Understanding the Ponzi Narrative

[taufik123]

Actually you're not completely correct.
It's true Bitcoin is decentralized and anyone can own Bitcoin no matter what his country, ages, religions, etc. But there's a whale who own large amount Bitcoin in a single address, we also don't know how many address he have. If the large amount Bitcoin were moved to another address, it will be posted on whale alert and sometimes it's affect the market.

They (whale) may not controlling Bitcoin, but they've a big impact on the market.

If this were to happen, it would be a huge shock to bitcoin and all altcoins. Whales may not fully control bitcoin, but they can manipulate the market very well and will have a huge impact on the price of bitcoin and all altcoins.

Ponzi husks are indeed centralized, and bitcoin is only used as a tool to make the ponzi scheme look attractive because it uses bitcoin which is of course decentralized and cannot be controlled by anyone.
Many ponzi projects do bullshit by using bitcoin or cryptocurrencies as a means to attract members.

[Kimonoe]

One of the largest roadblocks I have in defending bitcoin (and cryptocurrency in general) is when people compare it to a Ponzi scheme.

There is plenty of bitcoin FUD that is easy to defend, but when people pull the Ponzi-card, that is when I begin to get agitated. This is because I don't have a sound argument to combat this claim.

For those who are not readily familiar; A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from legitimate business activity, and they remain unaware that other investors are the source of funds.

People compare bitcoin to a Ponzi scheme because the price increases when more money flows into the underlying asset.  If I buy for X and sell for X+100 that 100 profit of mine came from another person who bought into the scheme after me. In the eyes of many, this is dangerously close to how Ponzi schemes generate value.

What is the best argument against the Ponzi scheme narrative?

In what ways are Ponzi schemes different from bitcoin?

How do they generate value differently?

how bitcoin become ponzi? That's nonsense mate because that's the way how bitcoin works even before whrein through demand and supply, so without such thing there's no chance for us to make money in it as well. Many people saying its a scam because they don't have knowledge how they can become successful in it after how many losses. Lol  Without knowing that it requires knowledge especially when it comes demand and supply where a lot people are buying and selling..   and what do you mean if you bought bitcoin it came from fraud?   Shut the front door mate. Unless if you don't use a trusted platform.. And if not your a lucky human to receive bitcoin from frauds. Lmao
Make some research sometimes.!!

things like this were heard a lot during 2018, where after bitcoin experienced a significant increase, then it experienced a significant decline as well. from there many say bitcoin is a ponzi scheme or pyramid, which will be detrimental to new investors. but in reality it is not so, bitcoin is able to show in 4 years later, because this is purely from the law of supply and demand

[romeareo]

the demand for get rich quick never goes away.

after every crash the whales/veterans start accumulating.

2 years later it starts picking up pace.

Retailers FOMO in. Everyone dumps it on the noobs and get rich.

Bubble crashes.

Suicide Hotline gets posted. Whoa.. did not see this coming!

Whales/veterans start accumulating.

The whole thing is one time loop.

[pinggoki]

People still think that bitcoin is akin to a Ponzi scheme? I don't exactly know how they go on about their lives being such a dumbass, it's like they're trying to make things wrong for bitcoin and discourage people from getting into it, plus who is at the top of bitcoin that's getting all the money then?

[odolvlobo]

You are getting agitated because you are not able to handle the truth. The truth is that Bitcoin *is* a Ponzi scheme. At-least until now.

People who get in early and HODL will make way more money than those who come in later and HODL and so on and so forth.
Right now Bitcoin is valued at $47k. The only way it will shoot up in price is if more and more people get into crypto and buy more and more of Bitcoin. This includes institutional investors, Billionaires, regular people, people who switch from Alts to BTC etc.

If nobody ever buys another BTC, the price will collapse because most people (99.999%) who "invest" in BTC/Crypto are only doing so to make more money.
...
Let's see the definition of a pyramid scheme as per usa dot gov

Your are one of the ignorant people I mentioned before. You say that Bitcoin is a Ponzi scheme, but you don't know what a Ponzi scheme is.

