Speaker 1: Hey, everyone, Welcome to another episode of The Mark Moss
Speaker 1: Show where we talk about bitcoin and we talk about
Speaker 1: cryptocurrencies and the decentralized revolution that is happening right now,
Speaker 1: right before our eyes. Now, I try to bring you
Speaker 1: everything that you need to understand this. I try to
Speaker 1: bring you the education so you can really understand what's
Speaker 1: going on. I try to bring you the latest breaking news,
Speaker 1: and of course I bring you some of the best
Speaker 1: and brightest guests in the space so you can get
Speaker 1: some different perspectives. Now, you know, trying to understand this
Speaker 1: is difficult, and when you don't understand it right, what
Speaker 1: happens is um usually bad things. You can get lucky,
Speaker 1: but bad things. Right. So for example, if you don't
Speaker 1: understand it enough, maybe you under allocate towards it, Maybe
Speaker 1: you over allocate towards it. Maybe um, you don't understand it,
Speaker 1: and so then you get shaken out of your position early,
Speaker 1: for example. And so you really need to understand it
Speaker 1: and so you can you know, get the right positions
Speaker 1: eyes and learn how to hold it and one of
Speaker 1: you know, there's a lot of things. Actually spent a
Speaker 1: few weeks um going through all the different fund if
Speaker 1: you're uncertainty doubt headlines are the big objections that we
Speaker 1: hear about bitcoin. Um. One of the ones I didn't
Speaker 1: address because it's a bigger topic that I wanted to
Speaker 1: cover at depth is one of the ones that I
Speaker 1: hear all the time of bitcoin is a Ponzi scheme? Now, um,
Speaker 1: what is a Ponzi scheme? Um? Really? What does that
Speaker 1: really mean? What do they mean when they say bitcoins
Speaker 1: like a Ponzi scheme? Um? And why is bitcoin? Is
Speaker 1: bitcoin pons game? Yes or no? So I want to
Speaker 1: I want to explain this in a way that's easy
Speaker 1: to understand, hopefully educational. Well, it's definitely educational, hopefully entertainment um.
Speaker 1: And really, I think this is gonna give you a
Speaker 1: lot bigger perspective. And if you um think that bitcoin
Speaker 1: will be a Ponti scheme, it maybe give you a
Speaker 1: whole different perspective on this. And if you already are
Speaker 1: a bitcoin advocate, that I'm gonna give you the information
Speaker 1: you need to answer this question when you hear it
Speaker 1: from someone else. Now, Um, I hear this all the time.
Speaker 1: I've heard it compared to the tulip mania, you know,
Speaker 1: the Dutch two mania, but really this Ponzi scheme and
Speaker 1: the Fine Fancial Times is uh the ft dot com.
Speaker 1: It's a big financial news news publication. They came out
Speaker 1: with a article and they said why bitcoin is worse
Speaker 1: than a mad Off style Ponzi scheme? So what does
Speaker 1: that even mean? There's a lot to this lot to
Speaker 1: unpack here, and I want to kind of break this down.
Speaker 1: So let's address this first of all. Like I said,
Speaker 1: it's a big it's a big claim. So first the
Speaker 1: thing we have to do is what is a Ponzi scheme? Like,
Speaker 1: what does that even mean? Right? So let's let's let's
Speaker 1: take on that topic. First of all, Like I said,
Speaker 1: this is gonna be entertaining and it's gonna be educational.
Speaker 1: But if we go directly to the U S. Securities
Speaker 1: and Exchange Commission, the SEC, which is supposedly out there
Speaker 1: to protect us. And I say supposedly because I don't
Speaker 1: know if they are, um, but I'm gonna takenna give
Speaker 1: you a quote directly from the SEC which says, quote,
Speaker 1: a Ponzi scheme is an investment fraud that pays existing
Speaker 1: investors with funds collected from new investors. Ponzi scheme organizers
Speaker 1: often promised investor money and generate high returns with little
Speaker 1: or no risk, But in many many Ponzi schemes, the
Speaker 1: fraudsters do not invest the money. Instead, they use it
Speaker 1: to pay those who invested earlier, and may keep some
Speaker 1: for themselves with little or no legitimate earnings. Ponzi schemes
Speaker 1: require a constant flow of new money to survive. When
Speaker 1: it becomes hard to recruit new investors or when large
Speaker 1: numbers of existing investors cash out, these schemes tend to
Speaker 1: collapse end quote. So that's directly from the SEC. So basically,
Speaker 1: what they're saying is that they are saying, Hey, you know,
Speaker 1: giving your money, I'm gonna invested. I'm making whatever and uh,
Speaker 1: and I'm gonna keep I'm gonna pay these investors. As
Speaker 1: long as I'm able to keep sucking in new people,
Speaker 1: I can keep paying the old ones out. I keep
Speaker 1: eight percent. That's a pretty good deal. Um. But of
Speaker 1: course I'm not really investing. I'm not really making anything,
Speaker 1: but everybody thinks I am. Now. Ponzi schemes were named
Speaker 1: after Charles Ponzi, who duped investors in the nineteen ease
Speaker 1: with a posted stamp speculation scheme. All right, So we
Speaker 1: want to break this down, all right. So first, ponzi
Speaker 1: scheme organizers promised to invest your money and generate high
Speaker 1: returns with no risk. Um. So that's that's a big
Speaker 1: piece of it, all right. So they go further on
Speaker 1: in the sec piece. Um, a couple other things that
Speaker 1: they list as red flags. So if you're this is
Speaker 1: the sec warning you so quote. Many ponzi schemes share
Speaker 1: common characteristics. Look for these warning signs. One high returns
Speaker 1: with little or no risk. Every investment carries some degree
Speaker 1: of risk, and investment yields yielding higher returns typically involve
Speaker 1: more risk. Be highly suspicious of any guaranteed investment opportunity.
