Topic: [FAQ] Is BitCoin a Ponzi or pyramid scheme? (Newbie-Friendly) (Read 55726 times)

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.

A Ponzi scheme is a type of confidence scam where people who think they are earning unusually high returns on an investment are actually being paid from their own money and that of later investors.   If investors try and withdraw their original investment from the Ponzi operator, the scheme collapses because no actual profits exist and there is not enough money to return the deposited amounts.  Alternatively the Ponzi operator may simply leave and take the investors' money with them.

Similarly, a pyramid scheme is a type of confidence scam where people who "enroll" by paying a certain amount of money are made to believe they can make a large return on their investment by recruiting other people and receiving some portion of their enrollment fee.  The scheme collapses because it requires exponential growth, so it quickly runs out of new people to enroll.  The person starting the pyramid scam, who didn't have to pay an enrollment fee, makes money off of all their referrals; while the people at the bottom parts of the pyramid, who cannot find anyone new to refer, are left with no return.

bitcoin not bussnies not return not ponzy
bitcoin only digital curency same with paypal perfectmoney solidtruspay and more

First, I am really new here but I signed up a long time ago and gave up. I came back at the urging of my partner because we argue when we talk about bitcoin. Is there an introduction thread here where I introduce myself like on other forums?

My question is that maybe bitcoin does not meet the requirements of a Ponzi or a Pyramid but might it meet the definition of some other scheme that could be considered illegal? Could I get into trouble for playing with bitcoin? I am in the USA.

Hi! I'm a newbie. I'm not sure this thread is a right place to ask, but could somebody please provide me with a link to a good long-range bitcoin price forecast? I saw a lot of them on the web, but numbers are always so different. I'd like to see something more or less veracious. Thanks!

In addition, bitcoins are a very new and unproven type of money.  Because their value depends on how widely they are accepted, they are susceptible to the same types of economic bubbles as any other commodity that is surging in popularity. The Bitcoin software is still in beta, and bitcoins should be considered "high-risk" from a financial perspective.  You should not invest money into bitcoins or BitCoin-related technologies unless you can afford to lose it!  Even firm believers in BitCoin tend to think it will take a while for the value of bitcoins to stabilise, and no one knows at what value that stabilisation might occur.  Trade and transact safely!

I highlighted a couple parallel perspectives to help the newbies visualize the dynamics of how bitcoin miners create and distribute the currency first (like the central banks do with fiat), and how a forever increasing price value of the distributed currency is required to keep the system from collapsing into deflation (in bitcoin's case, collapsing into "unprofitably for miners" who leave the system because they cannot turn a profit).


Sorry if I paraphrased a bit, but the "parallel concept in reference to a phenomenon" is not a simple method of explanation.  But in this case, since increasing demand for most things affects its price upwards, then there are always those who are able to capitalize first when the price is low.  In our cases, the capitalists are early bitcoin adopters getting cheap BTC and central bankers getting debt currency loans at 0%.

Commodity distribution often comes with varying pricing patterns often associated with ponzi dynamics especially in the growth phase its life cycle.  This is why bitcoin has been loosely referred to as a ponzi, and why people say "you can't taper a ponzi scheme"(why the central bank can't raise interest rates without triggering thousands of bankruptcies), etc..
 
ELI5 - Nowadays, the term: "Ponzi" is used loosely, almost as slang to describe certain extreme supply/demand/pricing conditions (where the growth phase is viewed more romantically than any decline phase) that we associate with simple chain letters, pyramid schemes, and how Bernie made off with your money.  All systems are dynamic, and endless growth is impossible, which is why a system that cannot withstand a contraction phase is simply referred to as a ponzi nowadays.  Bitcoin is surviving its de-growth phase, therefore, it is not a ponzi. It will be interesting to see if our debt currency system can survive a de-growth phase (rising central bank interest rates) without the world running to bitcoin, because gold is cumbersome. Thanks for bearing with my lack of grammatical perfection.

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.

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