You go on and talk about pyramid schemes, as if you believe that a pyramid scheme is a type of Ponzi scheme. That demonstrates that you don't know what a Ponzi scheme is.

[romeareo]

You are getting agitated because you are not able to handle the truth. The truth is that Bitcoin *is* a Ponzi scheme. At-least until now.

People who get in early and HODL will make way more money than those who come in later and HODL and so on and so forth.
Right now Bitcoin is valued at $47k. The only way it will shoot up in price is if more and more people get into crypto and buy more and more of Bitcoin. This includes institutional investors, Billionaires, regular people, people who switch from Alts to BTC etc.

If nobody ever buys another BTC, the price will collapse because most people (99.999%) who "invest" in BTC/Crypto are only doing so to make more money.
...
Let's see the definition of a pyramid scheme as per usa dot gov

Your are one of the ignorant people I mentioned before. You say that Bitcoin is a Ponzi scheme, but you don't know what a Ponzi scheme is.

You go on and talk about pyramid schemes, as if you believe that a pyramid scheme is a type of Ponzi scheme. That demonstrates that you don't know what a Ponzi scheme is.

From wikipedia:
A pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it does on a mistaken belief in a nonexistent financial reality, including the hope of an extremely high rate of return.


Sure there are differences between pyramid and ponzi schemes but the larger point is that there is no legitimate business utility for crypto at this point that is driving the prices up. If you invest in Apple stock they are going to manufacture more iPhones expand more across the world/country and thus you get rewarded for it.

For Crypto, there is no product yet that is driving the prices up. It is 100% speculation at this point.

Ofcourse if you are invested in BTC/Crypto then you will not see the larger picture.

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

― Upton Sinclair

Here is one more way to look at it. There are 15000+ cryptos in the space. Is each and every one of them legit? No. 99% of them will go out this cycle. They are all pump and dumps. Now, they are all similar to BTC except for 1 thing. They are not as popular. That's all there is to it.

[Slow death]

i think almost everyone knows what ponzi scam is and when some influential or famous guy comes to compare bitcoin with ponzi scam that person knows that's not true so they're just talking to piss off bitcoin users, if bicoin is ponzi then They could also call gold a ponzi scheme, diamond and oil a ponzi scheme. I think we have to start ignoring anyone who calls bitcoin a ponzi scheme.

[uneng]

Obviously late investors won't be benefited by bitcoin price fluctuations like early ones were, but it doesn't mean once this day comes bitcoin will become useless and disappear, like any ponzi schemes around.

Bitcoin will keep being used as virtual currency and as a method to protect our patrimony against inflation and abusive regulations from local governments over our money and properties.

However mutual trust from adopters is a must, otherwise what I said above won't work...

[o_e_l_e_o]

Everyone dumps it on the noobs and get rich.

Except there is nothing forcing newbies to sell and lose out. The ones who hold through the dips and crashes and emerge through the other end have exactly the same percentage gains from that cycle as any "whale or veteran", as you put it. In a Ponzi scheme the new investor always loses to the older investor. In bitcoin any user can win or lose over any other user, if timing the market is what you are interested in.

there is no legitimate business utility for crypto at this point that is driving the prices up.

Except all the merchants accepting bitcoin for goods and services, all the users spending bitcoin to buy those goods and services, all the employees receiving some or all of their paycheck in bitcoin, etc. You know, like any other currency.

[odolvlobo]

For Crypto, there is no product yet that is driving the prices up. It is 100% speculation at this point.

The rational price for an asset is its risk-adjusted Present Value, which in this case is based on aggregate expectations of a future price. So while the current price may not be justified by the current utility, it could be justified by the future utility.

[barabarian1]

ponzi, get paid after you invite people to join that project. and when people you invite, invite the other people, you will get bonus. salary made by people's line under your recruit.
i ever ask by my family about this, she ask me to join with bonus and the other extra cash. what we do just pay some cash and follow the rule, but i reject it because i know the end.

