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Bitcoin: the Opposite of a Ponzi Scheme

gold billion sign trophy

Bitcoin is one of the most transparent financial systems ever devised. Every transaction is recorded in the public blockchain, the common digital ledger that’s shared over the Internet. Anyone can look up any transaction on the blockchain, even months or years after they took place.

Also, in a Ponzi scheme, investors are promised regularly paid high returns. There are no such guarantees with Bitcoin. Anyone who buys Bitcoin takes a risk as they would with any other investment, be it stocks, bonds, or commodities.

And if you buy Bitcoin, your money is not used to pay off existing Bitcoin owners. You can buy Bitcoin and spend it, hold it, or sell it any time. There’s no backroom pipeline connecting investors’ accounts as there is in a Ponzi scheme.

Finally, Ponzi schemes that collapse do not resurrect themselves. Once it’s over, it’s over. That’s what happened in the Madoff case.

Back in 2014, Bitcoin’s critics viewed the failure of Mt. Gox and the steep drop in the price of Bitcoin as the demise of a Ponzi scheme. If that were true, Bitcoin would have ceased to exist in 2014.

But nearly 18 months later, Bitcoin is still here and gaining traction every day. After hitting a low of $177.28 in January, the Bitcoin price is up 62% to about $287. That’s not how Ponzi schemes work.

Meanwhile, venture capitalists have invested $397 million in Bitcoin-based startups so far in 2015, already exceeding 2014’s full-year total of $361.5 million. Again, spent Ponzi schemes don’t attract accelerating interest from sophisticated investors like venture capitalists.

But don’t expect critics to stop calling Bitcoin a Ponzi scheme.

About the author

Henry is the Founder and Executive Managing Director of Compumatrix and Networks International. He is also the Editor-in-Chief of the Compumatrix Bloggers' Network.


  1. very educational, Ponzi is never a fair money earner, it just doesn’t make sense, and lots of investors paid a huge price buy losing their life savings.

    1. A ponzi scheme is the catch phrase for a number of businesses particularly network marketing businesses …. in this context it means that only the people at the very top get rich and everyone else doesn’t have any real chance. In reality the corporate business world can be used to describe this way of working; in that, only those at the top are making the very high salaries, and those at the bottom have an extremely hard time to go from the bottom to the top in their lifetimes! Whereas, in network marketing everyone has the same chance.

  2. I truly love the statement that Henry says here about Bitcoin able to be held, sold,or spent any time. To me, a Bitcoin investment is much better than gold. If you buy gold, you don’t have the freedom to liquidate it very quickly. It’s a much longer process. With BTC, I can sell it through an exchange and have cash in hand in a short period of time. Being able to buy things directly with it, is amazing. Much better than gold. Maybe that’s why it has been termed the new digital gold !

  3. Too good to be true. It´s a scam a ponzi
    More than 10 years have passed and NO ONE has proved bitcoin wrong in fact it has been declared as the best investment in the decade
    Yes there are scammers out there that will steal your money . Be aware !!
    But Bitcoin as a system is unbeatable

  4. It’s an interesting historical fact that Ponzi did not start with the intent of a “Ponzi scheme.” That is, he saw the difference in government coupon values between the US and Europe and took advantage of the lack instant communications between countries to run these coupons between overseas countries via ships. Only after the competition moved in and he continue to promise these great returns after the margin had disappeared did his greed get him. Bitcoin is very different in that there is no “last in” problem as the market simply sets the price. It may be volatile but 1 btc will always be that just that, however we must all still be very careful as scammers and hackers can use any system deceptively.

  5. When people don’t bother to learn what Bitcoin is and what it can do for the world they will call it a scam. To to unlearned who listen to the likes of Jamie Diamond and folks like him they seem to prefer getting their opinions from someone else instead of doing their own research. Just a bit of investigation prevents lazy ideas..

    1. Yes Gail, it seems to me that a lot of people are too lazy to look these days. They except things that they are told by people who have their own agenda and quite often really have no idea what they’re talking about. We each need to look for ourselves and also watch that we are not looking through glasses that are tinted with biases of our own.

  6. This is an interesting comparison. The list of facts presented makes an impression. I also found it very interesting to see that at the time the article was posted that the price of Bitcoin was UP to $287.00 USD!!! LOL Yet at the time that I’m posting this comment, 5 years later, the price of Bitcoin is DOWN to $9,478.00!!! That sure is something to think about.

    I think it is a fair conclusion to draw that regardless of the relative perspective of if Bitcoin is Up or Down, it is a historical fact that Bitcoin has continued to significantly increase in price and value most years since it came into existence. Beyond all of the other reasons stated in the above article, results over time have proven beyond any doubt that Bitcoin is indeed the opposite of a Ponzi Scheme.

