As bitcoin is a completely decentralized asset, and it operates using blockchain technologys transparency, bitcoin cannot possibly be a Ponzi scheme. Bitcoin is not a pyramid scheme, since there is no reward or guaranteed profit from buying BTC coins. [Sources: 4, 5]

In other words, there is NO ONE promising you any returns from holding bitcoin, and its value comes from selling Bitcoins to others. Like fiat currency, however, when a day is over, the value of a Bitcoin is in its owners eyes. [Sources: 2]

To make that charge about Bitcoin is like calling the U.S. dollar a Ponzi scheme because a few con artists are using it as a form of payment. While Bitcoin and other cryptocurrencies are not Ponzi schemes per se, this does not mean Ponzi schemes cannot use Bitcoin to attract would-be investors. [Sources: 5, 9]

Ponzi schemes are frauds where the fraudsters use the money of the new investors to pay out rewards to existing ones, never earning a return. In short, a Ponzi scheme is a phony investment scheme that promises clients astronomical gains, but uses the money collected from new investors to pay out rewards to the original investors. By definition, a Ponzi scheme is a scam where money from one group of people is used in secret to pay promised returns to another group of people. Ponzi schemes work only so long as additional investors are added, and this added money is used to repay the investors who were previously added, creating an illusion that a profit has been made. [Sources: 1, 3, 6, 9]

Look, investors get a suspiciously stable profit on Ponzi schemes, and this is simply unfeasible when you are dealing with bitcoin. A Ponzi Scheme promises a high profit with a minimum amount of risk, while trading Cryptocurrency is rather volatile because of the market conditions, regulatory challenges, and other factors that provide investors the chance of achieving a high profit, but at the same time, high risks. The world crypto markets are unregulated because of intense lobbying from crypto industry, whose kingpins want to keep Ponzis going. There is also no figure like Charles Ponzi, who is scamming people into buying bitcoins for their own personal profit. [Sources: 5, 7, 8, 9]

Instead, Bitcoin is open for everyone and after just one purchase, an investor gets to keep and own the original cryptocurrency. While this article will not be discussing the ecological costs of Bitcoin mining, it is pertinent that, unlike the Madoff-style Ponzi schemes, in which Madoff merely transfers money from new investors to existing investors, with no actual investment made, Bitcoin miners must make investments in hardware, real estate, and energy. Sathvik Viswanath, Co-Founder & CEO, Unocoin, Cryptocurrency Exchange says crypto is being used as a means of payment because it is easier, and that using cryptocurrency, they are able to open up their whole Ponzi scheme worldwide, rather than being limited to one particular country or area. The decentralized nature of bitcoin is itself the number one reason bitcoin is not a Ponzi scheme, i.e., because Bitcoin is not managed by any corporation, so its value is determined solely by its core principles and markets, which decides its supply, demand, and its value. [Sources: 0, 5, 6, 7]

OTHER ARTICLES:

• Traders and holders, some things we should know

• Cryptocurrencies: brief summary for new investors

• Cryptocurrencies: The Dark Side

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SOURCES:

• [0]: https://medium.datadriveninvestor.com/why-simply-calling-bitcoin-a-ponzi-scheme-is-lazy-thinking-a3dfc67c25e

• [1]: https://www.bostonglobe.com/2022/05/24/opinion/is-cryptocurrency-ponzi-scheme/

• [2]: https://www.computerworld.com/article/3648339/bitcoin-delusions-of-money.html

• [3]: https://cointelegraph.com/news/how-to-tell-if-a-cryptocurrency-project-is-a-ponzi-scheme

• [4]: https://cryptonews.com/guides/is-bitcoin-a-pyramid-scheme.htm

• [5]: https://www.tap.global/blog/why-bitcoin-is-not-a-ponzi-scheme

• [6]: https://phemex.com/blogs/bitcoin-ponzi-scheme

• [7]: https://www.outlookindia.com/business/are-cryptocurrencies-really-like-ponzi-schemes-here-s-what-experts-have-to-say-news-182567

• [8]: https://www.newsweek.com/cryptocurrency-ponzi-scheme-its-time-regulate-it-opinion-1721965

• [9]: https://www.fool.com/the-ascent/cryptocurrency/articles/is-bitcoin-a-ponzi-scheme/