[Sterbens]

What is the best argument against the Ponzi scheme narrative?

Simple

Who are the rich lords who sacrificed others in Bitcoin? no, in fact, everyone who invests in bitcoin experiences the benefits without anyone being harmed.
Ponzi schemes do not apply to Bitcoin, for me it is too conventional if there are still people who generalize Bitcoin with Ponzi schemes. even those people don't really understand what Ponzi really is.

Okay, who do we put the money in Bitcoin to? while the Ponzi pattern or scheme from A to B to C to D and so on. In Bitcoin who is the intermediary to continue our money? other than ourselves. In fact, Bitcoin is present as one of the first systems that dared to destroy the Ponzi system.

Why? because this is what I often say to people who think Bitcoin is Ponzi
"NO SYSTEM OFFERING FINANCIAL FREEDOM EXCEPT BITCOIN" think !!!!

[odolvlobo]

ponzi, get paid after you invite people to join that project. and when people you invite, invite the other people, you will get bonus. salary made by people's line under your recruit.
i ever ask by my family about this, she ask me to join with bonus and the other extra cash. what we do just pay some cash and follow the rule, but i reject it because i know the end.

That is not a Ponzi scheme. That is a pyramid scheme.

[Wind_FURY]

What is the best argument against the Ponzi scheme narrative?

In what ways are Ponzi schemes different from bitcoin?

Bitcoin IS a “Ponzi”, but a natural-occuring Ponzi, like Gold. It’s not a Madoff-style Ponzi. Bitcoin doesn’t have a centralized issuer who can run away with your money. Plus Bitcoin is transferrable, it is used for payments. IT IS MONEY.

How do they generate value differently?

Both Ponzis and Bitcoin rely on the free market, but Ponzis are scams, Bitcoin is not.

[pushups44]

The Ponzi claim shows a basic misunderstanding of bitcoin and investments. Yes, there is always a triangular structure with all investments, whereby newer investors are needed to keep the value of the investments going up. However, with Ponzi schemes there is fraud and misrepresentation, often with false claims of cash flows. Bitcoin is simply a network of people who generally value its decentralization. That early investors get rich is a feature of all investment types, including major stocks.

What is the best argument against the Ponzi scheme narrative?

In what ways are Ponzi schemes different from bitcoin?

Bitcoin IS a “Ponzi”, but a natural-occuring Ponzi, like Gold. It’s not a Madoff-style Ponzi. Bitcoin doesn’t have a centralized issuer who can run away with your money. Plus Bitcoin is transferrable, it is used for payments. IT IS MONEY.

How do they generate value differently?

Both Ponzis and Bitcoin rely on the free market, but Ponzis are scams, Bitcoin is not.

A Ponzi is something very specific that implies illicit activity. Bitcoin is not and should thus not be referred to as a type of Ponzi. As I pointed out elsewhere, there may be similarities, but there are also major differences.

[BlackHatCoiner]

Bitcoin IS a “Ponzi”, but a natural-occuring Ponzi, like Gold.

There's no such thing as a natural-occuring ponzi. Something is a ponzi or it isn't. Neither gold and bitcoin are ponzis as there are no promised returns from (the) creators.

Plus Bitcoin is transferrable, it is used for payments. IT IS MONEY.

And same goes for dog coins. However, it is obvious enough that the creators do it for the profit. Even if they find alibis (that it has a usage), I can't unsee those as frauds. Still, they aren't ponzis. Ponzi has a really strict definition.

[kaya11]

The word "unaware" is a strong one for the argument, I think most of the investors of Bitcoin are aware of where does their profits came from, if they have manage to gain they should also know that some random person at the moment lost if they sell it on a lower price. If the haters tell you that Bitcoin is a ponzi scheme, then it won't survive for this long, as most ponzi schemes have been already eliminated and bitcoin still manage to survive.

