I don't love the characterization of it being a "ponzi scheme"; trying to be catchy is no excuse for being disingenuous and inaccurate.

At their core, Ponzi Schemes are investment funds which pay existing investors with funds collected from new investors [1]. There's really no way of looking at cryptocurrency where this is an accurate analysis.

Generally, existing cryptocurrency investors are not "paid" by the "fund" (currency) in any capacity. This is true for BTC & ETH, which represent the bulk of the crypto market.

The more common argument is that anyone can create a new currency, hype it up, drive market value higher, then exit at the expense of new investors. That's a totally legitimate concern, and it happens far too often; but its not a ponzi scheme. The accurate term would be "pump & dump".

There are many shades of gray between a pure pump & dump and something more legitimate. "Hype" (also known as "Marketing") is something every investment vehicle partakes in; from BTC (far beyond the "hype" phase) to DOGE (I'd label that one as "mass insanity") to TSLA (a fraction the revenue of many other auto manufacturers, but significantly higher value? how'd they get there?) to even PFE (this comment is Sponsored by Pfizer [2]). There are obvious examples of this behavior in the crypto community, but its simply not happening among major currencies; taking a pump & dump "scheme" to a billion dollar valuation is exceedingly rare, and there are currently ~90 coins with a market capitalization above $1B.

Where one does see it happening, in my opinion, is with (most) NFTs. Many holders won't admit this, but there's no reality where 99% of them will be worth anything after the initial purchase; their goal is to shill and liquidate. However, I'm cautious in extrapolating this concern to the "technology" of NFTs, and even further to all of crypto; its similar to asserting all of emerging med-tech is a scam because Theranos was. Ultimately, investment vehicles don't need to "make sense" to have marketable value; but that doesn't mean critical thinking is unnecessary when evaluating it.

There are some currencies, including ETH2, which stake and return an APY on investment. This could adequately, though somewhat inaccurately, be interpreted as being "paid out by the fund"; but the reward doesn't come from new investors. Where it comes from depends on the currency, but with ETH2 it is effectively minted from thin air. This is an inflationary action, which could (again, adequately but inaccurately) be interpreted as "taking money from new investors" (by lowering the value of each ETH they purchased). However, this concern is mitigated by the inflationary effect impacting all ETH holders, not just new investors, and the deflationary counter-effect from london hard-fork transaction fee burning.

ETH is currently still inflationary, but only through a delicate balance of PoW-style minting, PoS-style reward issuance, and london fee burning. The zeitgeist in the ETH community right now is to achieve deflation, for better or worse.

The statement that proof-of-stake APY represents "being paid out by the fund" in the context of evaluating cryptocurrency as a ponzi scheme, is very tenuous. Crypto is, at least in the US, not a currency; its a USD denominated investment vehicle. Being given more crypto does not "pay out" your USD investment, any more than a stock DRIP would be a "payout", because there is no "out". It does not allow you to exit the investment; on the contrary, it increases your investment.

Its totally fair to dislike crypto; I'm certainly in that camp. But its critically important to understand the mechanics, engineering, and economics of why its such a harm to society before one begins levying blind criticism.

[1] https://www.investor.gov/protect-your-investments/fraud/type...

[2] https://www.youtube.com/watch?v=4uexqgkyFmo