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From Black's Law Dictionary: Ponzi Scheme: "...Money from the new investors is used directly to repay or pay interest to earlier investors" Bitcoin does not f
by vocatus_gate 9y ago
From Black's Law Dictionary:
Ponzi Scheme: "...Money from the new investors is used directly to repay or pay interest to earlier investors"
Bitcoin does not fit the definition of Ponzi scheme for numerous reasons:
- There are no paid dividends to anyone
- The purpose of using bitcoin isn’t to recruit new participants
- There’s no centralized body that funnels money up to the top
- Unlike Ponzi schemes, Bitcoin retains value and continues to function even if no new participants join the ecosystem
Bitcoin fails the litmus test for a Ponzi scheme in any number of ways. The boring reality is that it is just a value transfer network that grows more useful the more people join it (much like a telephone network grows more valuable the more people are reachable on it).
- koolba 9y agoWe're talking about litecoin, not bitcoin. The ponzi aspect of it is that it's inherently worthless and people who bought in early are paid off by money (or even bitcoin) coming from later suckers.
- flyingfences 9y agoBy your definition the entire stock market is a ponzi scheme because early investors are "paid off" when they sell their shares to later investors.
- koolba 9y agoMost (all?) publicly traded companies produce something of value which is sold and translates to income and profits. A better analogy would be buying gold which produces no dividends. An even better analogy would be pyrite.
- flyingfences 9y agoIs a distributed, public, immutable, trustless ledger not something of value?
- koolba 9y agoNot if nobody is using it. As I've mentioned a number of times, we're talking about litecoin, not bitcoin. And this isn't like silver and gold either.
- flyingfences 9y agoBut people are using it.