What do you say to people who dismiss crypto as a ‘Ponzi Scheme’?

I’ll be honest, I’m always a bit flustered when this one gets levelled, because I never know where to begin in trying to debunk it. This is mainly because there are absolutely aspects of crypto investing that give off Ponzi vibes to the uninitiated – just look at all those rugged tokens, even the DAO’s that make headlines because of sudden price plummets etc. And no doubt the 2017ish Bitcoin craze where thousands of people bought the top before a very cold winter is still fresh in people’s minds, alongside BTC’s current price situation.

So my question is: how do you guys address the common accusation that we’re all just crabs trying to claw our way to the tippy-top of a grand digital ponzi? Many thanks.

**Edit:** To those saying “nothing”, I appreciate the pragmaticism – but I’m after retorts that address the core scepticisms that a lot of people display towards crypto. Either way, I always ask myself *”am I still early??”* I wonder if the internet’s early days were met with a similar response.

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50 thoughts on “What do you say to people who dismiss crypto as a ‘Ponzi Scheme’?”

  1. I say all this and usually get downvoted into oblivion. Almost every time.

    There is a bit of a test for what is a ‘ponzi’ and crypto (bitcoin specifically) fails at that test.

    For crypto to qualify as a ponzi it can’t just have one or two things in common with a ponzi, it would have to be most attributes lining up and being the same.

    so for example… A poinzi is:

    >A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.

    Okay, you can use those words to describe bitcoin.

    >The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds.

    okay, that would be a disqualifier for bitcoin/crypto

    >A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

    Again there’s a failure, if you own bitcoin you can verify that factually and cash out/trade for “fiat” any time you want.

    >In a Ponzi scheme, a con artist offers investments that promise very high returns with little or no risk to his victims


    >The returns are said to originate from a business or a secret idea run by the con artist. In reality, the business does not exist or the idea does not work. The con artist actually pays the high returns promised to his earlier investors by using the money obtained from later investors.


    >The operator of the scheme also diverts his clients’ funds for his personal use.


    >With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.

    1/2 a point here because a rather large majority of BTC “HODLers” are still in profit and while it’s true that if everyone sold their bitcoin at once that it would collapse you could say that about stocks or real estate too… so kinda not a unique attribute exclusive to ponzis.

    So anyway just because there’s only one or two things in common with a ponzi out of ten, i think bitcoin fails at being a ponzi. Bitcoin doesn’t promise you anything and doesn’t hold your funds hostage, those are the two biggest things.

  2. If they bring up “crypto” rug pulls:
    Ask If they’re invested in equities, and what they’d say to someone who refuses to invest in stocks “because of Enron” or “because $DWXYZ Penny stock crashed once!!”

    If they ask you to justify how Bitcoin isn’t a “ponzi scheme” ask them to first justify how the USD isn’t a ponzi scheme. Have them explain to you how social security and Medicare aren’t ponzi schemes. **Ask them to consider that Bitcoin may actually be the anti-ponzi.**

    If they claim there is no such thing as digital scarcity, ask them if anyone else can claim their current email address, ask if they are able to make their own website appear if you typed in “www.google.com”. Explain how for decades now, DNS web addresses have proved the concept that digitally scarce “things” exist and some have more value than others.

    If they claim “Nobody even knows how bitcoin works” ask them to assess their level of confidence in the statement that “Every single person using the US dollar had to first learn how the Federal Reserve and US Treasury work.” Heck, before you even explain Bitcoin ask them to explain the Dollar to you and interject with more and more questions, the way they’re preparing to interrogate you about bitcoin.

    If they say that Bitcoin has a limited use case, remind them that lifeboats also have an extremely limited use case but it’s not a bad idea to have them laying around on ships.

    If they still are talking shit, instead of “Have Fun Staying Poor”, tell them “**Have Fun Learning More**” and move on because they aren’t ready yet.

  3. Nothing.

    You say nothing to people who don’t want anything to do with crypto.

    There’s no benefit to acting like a Jehovas Witness for crypto. You won’t change their minds, they won’t change yours. Don’t waste your breath or further push them into confirmation bias.

    If someone asks about crypto, be sure you know what the fuck you’re talking about. So many idiots on this sub have *ZERO* clue what they’re talking about and just go ad hominem when NFTs and such get criticized. If you can’t politely inform someone of *factual* evidence to back up your claims, just don’t bother.

    My financial advice: don’t talk crypto with family or friends and certainly don’t push them to put in money.

  4. I just say that the price of Bitcoin is not the point of Bitcoin. And explain to them that it’s an asset only you can control with no third parties. And then you ask them how much they trust their bank and government.

