This Is STILL the Biggest Myth About Bitcoin

is Bitcoin a Ponzi scheme. Let's settle this once and for all. So this is the definitive guide

you can send to anyone who says that from now until the end of time. To be honest, I didn't really

even want to do this video to address this so-called criticism because it is so baseless and so

vapid that it doesn't really deserve a response, but because it's been 16 years and people are

still saying it and thinking that they're clever when they say it, I decided to put together

a little explainer. So this is like a little 101 level class for the people who don't really

seem to understand money, Bitcoin, assets, markets, prices, or of course, Ponzi schemes.

And even if you do understand those things, this will still be a fun watch for you to watch me

dismantle and dismember the Ponzi scheme claims piece by piece. Real quick, you're watching

the sat stacker show, a Bitcoin show for people who think deeper about money. I'm your host,

my name is John aka the sat stacker. If you want to learn to stack smarter, you hit the subscribe

button and let's give these haters a sat lip. So is Bitcoin a Ponzi scheme? Well, we can start with

the fact that words do have definitions, so we can just do what most of the people who've ever said

that couldn't quite figure out how to do, which is Google the actual definition of what a Ponzi

scheme is and just read it. From the SEC's definition, 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 of course, they probably keep some of it 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. I'm wondering if so far you think that describes Bitcoin, but just remember

the key characteristics of a Ponzi scheme, high returns with little or no risk, overly consistent

returns, unregistered investments, unlicensed sellers, secretive complex strategies, etc, etc.

Now, I do understand why this is confusing for some people when they first hear about Bitcoin,

because magic internet money is a brand new thing. The first of its kind, as John Oliver once said,

Bitcoin is everything you don't understand about money combined with everything you don't

understand about computers. So of course, it seems complicated at first glance, but I can't stress

this enough. Information does exist. Google exists, books, articles, sources, the literal Bitcoin

white paper exists, the actual open source code exists, the early communications of Satoshi Nakamoto,

all these things exist, along with 16 years of education beyond that, like YouTube videos and

podcasts and books, and everything else you could possibly need to try to understand it. Before

you go around saying Bitcoin is a Ponzi scheme and essentially announcing to the world that you are

unable or unwilling to pursue the act of learning. As the saying goes, it's typically better to remain

silent and be thoughtful than speak out and remove all doubt. So now that we've read the definition

of a Ponzi scheme and we know that the information exists to see whether or not Bitcoin fits that

definition, this video could easily just be over because it's pretty clear on its face that Bitcoin

doesn't really match that definition. It's not an investment fraud that promises high returns with

no risk and there are no organizers paying existing investors with funds from new investors,

but I am going to go a little deeper and I will be a little fair to the critics. They see an asset

they don't understand. They don't know why it has any value, but the market price keeps going up

over time. So how can this possibly happen? So they think something nefarious must be going on.

So they lobby accusations at Bitcoin like it must be a Ponzi scheme. Never mind that I've never

seen anyone lobby the Ponzi scheme accusation at any other asset or investment that they believe

has no cash flow or has no intrinsic value. Bitcoin is freely traded amongst global market participants,

24 hours, seven days a week in a global free market of buyers and sellers where the price is

determined, of course, by supply and demand. So if Bitcoin is a Ponzi scheme because its value

depends on new buyers coming in, then that logic essentially describes every non yielding asset

whose value is derived from market demand rather than promised returns or productive output.

So if you honestly extend that definition of a Ponzi scheme, you'd have to label gold, art,

land, vintage cars, wine, watches, collectibles, all our Ponzi schemes. And there's of course one more

thing, which is the biggest Ponzi scheme of all, which we'll get to a little bit later. But

now those assets or investments or collectibles that I just mentioned produce cash flow,

of course, their value is based on scarcity, demand, perceived desirability or utility,

and trust that others will continue to value them in the future. A Ponzi scheme requires

a central operator, deceptive promises of returns, payments to old investors using new investors

money, whereas gold, land, and Bitcoin are essentially decentralized assets. There's no promised

return. It's just open market price discovery. The value is determined by supply, demand, and

utility. That word utility obviously is a buzzword for a lot of people that say Bitcoin has no utility.

