A Ponzi scheme is a deliberate form of fraud. Is Bitcoin a deliberate form of fraud? No. It’s a technological proof-of-concept, a financial innovation, and the first major blockchain.
How people use Bitcoin, how they pontificate about it, how they sell it to others and manipulate minds (and investors)… well, that MAY BE a Ponzi scheme. But, ultimately, so what? If you put our existing financial system under the microscope, everything starts looking like a Ponzi scheme - especially our own fiat currencies.
Let’s look at this another way. If Bitcoin is a Ponzi scheme - just as all fiat currencies are Ponzi schemes - then what difference does it ultimately make? What do we gain from making such an observation? That we all suffer from collective delusion?
Many big tech revolutions - the kind that really, really changes society - often requires a speculative frenzy to get things going. Otherwise, nothing significant happens.
Believe me, I know. As the advocate of many tech projects that were ahead of their time, nobody is interested in the future delivered today unless they are motivated by FOMO or fear.
The underlying components of crypto have been around a long time. We’ve had smart contracts since at least the 80’s. Does anyone remember ‘autonomous software agents’, aka ‘bots’? We’ve had all sorts of decentralization efforts. We’ve had composability and component based systems (e.g. OpenDoc, OOP, Java - ‘write once, run everywere’). So, why didn’t crypto take off earlier? Because we didn’t have the perfect storm of speculative frenzy to fuel it.
The early days of the Internet had a few crash and burn cycles. I acutely remember the one in 2000 because I lost a packet, myself, as an investor in Internet companies. Nevertheless, it was a necessary evil required to fuel the furious pace of innovation necessary to move hearts and minds.
I really wish it wasn’t so. I really wish that a good idea was enough to get a lot of people amped up and excited but the truth is that if you have a really good idea, and I mean a really excellent ahead-of-its-time kind of idea, you are going to have to hit people over the head with a hammer before they’ll see stars.
This is how humans work. Most of us are not motivated by intellectual fruits and berries. We are motivated by fear and greed. Just as climate change won’t be taken seriously by all of us until there is crisis or calamity (fear), similarly we aren’t going to have a truly innovative financial system without speculative fury (greed).
There is a phenomenal amount of experimentation going on in the crypto world and it’s exposing the banking system to open-source development. The open source movement is responsible for a profound amount of citizen-driven innovation. Just look at the explosion of experimentation, learning and knowledge created on GitHub every day.
I’m grateful that DeFi is luring developers away from Goldman Sachs. If not then please explain why I cannot send an international wire transfer within a few days from my bank, yet I can do it within seconds on Bitcoin? And that’s just Day One of the movement. I can’t wait to see what it comes up with after a few more years.
We need crises and speculative fury to fuel technological revolutions that benefit us all. We need excitement spurred by our hearts or gonads to get the big shit done. That’s just how it is. Who cares if Bitcoin is a Ponzi scheme if it gets us to somewhere far far better than where we are now?
Yes, yes, I’m being pedantic to make a point. No, I don’t think that the end justifies the means; the means matter. It’s just that I don’t think slinging shade at the crypto movement by calling it a giant Ponzi scheme gets us where we need to go right now. It is distracting us from the real innovation that’s going on and from the adoption curve that we need to get us there.
Calling Bitcoin a Ponzi scheme is just smug self-congratulation, masturbatory, and unproductive. It dismisses the tremendous technological insight and innovation garnered by this experiment in order to win an argument. I think we can do better.