Bitcoin — a Ponzi Scheme?

There have been claims that Bitcoin were a Ponzi scheme. These are voiced by old-school economists who probably feel — a bit too hastily though — that the lack of some monetary properties of Bitcoin make crypto currencies a fake altogether.

This fails to recognise that all crypto currencies are primarily a transactional tool, and a very good and economic one at that. (Simply compare them to conventional payment systems.) You would not want to use them as a long-term store of value (although some people may erroneously try to do just that: this does not make Bitcoin, LiteCoin or other such digital currencies Ponzi schemes).

Common credit cards — for their fees and percentages clipped off payments alone — would much rather pass the test as a Ponzi scheme. Supported by the mainstream media and users’ normalcy bias, their existence is questioned by very few people though.

Bitcoin is not what one would call a store of value either. It is important to again stress that it is not meant to be one but that it is a transaction-facilitating mechanism. It can (and cannot, at the same time) be argued that Bitcoin is “money” for it does have many of the basic monetary functions while lacking others at the same time.

Be that as it may, this definitely does not make Bitcoin a Ponzi scheme — and certainly not “the biggest one in history” anyway! So here’s another thought for anyone making these outlandish claims: even IF it were some Ponzi scheme, Bitcoin would hardly be the “largest in history” as this place is firmly secured for the U. S. dollar since 1913.

In light of today’s total volume, there’s no way (yet) for Bitcoin to take the dollar’s “reserved spot” for this dubious honour.

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