On Bitcoin As The Antithesis Of Ponzi Schemes

Justin d’Anethan
3 min readMar 30, 2022


Over the years, I’ve often encountered some detractors comparing Bitcoin to a Ponzi scheme.

I’ll address, here, why I think Bitcoin is in fact the very opposite.

Their premise -on the surface, and only on the surface- seems valid enough: Assuming Bitcoin has no value, if you pour money into it, the only way you can get a profit and your money back is if other investors add more money, and because it has no value it must end badly for the investors that would pull out to late.

Not even addressing the ‘value’ part of their argument (if a decentralised, peer-to-peer, autonomous, immutable, durable, censorship-proof, digital transfer network doesn’t flash value, I guess nothing will), there’s still nothing to link BTC to Charles Ponzi’s infamous creation.

Ponzi Schemes have certain key characteristics:

  • Promise Of Certain Pay-Out: Investors must be enticed to allocate their cash with the promise of a certain return on top of the capital invested.
  • Highly Centralised: The whole scheme must be orchestrated by one or a few individuals.
  • Opaque: Gullible and greedy investors of course must not be aware of the inner working of said scheme, it’s operation, transactions history, true performance, etc.

For a while, as long as the activity of the fund isn’t questioned and new investors keep adding capital, the non-performing fund can keep on paying out older investors with the capital of newer investors. Eventually, the influx of capital doesn’t match the promised payouts, people withdraw funds and the whole structure crumbles.

Bitcoin, on the other hand, operates in a diametrically different fashion.

At its very core, Bitcoin was created to be and successfully operates as a decentralised network. There is not one single person, entity, participant, miner, authority that can change it, change its history, the transactions made, balances held, amounts, etc. It is forever managed, held, maintained by each participant in their own right.

Another pillar that is not an after-thought or a nice-to-have in the crypto ecosytem is transparency. This is necessary for participants to process and verify transactions and so keep updated record. Anybody, not even a crypto holder, can go on a blockchain explorer and audit every single transaction since the genesis block (the very first block containing that chain’s very first transaction). Thus, participants cannot be dupped of anything; it’s all there.

Lastly, there is absolutely not promise of future payment, yield or return on any investment. While some individual will acquire bitcoins to hold and transact in a decentralised fashion, others indeed will see it as an investment and assuming a profit on a trade. There is a stark difference between the two. An example that I’ve found often drives the point across is that buying a painting isn’t a Ponzi scheme: you buy it either because you like it and want to own it outright or because you think it will gain in value - either way there was no promise of performance and it’s very clear that maybe nobody will share your enthusiasm and it will be worth less or zero, or that maybe some will and then it will be worth more.

No orchestration, no promises, no opacity, just a very efficient and even playing field of participants and a desire to buy at a higher or lower price.

The concept detractors had in mind was probably the ‘greater fool theory’ which simply suggests that a value-less asset can still be traded at a profit provided that one more buyer take it off your hands, until there is one last one that will have paid the highest price and won’t be able to sell higher, being the greater fool. This I keep for another post.



Justin d’Anethan

Passionate about financial markets, long-term investments, the occasional short-term trade and disruptive technologies.