Speaker 1: So okay, that's one. Another sign overly consistent returns. So
Speaker 1: they say investments tend to go up and down over time,
Speaker 1: So be skeptical about an investment that regularly generates positive
Speaker 1: returns regardless of overall market conditions. Um, they say that
Speaker 1: it's uh. They also another red flag is secretive complex strategies.
Speaker 1: They say, to avoid investments if you don't understand them
Speaker 1: and can't get complete information about them. Um. They say
Speaker 1: that they there's issues with paperwork, an account statement errors,
Speaker 1: maybe a sign that funds are not being invested as promised.
Speaker 1: And then finally they say difficulty receiving payments. Be suspicious
Speaker 1: if you don't receive a payment or have difficulty cashing out.
Speaker 1: Ponzi scheme promoters sometimes try to prevent participants from cashing
Speaker 1: out by offering even higher returns for stay input. So
Speaker 1: that is uh good, some good red flags. Hopefully guys
Speaker 1: took advantage, took note of that. If you see any
Speaker 1: of those red flags, be careful. But now let's take
Speaker 1: that and let's compare those warning signs, those attributes, and
Speaker 1: let's see if Bitcoin has any of those. Okay, so
Speaker 1: before we before I compare bitcoin point to point by
Speaker 1: the to that list, Um, let's first just take a
Speaker 1: look at how bitcoin was launched. A lot of people
Speaker 1: may not know this. So in in August of two
Speaker 1: thousand and eight, somebody identifying themselves as Sotoshi Nakamoto created
Speaker 1: bitcoin dot org. Two months later, October two eight, so
Speaker 1: Toshi released what's called the Bitcoin White Paper, and that
Speaker 1: that's basically the document explaining how the tech, how the
Speaker 1: tech would work, and what the solution was, how the
Speaker 1: how he solved what's known as the double spending problem.
Speaker 1: The problem with digital goods is that if you send
Speaker 1: me a song or a photo or a video, I
Speaker 1: can make a copy of it on my computer. And
Speaker 1: if I send you the video, how do you know
Speaker 1: if I don't still have a copy on my computer. UM.
Speaker 1: So he solved the double spending problem. That's the big
Speaker 1: revolutionary thing that bitcoin solved. UM that there's only one
Speaker 1: bitcoin and it can't be copied or double spent. UM.
Speaker 1: In addition to that, a couple months later, January of
Speaker 1: two thousand nine, s Tosi published the initial software, the
Speaker 1: Bitcoin Code Software UM. In the Genesiens Genesis block, the
Speaker 1: first block of the blockchain UM, there was no spendable
Speaker 1: bitcoin there UM, and he provided a timestamped article headlining
Speaker 1: which I love. It was an article headline about bank
Speaker 1: baillouts from the Times of London, and I love that
Speaker 1: he put that in there. He said, the Chancellor is
Speaker 1: on the brink of another bailout. And the reason why
Speaker 1: they put that is because that was at the time
Speaker 1: of the two thousand eight bank baillouts. It was the
Speaker 1: time with the great financial crash, and so he basically
Speaker 1: stamped it saying that this is made as a response
Speaker 1: to that, because you are bailing out these banks, We're
Speaker 1: going to create our own monetary system, is what he said. Um.
Speaker 1: From there, it took a few days to finish mind
Speaker 1: in the block Um. There was really nothing going on
Speaker 1: in there. UM. And then and then there are some
Speaker 1: other people that got involved. How Finny started publicly tweeting
Speaker 1: about bitcoin. He was running software. UM, so Toshi was
Speaker 1: running at him and soci and how Finny, we're sending
Speaker 1: bitcoins back and forth to each other. UM. Basically, the
Speaker 1: point that I'm making here is that this was done
Speaker 1: out in the open on the public um message boards.
Speaker 1: There was other people involved, how Finny, We had Nick Sabo,
Speaker 1: Adam back. They were all getting involved in this. They
Speaker 1: were all aware of it. They were all mining bitcoin.
Speaker 1: So this was not done in the in the dark.
Speaker 1: This was not done. Um, you know, not, this was
Speaker 1: not done and the forest lead a lot of well
Speaker 1: pretty much, I think all the other cryptocurrencies besides Bitcoin
Speaker 1: were done with what's called a pre mind. And so
Speaker 1: when the founders created their token, they created a bunch
Speaker 1: for themselves. So they printed, you know, a hundred million
Speaker 1: tokens for themselves, and then they gave away a little bit.
Speaker 1: Typically they would keep anywhere from typically about thirty to
Speaker 1: sometimes as much as seventy of the tokens they created.
