Reply To: opinions please what is the better dividend: Pay out in ASSET or pay out in NHZ?


Horizon: 0.00 HZ
17th December 2014 at 12:36 am

Hi, new member here.

In my opinion the danger of receiving shares and not HZ is that it is very easy to end up investing in a Ponzi scheme! Even if it did not start as a Ponzi!

Say I issue 1 billion shares in my new enterprise, because I am going to pay you in shares. You buy shares for NH, I pocket the NH and issue share dividends. All the while I claim to be doing something (which perhaps I was at the start) that makes NH. I tell you the value of the company in NH on a regular basis so you know how much your shares are worth and I issue more shares as dividends. You buy more shares for HZ and I pocket them.

Eventually I run out of shares, is this the end of the Ponzi? No! I issue a new asset as assets of the company (which all the asset holders agree to) and continue this forever because it is cheap to issue new assets and you keep giving me HZ.

If on the other hand the dividend was in HZ then I would have run out of HZ a long time ago and the Ponzi would have collapsed.

The temptation to head into Ponzi land, to save face when things go wrong or fuel an ego is far to great for the average person. The idea will sit at the back of their head and nag and nag until an opportunity comes for it to be fulfilled. Remember that, when you shout scam. For the less than average person, though, who thinks taking your HZ and giving nothing in return is Capitalism at its finest, being able to create a Ponzi is far to tempting an opportunity to pass.

I would not recommend accepting shares as dividends except in very limited circumstances.

USDbitfnx is not a ponzi scheme (as far as I can tell) because the assets can be exchanged for dollars or BTC at any time and are being exchanged. This means the assets are being recycled not just issued and there has to be backing to do this. Whether there is enough backing for all assets is a different question but the number of assets in distribution is not growing particularly fast either which makes the backing plausible.

Could USDbitfnx become a Ponzi? The most likely scenario is that there was a theft and the issuer did not want to admit it. In this case unbacked assets might be issued and a step towards a Ponzi made. There is no need for this step to be permanent however because reducing the dividend rate would allow lost capital to be restored, eventually. There is however a risk, as there is with any asset that issues shares, of becoming a Ponzi.