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Well-known CRM analyst and thought leader, Denis has made contributions to our thinking about cloud computing, CRM, social media, analytics and mobility. He runs the Beagle Research Group, LLC and is the author of "Solve for the Customer", "You Can't Buy Customer Loyalty, But You Can Earn It", and recently, "The Age of Sustainability". He frequently contributes to this and other outlets. Check out BeagleResearch.com, and AgeSustainability.com

10 responses to “Is Bitcoin a Ponzi Scheme?”

  1. Marvin Turl

    I reallly agree….bitcoin is the biggest ponzi scheme in history. It is fueled by human greed and magnified by the use of computer technology. When is some law enforcement agency going to get involved and put a stop to this terrible nonsense? Thanks.
    M. Turl

  2. Tassos

    Hi Denis,

    It sounds to me you’re not very familiar with what a bitcoin, a ponzi scheme or a bubble is. The chart you have shows financial bubbles of the past. These are not ponzi schemes. And comparing the bitcoin to a ponzi scheme clearly shows you don’t understand what bitcoin is. A ponzi scheme is by design and intention a fraud. Someone creates an “investment” with intent to defraud others. It only works if people keep pouring money into it and then inevitably collapses.

    The Bitcoin is a storage of value. I can see that people now want to jump on the hype and make some quick money. But that’s only because it’s still in early stages. It will stabilize at some point and it will still remain a storage of value, similar to how gold works.

    Mind you, I am also very skeptical about the future of bitcoin. But not because there’s anything fraudulent behind it, but rather because it’s such a disruptive technology that will clash with the establishment. And the result of that isn’t easy to foresee.

    But the thought and technology behind it are solid and it would be better if you properly investigate it first before just posting a scary graph and throwing ponzi around.

    Cheers,

    Tassos

  3. Sirene

    I was invested in bitcoin until I read this:
    https://medium.com/@bitfinexed/bitfinex-never-repaid-their-tokens-bitfinex-started-a-ponzi-scheme-86a9291add29

    Imagine that :/
    This is going to go bust in epic style. It’s scary that people have invested their life savings in this!!!

  4. Slade

    Hi,

    Isn’t a Ponzi scheme defined by 1)promise of greater returns for your investment, and more importantly 2)early withdrawals payed for by later investors, and that it inevitably crashes when no further investments occur?

    n°1 only works in principle if you mine bitcoin, which is providing a service to the whole network and is subject then to the same constraints industries can face, with more or less high barriers to entry. n°2 does not seem to be in any way, shape or form the case with bitcoin itself (though bitcoin, like real money, is used in all sorts of Ponzi schemes in that way).

    Doesn’t it also depend in a way on opacity, whereas here everything is public? The currency is in finite quantity, it moves around in a way that can be known, and it has the value the people assign it. Just like any other finite ressource people may speculate on its value, which makes it a classic bubble, but arguably not a Ponzi scheme per se.
    Please justify why you think it is one, mechanistically speaking; describe the process.

  5. Boris

    Hi Denis,
    I agree, there’s something wrong with btc. First of all, it is made of… nothing. Well, wrong, by mining it, the world spent enormous amount of electricity and resources that could be used for better purposes. The quality of this “commodity” in terms of material is poor, so is the quality of many other created of literally nothing. The bubble only makes the Ponzi visible more and more. On the other hand, we should study the blockchain technology, to understand it properly and consider using this for the future.

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