Bitcoin – No, It is Not a Ponzi Scheme

Bitcoin – No, It is Not a Ponzi Scheme

Bitcoin is a lucrative investment. Considering recent happenings like Bitcoin massively crashing last month and dogecoin achieving year-to-date gains of more than 14,000%, you have got the idea that cryptocurrencies are very volatile. You have seen prices of some cryptocurrencies spiking and some cryptocurrencies taking a nosedive. The recent news may make you a Bitcoin skeptic. You may even think that it is just another cryptocurrency Ponzi scheme – Bitcoin Ponzi scheme.

All investors have concerns about the investments they are considering. This article addresses your concern – the Bitcoin Ponzi scheme

Before that, let’s find answer to the following question:

How a Ponzi Scheme Works?

It is an investment fraud in which a fraudster collects funds from new investors and uses these funds to pay existing investors. In a Ponzi scheme, the fraud­ster promises a high return on investment without any big risk. However, the fraudster makes no investment. They raise funds from new investors, use a part of the fund to pay existing investors and keep the remaining funds. So, this is always profitable for the fraud­ster if the fraudster manages to maintain a constant flow of investment. The scheme collapses when the fraudster is unable to find new investors.

This investment scam gets its name from Charles Ponzi. 

You can identify a cryptocurrency Ponzi scheme, Bitcoin Ponzi scheme or any other Ponzi scheme with the following characteristics: 

High Returns On Investment With Little To No Risk 

There are risks involved in every investment. Profits are not guaranteed in any investment. If an investment is promising high returns, that investment is highly risky as well. 

Unlicensed Sellers And Unregistered Investments 

The investment is not registered with any regulatory body. The seller is often unlicensed. You will not be able to find any information about the investor or firm on the official websites of regulatory bodies. 

Complex And Secre­tive Strategies 

The fraudster refuses to answer your questions about the strategy. Always avoid an investment if you are unable to understand the strategy.          

Paperwork Issues 

The individual or firm will refuse to show documents even when you demand. If you find errors in account statements, don’t invest.   

Difficulty In Getting Funds  

If you are finding it difficult to cash out or get paid, be suspicious. When you ask for payments, the fraudster will show reluctance to pay by saying that you can make more if you wait.   

Bitcoin Ponzi Scheme 

No Great Returns Promised 

Satoshi Nakamoto created Bitcoin in January 2009.  Bitcoin does not promise high returns on investment. It does not even promise a consistent return on investment. If you read Satoshi’s online writings, he barely writes about returns. Before investing in Bitcoin, the investor must understand that it is a highly volatile investment. According to Statista, in March 2021, the price of 1 Bitcoin was 58734.48 USD. On June 10, 2021, the price was decreased to 37127.19 USD. 

Open Source 

Secrecy is one of the characteristics of Ponzi schemes. In cryptocurrency ponzi schemes, the fraudster attempts to earn your trust. On the other hand, every Bitcoin transaction is verified. Moreover, there is no difficulty in getting payments. You are not going to face any issue with paperwork.     

Bitcoin Mining 

The software was public. Satoshi mined the coins. Like Satoshi, anyone could mine. This is how Bitcoin was launched. Even you can mine Bitcoins.        

Leaderless Growth 

There is no centralized authority to regulate or control this big digital asset. It took time to develop Bitcoin. It is distributed ledger technology. It is powered by Blockchain technology.


Are there risks in Bitcoin investment? Yes, there are. However, Bitcoin is not a Ponzi scheme.

Leave a Reply

Your email address will not be published.

Back to top