A Ponzi scheme is investment fraud. Its organiser finances payouts to earlier investors with money from later investors, keeping some for themselves.<\/strong> This can continue as long as enough new investors join to meet obligations to earlier ones. Once that is no longer possible, the system collapses and later investors lose their money.<\/p>\n Fraudsters\u2019 creativity produces many variations, sometimes difficult to recognise. They nevertheless share warning signs. First, they promise above-average returns without risk. \u201cGuaranteed\u201d profits should particularly arouse suspicion: they attract people hoping for easy money. Every investment carries a risk of loss, generally greater where potential returns are higher. Returns usually rise or fall with market conditions. Guaranteed fixed returns, especially high ones, may indicate financing through debt, for example to new investors.<\/p>\n Second, the investment strategy is unclear or excessively complex. By definition, a Ponzi scheme cannot generate enough to repay everyone. Organisers create convoluted, incomprehensible descriptions to hide the scam. It is better to avoid an investment if we do not understand how it generates returns.<\/p>\n Third, access to information or documents verifying the investment becomes difficult. Investors cannot confirm whether funds were invested as promised. Documentation is unavailable or limited to fabricated confirmations or certificates designed to create an appearance of legality.<\/p>\n Fourth, difficulties obtaining payouts should raise suspicion, particularly offers to defer payment in exchange for \u201ceven higher\u201d future returns.<\/p>\n Ponzi schemes always have organisers who actively recruit investors and control money flows. Bitcoin has nobody performing that function. No state, corporation or other specific person stands behind Bitcoin.<\/strong> It has no management board, shareholders or marketing department. Satoshi Nakamoto created and publicly released the software and all its source code, then disappeared. What remains is an open internet protocol<\/strong> outside anyone\u2019s control, including his own. No organiser is needed. Users sign no agreement and nobody checks their identity. We simply use an open protocol on equal terms with other users. It is a public good<\/strong> sustained by voluntary participants.<\/p>\n Neither Satoshi nor anyone else offers returns on an \u201cinvestment\u201d in bitcoin: no interest, dividend or other yield. We are not funding a business venture that might generate future income. We merely buy a scarce digital asset usable for saving or payment. This resembles buying gold much more than shares or other securities.<\/p>\n Like gold, its value may rise or fall with demand. Bitcoin\u2019s price depends entirely on market behaviour. No other asset in history reached a trillion-dollar market capitalisation so quickly, yet over shorter periods it has fallen by tens of percent within hours or days. Owners must be prepared for this volatility and its emotional consequences.<\/p>\n Some entities offer returns or other benefits from \u201cinvesting\u201d in crypto-assets, including bitcoin. Let us stress emphatically that they have nothing to do with Bitcoin itself. Entrusting funds to them is not buying bitcoin. Unless we understand the risks precisely and have specific reasons to trust them, their offers are best avoided.<\/p>\n Ponzi fraud works only because investors do not understand the actual mechanism. It must remain hidden; disclosure generally ends the scheme.<\/p>\n Bitcoin is the opposite. The system is fully transparent. Every line of code is known, and the entire blockchain is readily accessible. \u201cDon\u2019t trust, verify\u201d is the principle, and anyone can apply it by running a node. We can independently verify our savings and receive or send payments. Access does not depend on third parties: we have exclusive control.<\/p>\n Deeper understanding takes time. Yet many use Bitcoin successfully without studying every nuance. Such knowledge is unnecessary to use a wallet, including making or receiving payments. Those interested can readily find enormous resources: besides the code, countless articles, books, podcasts and videos address technical, practical, economic and even philosophical aspects.<\/p>\n One can always object that Bitcoin has value only because people buy it. Without buyers, its price would fall to zero. That is true, but the same can be said of every asset.<\/p>\n We must honestly admit that nobody knows whether user numbers will keep growing or what the future price will be. Its utility is nevertheless clear to a growing group: saving without the risk of unforeseen monetary inflation and paying without intermediaries or censorship, a feature hard to overvalue in an authoritarian or war-torn country. Bitcoin is also now the world\u2019s most powerful computer network, providing security unattainable in traditional financial services.