It may be the subject of a bubble, it may be subject to market manipulation, it may still play a part in any number of scams or frauds beyond the ones that have already been identified, some of which themselves may be Ponzi schemes. But, even if, for the sake of argment, all of those and more were true, Bitcoin itself would still not be a Ponzi scheme. It is and would still be just a digital commodity.
But that doesn't matter, because functionally, there is no difference between an intentional Ponzi scheme and Bitcoin.
Bitcoin trading is a negative-sum game. All winning that anyone gets comes out of the pockets of newer investors. There is no net inflow of value or money that could cover the gains people make trading, other than the money being put in by other people. There is a net outflow of money, in the form of trading and mining fees, but there is no inflow.
So functionally, with Bitcoin, old entrants are paid off with the money invested by newer entrants. This is exactly how a Ponzi scheme works.
Again, it may not be intentional, but it works the same nonetheless.
Of course that could be true, and people saying it may well believe it. Ponzi believed his international reply coupon scheme would actually pay out. So to some extent it will only be proveable in hindsight.
Particularly when the actual mechanism of raising value for early investors is convincing more to come in based on that narrative, but old investors can only cash out from new ones.
The mechanism you are describing is the mechanism by which every speculative investment works. That's not what identifies a Ponzi scheme. In fact it specifically can't be a Ponzi scheme if the old investors are aware that the returns are coming from new investors.
That’s not true. Most speculative investment promise revenues if they succeed.
For your last sentence, why would that be true? In the case of bitcoin, the early investors have been led to believe that later investors will need to invest. But this can easily be false.
That wouldn't be speculative then (at least not completely)
> For your last sentence, why would that be true?
Because it's not a Ponzi scheme unless you are lying about the origin of the returns which you are giving to investors.
Can you give an example of non crypto speculative investments which are not expected to produce revenues? That’s how 100% of business promise to eventually provide returns.
Even real estate is rents. Collectibles such as sports cards and art are the one exception category I can think of.
> Because it's not a Ponzi scheme unless you are lying about the origin of the returns which you are giving to investors.
Yes that was my point. Bitcoin could be a distributed Ponzi, where people make representations about bitcoin’s eventual value through network value, but it turns out there is nothing to it. There’s no single agent telling a lie but it has the same effect.
To make the limit argument: if bitcoin was run by a single person selling coins and claiming their value would go up because of network value, but this claim was not true, this would be a ponzi correct? Assuming the proferred proof was reported coin value appreciation to date. (I.e. the returns)
How about any commodity or foreign currency? Gold, oil, etc.
> That’s how 100% of business promise to eventually provide returns.
Exactly. Since Bitcoin obviously isn't a business, it couldn't be a Ponzi scheme (because investors in Bitcoin aren't being mislead into believing that the returns are coming from a business activity).
> To make the limit argument: if bitcoin was run by a single person selling coins and claiming their value would go up because of network value, but this claim was not true, this would be a ponzi correct? Assuming the proferred proof was reported coin value appreciation to date. (I.e. the returns)
No, that couldn't be a Ponzi scheme because the person isn't lying about the origin of the returns. They really do come from other investors. That might be considered a pyramid scheme, though.
That's not a Ponzi scheme, that's a market bubble.
There's nothing gained by misappropriating existing jargon just to try and lend more credence to an assertion that a thing is bad.
Imagine if someone were trying to argue that a MacBook's motherboard is just one big integrated circuit because it's a circuit (natch), and solder has been used to integrate it all together. On the one hand, sure I can why someone who isn't a computer techie might see it that way. On the other hand, that's simply not what that term means.
Again, this is not an organised Ponzi scheme, but it is functionality identical anyway.
When Coinbase (or whoever) shows a bitcoin price of 62000, what they are saying is that in their order book they have customers waiting to buy and sell bitcoins at that price right now. It is not just a made up number, it is actually the place where the demand between buyers and sellers is being met right now.
If you think that price is too high, then sell some for cheaper and you will take some of the high-price buyers off the market, therefore lowering the actual fair price of bitcoin.
> this is not an organised Ponzi scheme, but it is functionality identical anyway.
Functionally, a Ponzi scheme requires that investors are being deceived about the origins of their returns. What you are describing just isn't anything like a Ponzi scheme at all and it is a misunderstanding of what they are.
USD also has some similar effects at play. But inflation is also not fraud.
It's true that attempting to conduct your entire financial life in Bitcoin won't save you from receiving tax bills that are denominated in dollars. I think your more immediate problem, though, would be that it's probably impossible for someone living in the US to participate in Bitcoin without owing someone a bill that they will expect to be paid in USD. It's difficult to transact Bitcoin without Internet access, for example. And that'll get you long before the IRS sends police to knock on your door.
For it to be a Ponzi scheme, you first have to have some sort of centralized control of the ledger so that you can lie to people about the volume of assets they have in your care. And already we have made a complete departure from what Bitcoin is and how it works.
So did people who invested early in Apple, domain names, or property in Manhattan. I think the bare minimum you'd need to define something as being a Ponzi scheme is, well, a scheme - that is, an intention to defraud people, and I don't see such intent in the creation of Bitcoin.