I must declare a have some Bitcoin myself. Now let me explain why I say this.
A Ponzi scheme is a fraudulent system where the early investors get returns with the revenues paid by new investors. Rather than by business activities.
Is not a popular position to hold and present an argument to, and less here where people pay you to agree but sincerity has also a price for me
If you check the returns of people who invested early on Bitcoin 2.000.000% as of today (June 2009 1 BTC = 0.0001 USD * June 2010 1 BTC = 0.07 USD), you will see this definition seems to hold but what constitute the business activities of Bitcoin to see if this holds.
There are roughly a couple of reasons why Bitcoin is valuable and increases in value over time.
* It solves the double spending problem (double spending means using copies of the same Bitcoin for different transactions is possible)
* It's decentralized and It has a limited supply of maximum 21 million bitcoins.
Now let's see if this is true and try to prove them false.
1. There has been double spending in Bitcoin, maybe the most famous one was Peter Todd Explains How He Double-Spent Coinbase.
Aside from this, there are many current types of attack vectors:
- Race attack
- Finney attack
- Vector76 attack
- Alternative history attack
- Majority attack <1>
It solves the double spending problem
It's a partial solution to double spending. Depending on the strength of the network and developers. Is not that is impossible but that not many people have the technical abilities to do it.
2. The developers and early investors are a problem in itself as much as a solution. Bitcoin has multiple technologies inside and as a result, it requires the use of many internal languages that share a protocol. That protocol is Bitcoin.
But what happens when developers have different ideas about how the protocol should evolve? Just like most of the atoms in your body are not the same ones you started your life with, the code in Bitcoin has improved and changed over the past years since Satoshi Nakamoto made it open source. It will continue to change for as long as it exists and when a language has a radical difference in doing things they update in a way that no longer is fully compatible with the other ones, this upgrade is a fork.
Imagine this scenario:
The year 2021. The marketcap for Bitcoin is 1 trillion dollars. the price for 1 single bitcoin is $25.000.
An approximation of the goods and services for all the world at that moment could be around 100 trillions of dollars and the M1 (all the currencies and bank accounts should be close to 7.5 trillions of dollars at that moment) which means Bitcoin at that moment represents a little more of 1/7 of all the liquidity of the world. Let's leave outside the creation of futures based on Bitcoin (they could go as high as several hundred trillions of dollars).
Now, suppose there's a fork at that moment, as a consequence all bitcoins will most likely duplicate. Bitcoin (A) and Bitcoin (B). Which one do you use? Easy. The one that's not being dumped. A person like Roger Verr who got early in this space and has close to 300.000 bitcoins, at that moment could sell the version he doesn't like and crash the market. He and some associates early adopters could be dumping into the market a minimum of tens of billions of dollars.
This has already happened when the Ethereum Foundation<2> sold 90% of their version of ethereum Classic after their fork.
There are many points of centralization in Bitcoin. Exchanges, developers, mining pools. The first Block mined by Satoshi Nakamoto (He/she/they could very well liberate into the market at least a million bitcoins and collapse all forks if he wants to)
It's decentralized and It has a limited supply of maximum 21 million bitcoins.
The economies of hundreds if not billions of persons at the hands of a handful of particular people who could create more Bitcoins 42M, 63M...etc.
There are a couple more problems that would be a reactionary response to the points I described.
* Is not limited by access but by security
* Transactions are non-reversible
Sidechains and Dapps are a way to make those two services also false.
These new problems are being created at the moment with the purpose of preventing opposing parties to disrupt the hegemony in the future so developers and mining pool owners have even more power.
Who's wrong who's right? I don't know. Nonetheless, I'm fully conscious of this. What this technology may bring could change the history of this world at a rate never seen before. When people behave irrationally you must adapt, that's why I have Bitcoin.
The times they are a changing.