Speaker 1: The founders would keep that for themselves. But with Bitcoin,
Speaker 1: that that wasn't that wasn't done. As a matter of fact,
Speaker 1: he publicly put it out to everybody long before ever
Speaker 1: ever mining any on its own. As a matter of fact,
Speaker 1: the coins that's to Totian not Commoto mind, have never
Speaker 1: been moved, and so there was no pre mind in that. Now. Um,
Speaker 1: now that you understand that, let's dig into a little
Speaker 1: bit about these red flags and kind of dispute some
Speaker 1: of these one by one by one. Now, by the way,
Speaker 1: if you're just tune in, you're listening to the Mark
Speaker 1: Mass Show. We're talking about bitcoin, cryptocurrencies and the decentralized
Speaker 1: revolution that's happening. Uh, specifically, I'm talking about bitcoin being
Speaker 1: a ponzi scheme. Is it is it a ponzi or
Speaker 1: is it not? Well, we're breaking down what a ponzi is,
Speaker 1: and I gave you the warning flags and we're gonna
Speaker 1: look at some of those in comparison to bitcoin. Um, again,
Speaker 1: you're listening to the Markma Show, talking about bitcoin and cryptocurrencies,
Speaker 1: giving you the education that you need to thrive and
Speaker 1: succeed through this crypto revolution. I'll be back with more
Speaker 1: on this in a second. Don't go away, all right,
Speaker 1: Welcome back here, listening to the mark Ma Show. We're
Speaker 1: talking about bitcoin and cryptocurrencies and the decentralized revolution that's
Speaker 1: happening right now. And specifically, before the break, I was
Speaker 1: talking about bitcoin being a ponzi scheme? Is it a
Speaker 1: ponzi scheme? Is it not a ponzi scheme? What does
Speaker 1: a ponzi scheme even mean? Well, I read you the
Speaker 1: definition from the SEC of what a ponzi scheme is,
Speaker 1: and I read you a list of red flags they
Speaker 1: said ponzi schemes have and what you should be watching
Speaker 1: out for. So what I want to do now is
Speaker 1: let's compare Bitcoin to the red flags of a ponzi
Speaker 1: scheme and let's see if that works out. So the
Speaker 1: first thing, as they said that investment returns were they
Speaker 1: they promised um high returns with little or no risk.
Speaker 1: So with bitcoin, there's no investment returns promised. So Toshi
Speaker 1: never promised any investment returns. Let let alone, any high
Speaker 1: investment returns, never promoted any consistent investment returns UM. As
Speaker 1: a matter of fact, bitcoin was known for the first
Speaker 1: decade of his existence of being extremely highly volatile speculation UM.
Speaker 1: The online writings from Sotoshi still exists because it was
Speaker 1: launched through message boards, and so we can still see
Speaker 1: what he said, and he barely ever talked about any
Speaker 1: financial gain at all. As a matter of fact, he
Speaker 1: mostly only wrote about technical aspects. He talked about freedom,
Speaker 1: he talked about the problems of the modern banking system
Speaker 1: and things like that, but he never talked about, you know,
Speaker 1: making a bunch of money from that. And so I
Speaker 1: think that's a big key to differentiate a couple things
Speaker 1: that he said. One of the quotes that I love
Speaker 1: that he said. Now, of course I'm educated on bitcoin
Speaker 1: and cryptocurrencies, but what what um he said? A couple
Speaker 1: of things. He said, Uh, it might make sense just
Speaker 1: to get some in case it catches on. That's what
Speaker 1: he said. So he didn't say, hey, you should buy it.
Speaker 1: You can make a bunch of money, Hey you should
Speaker 1: buy it. Your guaranteed to make a bunch of money. Hey,
Speaker 1: you're guaranteed to get higher returns. He didn't say that.
Speaker 1: He said it might make sense to get some just
Speaker 1: in case it catches on. And that's what I tell people.
Speaker 1: If you're skeptical about bitcoin. Um at this point, I
Speaker 1: don't know how you could be. But if you are,
Speaker 1: that's okay. You're new to it, I understand, but hey,
Speaker 1: it might make sense to get some just in case
Speaker 1: it catches on. That's what he said. Um, let's see
Speaker 1: a couple other things here. Um. Okay, So the second one, Um,
Speaker 1: the second red flag that they that they warned us
Speaker 1: of was that they they that a ponzi scheme uses
Speaker 1: secretive and complex strategies. Okay, well, bitcoin is open source.
Speaker 1: Open sources the opposite of secrecy. Now, I talk a
Speaker 1: lot about the Federal Reserve. The Federal Reserve is the
Speaker 1: opposite of open source. The Federal Reserve is secret. As
Speaker 1: a matter of fact, in a previous segment, I was
Speaker 1: talking about the Federal Reserve and how a Freedom of
Speaker 1: Information Act request was filed against them and they are
Speaker 1: denying the request, which I don't even know how that's legal. Uh,
Speaker 1: it's the opposite of open source. So ponzi schemes rely
Speaker 1: on secrecy. If the investors understood that an investment they
Speaker 1: owned was actually a Ponzi scheme, then of course they
Speaker 1: would try to pull their money out immediately. Right, it's
Speaker 1: the secrecy um. The secrecy prevents the market from appropriately
Speaker 1: pricing the investment until the secret gets found out. So
Speaker 1: one of the most famous examples of the Ponzi scheme
Speaker 1: was Burnie made Off and investors in Bernie made Off
Speaker 1: scheme thought they owned a variety of assets, but in reality,
Speaker 1: the earlier investors outflows were just being paid back from
Speaker 1: new investor inflows, so it wasn't actually money being made
Speaker 1: from the investments. The investments list on their statements were
Speaker 1: all fake and for any of those clients it would
Speaker 1: be nearly impossible to verify that they're fake, Like, how
Speaker 1: could they do that? Right, They didn't have access to it.
Speaker 1: There was secrecy. Bitcoin is the opposite though, right. Bitcoin
Speaker 1: works the opposite on an opposite set of principles. It's
Speaker 1: a distributed piece of open source software that requires a
Speaker 1: majority consensus to change. Every line of code is known.