    If you hadn’t noticed – whether you’re left or right everybody has trust issues these days.

  5. Let’s see:

    People invest in it because they expect a great profit. Such expectation is based on historical records where the price of bitcoin grows and grows over the years.

    However, there is not an external source of revenue for those gains. Instead, all the profits come from new investors entering the scheme.

    Based on the above, how it’s not *essentially* a ponzi? Or maybe you need a new name for it? (some people call it “ponzi 2.0”, and some others call it “Nakamoto scheme”)

  6. Crony Capitalism is a Ponzi scheme. This whole rigged goddamned game is a sort of ponzi scheme. Everyone wants loads of cash so they can work less and enjoy life more.. Pick your poison and get rich or die trying!.

  7. I used to try to explain it to people but realized they almost never want to listen. Their mind is made up and there’s no point in trying to convince them.

    Just move on and change the subject. When they come to you with questions, answer away but never waste your time trying to convince someone who has zero interest in learning.

  8. You have to figure out the tone in which someone is saying that it’s a ponzi scheme. Some people are willing to learn. And in that case, you better really understand crypto and gow it works.

    I’ve read somewhere online a quote supposedly by Albert Einstein – if you can’t explain it simply, then you don’t understand it well enough.

  9. About the internet: remember that clip from Bill Gates where he explains the internet and is met with: do you remember…radios? Libraries?

    And that other clip where Internet is dismissed, because it just does something we can already do, but on computer screen?

  10. The key thing I make sure I do is not getting caught up in defending “crypto”. All chains/tokens/NFT’s/etc are not the same.

    Most critics will point to obvious issues in scam/poorly thought out projects then tie that to everything.

    For example, focus on how a specific project you’re into doesn’t fit the ponzi descriptor (ie. I often focus bitcoin, not crypto. Or Ethereum, not “blockchains”). Now, Any arguments that go “well, what about so-and-so though…” you can stop easily and instantly.

    Also, don’t allow others to rapid fire critiques at you while you’re half-way through a previous argument. Once you start making sense, they’ll shift goal-posts if you let them. Stay focused until you concede they’re point, or they concede yours.

    Ultimately though, saying “Crypto” is anything, good or bad, is like saying the internet is good or bad.

    Some parts are great and can reshape society. Others are money grabs with no true thought or understanding, and the rest are likely straight up scams.

  11. Man you guys should go in the r/NFL subreddit right now. The top story is how Pepsi announced they’re no longer sponsoring the SB halftime show. Most of the replies in there are how it’s going to be the Crypto.com halftime show and people are just straight up shitting on crypto in there, with a lot of comments calling crypto a Ponzi scheme. I was kinda surprised but then again most people on Reddit are idiots.

  12. Cryptocurrency and blockchain are technologies. Just because people use tech for ponzi schemes doesn’t mean the tech itself is flawed. MLMs existing doesn’t mean businesses are bad. Penny stock pump and dumps don’t make the stock market a scam.

  13. Everything, in the markets, is a Ponzi on some level. Someone has to give capital to purchase something someone else got before them, in hopes to make a return. I see no difference 🤷‍♂️

  14. Look at the Nasdaq on the monthly zoomed out all the way. Then tell me what looks like a Ponzi scheme. Mate, as far as living in the US, our entire economic system is a Ponzi scheme built on leverage and credit that doesn’t even “exist”.

  15. I don’t try to prove things to people who come in with such a negative impression. It’s like pushing a boulder up a mountain.

    But if I had to, I would explain that there is no promise of profits, nor teams of people pushing huge dividends and returns. Those projects exist, but they’re largely decried as rug pulls and scams. I wouldn’t try to explain the tech to them, but I’d ask them to explain to me why they think it’s a Ponzi scheme, and then see if those criteria could be applied to other markets, like gold or the stock market

  16. I’m old enough to remember when email and online forums was just for nerds.

    Then companies introduced it into the work place and now everyone uses it.

    The same is happening to crypto. People who say it’s a Ponzi have no idea how Ponzi’s work. By their definition everything is a Ponzi. Spanish pieces of 8 don’t have value because the Spanish monarchy no longer exists and thus are a Ponzi. 😂

    Bitcoin and many other tokens are no longer Ponzi’s because there is adoption and with it is liquidity.

    I don’t waste my time any more. If they ask what is it good for, then I will engage. Such a question shows an interested and willingness to learn.

  17. I say: “Don’t talk about ponzi scheme because you don’t even know what that is and stop judging it with you feelings, go DYOR on crypto before talking like that….. BIAAAATCCHHH”


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