| That article does a good job of explaining the problem with an inherently deflationary currency. It does not explain why the author claims that Bitcoin is not a curreny. Neither does it explain why the author claims that Bitcoin is a Ponzi - or pyramid - scheme. The fact that the author feels that the two are interchangeable demonstrates a lack of understanding of what those schemes actually are. A pyramid scheme involves selling a product - something like knives or energy drink. But the actual thing which is sold are licenses to sell the product. Each licensee passes some of their profits up to their licensor who is the licensee of someone else and passes along part of that and so on. Eventually the last round of licensees are stuck with product that they can't sell and the upstream licensors are getting rich from the "pyramid" of downstream licensor/licensees recruited into the scheme. Well, there are no Bitcoin licenses - anyone can mine it, hoarde it, spend it, etc. So it is not a pyramid scheme (or multi-level marketing scheme). The value of Bitcoin will not collapse if everyone in the world is using it. A ponzi scheme is quite different. You pretend to invest an initial investor's money. The returns to that investor are paid out of money coming in from later investors. There is no opaque "fund" making "investments" when it comes to Bitcoin. So what makes something a currency? It is: * Medium of exchange - 100s of 1000s of merchants accept Bitcoin for payment * A store of value - Bitcoin has had a nonzero value for 5-10 years now so it can be reliably used for savings * Unit of account - This is where things get fuzzy. Things tend to be denominated in US dollars or Euros with Bitcoin converted at the spot price when a transaction occurs. There is no reason why Bitcoin can't be used as a unit of account, but it still has a ways to go before it is popular enough that it is actually used that way. The Washington Post article places a lot of emphasis on the greater fool aspect of buying/selling/hoarding Bitcoin. This applies to all investments, and especially to stocks. Are you going to claim that the stock market is also a Ponzi scheme or a pyramid scheme? |