I envy those who make money by trading virtual currencies, just like I envy those who make money by trading stocks (that's their skill), but that doesn't prevent me from believing that most virtual currencies are a Ponzi scheme.
Many cryptocurrency projects, especially those altcoins with no substantial use, indeed exhibit typical characteristics of a Ponzi scheme.
The value of the project entirely relies on the continuous influx of new investors, using their funds to drive up prices, allowing early participants to profit. Once the inflow of new funds slows down or stops, the price will crash.
Many cryptocurrencies have no actual use case, cash flow, or asset backing besides being "hyped up"; their value is entirely based on market sentiment and consensus, which is very fragile.
Of course, due to the adoption of certain technical means, cryptocurrencies may seem a bit special.
A Ponzi scheme typically has a clear centralized organizer who controls all funds and rules. In contrast, mainstream cryptocurrencies like Bitcoin are decentralized. There is no single controlling entity. Its operation relies on a network maintained collaboratively by globally distributed nodes and miners. No one can unilaterally abscond with funds like a Ponzi scheme operator.
The accounts and cash flows in a Ponzi scheme are completely opaque. In the case of Bitcoin and others, all transaction records are on a public blockchain, anyone can view them, making it highly transparent.
The underlying technology of cryptocurrencies—blockchain—is a revolutionary distributed ledger technology. It holds potential application value in areas such as supply chain management, digital identity, and voting systems, which transcends the realm of pure financial speculation.
Supporters of Bitcoin believe its value comes from the "consensus" formed by hundreds of millions of people worldwide. It is seen as a digital value storage tool that is similar to gold, censorship-resistant, and scarce. However, whether this becomes a global consensus remains to be seen over time.
For the vast majority of ordinary people, staying away from this extremely volatile and fraud-ridden field is a wise choice. $ETH