Speaker 1: There's no central authority that can change it. And you know,
Speaker 1: one of the things that we say with bitcoin is
Speaker 1: don't trust but rather verify. And so what that means
Speaker 1: is that because the code is open source, because I
Speaker 1: can run the bitcoin software on my own, anybody, anybody
Speaker 1: can just freely download it and run on a on
Speaker 1: an old laptop if you want, you can use that
Speaker 1: to audit the entire blockchain. You can use it to
Speaker 1: odor the UM, to audit the entire monetary supply. It
Speaker 1: doesn't rely on a website. There's no data center, and
Speaker 1: there's no corporate structure. There's none of that. And because
Speaker 1: of this, there's no issue with the paperwork, right, there's
Speaker 1: no difficulty receiving payments. As as the SEC told us,
Speaker 1: there was red flags about now you know, there's of
Speaker 1: course there's bad actors that would you know, associate with
Speaker 1: this with the with the ecosystem. Let's say, UM, you
Speaker 1: know people rely on others to hold their private keys,
Speaker 1: for example, and those people holding private keys, the custodians
Speaker 1: could be bad, they could do things like that. UM.
Speaker 1: But the but the bitcoin software isn't isn't bad. The
Speaker 1: bitcoin software doesn't trick people. It's open source. UM. Another
Speaker 1: thing is that UM back to that, as I was
Speaker 1: kind of saying before about the mining UM, there was
Speaker 1: no there was no pre mind there and so um
Speaker 1: so Toshi didn't really never got any of his any
Speaker 1: of his coins of the mind. But usually you know,
Speaker 1: so bitcoin was launched and open in a fair way
Speaker 1: when it was launched, But as I said, most cryptocurrencies
Speaker 1: don't follow those principles. So like with Ethereum. For example,
Speaker 1: ethereums the number two cryptocurrency by market app and the
Speaker 1: Ethereum developers provided seventy two million tokens to themselves and
Speaker 1: their investors prior to any being available to be owned
Speaker 1: by the broader public. So that's about half of the
Speaker 1: current token supply of Ethereum, So before anybody could get
Speaker 1: it half, about about half seventy two million tokens were
Speaker 1: given to themselves and their investors. Ripple x RP, on
Speaker 1: the other hand, is even worse. Now, if you're an
Speaker 1: x RP fan, um plug, your ear is not gonna
Speaker 1: like to hear this. But Ripple Labs pre mind one
Speaker 1: hundred billion XRP tokens with the majority being owned by
Speaker 1: Ripple Labs, and then what they did is they gradually
Speaker 1: begin selling the rest to the public, but they still
Speaker 1: hold the majority. Now, of course, they're currently being accused
Speaker 1: by the sec of selling unregistered securities. And we've yet
Speaker 1: to see how that plays out. But with bitcoin, the
Speaker 1: founder gave himself no advantage to mining bitcoin. He started
Speaker 1: talking about it, he started even the software oute long
Speaker 1: before mining was ever done. Um, So lots of people
Speaker 1: had the same opportunity to mine at the same time.
Speaker 1: And he's never even cashed his coins in anyway, and
Speaker 1: so that makes it the cleanest approach. The other thing
Speaker 1: is that there's no leader, right. So bitcoin is really
Speaker 1: interesting because there's no centralized leadership. So totian not comot
Speaker 1: to a person or a group of people, but you know,
Speaker 1: a group of people potentially, Um, they disappeared, So there's
Speaker 1: no leader there. Um. And so I think when you
Speaker 1: break that down point by point, you see that it
Speaker 1: doesn't really trigger any of these red flags. Um. There's
Speaker 1: you know, again they're not unregistered investments or unlice. It's sellers.
Speaker 1: If if there was maybe any um red flag to
Speaker 1: be raised potentially and not not about a ponzi but
Speaker 1: about but but about a security, um, is that you know,
Speaker 1: I mean you're selling assets, um, But it doesn't mean
Speaker 1: that just because it's an asset that could be maybe
Speaker 1: potentially a security doesn't mean it's a ponzi. Right, So
Speaker 1: it doesn't mean that. Now let's look at something else.
Speaker 1: Let's look at um a broader definition of a ponzi. Right. So,
Speaker 1: I think I've proven that bitcoin is not a ponzi
Speaker 1: based off of the SEC's definition and the SEC's red flags.
Speaker 1: But I want to look at a broader definition of
Speaker 1: a pons because I believe that maybe there are some
Speaker 1: similarities to the gold market or some other assets like that,
Speaker 1: And I think if you understand how the gold monetary
Speaker 1: network works or the Fiat banking system works, you might
Speaker 1: actually see this whole situation from an entirely different angle. Now,
Speaker 1: by the way, you're listening to the Markmas Show, we're
Speaker 1: talking about bitcoin, we're talking about cryptocurrencies, we're talking about
Speaker 1: the decentralized revolution that we're going through. We're talking about
Speaker 1: bitcoin and cryptocurrencies. Well, bitcoin not being a ponzi scheme,
Speaker 1: as it's been a huge many times before. When I
Speaker 1: come back, I want to talk about, like I said,
Speaker 1: the broader definition of a ponzi and talk about the
Speaker 1: gold market, talking about the Fiat money system and the
Speaker 1: stock market, and like I said, once you understand these
Speaker 1: from this different angle. I think you'll see this from
Speaker 1: a completely new light. You don't want to miss this.
Speaker 1: You need to understand this. Listening to the Markmas Show,
Speaker 1: I'll be right back. Don't go away, all right, Welcome back.
Speaker 1: You're listening to the Markma Show and we're talking about
Speaker 1: bitcoin and decentralized revolution, cryptocurrencies and all that stuff that's
Speaker 1: going on right now. And specifically, before the break, I
Speaker 1: was talking about bitcoin and uh, bitcoin being a ponzi scheme?
Speaker 1: Is Bitcoin a ponzi? What is a ponzi? A lot
Speaker 1: of times people throw these words around and they don't
Speaker 1: ever really stop to think about what they are, what
Speaker 1: they mean, And so I want to break that down.
