Does Bitcoin fit the definition of a Ponzi scheme? This is the theme of the latest Cointelegraph Crypto Duel, where the Bitcoin strategist in Kraken meets the Professor of Computer Science at the University of Campinas, Jorge Stolfi.
Similar to other Bitcoin skeptics, Stolfi repeatedly defined Bitcoin as a Ponzi scheme. The core of his reasoning is that Bitcoin does not produce cash flows and the money that Bitcoin investors are paid with 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,” Stolfi said.
In response to Stolfi’s argument, Rochard pointed out that Bitcoin is a peer-to-peer cash system and, like other forms of money, is not intended to generate cash flow.
“It’s just a general property of money because it’s cash. So there are no cash flows and that doesn’t make it a Ponzi scheme. “Said Rochard.
Rochard also pointed out that Bitcoin differs from Ponzi schemes in that it does not guarantee fixed returns and is known to be a very risky commodity.
“Bitcoin proponents repeatedly stress that there is a risk of loss and that this risk has been repeatedly recognized when we look at the empirical data,” said Rochard. “That’s not how Ponzi programs work,” he added.
However, Stolfi is convinced that effective Ponzi programs promise no return as it would be “a dead giveaway”. “The S.E.C. would knock on your door the next day,” he argued.
As an example, the computer scientist mentioned the infamous Madoff-Ponzi program, which defrauded thousands of investors for 65 billion US dollars. “He didn’t promise anything. […] The reason people invested in it is because he paid everyone who wanted to cash out. ”
Choose your side and watch the full debate on Cointelegraph’s Youtube channel!