Over the years, many critics have likened Bitcoin to a pyramid or Ponzi scheme. These fraudulent operations rely on new money entering the market to provide returns to existing participants.
Bitcoin is a computer program and it does not guarantee holders any returns. Instead, it simply operates as a fully decentralized, freely-traded digital currency. Its value is driven by factors like supply and demand, adoption, and market sentiment — the same principles that determine the value of most asset classes including real estate, gold and even baseball cards.
Unlike a fraudulent scheme, if people stopped buying into Bitcoin, the protocol itself would continue to operate.
While there have been instances of scammers using Bitcoin to carry out their frauds, Bitcoin itself is not a pyramid scheme.
Check out our article Busting Crypto Myths: Bitcoin is a Ponzi Scheme for more information.