If you're a retail investor and think Bitcoin is "Digital Gold", you're a useful idiot for the market manipulators for whom that's true. (Opinion)

I'm bullish on, and have profited from, BTC. Even so, it's still important to recognize the reasonable validity to arguments that, in the big picture, many fundamental attributes of BTC meet some important technical attributes of a ponzi scheme (while failing others); for a bigger point that transcends that particular unwinnable and pointless argument.

(As an appeasement: Traditionally and by many definitions, ponzi schemes are opaque and secretive, while bitcoin is open-source and public-ledger. And - this is important - a classic ponzi scheme is typically intentional, while - if bitcoin is a ponzi scheme - almost certainly through uncoordinated action, however intentional in isolated instances.)

So I'm not going to argue that "Bitcoin is a ponzi scheme", only going to point out the few ways that they do overlap along the way in making a different point, the one in the title.

Wikipedia opens with this about a ponzi scheme:

A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.[1] The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

BTC meets all of that (except the implied intentionality).

Either way, consider the confluence of these attributes:

• There is - for now - a fixed supply; or at least will soon be. At this late asymptotic stage by design, and open knowledge of how the waning supply works baked into the market price, it's nearly "fixed" now in terms of price structure. (Which, to be fair, could always be changed with a voted code update, however unlikely.)
• It is not too controversial a statement to say that in the first-world, bitcoin fails as a "currency".
  • As far as unacceptable transaction fees and speed go (e.g. $10 and 15-30 minutes to clear a pack of gum), layer 2 solutions could help there, but are yet to be widespread enough; but either way, the Lightning network messes with the original vision of bitcoin (if not cryptocurrency in general), of decentralization and security.
  • Even in the third-world, the adoption of Bitcoin as "currency" appears to be far more politically cynical - if not downright sinister - than for "public good".
  • There is, as of yet, no solution to the unacceptable risk involved with paying employees and receiving paychecks with such a volatile "currency". (Any cryptocurrency other than stablecoin.)
  • Converting from fiat to bitcoin and back again at the point of every transaction, over the Lightning network, could in principle solve almost all of these problems...but then, what's the point?
• Is BTC "digital gold"? Well, technically, no:
  • All the gold on/in Earth was created long before the Sun existed, as is currently theorized, during the mergers of Neutron stars.
  • All the gold mined in human history - and dwindling - can fit in two Olympic-sized swimming pools.
  • Gold is an extremely economically important resource. It is almost as electrically and heat-conductive as copper, but extremely corrosion-resistant and non-brittle, thus making it critically important in the manufacture of high-precision, highly reliable, durable electronics components.
  • Unlike Bitcoin, gold has been prized for it's value as jewelry since recorded human history. And unlike diamonds, are not artificially rare, and cannot be manufactured from mere carbon.
  • As mentioned before, the supply of BTC is only artificially capped, and could be uncapped with a mere voted code change. (Which seems unlikely now, especially as ineffective as bitcoin "governance" currently is and has been. But the only constant is change.)
• Bitcoin has no utility other than "currency" (see above), and "store of value".
  • Yes there are Ethereum-like layer 2 projects in the works or at least feasible in concept. But Ethereum, Cardano, Algorand et. al are at least a decade ahead and have significantly more compatible governance structures - so what's the point?
• So with "fixed supply" and little inherent utility as a currency or otherwise, the value of bitcoin is entirely held up as a speculative investment instrument.
  • Note: This fact will surprise no one, nor should it (nor will it) dissuade anyone from continuing to speculatively invest in it. There's literally nothing wrong with that. Almost the entirety of the US economy works on speculative investment.
• To restate the obvious, the price of BTC can only go up by - surprise - more money flowing into the market, competing for the fixed supply. Either from new investors, and/or new money from existing investors.
  • So of course, early investors have a huge incentive to give dog-and-pony road show talks to anyone who will listen (cough cough Michael Saylor), about how they plan to "hodl forever".
    • Which of course is complete bullshit. They're only trying to convince you to hodl forever. Or at least, longer than them.