  7. I’m looking forward to using Bitcoin for my every day expenses. Right now, I’m relying on that Ponzi scheme called SOCIAL SECURITY. It is perhaps the biggest Ponzi scheme the world has ever seen. “They” keep predicting the date when the funds would run out of the Social Security system. Meanwhile, we have an alternative with Bitcoin. By design, there are a limit on the number of Bitcoins, eliminating the concerns of manipulation.

  8. Ponzi scheme is a phrase that someone uses about bitcoin that knows nothing about bitcoin. I’ve had people talk negative about bitcoin in conversations and instead of getting upset or just changing the subject I like to use that opportunity to educate them.
    I’ve asked people to look at the closing price of bitcoin on the last day of the year and the last few years. I’ve asked them to also look at their 401(k) and what type of increase did they have this year and what type of increase they have last year. If they actually do that research they usually want to know more about bitcoin and they know it’s not a Ponzi scheme.

  9. It has been ten years since the introduction of bitcoin in the market and so far, its transactions using the public ledger called blockchain has proven its trustworthiness. It is decentralized and difficult to alter. On the other hand, the ponzi scheme is controlled by an inidividual or a group using a system that can be manipulated. Many who fell for this type of scheme have lost their hard-earned money for a promised high interest rate which did not happen. This is not so with bitcoin because of the integrity of the blockchain. It is for this reason that I believe bitcoin will stay.

  10. not sure if I would go totally the opposite of a ponzi scheme because there are enough people worldwide that over the 10+ years of bitcoin may very well be able to show the similarities twix both ?? but I tend to hope and my research has helped me to feel fairly comfortable in that its more like the opposite of ponzi than it is not ? time will tell

  11. The definition of a Ponzi Scheme is a type of fraud; Bitcoin is in no way a type of fraud! I completely agree that Bitcoin is the opposite of a Ponzi Scheme. On a completely different note, I could not help but notice that Bitcoin in 2015 was worth $287! While I am writing this comment, Bitcoin is at $9163 – that’s almost 32x what it was worth back in 2015! People may doubt BTC and cryptocurrencies in general, but the ones who continue to believe and chip away at creating something that will make the world a better place WILL end up victorious!

  12. Yes I was aware of Ponzi schemes years ago they are still on the internet and should be outlawed. What is sad is our own currency system is nothing but a pyramid scheme. Most of us sit at the bottom of this pyramid while the bankers and millionaires are at the top and know what is going on. I believe bitcoin will change the world with its honesty.

  13. Well, one thing is sure that BTC is not a Ponzi Scheme , otherwise it would have been gone years ago. The value of one Bitcoin rose more than any other asset , placing it among the some of the year’s top performing financial assets. Yes they will always be the one who will call it a ponzi scheme or whatever , but the important part is in short, Bitcoin is backed by mathematics. With these attributes, all that is required for a form of money to hold value is trust and adoption.

  14. Bitcoin is not a Ponzi Scheme! The fact that some people say that means that they have not been able to fully digest what Bitcoin truly is and how it functions! Bitcoin has the support of numerous influential educated people. People need to read the white papers for Bitcoin and listen and watch a video on Bitcoin before labeling it something. Everyone should have the opportunity to understand Bitcoin, if not they are doing themselves a real disservice.

  15. Ponzi schemes are /were usually robbing Peter to pay Paul.taking the money one would pay off ONE debt to pay off another. Bitcoin is nowhere like it.It’s very transparent form of financial system where each and every transaction is recorded and available to be viewed/review by one and all.A lot more education needs to be imparted to the general populace for them to totally understand all about Bitcoin and Cryptocurrency as a whole.

  16. i just finished reading blog on BTC machines and thought this blog ties so well into that blog — and having fallen hard to a couple ponzi in the past — agree so much that BTc is not — and understanding that getting from peter to pay paul –then eventually nobody is found –but those who started are financially enriched — actuall at one point thought about doing a ponzi to get my money back — but couldn’t look at myself in mirror — just keep learning here and very much appreciative of the wisdom and knowledge put forth here — thank you —

  17. just learn so much more when I come back or go back and read these older blog postings and when you put together the some of the new with some of the older — it is just a great learning experience and helps me to understand virtually a whole new way to look at business and life actually — great stuff thank you Henry —

  18. Until a few years ago I had never encountered these words. Fortunately I have never fallen for anything that is ‘too good to be true’. Even though I am sometimes sceptical of the ability of Bitcoin to withstand all that has been thrown at it, I am hopeful that common sense will prevail.

  19. Bitcoin and the various forks and changes that have been dominating the crypto world just confirm for me that cryptocurrency is the only way forward. The governing bodies have been ruining and ravaging fiat currencies for too long. It is time for a more solid base!

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