it could be the purchase of ownership in a partnership or a business all right that's fair so by that definition are bitcoins an investment no not really because Bitcoins are simply a peer-to-peer currency and like gold they don't generate an investment return but people invest in gold don't they yes but people buy gold to preserve their wealth from the ravages of inflation gold may go up in price due to inflation but by the strictest definition it is not an investment because it doesn't generate a steady return okay so what you are saying is that Bitcoins are like gold and that they don't produce a return so Bitcoins are not an investment in the traditional sense so what about the next element do Bitcoins make a promise of fraudulent returns actually no they don't make any promise of return and they are not even an investment so no Bitcoins do not promise fraudulent returns excellent what about abnormal returns do Bitcoins promise abnormal returns again as I said before Bitcoins don't make any promise of return so no there are no abnormal returns either good pory schemes also use new money to pay off older investors do Bitcoins do that no because there are no returns so newer buyers of Bitcoins might pay more for them than people did in the past but that's not at all like taking the funds of newer investors to pay off older investors okay so what about the fact that a porn scheme must grow exponentially or it collapses don't Bitcoins need to grow exponentially in use or they will collapse no not at all Bitcoin adoption could stop growing right now and they would be fine but because the number of coins is strictly limited more adoption will force the price higher as more people desire to use them so what you are telling me is that bit coins meet none of the elements of the definition of a pory scheme correct because Bitcoins aren't an investment correct and Bitcoins don't fraudulently promise abnormal returns correct and Bitcoins don't use new Monies to pay off older investors correct and Bitcoins don't need to grow exponentially or they will collapse correct so Bitcoins are in no way a pory scheme by any element of the definition of the word correct so why are all these people saying Bitcoins are a porn scheme because they are trolls Shields Bashers stupid Liars or Worse what could be worse than that a Wall Street bankster true that lws