<\/p>\n Even scepticism about Bitcoin as a technology does not justify calling it a Ponzi scheme. One may doubt its future success, but cannot substantiate the claim that the technology is fraud.<\/strong><\/p>\n Originally published in the Bitcoin section of iMagazine 3\/2024.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" A Ponzi scheme is investment fraud. Its organiser finances payouts to earlier investors with money from later investors, keeping some for themselves. This can continue as long as enough new investors join to meet obligations to earlier ones. Once that is no longer possible, the system collapses and later investors\u2026<\/p>\n","protected":false},"author":6,"featured_media":1545,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","_seopress_robots_follow":"","_seopress_robots_imageindex":"","_seopress_robots_snippet":"","_seopress_robots_primary_cat":"294","_seopress_robots_breadcrumbs":"","_seopress_robots_freeze_modified_date":"","_seopress_robots_custom_modified_date":"","_seopress_robots_canonical":"","_seopress_social_fb_title":"","_seopress_social_fb_desc":"","_seopress_social_fb_img":"","_seopress_social_fb_img_attachment_id":0,"_seopress_social_fb_img_width":0,"_seopress_social_fb_img_height":0,"_seopress_social_twitter_title":"","_seopress_social_twitter_desc":"","_seopress_social_twitter_img":"","_seopress_social_twitter_img_attachment_id":0,"_seopress_social_twitter_img_width":0,"_seopress_social_twitter_img_height":0,"_seopress_redirections_value":"","_seopress_redirections_enabled":"","_seopress_redirections_enabled_regex":"","_seopress_redirections_logged_status":"","_seopress_redirections_param":"","_seopress_redirections_type":0,"_seopress_analysis_target_kw":"","_seopress_news_disabled":"","_seopress_video_disabled":"","_seopress_video":[],"_seopress_pro_schemas_manual":[],"_seopress_pro_rich_snippets_disable_all":"","_seopress_pro_rich_snippets_disable":[],"_seopress_pro_schemas":[],"iawp_total_views":0,"_djp_featured_image_mode":"full","footnotes":""},"categories":[{"term_id":294,"name":"Articles","slug":"articles-en","term_group":0,"term_taxonomy_id":294,"taxonomy":"category","description":"","parent":0,"count":100,"filter":"raw","cat_ID":294,"category_count":100,"category_description":"","cat_name":"Articles","category_nicename":"articles-en","category_parent":0},{"term_id":295,"name":"Bitcoin","slug":"bitcoin-en","term_group":0,"term_taxonomy_id":295,"taxonomy":"category","description":"","parent":0,"count":16,"filter":"raw","cat_ID":295,"category_count":16,"category_description":"","cat_name":"Bitcoin","category_nicename":"bitcoin-en","category_parent":0},{"term_id":291,"name":"General","slug":"general-en","term_group":0,"term_taxonomy_id":291,"taxonomy":"category","description":"","parent":0,"count":153,"filter":"raw","cat_ID":291,"category_count":153,"category_description":"","cat_name":"General","category_nicename":"general-en","category_parent":0}],"tags":[],"djp_center":[289],"coauthors":[240],"class_list":["post-4880","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles-en","category-bitcoin-en","category-general-en","djp_center-bitcoin-en"],"acf":{"djp_promote_now":false,"djp_promotion_days":7},"images":{"thumbnail":"https:\/\/djp.pl\/wp-content\/uploads\/2024\/05\/pexels-miriamespacio-27034781-scaled-1-150x150.jpg","medium":"https:\/\/djp.pl\/wp-content\/uploads\/2024\/05\/pexels-miriamespacio-27034781-scaled-1-205x300.jpg","medium_large":"https:\/\/djp.pl\/wp-content\/uploads\/2024\/05\/pexels-miriamespacio-27034781-scaled-1-768x1122-djp-web.webp","large":"https:\/\/djp.pl\/wp-content\/uploads\/2024\/05\/pexels-miriamespacio-27034781-scaled-1-701x1024-djp-web.webp","full":"https:\/\/djp.pl\/wp-content\/uploads\/2024\/05\/pexels-miriamespacio-27034781-scaled-1-djp-web.webp"},"_links":{"self":[{"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/posts\/4880","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/comments?post=4880"}],"version-history":[{"count":2,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/posts\/4880\/revisions"}],"predecessor-version":[{"id":5528,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/posts\/4880\/revisions\/5528"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/media\/1545"}],"wp:attachment":[{"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/media?parent=4880"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/categories?post=4880"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/tags?post=4880"},{"taxonomy":"djp_center","embeddable":true,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/djp_center?post=4880"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/djp.pl\/en\/wp-json\/wp\/v2\/coauthors?post=4880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Bitcoin has no organiser<\/h2>\n
Bitcoin promises no profits<\/h2>\n
Bitcoin is transparent and gives us exclusive control over savings<\/h2>\n
Finally<\/h2>\n