So you can say Bitcoin has no utility, but the market disagrees with you. This video isn't

totally about debunking that criticism, but we can actually knock out two birds with one stone

by saying this. The number one thing that people who say Bitcoin is a Ponzi scheme or Bitcoin has

no utility, do not understand is that Bitcoin is not an investment. It's not really even just a

new kind of asset. Bitcoin is money, peer-to-peer digital money, with a totally finite supply,

is a new form of money that never existed before Bitcoin. That one sentence describes Bitcoin so

simply, yet absolutely breaks the brains of millions of people because they just can't wrap their

mind around how something digital can be scarce and how it can have so much value.

Bitcoin's utility is the fact that Bitcoin is money. Its value comes from the fact that it's money.

And the growth in its value comes not from being some kind of Ponzi scheme, but simply from the

fact that it's better money than any other form of money that's existed before it. If you just

look at the history of money, what you will see is humans trying out different types of

monies over time. In particular, with commodity monies, if something is good at being money,

which I've described in many other videos in the past, but I'll say it very briefly here,

in short, for a commodity to be good at being money, it must be durable, portable, divisible,

fungible, verifiable, and scarce. A lot of people try to say, oh, Bitcoin isn't valuable just

because it's scarce. People have said, there's on my head our scarce. My teeth are pretty scarce.

I'm pretty useful, but they're not worth billions of bucks. Well, of course, they don't have the

first other five properties that I mentioned. And therefore, at this scarcity, just on itself,

doesn't matter. But if any commodity good has all six of those properties, it can just enter into

a free market competition of monies. People can start monetizing it, using it as money.

And if it does a good job of fulfilling those properties and the functions of money,

it will become monetized and it will gain purchasing power over time as people store value in it

or use it as a medium of exchange for goods and services. But if a better form of money comes

along, it will demonetize the inferior money and suck the purchasing power out of it.

Just another video a few days ago, I'll put a link up here where I included a quote from

safety and a moose who said, Bitcoin is like financial gunpowder because it's a superior form of

money. You don't have a choice whether or not to adopt gunpowder when it was invented.

You will either choose to adopt it or it will be used against you. So that's what happens when

superior money encounters inferior money in the free market. Salt, beads, shells, tobacco,

precious metals. You name it. Many things were once used as money. And for a time,

they saw their value grow as they became monetized. They're purchasing power grew as people

use them as a store of value. They gained what's called a monetary premium. That means the value

of the commodity above and beyond its practical use. Salt being worth more than just its use in

cooking or food storage. Gold being worth more than just its value for industrial or manufacturing

uses. A lot of people say, oh, gold has real utility because it's used in manufacturing or

electronics. Yeah, but that doesn't account for why it's $5,000 an ounce. If it were only value

for its practical value, its value would collapse by 80 to 90% overnight. But just like what happens

to salt, beads, tobacco, and all kinds of other crappier monies, if a superior money comes along,

people will realize over time that the superior money stores its value better and they'll begin

shifting away from the weaker money and storing their value in the better money.

Demand for the inferior monetary good collapses, its value collapses back down to its utility value

or practical value. And that purchasing power ends up being stored in the harder money.

So you can use any example of one money demonetizing another. But let's just say hypothetically,

in the 1920s, if wealthy Germans were fleeing the German mark into a harder money like gold

and gold's value was increasing, does that make gold a Ponzi scheme? Well, its value is only

going up because late entrants are paying more than early entrants did. Of course, anyone saying

that would be considered a fool. But that is quite literally what they say about Bitcoin. So yes,

Bitcoin's price appreciation measured in fiat terms depends on demand. But A, that's true of all

scarce desirable assets. And B, its demand is not artificially propped up by some central organizer

who's promising returns. Its demand comes from organic adoption by people who are coming to the

realization that it's better money and a better sort of value than other monies or other assets.

