Lewis: At least the SEC is nailing “Bitcoin Bernie Madoff”

Theft and security breaches have undermined Bitcoin's viability as a currency from the beginning. Speculation, which can lead to bubbles and busts, is also destablizing the currency — especially as investment schemes get more complicated, grandiose, and high-risk.

Bitcoin is basically a Ponzi scheme

The Bitcoin Global Stock Exchange allows Bitcoin startups and entrepreneurs to issue shares, bonds, futures, and other financial instruments. As one Bitcoin trader told this reporter last year when the Bitcoin derivatives market was just getting off the ground, "Bitcoin is like Wall Street was 15 to 20 years ago when I entered. Fragmented markets, wide spreads, manipulation, the trading stone ages. Although Bitcoin seems to be rebounding, these trends have elicited skepticism along with bullishness.

Bitcoin is basically a Ponzi scheme | The Seattle Times

There's reason to be cautious. Bitcoin is a relatively new currency. In lieu of a government or central authority, Bitcoin is essentially backed by a sophisticated technology of unknown origins; a small development team; and the faith of its users. Intense speculation and recurring cyberattacks by the equivalent of information superhighway robbers have made some people rich and others poor.

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The dramatic volatility suggested the market for Bitcoins had been fueled by hype. One could argue that any time or money invested in Bitcoin is high-risk. But as the technical core of the new economy and the supporting infrastructure evolve, the basic bet looks less risky. Andresen said in an email.

The Bitcoin Project will be making a major announcement in September that should contribute some stability, he said. Still, he predicted things will continue to be exciting in the world of Bitcoin with "continued controversy and chaos.

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The number of HYIPs promising champagne profits certainly adds to a bubbly atmosphere. The well-respected startup investor Fred Wilson recently solicited opinions about the state of Bitcoin on his blog.

Compared the the volume of transactions Square will do with Starbucks, Bitcoin looks like a joke," Mr. Wilson wrote. Subscribe to get the best Verge-approved tech deals of the week.

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Calling the stock market a Ponzi scheme wouldn’t be fair… to Ponzi schemes..
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What are the repercussittons? Just as gravitation that pulls galaxies together is gradually becoming less of a factor as the expansion of the universe accelerates the bitcoin profit taking by big institutions will gradually become negligible and will have no effect on the exponential curve of bitcoin value increase as expressed in fiat currencies. Therefore, in the forseeable future, it will be possible to buy only an extremely tiny fraction of a bitcoin whether you are a Wall St institution or Main St dude.

It will serve as an insurance policy that parents will pass on to their children and their children to their children and so on.

Is Bitcoin A Ponzi Scheme?

If you sell it on an auction you will no longer be insured. This is kind of like asking if a computer is a magic robot.

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But it doesnt work at the level of accurately describing the system. Bitcoin is a currency and just like any other currency, can change value based on supply and demand and inflation. Thats it. Things bitcoin lacks in a comparison to a Ponzi Scheme: Its not run by a company, corporation or individual. There are no shares. You are never promised a return. The value is not being manipulated by anything other than market forces. I think pyramid scheme would be a more appropriate term as you need someone to pay more than you paid to make money.

One day, tulip bulbs were trading for 10 years of pay. The next they were worthless.

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And his real name, mind you, is Shavers, which is arguably a form of full disclosure in itself. Anyone who did business with him should have expected a haircut. Entire generations of children have been conned out of their baseball cards. Al Lewis: or al. More in News.

Bitcoins moving like Bernie Madoff