Why Bitcoin is not a Ponzi

Posted on November 9, 2012

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Interesting read on why Bitcoin is not a ponzi, based on Wikipedia discussion around the speculative nature of Bitcoin.

For the record, I agree with the article’s author, and understand that people get confused because a) early adopters have the potential to make money, and b) Bitcoin value is an output of demand.

But under that confused definition, anything worth more in the future based on demand is a Ponzi. Which is clearly false  – artwork and fashion, for instance, rely on people believing that something is worth a great value for its symbolic nature, rather than anything inherently useful. (See Banksy image above.)

Same with Bitcoin – but as with art (and not Ponzis), the system doesn’t crash if more people stop coming in. The value just stabilises, or drops, in line with demand. That’s called market value, and it’s key to Bitcoin’s success, IMHO.

Now, pensions on the other hand…

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Posted in: Opinion, Shorts