All Ponzi scheme start with seed money

[sandaq]

In my view, every Ponzi scheme starts with seed capital. Strategy had that seed capital and used it to buy Bitcoin (quite a lot of it).
It then built a strong reputation, completed an IPO (and later another capital raise), and attracted even more investor money.

With those new funds, it bought additional Bitcoin, creating the impression that the company could generate an endless stream of value for shareholders.
Now, as I see it, it's selling Bitcoin that was originally purchased with investors' money in order to return cash to those same investors through dividends.

To me, it's a very simple cycle.

[goldkingcoiner]

In my view, every Ponzi scheme starts with seed capital. Strategy had that seed capital and used it to buy Bitcoin (quite a lot of it).
It then built a strong reputation, completed an IPO (and later another capital raise), and attracted even more investor money.

With those new funds, it bought additional Bitcoin, creating the impression that the company could generate an endless stream of value for shareholders.
Now, as I see it, it's selling Bitcoin that was originally purchased with investors' money in order to return cash to those same investors through dividends.

To me, it's a very simple cycle.

Every ponzi scheme needs hype and hype needs either money to pay for marketing (influencers, and so on - Either that or foolish and rich investors. And there are quite a few of those going around, especially when they inherited their riches instead of built it out of nothing.) or they can connect themselves to something which is already successful and make it look like they and their product/offering/whatever are an integrated part of it.

Unlike good investments, like Bitcoin, hyped investments need marketing. Bitcoin did not need any rich investors. Bitcoin did not to attach itself to a more successful thing. It did not need anything. People learned about Bitcoin and through that understanding they could figure out for themselves as to why Bitcoin is an amazing thing to invest in and why its value will continue to rise.

I have no idea why people thought Strategy was somehow going to create more value than simply buying the actual Bitcoin themselves, but they invested nonetheless. Strategy used Bitcoin's name to connect themselves and their own non-Bitcoin product to it.

[sandaq]

My conviction is that every Ponzi scheme requires seed capital (and, as you pointed out, plenty of hype). By that logic, I can argue that Bitcoin—having started from essentially nothing—doesn't fit the classic Ponzi model.

That said, to be completely honest, even after 15 years I'm still not sure what to think about Bitcoin. The growing institutional adoption has made me question it even more, because I feel it has, in many ways, drifted away from or even circumvented its original purpose.

[BIT-BENDER]

In my view, every Ponzi scheme starts with seed capital. Strategy had that seed capital and used it to buy Bitcoin (quite a lot of it).
It then built a strong reputation, completed an IPO (and later another capital raise), and attracted even more investor money.

With those new funds, it bought additional Bitcoin, creating the impression that the company could generate an endless stream of value for shareholders.
Now, as I see it, it's selling Bitcoin that was originally purchased with investors' money in order to return cash to those same investors through dividends.

To me, it's a very simple cycle.

Most Ponzi scheme functions by those inside the Ponzi scheme required to advertise for the Ponzi scheme, in essence investors are demanded to bring in more new investors for them to collect their profit.
I don't think strategy is a Ponzi scheme because most Ponzi scheme you hardly know what investment the organisers are investing in but logically there is usually no investment being made they just take from new investors to pay old investors until there is no longer funds to pay them they fold up.
Although I will rather by Bitcoin directly for myself and hold than use any other means.

[Alphakilo]

In my view, every Ponzi scheme starts with seed capital. Strategy had that seed capital and used it to buy Bitcoin (quite a lot of it).
It then built a strong reputation, completed an IPO (and later another capital raise), and attracted even more investor money.

With those new funds, it bought additional Bitcoin, creating the impression that the company could generate an endless stream of value for shareholders.
Now, as I see it, it's selling Bitcoin that was originally purchased with investors' money in order to return cash to those same investors through dividends.

To me, it's a very simple cycle.

