
Bitcoin is like a Ponzi scheme: Indian Finance Ministry warns investors - ajonit
https://timesofindia.indiatimes.com/business/india-business/bitcoin-other-virtual-currencies-like-ponzi-schemes-finance-ministry-warns-investors/articleshow/62295331.cms
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randomerr
I completely agree. Here is a write up that sums up the issue very well:

Why Bitcoin is the largest Ponzi scheme in human history

[http://www.hindustantimes.com/analysis/why-bitcoin-is-the-
la...](http://www.hindustantimes.com/analysis/why-bitcoin-is-the-largest-
ponzi-scheme-in-human-history/story-L5z56wbz3hqxl2gIrf125H.html)

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mtgx
I don't disagree with most of what he said, including Bitcoin's usefulness
right now (not to be confused with the usefulness of _all_ cryptocurrencies),
but I think calling it an outright ponzi scheme is not that clear.

So he says that Bitcoin has seen no increase in usage. But that's not true, or
at least it wasn't true for many years. But I think if someone was to quantify
how many companies use Bitcoin as payment, for instance, we'd see a net gain
for 2017 compared to 2016, which means that statement would then be false.

Now if he'd be saying that the increase in recent value doesn't correlate with
the increase in usage, that's quite different. At the same time, it's not out
of the ordinary for Bitcoin, because Bitcoin, and other cryptocurrencies, too,
see "spikes" in valuation whenever there's a trend of positive and major news
about it - news that has little to do with the price of Bitcoin.

The main problem is that after that initial spike the mainstream media starts
covering it, and then all the people who hear _then_ about it, only hear about
the price increase. I would say that at _that point_ it becomes sort of a
ponzi scheme, but only temporarily.

But even in this case, would you say it's so much different than the
mainstream media covering how "Tesla reached $400 per Share" or "Apple reached
$1 trillion valuation", and other examples like that? When people would read
those sorts of stories, most would also think "Oh, look at that company grow,
I guess it's time for me to buy some shares there, too!". And then the price
increases further, but the rise is not as pronounced as for cryptocurrencies.
But fundamentally I don't see too much of a difference.

Why the mainstream and tech media doesn't cover the _rest_ of the
"fundamental" stories about cryptocurrencies beats me. For instance, there
have been important news stories like big banks forming alliances to use
cryptocurrencies in one way or another. But you only see those stories on
crypto news sites. The tech media or MSM only seem interested in the price
stories, at least for now. And I would say they are primarily responsible for
the "ponzi" aspect of cryptocurrencies.

~~~
geezerjay
> I think calling it an outright ponzi scheme is not that clear.

It's a very fitting comparison.

Like all ponzi schemes, people are attracted to the bitcoin scheme due to the
propaganda barrage on how it's a sure thing and guarantees profits to those
who get on board right now. Like all ponzi schemes, the bitcoin scheme depends
on the people already onboard attracting more members for them to keep pumping
money to inflate its value. Pump-and-dump schemes share many strikibg
similarities with ponzi schemes, thus the appropriate comparison of bitcoin
with a ponzi scheme.

