Q: Is Bitcoin a ponzi scheme? A MLM scheme? Pyramid? Bubble?
A: What is a Ponzi scheme?
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from existing capital or new capital paid by new investors, rather than from profit earned by the individual or organization running the operation. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.
- There is no person or organization running the operation.
- Bitcoin does not “pay returns”.
- There is no “fraudulent investment operation” involved in bitcoin, everything is public.
- Bitcoin is like a stock, bond, commodity or other asset that is useful and increases in value. Was Apple, Google, or Microsoft a Ponzi scheme because those who were involved early made money?
- The U.S. Department of Justice says Bitcions can be “legal means of exchange” in front of the U.S. Senate, November 2013.
Looking at the definition of “Ponzi Scheme,” bitcoin does not fit.