If it were a Ponzi scheme, there would be lies told about the underlying existing assets but in the case of Bitcoin, it is clear and transparent enough for investors as they see where their money actually is.
Micro strategies works well in a bull market but the real danger here is market reversion and leverage, because if the market price of Bitcoin drops, the company might find it harder to raise more capital. It's simply just high stakes bet on a single digital asset and so far it has paid off, it shows how different from a ponzi scheme this investment path to accumulate more Bitcoin and reap dividends, is paying off big time.

[sandaq]

Most Ponzi scheme functions by those inside the Ponzi scheme required to advertise for the Ponzi scheme, in essence investors are demanded to bring in more new investors for them to collect their profit.
I don't think strategy is a Ponzi scheme because most Ponzi scheme you hardly know what investment the organisers are investing in but logically there is usually no investment being made they just take from new investors to pay old investors until there is no longer funds to pay them they fold up.
Although I will rather by Bitcoin directly for myself and hold than use any other means.

I agree that Ponzi schemes often rely on investors not fully understanding what they're buying. Sometimes it's a complex mortgage product, sometimes it's an obscure financial instrument.

But what exactly is Bitcoin to the average investor? I don't believe the average Strategy investor even knows what a satoshi is, let alone understands how Bitcoin actually works.

[ColdLava40]

My conviction is that every Ponzi scheme requires seed capital (and, as you pointed out, plenty of hype). By that logic, I can argue that Bitcoin—having started from essentially nothing—doesn't fit the classic Ponzi model.

That said, to be completely honest, even after 15 years I'm still not sure what to think about Bitcoin. The growing institutional adoption has made me question it even more, because I feel it has, in many ways, drifted away from or even circumvented its original purpose.

Being an institution doesn't change anything about Bitcoins adoption. Just like every other small investor, the institutions are no different.

They don't have any power nor do they control the network. They can only control their own portion of Bitcoin.  My point is that in Bitcoin there's equality.

Even if the government decides to keep buying the remaining Bitcoin that's left to be minted, they can't change it from decentralized to being centralized. The eal ponzi are those buying shares of Bitcoin and not the real Bitcoin. It shows how bad their intentions towards Bitcoin is.

[Bitcoin-Forever]

In my view, every Ponzi scheme starts with seed capital. Strategy had that seed capital and used it to buy Bitcoin (quite a lot of it).
It then built a strong reputation, completed an IPO (and later another capital raise), and attracted even more investor money.

I mean no agree with you in some extent regarding what you are trying to point out here, when you talk about seed money, then we are definitely referring to capital for an investment or the source to which the fund is being gotten, I'm not everyone that invested have their wealth accumulated from exit scam or seed money as you call it from Ponzi scheme, if a legitimately engage in a business and make success in it, you can as well diversify to invest in Bitcoin with your profit and still make more money over it.

[Findingnemo]

~
That said, to be completely honest, even after 15 years I'm still not sure what to think about Bitcoin. The growing institutional adoption has made me question it even more, because I feel it has, in many ways, drifted away from or even circumvented its original purpose.

Bitcoin is bitcoin, you can use it as you want that is the original vision of Satoshi as well. Maybe in future, when it reaches the threshold value then people starts using bitcoin as a currency but when that happens, you need to have bitcoin, right? So start accumulating bitcoin either way, it is not going to be a loss in long term.

[Donneski]

So in a nutshell, you're saying that Strategy is Ponzi? Comparing Strategy to Ponzi actually does not tally and that's because Strategy isn't hiding where shareholder value comes from. Every Strategy investor or intending investor is aware that the company raises capital to acquire Bitcoin as that part is open for all to see.

Calling that a Ponzi simply means you actually can't differentiate between a Ponzi scheme that mostly depends on deception and paying earlier investors with the money of new investors while pretending the returns came from a different source and a company that's transparent on how it raises capital, as well as the risks involved. As an investor, you're free to either agree or disagree with Strategy's approach but Ponzi doesn't give you that transparency that you can base your decision on.

[sandaq]

So in a nutshell, you're saying that Strategy is Ponzi? Comparing Strategy to Ponzi actually does not tally and that's because Strategy isn't hiding where shareholder value comes from. Every Strategy investor or intending investor is aware that the company raises capital to acquire Bitcoin as that part is open for all to see.

