Is Bitcoin a Ponzi Scheme?
Craig Wright recently accused Bitcoin of being a “Ponzi scheme” that would be ending soon. Over the decade that Bitcoin has been in existence, many have accused it of being a Ponzi Scheme, and all have been wrong so far. Bitcoin is not a Ponzi Scheme, and I will explain why.
To understand why someone would think Bitcoin is a Ponzi Scheme, it is important to define what a Ponzi Scheme is. A Ponzi Scheme is an investment scheme that depends upon fraud and fabrication to convince investors to invest in a product or service that does not exist and that promises extreme reward for little or no risk. Bitcoin does not promise any return, and is a real product that moves money better than any remittance services on the market. Bydefinition, it is not a Ponzi Scheme.
Bitcoin has been used in Ponzi Schemes that were prevalent during the cryptocurrency bull market of 2017. Bitconnect and the HYIPs that populated the internet during the bull market took advantage of new investors in cryptocurrency who were not savvy to how a cryptocurrency worked. The websites promised insane returns of 40% a month, and lending platforms used new investors money to pay older investors. When the cash flow stopped during the bear market of 2018, these scams and Ponzi Schemes folded. Bitcoin did not.
Bitcoin’s volatility, the unknown creator of Bitcoin and the complicated nature of the asset (especially when evaluating the value of the asset) have led many to call Bitcoin a Ponzi Scheme. The biggest contributor to these accusations come from the extreme volatility related to large leveraged trades that push the price.
Let's get down to the technical reasons why Bitcoin is a real, tangeable product with a value proposition. Marketwatch released a chart with the cost of mining a Bitcoin by country, and the US cost is approximately $4,700. Beyond the cost of mining the coin, there is the demand for the product, and the ability of Bitcoin's blockchain ledger to maintain a spotless transaction letter. Bitcoin also supports business development and provides jobs for workers. There are more than 5,000 Bitcoin ATMs worldwide, and Bitcoin had acted as digital gold during downturns and disasters.
In short, Bitcoin is not a Ponzi scheme. It is a quality product traded worldwide that has a unique value proposition. It is the king of cryptocurrency, and the digital gold. It is the next safe-haven asset.
Originally published in my Publish0x account I own at:
Also published in my Minds, Hyperspace, Serey, Weku, Bearshares, Whaleshares and Golos accounts I own.
Picture from Pixabay.