Too many arguments sink into irrelevance when one side insists A is a Ponzi scheme and the other side says it isn’t.
Bitcoin and Social Security are both called Ponzi at times. The definition of Ponzi is much more nuanced and fuzzy than we usually think. Intention is important.
Two classic examples show the real line.
Charles Ponzi knew what he was doing. He had no INTENTION of running a real business, no INTENTION of buying things, adding value, and selling them for more.
Bernie Madoff was running a REAL investment firm. He bought stocks and bonds wholesale, gathered the interest and dividends, and paid out the proceeds to retail customers after taking some profit. When he ran short he decided to pay from the capital instead of using the interest, and then he got in the habit of doing it that way. As a juror I would have struggled with convicting Madoff. He wasn’t a professional criminal, and the people who lost money were rich enough to know better. No intentional crime, no real victims.
Real businesses do sometimes have to pay from capital instead of profit. Real businesses won’t keep it up. If the interest or added value isn’t working, an honest owner will close the business or switch to a different line of products.
The REAL QUESTION is INTENTION, not where some of the value is coming from.
Bitcoin is pure fraud from the start. You don’t need to ASK whether it’s Ponzi or not, because it has no intention of doing anything but pure theft.
Social Security and many commercial insurance firms do rely on some of the input to pay out the proceeds. Life insurers count on a certain number of people paying in and then canceling the policy. They don’t refund those premiums, so those premiums could be called Ponzi losses. But there’s no expectation of refund, so there’s no fraud. SS is the same. Many people pay in for a long time and die early with no chance to cash out and no dependents to receive the benefits. Again there’s no contractual expectation of refund, so no fraud.
Polistra's Mill 