It’s not a Ponzi scheme

I sometimes venture out to other media sources to hear differing opinions on Bitcoin. One that I have heard repeated more than once likens Bitcoin to a Ponzi scheme: that the only way you actually make money at is is by selling it on to a bigger fool for more money, and it will be a game of musical chairs with who gets left holding the bag when the whole thing “comes crashing down.”

When I think of Bernie Madoff perpetrating one of the largest Ponzi schemes, what I take away is that none of his clients actually had anything to show for their investment in the end. They had a balance sheet, a piece of paper, that said they were getting richer, but there was no money to back it up.

Buying Bitcoin, by contrast, leaves you with Bitcoin. On any given day the value of Bitcoin in your local fiat currency may fluctuate, but you still have the Bitcoin. As long as you hold your own keys, no one can take it away from you.

The power of Bitcoin as a financial tool, as a currency, as a vessel for transference of wealth, as a store of value, comes from widespread acceptance and participation. As the network continues to grow, adding more and various clients and people, the concept of it being a scheme seems more and more far fetched. It’s more like the beginning of a true grassroots, democratic acceptance of a currency, than one forced onto the people.