Speaker 1: We've been dissecting what the SEC said of ponzi was. Um,
Speaker 1: we talked about the Bernie made Out scandal. I talked
Speaker 1: about the red flags that the SEC gives you to
Speaker 1: watch out and be careful if you may be involved
Speaker 1: in a ponzi, and then we went point by point
Speaker 1: and showed how bitcoin actually doesn't have any of those
Speaker 1: red flags. UM. Now, what I want to talk about
Speaker 1: is is something bigger. I wanna talk about the broader
Speaker 1: definition of a ponzi because the narrow ponzi scheme, you know,
Speaker 1: as I just made the case, it clearly doesn't apply
Speaker 1: to bitcoin, um. And so what some people try to
Speaker 1: do is they use like a broader definition of a
Speaker 1: ponzi scheme to assert that bitcoin is one of them.
Speaker 1: You have to be very careful, like I said, with
Speaker 1: these words and definitions, especially in today's age, because we've
Speaker 1: twisted all these words. So for example, let me give
Speaker 1: you an example, UM, capitalism. Capitalism has almost become this
Speaker 1: dirty word, and I've found myself starting to not use
Speaker 1: the word capitalism and instead used UM free markets because
Speaker 1: free markets to sound different, and people think, no, capitalism
Speaker 1: is capitalism led to slavery, and capitalism led to colonialism,
Speaker 1: and capitalism UM allows these greedy corporations to pollute the environments. Right, Okay,
Speaker 1: well we should inspect the word capitalism then, because UM,
Speaker 1: I don't believe that is capitalism. So capitalism is sure
Speaker 1: private property rights and UM me being able to manage
Speaker 1: and control my property rights and direct him as I
Speaker 1: see fit. Now, UM, what people think is that capitalists
Speaker 1: are only in the pursuit of profits, and that's it.
Speaker 1: And so that's what leads to slavery and colonialism and etcetera.
Speaker 1: But that's not true. That's not totally true. So capitalism
Speaker 1: is the protection the priority of private property rights, private
Speaker 1: property rights. It's also voluntary exchange. And so my thoughts,
Speaker 1: my labor, my energy, it's my private property. That's my
Speaker 1: private property. My arm is my private property. Nobody can
Speaker 1: move my arm except for me. That's my private property.
Speaker 1: My energy is my private property. My my my my
Speaker 1: thinking capacity, my ideas, my creativity, that's my private property.
Speaker 1: And so if anybody were to, you know, hold me
Speaker 1: as a slave, for example, I don't think that would
Speaker 1: be protecting private property. As a matter of fact, I
Speaker 1: think that would exactly contradict that. Another attribute of capitalism
Speaker 1: is voluntary exchange. If I'm a slave, that's not voluntary exchange.
Speaker 1: So you see, by omitting the key words that define
Speaker 1: what capitalism is, sure then you can say capitalism is
Speaker 1: colonialism if you're saying all capitalism ism is trying to
Speaker 1: be as greedy as you can and try and grow
Speaker 1: your capital. But that's not what it is. It's protecting
Speaker 1: private property rights and free and voluntary exchange, all right,
Speaker 1: So it's important to break that down. And by the way,
Speaker 1: I'm wanna throw a plug out. I wrote a book
Speaker 1: UM a couple of weeks ago, UM, trying to actually
Speaker 1: define this much better. UM. And you can go to
Speaker 1: Uncommunist dot com Uncommunist dot com and you can check
Speaker 1: out this book. It's just a little booklet UM. And
Speaker 1: I basically took the Communist Manifesto and we rewrote it
Speaker 1: and it's it's just about a forty five minute read. UM.
Speaker 1: And I read defined um this capitalism theme because in
Speaker 1: the Communist Manifesto he broke down how capitalists were bad
Speaker 1: and didn't contribute anything. And I think you just got
Speaker 1: it all wrong. And so in the Uncommunist I basically
Speaker 1: rewrote the book to kind of reframe it. That's why
Speaker 1: it's the top of my head. But it's important to
Speaker 1: understand these UM, these words and what they mean. And
Speaker 1: so back to Ponzi, we also need to understand what
Speaker 1: it means because we broke down the definition, but they're
Speaker 1: trying to use a broader definition of what that Ponzi
Speaker 1: scheme is. So UM, a bitcoin is basically a commodity.
Speaker 1: That's how the Commodities Exchange has labeled it. UM. The
Speaker 1: I R s has labeled it as property, which is
Speaker 1: like a commodity. So in the sense it's a scarce
Speaker 1: digital object. But um, it provides no cash flow, all right,
Speaker 1: But it has utility because it allows me to store
Speaker 1: wealth and transmit value. But there's no cash flow. R's
Speaker 1: just the digital object. Now, like any commodity, um, so
Speaker 1: commodity like energy, like wheat, like grain or whatever, it
Speaker 1: produces no cash flows or dividends, right, So it's only
Speaker 1: worth what someone else is willing to pay for it
Speaker 1: or trade you for it. And that's a key piece.
Speaker 1: So that's what people say with with with with bitcoin, Yeah,
Speaker 1: it's only good if you can find someone else to
Speaker 1: buy it from you. Yeah, like every other commodity in
Speaker 1: the world, because it pays no casual or dividends. It's
Speaker 1: only worth what someone else will wanted to pay for it,
Speaker 1: all right. Now, it's specifically it's a monetary commodity commodity,
Speaker 1: but it has utility, like I said, storing and transmitting value.
Speaker 1: So it kind of made Gold is probably its closest comparison.
