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A Few Thoughts To Dismantle The "Bitcoin Is A Ponzi" Argument

By BitcoinGordon | BitcoinGordon | 6 Feb 2022


It always amazes me when I come to the same conclusions about people I would otherwise respect, even when I disagree with them.

There are SO many self-proclaimed "experts" in economics and finance, and more and more as our globalist regimes organize and take hold, brainwashing the masses and organizing populations against one another, destroying critical thinking at the very basis of its architecture, we find people who are supposed to be independently... smart, doing the bidding of exactly what the globalists wish them to do.

Journalists, economists, financial advisors, gold bugs, planners, think tanks... they all seem to be willing to trash their reputations with mindless jibber jabber of some of the most unimaginably poorly argued positions about something like Bitcoin.

So, I just want to focus on one of the really easy ones that makes me red with anger when the argument itself doesn't completely tear down what is left of these mindless, weak-kneed analysts' reputations in the public sector. People who already believe in Bitcoin should not be the only one's with a grade-8 level argument that defeats these people's reasoning skills or lack thereof, and I believe we all suspect that when these 'fact checker' 'truth serum' articles come out, they display such a massive drop in IQ, it is fair to assume the money is quite good to soil one's public validity. It must be a bribe, for someone to think they are giving a scoop, by calling Bitcoin a Ponzi scheme.

We have a lot more work to do, people, to educate the public and rescue them out of the haze to which they have fallen.

Here we are, to debate the argument that "Bitcoin is a Ponzi scheme".

First, you do know Ponzi is named after Mr. Ponzi who invented what we know today as a Ponzi scheme, right?

Bernie Madoff would be a prime example of a real Ponzi schemer. He used people's long term trust in his reputation overseeing government agencies to lure in investors for years and years. Whenever anyone in the chain questioned the legitimacy of their investment or asked to have some profits pulled, he would evade an avalanche of fear by using funds from others to pay the more panicked players, which would give the illusion of legitimacy in his scheme and maintain the process moving forward.

What made Madoff's scheme one of a Ponzi nature, is that early investors receive profits or royalties or dividends that are promised, off of the investments of new investors. The very definition of a Ponzi scheme, is that there is no real underlying value they are investing in. The actual asset of value does not exist.

As it goes along, excuses are made to delay payments, and later participants have to be added at a faster pace, and they have to be shaken down for larger funds. The reason that the Ponzi scheme always fails, is because first, the investors are not profiting from some good investment; the entire scheme is what they call a long con and a confidence scam. It is their belief in the person that makes people accept whatever evidence they provide, and the con is done with evidence to comfort investors over many years before it starts to deteriorate.

The confidence man is mostly paying themselves and living a lavish lifestyle off of investor funds, depleting the source, so eventually cracks will appear, someone will question their legitimacy, though the better they are at the con the longer this takes, and eventually every Ponzi fails.

One big mistake the uneducated or intentionally misleading articles and accusations surrounding Bitcoin as a Ponzi include, is combining accusations that it is a Ponzi and a pyramid scheme. While these can look similar, let me explain how stupid this is.

In truth, a pyramid scheme can be legitimate even if some would view it as unfair. The main issue with a pyramid scheme is that of financial musical chairs. While everyone in the pyramid could be following a legit set of rules, even selling legit products, their main source of earnings is usually to sell the program and commissions.

Honestly, if the products involved are good and the prices are fair, that justifies a large portion of the pyramid in my opinion. But, the distinction here, is that these are not necessarily a con or run by a con man or team, and the main reason for concern is that each level of people involved earn off of the sales of those lower from them, so recruitment is the main source of wealth. The lower the ranking of individuals, the harder it is for them to find new souls willing to partake, and the more likely the majority of their efforts are in fueling the multi-tiered wealth of early adopters.

Now, you may see where I'm going with this; a key element to the false claims on Bitcoin, being the early adopters model.

So, let's break this down a bit, and seriously folks, this stuff matters. In my next article I will focus on the pyramid  scheme argument and tear it down. Here, I fight the Ponzi lie.

First, the underlying asset.

Bitcoin is clearly a tangible digital asset that millions of people believe in as a store of value, an investment, a profit-earning trade, a better currency, a means of separating centralized power, and a myriad of things that we make tangible through legitimate means.

Second, in the specific case of Bitcoin, the inventor(s) Satoshi, did not unfairly rig the Bitcoin 'Ponzi' in their favor.

In fact, they have acted as close to the opposite as a con artist, only sharing the original code with a small group, getting direct feedback out in the open, making the code accessible, allowing a team to be involved in protecting and updating code. They did not set aside any for themselves, but rather had to 'mine' it for themselves just like any other individual could have. They designed a model of scarcity for the protection of inflationary economics versus an asset that was unfairly rigged.

There is simply no Ponzi, thus no scheme.

Third, the idea that it is unfair because it profits early investors more heavily.

Here we are, 13 years into the Bitcoin movement, and everyone who believes in Bitcoin and has had ample opportunity to decide what to do with that knowledge, can still mine it, buy it, store it, HODL it, trade it, use it for cash. Everyone involved tends to believe that "we are still early", meaning that the jig certainly isn't up, so to speak.

Most of us believe $40K is a reasonable price for owning one of 21 million coins that will ever be denominated in the Bitcoin network. Latecomers are likely to benefit from a 2X, 5X, perhaps even a 1000X... because it is an incredibly liquid asset, anyone who wishes to unload theirs on someone else can make that other person a fresh entrant without any cost other than the current going market price. The idea that it is unfair to later arrivals is ridiculous.

