Second, if you look, I think you'll find that Bitcoin shares a lot of attributes with Ponzi schemes; you could say that it's a Ponzi whose innovation is to be globally distributed on the Internet. Specifically:
* Returns to Bitcoin investors are funded by successive waves of future investors; Bitcoin's value will collapse without a steady supply of them.
* A significant part of the capitalization of Bitcoin is owned by "hodlers" who accumulate "paper" earnings that don't demand any real-world reckoning.
* It's structurally difficult to withdraw funds --- particularly large amounts of funds --- from the Bitcoin network; see, for instance, Tim Bray's experience.
* The whole phenomenon is backed by a core group that includes significant "early" or "founder" allocations.
Part of the problem with trying to pull apart "Ponzi schemes" and "bubbles" is that many (but not all) previous bubbles were fueled in part by a series of Ponzi schemes; for instance, during the first bubble, IPOs for companies that could not possibly have succeeded under any circumstances, or, during the housing bubble, AAA-rated securities for bundles of distressed mortgages.
Ponzi schemes involve fraud by an operator secretly paying out existing investors with new investors' money. Unless exchanges are artificially inflating the price and running fractional reserves then Bitcoin is not a Ponzi scheme.
That's not necessary. From wikipedia: "A Ponzi scheme (/ˈpɒn.zi/; also a Ponzi game)[1] is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading."
Bitcoin's only real value is that of the chance of being adopted as currency. For it to become a currency people have to start buying bitcoins, as it is the only realistic way get hold of them. So the only way to make value for the current holders(older invenstors) is more people buying into it(revenue paid by new investors)
Second, if you look, I think you'll find that Bitcoin shares a lot of attributes with Ponzi schemes; you could say that it's a Ponzi whose innovation is to be globally distributed on the Internet. Specifically:
* Returns to Bitcoin investors are funded by successive waves of future investors; Bitcoin's value will collapse without a steady supply of them.
* A significant part of the capitalization of Bitcoin is owned by "hodlers" who accumulate "paper" earnings that don't demand any real-world reckoning.
* It's structurally difficult to withdraw funds --- particularly large amounts of funds --- from the Bitcoin network; see, for instance, Tim Bray's experience.
* The whole phenomenon is backed by a core group that includes significant "early" or "founder" allocations.
Part of the problem with trying to pull apart "Ponzi schemes" and "bubbles" is that many (but not all) previous bubbles were fueled in part by a series of Ponzi schemes; for instance, during the first bubble, IPOs for companies that could not possibly have succeeded under any circumstances, or, during the housing bubble, AAA-rated securities for bundles of distressed mortgages.