Speaker 1: So if we look at bitcoin versus the gold market. Now,
Speaker 1: some people say that bitcoin is a Ponzi scheme because
Speaker 1: like I said, it relies on an ever larger pool
Speaker 1: of investors coming into the space to buy from the
Speaker 1: earlier investors. Right, So if more people don't come by,
Speaker 1: you need you know, they say, Mark, You're always like,
Speaker 1: you're always shilling bitcoin. You just want more people to buy. Um. Yeah, okay,
Speaker 1: so bitcoin, you know need They say that it needs
Speaker 1: an ever larger pool of investors to come in. But
Speaker 1: that's basically the same thing as other network. So the
Speaker 1: reliance on new investors is correct, that's no k framing.
Speaker 1: Bitcoin keeps growing its network effects reaching more people, and
Speaker 1: it reaches more people with bigger pools of money, which
Speaker 1: then keeps increasing its usefulness and its value. Right, So
Speaker 1: um Metcalf's law. If I'm the only person in the
Speaker 1: world with the phone, it's not worth very much. If
Speaker 1: more people have phones, it's worth more. When everybody has
Speaker 1: a phone, they're worth more. And so as it reaches
Speaker 1: more people, it becomes more useful and more valuable. Yes,
Speaker 1: they are true with saying that, right, but that doesn't
Speaker 1: make it a Ponzi scheme, because if I use similar
Speaker 1: logic with gold, then goals of five thousand euro ponzi scheme, right,
Speaker 1: Because the vast majority of gold's usage is not for industry.
Speaker 1: It's for storing and displacing displaying wealth. It produces no
Speaker 1: cash flow. It's only worth what someone else will pay
Speaker 1: for it um. If people's jewelry taste change and if
Speaker 1: people no longer view gold as an optimal store value,
Speaker 1: then it's a network effect would go down and it
Speaker 1: would lose value. Right, So very similar, it requires more
Speaker 1: and more people to continue to use it and can
Speaker 1: continue to store their wealth in it um. There's about
Speaker 1: sixty years of gold's annual production supply estimated to be
Speaker 1: available in various forms around the world, and that's like
Speaker 1: five hundred years worth of industrial only supply, and that's
Speaker 1: factoring out jewelry and store value demand. And so that
Speaker 1: means that gold's supplied demand balance to support a high
Speaker 1: price requires the ongoing perception of gold as an attractive
Speaker 1: way to store and display your wealth because it's not
Speaker 1: being used for monitor for industrial usage. So gold monetary
Speaker 1: network has remained robust for a long period time because
Speaker 1: the collection of unique properties it has is what made
Speaker 1: it continually regarded as being optimal for long term wealth preservation.
Speaker 1: All right, that's why people use it. Similarly, bitcoin relies
Speaker 1: on network effects, meaning it's a large number of people
Speaker 1: need to view it as a good holding to retain
Speaker 1: its value. But a network effect is not a Ponzi
Speaker 1: scheme in you know, in itself. Prospective investors can analyze
Speaker 1: the metrics of bitcoins network effects and then determine for
Speaker 1: themselves the risk and reward of buying into it. So
Speaker 1: bitcoin is no more a Ponzi scheme than gold is
Speaker 1: a Ponzi scheme, or any other commodity to be a
Speaker 1: Ponzi scheme. Now, what about if we look at the
Speaker 1: FIAT banking system. Now this is interesting, so let's look
Speaker 1: at it in the same type of a lens. So
Speaker 1: by the broadest definition of a Ponzi scheme, the entire
Speaker 1: global banking system is a Ponzi scheme. Now we've talked
Speaker 1: about um. The Federal Reserve has now come out and
Speaker 1: said they're gonna cut rates. They're gonna cut them, They're
Speaker 1: gonna start tapering, sorry, cut taping. They're gonna they're gonna
Speaker 1: start tapering, and they're going to start raising rates. And
Speaker 1: I've said over and over and over again, you can't
Speaker 1: taper a ponzi You can't taper a ponzi because it
Speaker 1: requires new money coming in to pay the old people.
Speaker 1: And so, um, I'm gonna back it up. I've said
Speaker 1: that any times. You probably heard me say that many times.
Speaker 1: Let's back that up here. Like I said, the broadest
Speaker 1: definition of a ponzi scheme, the entire global banking system
Speaker 1: is a ponzi scheme. So, firstly, fiat currency is an
Speaker 1: artificial commodity. Right, A dollar in and of itself is
Speaker 1: just an object made out of paper. Now the dollar
Speaker 1: is supposed to represent something. The it's an artificial commodity.
Speaker 1: So gold was money for five thou years. Gold is
Speaker 1: hard to move around, it's not portable. It's hard to
Speaker 1: pay someone in gold. So I put the gold in
Speaker 1: a bank and the bank gives me a paper gold certificate.
Speaker 1: Gold is layer one settlement. The paper goal certificate is
Speaker 1: layer two. The gold. I can tran the paper certificate.
Speaker 1: I can transact very quickly, but it's not final settlement.
Speaker 1: And so what that means is that there's additional risk there. Um,
Speaker 1: But really that that paper only represents it's a claim
Speaker 1: against the gold, all right. Now, Secondly, when we organized
Speaker 1: all these pieces of paper or let's call it a
Speaker 1: digital representation of the paper because now most dollar transactions
Speaker 1: that they are digital. So if we take the piece
Speaker 1: of paper the digital representations in a fractural reserve banking system,
Speaker 1: then we add another complicated layer. So what does that mean?