So those people ditch their other monies or their crappier stores of value and they put their wealth

into Bitcoin. And its fiat denominated price or its value or its purchasing power goes up.

Bitcoin, of course, produces no cash flow because it is cash and it produces no yield or payouts

because it is money and money doesn't yield more money unless you perform some kind of shenanigans

with it. But money can and Bitcoin does produce returns in the form of greater purchasing power.

But if the returns come from anywhere, it's from that process of sucking the value out of other

assets and other monies and into Bitcoin, which is a harder money. And Zimbabwe, you think they

would take money off the table, right? Like the point is if you have the superior asset,

it's going up forever, Laura, forever. I'm obviously glossing slightly over some of the other

criticisms that people have of Bitcoin. But this video is strictly about the Ponzi scheme comparison.

So again, a true Ponzi scheme requires a central operator, deceptive promises and returns,

payments to old investors using new investors money. Bitcoin, of course, has none of those

things. It's fully decentralized. There's no one in charge as a central operator. There are no

promised returns. It's just open market price discovery. If someone promised you returns in Bitcoin,

well, they're not the central operator of Bitcoin. So you probably shouldn't have listened to them.

By the way, I also love how one of the biggest criticisms you'll always hear about Bitcoin is that

it's too volatile. People say it's way too risky. While the other people are calling it a Ponzi

scheme, maybe the same people calling it a Ponzi scheme. But a Ponzi scheme is literally defined as

promising high returns with little to no risk. So how can it be both way too volatile and way too

risky and a Ponzi scheme promising you high returns with no risk? Bitcoin, again, promises you

nothing because there's no central operator. There's no CEO. There's no marketing team doing official

Bitcoin messaging, making you promises. There's companies building on top of Bitcoin or doing things with

Bitcoin that might be promising you things and you should be skeptical of all of them. But even if

you think Bitcoin is promising you high returns, it is currently doing so only because it is also

promising you tremendous volatility and risk. So it can't be both things. Ponzi schemes, by the way,

also always collapse when they encounter a significant downturn. So if everyone tries to pull the money

out, they'll then collapse is because the money is not actually there. Bitcoin has seen massive

drawdowns throughout its history, 50, 70, 90%, but despite being declared dead in the media a million

times, it's never actually died. It's never collapsed. So if it were a Ponzi scheme, how is that possible?

Well, because it's not deceiving people with lies about money that isn't actually there,

it's just a market like any other liquid, tradable asset or scarce desirable. Good. The price

floor is put in by buyers in the free market. If sellers outnumber or overwhelm buyers at a given

price level, then the price will drop. But Bitcoin has never fallen to zero because there's always

demand for it. There's always buyers willing to step in at prices above zero. And it's not only never

collapsed. It's always come back to make higher highs and higher lows than ever before. So it's a

Ponzi scheme, but just one that can never actually collapse and always just keeps coming back and

making higher highs. That doesn't quite track. Now to be fair again to the critics, Bitcoin shows like

me do sound like Ponzi schemers because we will tell you Bitcoin is absolutely going to the moon and

it is virtually risk free. But I am not the CEO of Bitcoin. So I won't be paying out your returns

personally. But also me believing that or saying that is just a result of me studying and understanding

the history of money, understanding the fundamental properties of Bitcoin, and simply extrapolating

those two things out into the future. So I believe I guess that one of the biggest risks to Bitcoin

is actually just that money and human beings stop behaving the way that they have for the last

several thousand years. But I personally am not that worried about that. Ponzi schemes also,

of course, require secrecy and deception. Bitcoin is literally just open source code, a fully

transparent open ledger that anyone can see and audit and verify anytime they want. So again,

where is the secrecy and the deception? Just because someone doesn't know how to read the code

doesn't mean the code is lying. But I promised you earlier that once we had a little bit better