Calling that a Ponzi simply means you actually can't differentiate between a Ponzi scheme that mostly depends on deception and paying earlier investors with the money of new investors while pretending the returns came from a different source and a company that's transparent on how it raises capital, as well as the risks involved. As an investor, you're free to either agree or disagree with Strategy's approach but Ponzi doesn't give you that transparency that you can base your decision on.

That's what makes it even more troubling, in my opinion. Investors are effectively being paid with money that ultimately came from their own investments, and it's happening out in the open rather than being concealed. To me, that represents an entirely new level of deception.

[Hypnotizer]

That's what makes it even more troubling, in my opinion. Investors are effectively being paid with money that ultimately came from their own investments, and it's happening out in the open rather than being concealed. To me, that represents an entirely new level of deception.

Is that a troubling problem? Not really

The fact MSTR are doing in publicly or Openly makes it more transparent for the investors and I consider it totally fine, what they’re doing isn’t sounding or looking like a Ponzi scheme atleast from my own perspective and I think you’re oversimplifying what is happening here.

Why do you in the first place think Strategy would pull or is pulling a Ponzi? With them being a public US company it’s very extremely unlikely for that to happen…

[sandaq]

Why do you in the first place think Strategy would pull or is pulling a Ponzi? With them being a public US company it’s very extremely unlikely for that to happen…

I consider any scheme that pays investors using money derived from the investors' own capital, rather than from value created by providing a genuine product or service, to have the characteristics of a Ponzi scheme.

[Mahiyammahi]

In my view, every Ponzi scheme starts with seed capital. Strategy had that seed capital and used it to buy Bitcoin (quite a lot of it).
It then built a strong reputation, completed an IPO (and later another capital raise), and attracted even more investor money.

With those new funds, it bought additional Bitcoin, creating the impression that the company could generate an endless stream of value for shareholders.
Now, as I see it, it's selling Bitcoin that was originally purchased with investors' money in order to return cash to those same investors through dividends.

To me, it's a very simple cycle.

If it were a Ponzi scheme, there would be lies told about the underlying existing assets but in the case of Bitcoin, it is clear and transparent enough for investors as they see where their money actually is.

Alphakilo it's not like this. Let me explain it to you a little better. Suppose MicroStrategy pays its stakeholders an eight to eleven percent dividend every year. Now, if someone invests one million dollars, it will take ten years for that one million dollars to double in interest. In this case, Bitcoin is a little different. Bitcoin can double in a cycle of four years. But the objection is not raised here. The objection is that MicroStrategy is not selling Bitcoin. They are constantly buying Bitcoin, which is going to put them at a financial loss. Because the strategy must pay some dividend every year. Where will they pay this? They have no source of income. So they have to sell the Bitcoin they have bought. This creates instability in the market, it may even reduce their unrealized PnL.

[Faisal2202]

With those new funds, it bought additional Bitcoin, creating the impression that the company could generate an endless stream of value for shareholders.
Now, as I see it, it's selling Bitcoin that was originally purchased with investors' money in order to return cash to those same investors through dividends.

To me, it's a very simple cycle.

They have not sold BTC except those 32 BTC to pay the dividends. They have cash flows and they are paying from that.

But eventually all we fear is that they will sell BTC once they are out of cash flows and I just hope that it never happens because once they start selling to cover the expenses and interest then a chain of selling will start and everyone will panic.

BTC critics will also start spreading FUD. In such cases we must stay cool because if they call it the next FTX crash then it will recover as well, just as BTC recovered after FTX.

[sandaq]

They have not sold BTC except those 32 BTC to pay the dividends. They have cash flows and they are paying from that.

But eventually all we fear is that they will sell BTC once they are out of cash flows and I just hope that it never happens because once they start selling to cover the expenses and interest then a chain of selling will start and everyone will panic.

BTC critics will also start spreading FUD. In such cases we must stay cool because if they call it the next FTX crash then it will recover as well, just as BTC recovered after FTX.