Speaker 1: So that means that the banks create money or they
Speaker 1: create currency from thin air. Alright, the Fiat money. So
Speaker 1: first of all, Fiat A lot of people don't understand
Speaker 1: what Fiat is. People think that Fiat money is like
Speaker 1: fake money. That's not really what it means. I'm gonna
Speaker 1: give you the definition of Fiat money. I'm gonna explain
Speaker 1: to you how they create this Fiat money through the
Speaker 1: banking system out of thin air. When I get back,
Speaker 1: you're listening to the Mark Moa show talking about bitcoin,
Speaker 1: cryptocurrencies and the decentralized Revolution, talking about the Fiat money
Speaker 1: system and how that is a Ponzi system and not bitcoin.
Speaker 1: I'll be right back with more. Don't go away, all right,
Speaker 1: welcome back. You are listening to the markma Show and
Speaker 1: we're talking about bitcoin and cryptocurrencies and the decentralized revolution,
Speaker 1: and uh, I was knocking down some of the big
Speaker 1: objections that you hear talking about how uh, well, we
Speaker 1: were taking a look at is bitcoin really a ponzi scheme?
Speaker 1: Yes or no. We've looked at what the definition of
Speaker 1: a ponzi scheme is. First of all, what the SEC
Speaker 1: warns us, the warning signs of what a ponzi scheme is.
Speaker 1: We looked at, um, the broader definition of it. We
Speaker 1: looked at one of the best, the most famous ponzi
Speaker 1: scheme histories of Bernie made Off and now we're looking
Speaker 1: at a broader definition. We compared to the Ponzi scheme
Speaker 1: of bitcoin to gold and how if if bitcoins upon
Speaker 1: the scheme, then gold upon the scheme as well. And
Speaker 1: when we just finished off, we were talking about big
Speaker 1: the Fiat banking system and how um, by the broad
Speaker 1: definition of ponzi scheme, the entire global banking system is
Speaker 1: a Ponzi scheme. Now I was talking about fiat currency
Speaker 1: and a lot of people think that fiat currency is
Speaker 1: like means it's not backed by anything for example. Um,
Speaker 1: but what fiat currency means is I believe it's a
Speaker 1: Latin word and it means like by decree. So what
Speaker 1: does that mean? So? Um, that means that fiat money
Speaker 1: has value because we say it does. We've create it
Speaker 1: as a government. We've said you must use this by law, right,
Speaker 1: and so that's what it is. But like I said,
Speaker 1: it's just an object made out of paper. And so
Speaker 1: what happens is, um that that paper, that money, that
Speaker 1: that currency is created when the banks loan it into existence.
Speaker 1: And so the federal reserve creates um reserves. They put
Speaker 1: those reserves into the banks, and then the bank's loan
Speaker 1: money into existence. And it's a fractional reserve banking system.
Speaker 1: So what that means is that, UM, you deposit your
Speaker 1: money into the bank, and then the bank keeps that
Speaker 1: money on deposit on reserve and they loan money out
Speaker 1: in multiples of that. And so for example, if UM,
Speaker 1: you bought something from me for ten dollars, I take
Speaker 1: that ten dollars, I put it into the bank. The
Speaker 1: bank holds onto one of those dollars, and the nine
Speaker 1: loans them back out, And those nine dollars going to
Speaker 1: nine different banks, and the bank takes ten percent of it,
Speaker 1: holds it, and the rest loans it back out, and
Speaker 1: that process repeats over and over and over and over
Speaker 1: and over again. That money is created into existence. So
Speaker 1: when you take out a loan for a house, a car,
Speaker 1: a boat, and RV that money is created into existence.
Speaker 1: And so what that means is if only a few
Speaker 1: percentage of the people were to all go to the banks.
Speaker 1: Let's say that, you know, all these people that don't
Speaker 1: have trust in the banks anymore, decide we're all gonna
Speaker 1: go to the bank and pull our money out right now.
Speaker 1: That would create what's called a run on the bank.
Speaker 1: It happen, It's happened to many times throughout history and
Speaker 1: even in recent history, and the banks would collapse because
Speaker 1: they don't have the money. They would create it out
Speaker 1: of the air. Now, realistically, the banks would say no,
Speaker 1: they would say no, you can't withdraw. As a matter
Speaker 1: of fact, go to your bank and try to withdraw
Speaker 1: twenty dollars and see what happens. I pretty much guarantee
Speaker 1: you if you drove to the bank today and try
Speaker 1: to withdraw dollars, you could not get it out. They
Speaker 1: would tell you that. They would tell you no because
Speaker 1: they don't have the cash. That's why if you want
Speaker 1: to get twenty dollars today, you pretty much have to
Speaker 1: organize that ahead of time. You have to order that
Speaker 1: ahead of time. They just don't have the cash. Now,
Speaker 1: Like I said, this has happened many times throughout history.
Speaker 1: In recent history, it happened to some banks in the
Speaker 1: early twenties during the pandemic shutdown. Um, it occurs regularly
Speaker 1: around the world. And it's actually, like I said, one
Speaker 1: of the SEC's red flags of a ponzi scheme is
Speaker 1: quote difficulty receiving payments. M that's interesting. So, um, that's
Speaker 1: a red flag. They warned me about that, So that's
Speaker 1: one strike against it. Now. It's kind of like, um,
Speaker 1: probably as a kid, you guys have played the game
Speaker 1: musical chairs. Right, there's like a set of chairs. Someone's
Speaker 1: playing music. Um, there's one less chair than there are
Speaker 1: people than kids, and they walking around around around right
Speaker 1: when the music stops, one per one kid unfortunately doesn't
Speaker 1: doesn't get a chair. Right in the next round, you
Speaker 1: move another chair. Um, and on and on and on.