Fourth, it does not require the next "mark" to come along for someone to 'get out' of the risk of this Bitcoin scheme.

Liquidity is something that is 100% an illusion in a Ponzi scheme. The only money that exists is what investors are paying in, so if anyone wants evidence of their profit, the con man has to give them money from another investor. In contrast, legitimate trading happens out in the open on order books and OTC trades managed by brokers, and there is a constant flow of people willing to buy, and willing to sell at market. One could potentially argue that in later years there will be intense price action pressure as more and more people, institutions and nations realize the value in holding on to their Bitcoin, so scarcity does exist, but again, not because the profits aren't real, but rather because everyone sees the value in a finite resource that is programmed to get tougher to create the more value people perceive. Even if we get to a point where only a handful of new Bitcoins can be mined, and there are only tens of coins available on the order books of exchanges, it will mean that people pay a premium to be included in an exclusive group of people who own some Bitcoin. The price will hike as fewer are willing to sell, but there will still be liquidity hanging out at extremely high levels, and guess what: there will still be derivatives and ETFs where people can gamble on the price without the scary idea of owning the real thing. None of these aspects exist in a Ponzi.

Fifth, the argument of perceived value.

Now, to be completely truthful, none of the idiots perpetuating the Ponzi-Bitcoin lie have done this well or gone this far in their arguments, so I will lend this to them to use next time so I can knock it down and you, the few who read this, can be the intellectual in the room when an un-pilled friend parrots what they read from Forbes.

The value in a Ponzi scheme comes from someone lying that the investment is making investors profit. This is the argument that someone MUST make in order to compare Bitcoin to a Ponzi scheme. So, again, I turn to liquidity.

If people are having a problem selling their Bitcoin for profit, they are doing it wrong. It is easy to sell Bitcoin, and there are only 2 times in history it has been worth a higher price than the $41K it currently resides at as I write this.

Importantly, a volatile asset doesn't mean there is a weakness in the underlying value or the network or the actual perception of value. It means the same thing as any stock people buy in public companies; markets get skittish, governments make up false flag manipulative scare-stories to shake people's assets out of their hands, and even in the face of what we all believed to be a global pandemic that stopped planes, cars and commerce, Bitcoin could not be knocked lower than $3800. If it was a for-real Ponzi, when everyone was unloading, there would be no one willing to buy back in, and we would never see a $68K Bitcoin, but we did... twice.

So, if we don't have a "who" in our Ponzi scheme, and the early investors aren't paying for the later ones who need proof of profit, and the scarcity model is not because confidence runs out, but rather the exact opposite, a feature that is built in, and the "what" of our equation is an actual asset we can all prove exists, as is the "where" "why' and "how", then I would like to ask you the incredibly important question that I have on the matter: who is actually believing this crap about a Ponzi scheme? We must educate the public, because the press surely isn't going to do so.

Some day in the future, every banker, investor, and nation that is not tied directly to extortion through the IMF, is going to tell people they should hold Bitcoin in their portfolio. They will do it at that late moment after the have shaken out as much from the free market as they can, and they will press on the price until it skyrockets for years.

It will become clear to the public that they were lied to either out of massive incompetence, or because the press, bankers, governments and investors were... you guessed it, running a Ponzi scheme on them, but not on Bitcoin; on making sure they DON'T get any.

I would suggest it is easier to argue that the real Ponzi scheme is forcing people to choose from flawed, devaluing investments and to stay away from Bitcoin (and Litecoin as the case may be).

There is an underlying asset. We know it was made without insider benefits. The network, the public record of everything spent, and the very value of decentralization in running the energy flow of the Bitcoin network forces it to be impossible to classify as a Ponzi scheme. There is no confidence game from the owners of Bitcoin, where the more loyal they are, there is absolutely zero chance of them ever selling theirs, and sure they want the value to go up, but the utmost importance to them, is to stop thinking of that value in fiat terms, which again, cannot work in the pretext of a Ponzi. We know the "how" because the network has worked for 13 years and we can even read the code. The "why" is obvious, which is why more people care today under more clear signs of global tyranny than ever before.

Be sure to reason your own means of explaining how thin the "Ponzi" argument actually is. If you are in the active process of recruiting people (again, the pyramid comes next), orange-pilling to be exact, it will eventually come up that they think on some level, this is all invisible, is designed to take their fiat, and there must be a bad actor hiding behind the curtain somewhere. Be able to counter that argument, because every individual who can take a piece of future wealth for themselves is another dangerous globalist that gets one fraction smaller for themselves. The best weapon against the con, is to leave the con artist with as little profit as possible. 

And my final reason this Bitcoin thing ain't a Ponzi (which also deflates the pyramid argument), is because each person who opts in is increasing the value of their own investment, and every single other person's investment. Their is no hierarchy as I'll explain next, but let that sink in... the very act of purchasing whatever fraction of a Bitcoin a person can afford, is actually increasing that value merely by making the purchase and holding it, to the exact same percentage as everyone else who holds.

And on that note, a very un-conned Crypto Gordon Freeman, the free man, for now... out.

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BitcoinGordon
BitcoinGordon

Hi! I'm Gordon Freeman (I hear they made a likeness of me in some video game... totally unrelated... or...).


BitcoinGordon
BitcoinGordon

Welcome! This is my blog for all things crypto, from my day trading and tutorials to general crypto news.

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