Bitcoin: Is it a Ponzi Scheme?
17th February, 2019
Every country has probably had at some point in time its own Charles Ponzi, an influential con artist who lured investors to entrust him with their money and who paid quick returns to the first investors from money invested by later investors. The preys believe that the profits are the result of assets trading and appreciation, and are not aware that fresh funds from new investors are the source of their fictitious profits. With time, the bubble grows, the scheme manager cannot cover the massive lie anymore and the bubble bursts causing collateral damage. Is Bitcoin a Ponzi scheme?
In my opinion, Bitcoin is an extreme form of speculative bubble but I would not call it a Ponzi scheme. In Bitcoin there is no central point of fraud; it's a just an overheated trade: between the months of October and December in 2017, the price of a single Bitcoin grew from around $4,000 US dollars to a little over $19,000 [1]. That’s an increase of nearly 500 percent in under 3 months for an asset that has no fundamental value.
This bubble isn’t the first and it won’t be the last. We’ve had housing bubbles, dot com bubbles, and even a tulips bubble. We might agree or disagree on the name to give to the collapse of Bitcoin, but my 5 cents on trading with such instruments is to stick with the saying of Otto von Bismarck: “Fools say they learn from experience; I prefer to learn from the experience of others”. Watch and learn, better than speculate and suffer!
[1] https://www.coindesk.com/price/bitcoin
Related Blogs
Implementing AI into your organization. Where do you begin?
Starting with AI in Your Organization: Building the First Capabilities Artificial Intelligence (AI) is transforming the business landscape, offering unprecedented opportunities for innovation, efficiency,...
Facilitator/ Blogger
11th August, 2024
Read More
Why Finance Certifications Matter: An Experienced Perspective
In the realm of finance, I frequently field questions about the tangible value of professional certifications. Is there a discernible edge in holding a CFA, CMA, FP&A, ACCA, or CFE designation? Given the subst...
Adnan I. Akeel
14th August, 2023
Read More
Building an All-Star Credit and Collections Team
Training opportunities, in less enlightened organizations, are handed around like chocolates in a box. In some instances, they are often chosen with only as much consideration. This approach is mostly the...
Facilitator/ Blogger
18th September, 2018
Read More
Turning the Credit and Collections Department into a Profit Earning Function
Below is a real-life case study by Jon Ray MICM. A few years ago, I was doing some consultancy work for one of the big European banks. This institution had some i...
Facilitator/ Blogger
22nd October, 2017
Read More