Does Bitcoin meet the definition of a Ponzi scheme? That’s the subject of the latest Cointelegraph Crypto Duel, where Kraken’s Bitcoin strategist meets Professor of Computer Science at the State University of Campinas, Jorge Stolfi.
Similar to other Bitcoin skeptics, Stolfi has repeatedly defined Bitcoin as a Ponzi scheme. The heart of his argument is that Bitcoin does not produce any cash flow and the money with which Bitcoin investors are paid comes exclusively from new investors who buy Bitcoin.
“Every time you invest in Bitcoin, the money you invest goes to the previous investors or the miners and disappears,” said Stolfi.
Responding to Stolfi’s argument, Rochard pointed out that Bitcoin is a peer-to-peer cash system and, like other forms of money, should not produce a cash flow.
“It is just a general property of money because it is money. Therefore, it has no cash flow and that does not make it a Ponzi scheme. ”Said Rochard.
Rochard also pointed out that Bitcoin is different from Ponzi schemes because it does not guarantee fixed returns and is known to be a high risk asset.
“Bitcoin promoters have repeatedly emphasized that there is a risk of loss and that, if we look at the empirical data, that risk has been repeatedly realized,” said Rochard. “This is not how Ponzi schemes work,” he added.
Stolfi, however, is convinced that effective Ponzi schemes do not promise a return, as that would be “a dead gift”. “The SEC would come knocking on your door the next day,” he argued.
As an example, the computer scientist mentioned Madoff’s notorious Ponzi scheme, which defrauded thousands of investors by $ 65 billion. “He didn’t promise anything. […] The reason why people invested in it is that he was paying everyone who wanted to cash out ”.