Question: Is Bitcoin a Ponzi Scheme?

Without a doubt there are a lot of Cryptocurrency and ICO scams, but what is a Ponzi Scheme exactly, and is Bitcoin one of them?

The original Ponzi Scheme involved direct, internal fraud. Mr. Charles Ponzi claimed that he could get people a 50% return on their investment in 45 days, or a 2X return in 90 days. In reality, he was using the funds from the new investors to pay off the earlier investors. Knowing that once new investors stoping coming in pyramid would fall apart.

This is not what’s happening in Bitcoin. In any high risk speculative investment you expect early investors to make the most money. When its legitimate, no one is upset about it. Bitcoin is no different, many early investors have made money on bitcoin. Most of them very surprised bitcoin has increased in value as much as it has. Most of the people who held bitcoin at $10 sold at $100, same for the people who bought at $1000 and sold at $10000.

What makes a Ponzi scheme is the insider or centralized knowledge that they are going to pay off early investors with new investors.

The value of Bitcoin has always been speculative, there has never been any guarantee of an increase in value, no promise of anything other than what it is. A decentralized currency and payment platform.

The market determines Bitcoins value, but that doesn’t mean its immune to manipulation.

Because the CFTC ruled bitcoin would be labeled as a commodity, the general public has unlocked the opportunity to invest in Bitcoin. Its tempting for the public to believe bitcoin is a Ponzi scheme because for most people in the US, “non accredited investors” (anyone with a net-worth is under $1 million and makes less than $200,000 a year) in most situations, they are gated out or protected from certain investment opportunities. Opportunities, like buying shares in a startup for instance.

For the general public, and the average American, Bitcoin is the opportunity to play with some high risk investments, for as long as they’re willing and able to accept the responsibility of everything “high-risk” entails.

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