My point isn't about the legitimacy of Bitcoin itself, although I think Strategy's approach inevitably raises questions about it. My concern is specifically about Strategy and how it may ultimately generate returns for investors.

It's true that, so far, the company hasn't relied on selling significant amounts of its Bitcoin holdings to meet its obligations. However, in my view, many schemes that later become unsustainable don't start by paying investors with investor capital—they reach that point over time.

To me, Strategy's sale of 32 BTC is noteworthy because it suggests the company has begun, however modestly, to monetize its Bitcoin holdings.

I also read an article today arguing that if Bitcoin were to decline or remain stagnant for 3 years, Strategy might need to sell approximately 15–20% of its Bitcoin holdings over that period to service its debt obligations.

[Myleschetty]

My conviction is that every Ponzi scheme requires seed capital (and, as you pointed out, plenty of hype). By that logic, I can argue that Bitcoin—having started from essentially nothing—doesn't fit the classic Ponzi model.

That said, to be completely honest, even after 15 years I'm still not sure what to think about Bitcoin. The growing institutional adoption has made me question it even more, because I feel it has, in many ways, drifted away from or even circumvented its original purpose.

Yes, all Ponzi schemes need some sort of seed money to get off the ground. This money was primarily used to give early investors the illusion that the scheme was genuinely successful so that the early investors' testimonies could help in gaining more traction.
I see the seed money as marketing and structure building funds. However, the majority of the funding comes from the operator's own pocket or other fraudulent sources, it don't necessarily mean that it will be raised through early investors.
Are you referring to an ETF similar to MicroStrategy, based on what you stated in the OP page?

[EluguHcman]

Every ponzi scheme needs hype and hype needs either money to pay for marketing (influencers, and so on - Either that or foolish and rich investors. And there are quite a few of those going around, especially when they inherited their riches instead of built it out of nothing.) or they can connect themselves to something which is already successful and make it look like they and their product/offering/whatever are an integrated part of it.

This is always how something that's not genuine struggles to standout to catch people's attentions and interests.
Ponzi schemes has dynamic ways that requires developers funding the project for marketing as a strategy to make the project go viral and also paints it to look real or even go forth to pretends to allow the project excel for a while while the early investors are cashing out profits while the testimonies is always mind blowing spreading the product without knowing it is a Ponzi.
This time the insiders or project teams speculates positive news about the coin and so on investors gets convinced to invest in it ignorantly.

Unlike good investments, like Bitcoin, hyped investments need marketing. Bitcoin did not need any rich investors. Bitcoin did not to attach itself to a more successful thing. It did not need anything. People learned about Bitcoin and through that understanding they could figure out for themselves as to why Bitcoin is an amazing thing to invest in and why its value will continue to rise.

Of course Bitcoin made it so far due to its reputation and real world utilities that only leans on Speculations without any insider having to fund it for marketing or laying projects for hyping rather it is the community users in the real world that do the marketing without having personal interests that is to personally enrich them like the Ponzi project which shutdown along the lines andake away with investors funds.

Bitcoin is an epitome that what is real does not require to force in or convince the people with hypes.

[PrivacyG]

I do not believe Strategy is operating a 'Ponzi Scheme'.  I do believe it is a stupid thing to purchase their shares instead of purchasing Bitcoin directly but they have their own share of customers just like ETFs.  Saylor does sell kind of a dream, one that can be pretty much achieved by simply holding Bitcoin long term which to me at least is a lot less head ache.  Buy and wait instead of running through Third Parties, documents, signatures, Know Your Customer et cetera.

[Churchillvv]

I have no idea why people thought Strategy was somehow going to create more value than simply buying the actual Bitcoin themselves, but they invested nonetheless. Strategy used Bitcoin's name to connect themselves and their own non-Bitcoin product to it.

This perfect and not a single thing is missed out but adding to this point I’m really pissed how people think strategy was some sort of magician that will help bitcoin itself, while it was the opposite obviously but they refuse to know or realize this, truth remains that strategy’s aganda has been fulfilled and every other thing that is going to happen from now forth is the result of ignorance from his followers and believers.