[FAQ] Is BitCoin a Ponzi or pyramid scheme? (Newbie-Friendly)

[fifivotch]

what is Bitcoin ? sample  and funny video that presents  bitcoin and how it works !
http://youtu.be/OJV8qTkFwZk

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[Night Owl]

I am new to BTC, there is a lot of good info here but will take time I see to learn it all.

My question is: what happens if i loose my mobile with my 2 A Athentication on it? How do I log back in to the exchange? Will I have to email them and jumb through lots of questions? Would it be easy to set up again on new phone?
I have not lost it but was just wondering?

[Asianconnect]

Thanks for the detailed information. This would help me a lot to fully understand bitcoin.

[fa]

Thanks. Great explanation for new coiners. I'd bookmark this.

[2good2betrue]

I can't fathom how someone comes to that conclusion, Bitcoin and Ponzi schemes don't have anything in common.

[Dillar]

Thanks a lot. You left me in no doubt that Bitcoin is not a ponzi scheme. Bitcoin has no operator, that is the point.

[LiteCoinGuy]

nice faq, thanks for that. it will help some noobs.

@ Dillar

not only that: bitcoin has a value because its a TOOL!

[Dillar]

nice faq, thanks for that. it will help some noobs.

@ Dillar

not only that: bitcoin has a value because its a TOOL!

Yes, you are able to buy some things using Bitcoin too. Unfortunately, not all can be bought or sold, but it is great that the use of Bitcoin is growing.

[ashleygrey08]

I am newbie here and newbie to bitcoins. But my client proved to me that BitCoin is not a pyramid scheme. He pays me through his bitcoins and transfer to my bank account and I got it for less than 12 hours.

[gregM]

Thanks a lot!

[keepdoing]

Q:  Is BitCoin a Ponzi or pyramid scheme?

A:  No.  Like any other currency, BitCoin is designed to be used as money, not as an investment.

Unlike either of these situations, BitCoin has no person "at the top"................

This is a pretty old post and I think due to the recent fork possibilities needs updating in order to be completely truthful.  There WASN'T a person at the top as it was a rather collective open source project.  But as Mike Hearn has pointed out - all Open Source Projects ultimately have a "Benevolent Dictator" (I think that is the word he used).  In this case we have Mike and Gavin as our proclaimed benevolent dictators - and they are "at the top" and they have introduced an Upgrade "XT" that is very controversial and threatens to split the Bitcoin Chain.  If that happens, then anyone on the other chain will indeed experience the crashing effect of the pyramid falling on their heads.

So be aware of what is going on and get your info from multiple sides / sources.  And if it is all over your head..... well, be careful.

But with that said, I advise everyone to go to a major exchange and buy a couple of bitcoins at minimum, and wait things out.  Because I have talked to many of the major exchanges and they pretty much want XT.  But they will NOT make the move and convert until it is clear it will succeed.  So I think your bitcoin is safest there, and I definitely think that having a couple of bitcoins is worth the gamble.  Because IF this is resolved satisfactorily, Bitcoin is going to soar.  Even if it doesn't I think the flight will simply be delayed.  My guess is that the next year is going to see a huge paradigm shift in the Global Finance system.  By 2017 Fiat Currency will be gone.

The only real worst case is if the Fork goes so badly that it results in Mutual Destruction and the Powers That Be start their own Fiat Coin.  That would indeed suck and is my greatest concern - but I think it is highly unlikey.  However, one way for that to happen would be to use a Massive Global Financial Crisis to scare the masses into a suddenly new solution.  And it is possible, and it is why I wish this Fork crap would resolve quickly - in order to avoid that - because I do think the Powers that be actually want to just use Bitcoin as this transitional vehicle.

[AtteJ]

Thank you for the good explanation!

[GregSFKF]

Thank u

[Mont1020]

thanks

[mobnepal]

Yes i also think bitcoin has lots of potential. Thanks for this well written review.

[Kprawn]

I can't fathom how someone comes to that conclusion, Bitcoin and Ponzi schemes don't have anything in common.

Well, If you are a Bitcoin shill {Someone paid to bad mouth Bitcoin} you would make any connection, even if it has a 10% chance. Most of these shills wants to come from a angle

to say that the early adopters of the technology have the advantage over the late adopters of Bitcoin. So they are hyping up the price to get more people to buy Bitcoin and then

they offload for maximum profits. That is not how Ponzi schemes work... as explained in the OP's great post. 

[jcg414]

You want the one fact I've learned that had me convinced? That at least 3 of your largest Bitcoin partners have stolen from you recently and Bitcoin is still here and in court. The high ups could've cut and run.

Signed, Jeffrey Geller

[maokoto]

Today almost all things seem like ponzis. It is more or less true that to profit from Bitcoin, one depends on more people putting money into it. But it is used as money too.

If we define ponzi as "you get paid only if more people buy into it", even fiat is a ponzi: you sell your goods for fiat, and you will only profit if more people decide to trust fiat. If not, you just have useless paper.

[avatar_kiyoshi]

Today almost all things seem like ponzis. It is more or less true that to profit from Bitcoin, one depends on more people putting money into it. But it is used as money too.

If we define ponzi as "you get paid only if more people buy into it", even fiat is a ponzi: you sell your goods for fiat, and you will only profit if more people decide to trust fiat. If not, you just have useless paper.

You forget about supply and demand.

Ponzi is investment come from nowhere, fake investment.

[GetClams.com]

My hope is all this discussion about the validity of different types of currencies will get the general public to realize what fiat truly is. Then all we have to do is wait for the next 2006 style economic disaster.