Quote from: edd on July 15, 2011, 02:43:52 PM

Ponzi schemes in a nutshell:

1. Charles Ponzi says, "Invest with me and I'll pay you 150% whenever you cash out!"

2. Trusting individuals give Ponzi their money.

3. Whenever someone wishes to cash out, Ponzi pays them from what he's accumulated from other investors or, if he's already spent it, he gets more people to give him money and uses that. There is no other source to draw from.

4. Someone finally asks too many questions or a significant number of investors attempt to cash out and the whole house of cards comes crashing down when it becomes public knowledge that Peter was being robbed to pay Paul.

Differences with Bitcoin:

1. There is a finite number of BTC in existence. Their value increases because the demand for them increases.

2. The only advantage "early adopters" may have is that they were able to acquire bitcoins at a time when it was relatively inexpensive to mine them. There was no "Charles Ponzi" to receive an investment! Bitcoins are still created the same way but just at a higher difficulty rate and with much more competition.

3. The project is open source and, consequently, there is no deception inherent in it. The code does not lie.

4. Bitcoin is a currency, not an investment. You may choose to invest in this currency with the hopes that it will increase in value but it is not required for it to function in its intended role.

Finally, someone that can explain it in a way for every dumbass to understand that Bitcoin isn't and will never be a Ponzi scheme.

+1 for you, my friend