[odolvlobo]

Bitcoin IS a “Ponzi”, but a natural-occuring Ponzi, like Gold.

I remember reading the article a few years ago where the term "natural" ponzi scheme was invented. The author wanted to say that is Bitcoin a Ponzi scheme, but they couldn't because it is not. So, they invented the term "natural" ponzi scheme. Of course, the bitcoin-is-a-scam crowd loved this term and has adopted it because now they can call Bitcoin a "natural" ponzi scheme, which seems to describe some kind of scam.

A "natural" ponzi scheme is not a ponzi scheme. It more closely resembles a pyramid scheme because both rely on early adopters making money from later adopters. Regardless, keep in mind that a "natural" ponzi scheme is an artificial term that doesn't describe any kind of real scam.

A Ponzi scheme is an investment scam in which the operator only pretends to invest the victim's money. They might pay returns using invested money, but they don't necessarily have to. Instead, they may just create account statements that show fake returns. Many restrict withdrawals so that they don't have to pay returns.

[cryptosize]

Bitcoin IS a “Ponzi”, but a natural-occuring Ponzi, like Gold.

There's no such thing as a natural-occuring ponzi. Something is a ponzi or it isn't. Neither gold and bitcoin are ponzis as there are no promised returns from (the) creators.

Of course there is:

https://en.wikipedia.org/wiki/Trophic_level

There's a (mathematical) reason we cannot have infinite trophic levels. It's a pyramid system, made by nature herself. That doesn't mean we should stop eating meat, let alone food altogether. It is what it is.

So it's not necessarily a bad thing... it's just the law of nature. Nature knows better than Homo Sapiens, there's no question about that.

Plus Bitcoin is transferrable, it is used for payments. IT IS MONEY.

And same goes for dog coins. However, it is obvious enough that the creators do it for the profit. Even if they find alibis (that it has a usage), I can't unsee those as frauds. Still, they aren't ponzis. Ponzi has a really strict definition.

There are legalized ponzi schemes, such as the social insurance/pension system.

Some pensioners (especially early ones 100 years ago) got pensions for paying literally nothing (when the pension system started in the West) and current workers pay exorbitant taxes to fund the pension system, with no promise of getting a decent pension. Seems familiar?

Pension systems require new members/workers, which requires births and there's a birth deficit in the West these days. It will collapse sooner or later, just like Madoff's ponzi scheme.

I would call it a scam, but it's legalized by the state. Just like there's legalized violence (police) and legalized money monopoly (fiat currencies issued by private central banks like FED/ECB).

So it doesn't matter if it's a scam, what matters is if it's legal (having state backing) or not. Madoff didn't have any state backing (he was a small fish compared to big fraudsters), so there you go.

Thank god we have BTC, that's my "pension insurance". I don't give a shit about state pensions, regardless of the countless taxes I've paid over the years.

[BlackHatCoiner]

https://en.wikipedia.org/wiki/Trophic_level

Hmm, interesting. However, is it proper to compare what nature does to human with what human does to human? Ponzi is a form of fraud made by humans effecting solely humans.

There are legalized ponzi schemes, such as the social insurance/pension system.

I think it's advisable to say that laws exist to protect the society. Legalization happens from the state to supposedly protect/take care of you. Yeah, pension looks like a pyramid, and many other things in life too. That's why the ponzi, as a term, is strict.

Besides, ponzi is by far a big fraud. What fraudulent does the pension system have?

Some pensioners (especially early ones 100 years ago) got pensions for paying literally nothing (when the pension system started in the West) and current workers pay exorbitant taxes to fund the pension system, with no promise of getting a decent pension. Seems familiar?

Do you consider this a strong proof to consider the entire pension system fraudulent?

I would call it a scam, but it's legalized by the state. Just like there's legalized violence (police) and legalized money monopoly (fiat currencies issued by private central banks like FED/ECB).

I agree about the latter, but for the former, I'm not yet convinced.

So it doesn't matter if it's a scam, what matters is if it's legal

Do ethics matter?