Speaker 1: Eventually you have just two kids in one seat, and
Speaker 1: then eventually there's a winner. Um. And that's basically what
Speaker 1: the banking system is. It's a it's a permanent round
Speaker 1: of musical chairs. There's more there's more kids than chairs,
Speaker 1: there's more people than money, and they all can't get one. Right.
Speaker 1: If the music ops, then that would become very clear.
Speaker 1: Now what happens to stop the music, Well, that's when
Speaker 1: trust is lost, right. UM. For the United States, banks
Speaker 1: collectively have about plus or minus about of customer deposits
Speaker 1: held as cash reserves, so about two outs. So that's
Speaker 1: like back to the musical chairs, there's ten kids walking
Speaker 1: around the chairs and there's only two chairs. To put
Speaker 1: that into perspective, that's basically what we're working with. UM.
Speaker 1: So that's not very good UM at all. Now this
Speaker 1: this actually used to be much lower. It was about
Speaker 1: five percent back to the global financial crisis. So that
Speaker 1: means out of UM anyway way way more kids, weigh
Speaker 1: less chairs. That's what that means, UM. And so that's
Speaker 1: basically it works. It's a it's a red flag UM.
Speaker 1: At the Ponzi scheme, there's not enough money for the
Speaker 1: people to be able to pull their capital all at once,
Speaker 1: and so people would run into that difficult receiving payments. UM. Now,
Speaker 1: the monetary system also, like I said, functions as like
Speaker 1: this round of musical chairs on on top of artificial
Speaker 1: governed government issued commodities UM, which is those those paper
Speaker 1: moneys right, So there's more claims on the money, there's
Speaker 1: more kids and there's available than there are chairs. Now
Speaker 1: we kind of accept this as normal. Well, actually we
Speaker 1: don't accept it as normal. Most people just have no idea. Um.
Speaker 1: I I've said many times before, Henry Ford famously said,
Speaker 1: over hundred years ago the American people knew how the
Speaker 1: banking system work, there would be a revolution before the morning.
Speaker 1: That's why you don't know. So most people don't know
Speaker 1: you're actually playing a game of musical chairs. But for
Speaker 1: those that do, like myself, we also assume it may
Speaker 1: never end. Right, the fractional reserve banking system, it's functioned,
Speaker 1: you know, for a few hundred years. Um, you know,
Speaker 1: I mean, sure there's been a few you know, problems
Speaker 1: here and there, but you know, for the most part,
Speaker 1: it's not that bad. Um. Although you know, the purchasing
Speaker 1: power of my via currency has lost about of its value.
Speaker 1: I guess that's not really good. Most people don't know
Speaker 1: that as well. They think things are getting more expensive.
Speaker 1: They don't realize that that means that their dollar has
Speaker 1: just lost the value. But what that really means is
Speaker 1: that investors either need to earn a rate of interest
Speaker 1: that exceeds the real inflation rate, which of course isn't happening,
Speaker 1: or they have to buy investments instead, which inflates the
Speaker 1: value of stocks and real estate compared to their cash
Speaker 1: flows and pushes up push up the price of those assets. UM.
Speaker 1: So if the inflation rate, if the government printed thirty
Speaker 1: percent more currency, then you need to make about thirty
Speaker 1: more money, which, as I said, most people are getting
Speaker 1: that pay raise, and so everyone is being forced into
Speaker 1: being an investor. Um. Also there's very high frictional costs.
Speaker 1: So um. Again, another variation of the broader Ponzi scheme
Speaker 1: claim asserts that because bitcoin has frictional costs a Ponzi scheme, um,
Speaker 1: the system requires can don't work to keep it keep
Speaker 1: it functioning, so you have to you know, mine it,
Speaker 1: you have to pay a transaction fee to move it.
Speaker 1: But again bitcoin is no different in this regard to
Speaker 1: any other system of commerce that costs money to move gold,
Speaker 1: for example, Any any healthy transaction has a cost associated
Speaker 1: with it. Right, So bitcoin miners have this customized hardware,
Speaker 1: they pay electricity, they have support personnel, all those things.
Speaker 1: If I was talking about gold, gold miners have the
Speaker 1: same thing. They put a bunch of money into equipment,
Speaker 1: they have personnel, they have exploration, they have to extract
Speaker 1: the gold, they have to process it, all of those things.
Speaker 1: So there's cost. And also the global fiat monetary system
Speaker 1: as frictional costs as well. Um. And so you know,
Speaker 1: banks and fintech firms extracted over a hundred billion dollars
Speaker 1: a year in fees, and that's just what happens. That's
Speaker 1: the way things work. UM. So the gold system, the
Speaker 1: bitcoin system, and the monetary system both require that. And
Speaker 1: then I guess um summary, Um, I was a bitcoin
Speaker 1: is a network effect and not a pon z right,
Speaker 1: So the broadest definition of a ponzi's game refers to
Speaker 1: a system that must continually keep operating to her main
Speaker 1: functional or has frictional costs. Um. Bitcoin doesn't meet this,
Speaker 1: um because you know any more than the than the
Speaker 1: gold market doesn't anyway, but the global fiat banking system does.
Speaker 1: As a matter of fact, we saw President Biden come
Speaker 1: out talking about the last stimulus and they said, um,
Speaker 1: the government has always paid its bills, but we need
Speaker 1: to take new debt in order to pay the old debt.
Speaker 1: He said that I don't have a clip for you.
Speaker 1: I wish I should have pulled that ahead of time,
Speaker 1: but he basically told us up front, we are a ponzi.
Speaker 1: We need new debt to pay our old debt um
Speaker 1: not like bitcoin. Bitcoin doesn't do that, and hopefully that
Speaker 1: makes sense. You're listening to the Mark Mos Show talking
Speaker 1: about bitcoin. Thanks for listening.