Bitcoin is Not a Ponzi Scheme

Bitcoin is clearly not a Ponzi Scheme because there is no dude named Charles Ponzi centrally running bitcoin. The original Ponzi was run by Charles Ponzi in the 1920s using a postage stamp speculation scheme. At its core a Ponzi requires a person or entity in charge, bitcoin is leaderless and controlled by nobody. The rules that govern bitcoin are hardcoded and extremely difficult to change by design; owning more bitcoin does not give a person greater control of the network.

Since it is leaderless, bitcoin is closer to a Pyramid Scheme. In a Pyramid Scheme "participants attempt to make money solely by recruiting new participants." Bitcoin is not a Pyramid Scheme because of bitcoin mining, anyone can plug in a miner and start earning bitcoin for the work they provide without existing participants granting them permission.

Due to the ability to mine, neither bitcoin or gold are Pyramid Schemes. That said, the majority of cryptocurrencies other than bitcoin exhibit Pyramid Scheme characteristics. Ethereum and other Proof of Stake networks do not offer new participants the ability to mine, they must buy in from existing participants to enter the system, and once they hold the token they are paid additional tokens for locking theirs up. Existing participants directly benefit from new participants entering.

Following this logic, the US Dollar resembles a Pyramid Scheme much more closely than bitcoin. It is centrally controlled with a certain set of privileged participants having easy access to new money and the yield derived from it. In order to participate in the "US Dollar Network" you have to buy in from existing participants. As new participants enter, the control and financial returns of the privileged participants grows.

Just a few thoughts I figured I would put out there. Happy New Year y'all! 🧡 Stay humble and stack sats.

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