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.
The price increases based on a number of factors and not simply cause new investors buy in. Using that analogy, if you buy at Y price and sell at a loss of $100 what would that situation be?
What is the best argument against the Ponzi scheme narrative?
Bitcoin is not even a scheme at all, it is simply a digital currency with some pretty cool features. No one should get into bitcoin with the sole purpose of profiting, rather they should be interested in the usage.
And all investments grow with more adoption. If you bought facebook stocks in 2012, you were expecting it to get more popular and grow in adoption which will lead to an increase in the asset value. That is how product growth works.
In what ways are Ponzi schemes different from bitcoin?
Ponzi schemes are frauds, bitcoin is not,
Ponzi schemes promise returns on investments, bitcoin does not,
Ponzi schemes do not have actual value, bitcoin has real life utility.
How do they generate value differently?
Bitcoin does not generate value, it has a real life utility and as more people realize that, its market value grows. Ponzis depend entirely on new investors and has no product value.