No, it is not a Ponzi Scheme
The Securities and Exchange Commission (SEC) in the US outlines the typical Ponzi Scheme:
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.
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.
Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp speculation scheme.
Bitcoin is the furthest asset class from what is outlined above.
Bitcoin does not promise high returns, as there is no central authority or provider to ‘promise’ anything in the first place.
Secondly, Bitcoin does have internal and external risks – all assets do, especially new types of assets.
Bitcoin does not provide consistent returns. Based on previous patterns and cycles, it has provided an average return of 200% year-on-year against the Dollar, with exceptional short-term drawdowns from the peaks to troughs. Bitcoin is cyclical in nature with an average bull market of 2-3 years (when including consolidation periods) and bear markets of around 1-year. The last bear market saw a drawdown of ~80% and there is definitely a risk of another one.
In summary, long-term Bitcoin holders have gone through a rollercoaster of ups and downs over time and have felt no consistencies that Ponzi Schemes normally promise. Long-term holders who believe in the fundamentals, understand that volatility is a characteristic of Bitcoin as it continues along its adoption curve and price discovery.
Ponzi Schemes do tend to have unlicensed sellers and in many countries, this is the same case with Bitcoin – due to lack of regulation. The most important point to clarify here is that Ponzi Schemes custody assets on behalf of investors and thus have the power to do with it what they want; whilst hiding operations and processes from clients.
There are and have been many similar custodians, exchanges and service providers in Bitcoin that do the same. That is why it is essential to purchase and immediately self-custody Bitcoin for oneself – without the need to trust any third party.
Other Ponzi Scheme characteristics include secretive and complex strategies. Holding Bitcoin for oneself for the long-term is extremely simple in nature.
Lastly, Ponzi Schemes work by a few holding many. That’s where the pyramidic symbology comes into play. When a few hold close to all, human greed and sociopathic tendencies tend to flourish. And so, the many end up the losers. This has happened for many years in all verticals of life.