understanding of Bitcoin and of Ponzi schemes, we would examine a real Ponzi scheme that's been

hiding in plain sight for decades. The one that every person and every system completely depends on

and that is, of course, Fiat money itself. The money we all use all day, every day, unless and

until you opt out for Bitcoin. But the dollar, the euro, the yen, almost nobody ever questions these

things, least of all the people calling Bitcoin a Ponzi scheme. Yet Fiat, of course, checks every

single box of a Ponzi scheme. Let's walk back through it again. Fiat money is, of course, not

backed by anything. It's literally created when the Fed types it into existence or by a bank when

someone takes on new debt. So when the government borrows new money enters the system when banks issue

loans, new money is created and issued in circulation. But a system built on debt only keeps working

if new debt keeps being issued. It's a structure that requires constant new inflows to sustain itself.

Does that sound familiar? The Fiat math does not work without new participants.

The US government owes about $38 trillion today. But it doesn't pay the debt off. It just refinances

it endlessly by issuing new debt to pay off or cover the interest payments on the old debt.

It's literally a Ponzi formula. And just like every other Ponzi, it rewards those at the top.

Banks and governments create the new money and they can spend it or benefit from it before

prices adjust. And by the time it trickles down to you, of course, prices everywhere are rising.

The new money literally redistributes existing wealth from all previous holders to those who

receive access to the new money. I guess in that way, it's a little bit of a reverse inverse

Ponzi because instead of paying out old investors with the money of new entrants, it's basically

redistributing purchasing power from all the old investors to the receivers of the newly printed

money. I don't know, maybe we'd call that an inverse Ponzi. But in this Fiat system, the money

supply can never stop growing. It must inflate forever. If credit stops expanding, the defaults

start cascading. And if the defaults cascade, the system collapses. So the only way to avoid that

collapse is to print more and more money, create more debt, kick the cam further down the road.

Meanwhile, the whole system is managed by a handful of unelected central bankers,

meeting behind closed doors and deciding how much your money should be worth next year.

They pull the levers in secret and you just live with the consequences. And they lie about

things like CPI to under report inflation. So a Ponzi scheme requires secrecy and deception,

and there you have it right there. And of course, a Ponzi always works until it doesn't. It survives

as long as confidence holds and new participants keep it alive. Fiat money is exactly the same.

It survives because people believe it will hold value tomorrow. I mean, I literally have people

say to me all the time in the comments with a straight face that the dollar is backed by the

full faith and credit of the US government. But look at the history and track record of Fiat

monies. Almost all of them have eventually collapsed, just like Ponzi's games do. Because

full faith and credit is not a recipe for real money. If the supply is effectively unlimited

and the debt is effectively unpayable, then the purchasing power of the money is always decaying.

At least the OG scheme or Charles Ponzi never pretended his scheme was a moral necessity.

But we have governments and central banks who fully institutionalized this and then taught us

that it's actually for the greater good of the economy. So of course, at the end of the day,

the answer is no. The coin is obviously not a Ponzi scheme. But Fiat most definitely is.

It's a system that only stays alive by promising the incumbents will remain solvent

through the constant introduction of new money, a system that enriches the few, devalues the

finite precious time of the many, and guarantees that they will dump on you in order to protect

and enrich themselves forever. Bitcoin doesn't rely on debt, deception, or inflation.

It's simply a globally open, permissionless, transparent, predictable and fair monetary system

that anyone can freely opt into at any time. So of course, none of this is financial advice,

but if I were to give you some life advice, it's to consider exiting the system designed to

steal from you and consider putting more of your time and energy into a new system designed

to protect your wealth and your property and make everyone play by the same rules.

As always, if you want to learn to stack smarter and grow your conviction in Bitcoin,

you subscribe to the channel, you hit the like button and leave a comment so the algorithm knows

to send this video to all the Fiat Maxi NPCs who keep repeating Bitcoin is a Ponzi's game

to each other all day long. And you never forget quit slacking and start stacking.