Wondering if Bitcoin is a Scam?🧐
It's not. Here's why.
Bitcoiners,
You may have been in casual conversation with someone about Bitcoin and somehow this topic comes up:
"I heard Bitcoin is a scam!"
I get this response all the time from skeptics so I figured I would formalize the way I respond to that statement.
Feel free to share this with someone in your life that thinks Bitcoin is a scam.
Here is an analysis which proves Bitcoin is NOT a scam:
What is a scam?
Scam (noun) - a dishonest scheme; a fraud.
"an insurance scam"
Definition Analysis
For Bitcoin to be a scam according to the definition above, Bitcoin will need to be:
Dishonest
A Scheme
A Fraud
Let's briefly tackle each of these at a time starting with #1.
1. Dishonest: Bitcoin will need to be untrustworthy in order to satisfy the dishonest criteria.
People for or against Bitcoin may be dishonest in the way they portray Bitcoin to others, however, the computer code running the Bitcoin network was literally coded on the foundation of trust. In other words, Bitcoin operates according to Proof of Work algorithm as a basis of trust.
Proof of work (PoW) is necessary for security, which prevents fraud, which enables trust.
2. A Scheme: You may have heard the term "Ponzi Scheme" before.
Simply defined by the US Securities and Exchange Commission (SEC):
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors.
To get to the root of this, we would have to assume the original creator of Bitcoin was the initial existing investor seeking to profit from the creation of Bitcoin by selling all his original coins to newer investors.
There are nearly 1 million bitcoins that are believed to belong to the original initial existing investor and creator of Bitcoin, Satoshi Nakamoto. Satoshi has still yet to cash out all of his original coins worth billions of dollars today, even with the project being over a decade old now.
3. A Fraud: In order for Bitcoin to be considered fraudulent in nature, it would have to be used by criminals in a deceptive manner for a personal gain.
Yes, in its early days, Bitcoin was used as a form of payment for illegal activities on the Dark Web.
That does not necessarily mean it was used in a deceptive manner. It was more used as a store of value which was used to trade as a utility. Bitcoin has evolved to be used for much more than that to now in present day.
Conclusion
I hope by reading through this, you can now understand why Bitcoin is NOT a scam.
You can read up more on topics I discussed in today’s newsletter here.
Happy Friday,
-Pod
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Eric Podwojski
Founder, Bitcoin EDU
Twitter: @epodrulz
