What people refuse to understand or are unable to understand is the simple yet fundamental difference between economic production and unproductive gambling. This is because people are generally self-centered and like to think that one buck in my pocket is one buck, and it doesn’t matter how I got it.
But as an economic system, it makes a life and death difference.
Let me tell you a tale of the Dollar village:
Once upon a time, there was a village of 1024 Dollars. A swindler Mr. Ponzi came and asked the villagers to buy a token for one dollar and promised that he would return a one-dollar profit after a certain period of time.
A multilevel scheme started to work: Mr. Ponzi gets the first dollar. After a period of time, he gets the second dollar. He returns the second dollar to the first dollar as profit. He then recruits two more dollars, and at the end of the second period, he returns one dollar to each existing earlier dollar, in this case, the first and the second dollar. He then recruits four new dollars, and at the end of the third period, he returns one dollar to each existing earlier dollar, which are, in this case, the first, the second, the third, and the fourth dollar. He then recruits eight new dollars, and so on.
One can design a simple program to illustrate the swindler’s game.
By the end of the nineth period, the swindler has 512 dollars in play, among which 256 are new dollars. The first dollar was already rewarded nine times, the second eight times, the next two (the third and the fourth), seven times, the next four, six times, so on. Now everyone including the 256 new dollars are expecting to receive another return, because the remaining 512 dollars are expected to come into play.
The remaining 512 dollars did come into play, but immediately after that, Mr. Ponzi disappears with the 512 dollars finally arrived.
It leaves the Dollar village in a condition like the following:
(1) it is now twice as poor, having half of its wealth robbed away;
(2) it now has an extremely uneven distribution of the dollars;
(3) the dollars have developed a mental disease of always expecting some kind of a gambler return and therefore refuse to work or unable to work;
(4) started to hate each other; and
(5) the village has lost productivity and is in economic death.
Sad, isn’t it? But do you still not see the difference between a nonproductive gambling and productive economic activities?
However, I do not think humanity on earth is as foolish as the Dollar village in the above tale.
The global economy is a village of $500 trillion dollars. So far, $2 trillion (0.4%) has participated the BTC Ponzi gambling. Could it even go further? I don’t know. But I think it’s safe to say that if 10% of the dollars participated the destructive Ponzi gambling, the general well-being of the village would be apparently affected, and people would wake up en masse, not because of their intelligence but because of the practical pain that the company has caused to the society. And 10% seems an extreme. Why can’t people wake up now at 0.4%? Why not at 1%, etc.?
It’s hard to say exactly when and how it will end. Humanity hasn’t been so stupid since the fall of Adam and Eve. But I don’t think man’s history will be like the tale of the Dollar village above.
And although I can only make a tiny difference, I work hard to make sure that it doesn’t.
Human society is a complex system different from the Dollar village. It has very strong self-protection and self-healing powers. In the case of the BTC Ponzi scheme, for example, if at any point the real Bitcoin blockchain that is useful and productive starts to emerge and gain adoption, the BTC Ponzi will be broken by an objective external force before it collapses due to internal pressure.