Since more big news agencies have been talking about Bitcoin in the past two months, a large group newcomers to Bitcoin have created the misconception that Bitcoin as a system is equivalent to a pyramid scheme.
Apart from the fact that Bitcoins are created by making computers perform hugely sophisticated calculations, which cost real power and material. Every Bitcoin is unique. This means that when a transaction transpires, no Bitcoin has been created. In a pyramid scheme, on the other hand, a buyer receives the same ‘product’ as his seller has once bought, without the seller giving something up. Also, in a pyramid scheme, buyers have to perform action once they’ve bought in, in order to get their money back or make a profit. In the Bitcoin system, one buys a Bitcoin and waits until he wants to buy something with it.
Another big and well thought-out aspect of Bitcoin, is the limit. Twenty-one-million Bitcoins can be mined, not more. As soon a system shows this kind of limitation: It can not be a pyramid scheme.
Pyramid schemes inevitably fail, because they are schemes. Bitcoin’s peer-t0-peer nature makes it so that it can not seize to exist. Bitcoins will always be there, and as soon as people stop buying them, they become so cheap that everybody will buy them again. This kind of fall back insurance is never inherent in a pyramid scheme.
Recently, everybody that looked at a Facebook page for Bitcoin, saw a link under ‘related pages’ called ‘ponzi scheme’. This is not Mark’s way of telling us to be careful with Bitcoin, it’s the consequense of people talking about Bitcoin being a Ponzi scheme, bots combining the keywords, people talking about that, and bots again combining the keywords resulting in automatic linking between the subjects. There is no similarity between Bitcoin and pyramid schemes, the keywords are just often used on the same webpage.