Of course you can profit from bitcoin as a retail investor with reasonable risk - with lots of luck of timing and/or skill (although skill alone is not usually enough). And maybe you got in really early with $20 worth, forgot your wallet password in 2010, then found it written down somewhere last year.

But here's the cold hard truth: The ultimate way to maximize your BTC earnings, is to exit close to the final ATH, while convincing as many of the faithful/cultish plebeians as possible to "hodl forever" (or at least one hour longer than you).

Of course, guessing "The Final ATH", as a plebeian retail investor, is going to be nigh impossible. But not so much, when you are big enough to create the final ATH.

(Wait, what do you mean, "Final ATH"? Bitcoin will go on forever, right? Well sure, there's nothing stopping it. Even if it crashes for good, it may go on indefinitely on hobbyist laptops, back to fractions of a penny per coin. But if and when it does crash, you can bet it will essentially come down to a decision by one of the largest whales to fully liquidate - or perhaps more than one near the same time due to some global event that also compounds the problem - knowing what that likely might precipitate.)

If I had to try to think like a large whale/market manipulator - and there's no reason my guess would be better than yours - I'd bet they would quietly reverse-DCA out steadily ahead of time, in the largest amounts and patterns they think they could get away with without alarming the blockchain and exchange watchers; knowing that eventually it would signal to other whales to also start exiting, and would eventually pretty quickly precipitate a run - with the whales' orders of course being first in line - and a final crash. Leaving us retail "investors" holding the bag, orders going unexecuted, as usual.)

Only in bitter, angry hindsight - I believe - will those who passionately currently argue that BTC is not a ponzi scheme but instead "Digital Gold", realize they've been had, and eventually, grudgingly agree that maybe it had been an unintentional ponzi scheme all along, and had only been "Digital Gold" for about 1% of the wallet holders.

(The upshot to all this is that, while some losses will be spectacular, heartbreaking, life-wrecking losses splashed across the news - the vast majority will be piddling hobbyist losses for whom the vast majority can shake off reasonably quickly.)

Sure, many people have already taken more fiat money permanently out of Bitcoin than they will ever put in. Same here. Congratulations! If this post's thesis holds up, you'll be among the small minority that will have netted in the black. Presumably not NINE ZEROES black, so not really relevant to the point here, but I suppose you'll still count. Maybe in order to include our many-orders-of-magnitude-smaller cases, we'll need to expand the percentage from 1%. How about 10% as a nice round estimate, who won't have lost money?

Either way, personal anecdote is not evidence - especially involving a phenomenon that has millions of people wrapped up in it - and not really relevant. In this case, statistics (or whole population blockchain data) is evidence.

So...what to do with this doom and gloom, if true? Nothing. It's business as usual. Most of the economy works this way. Just the usual advice - don't invest more than you can afford to lose, don't hodl forever, have (and exercise!) an exit strategy, etc.

Passive DCA is dead-simple easy, any idiot can do it. (And, conveniently, proven in a research paper to be more effective than actively "buying the dips".)

But Reverse-DCA is, frankly, hard. (Hint: If you reverse DCA fixed dollars rather than fixed shares, you just undo your DCA.) And the tax tracking, especially fitting for capital gains, is hard.

And if you're used to just blindly always DCA'ing in no matter what (which is all good), the added complexity of deciding when to DCA in and when to switch direction to Reverse-DCA out (or more generically "Take Profit"), and/or how frequently, can be - but doesn't have to be - fraught with uncertainty and stress. Because, there's no one objective signal. It's just you and your best guess of when you think the market is undervalued vs overheated.

But you have to figure this shit out, or you will be left holding the bag. Maybe not next week, maybe not next year or in five years. (Hell, maybe not even in your lifetime, because I could be WAAAY off on timescales by like 10,000 years. But just in case, it's still really good to learn, understand, and practice the art of taking profit.)

Hodling forever like Michael Saylor desperately wants and needs us plebeians to do, is not a plan - it's the talk of a noob who just jumped in. (Which is fine. But you eventually need a plan, and if you stay a noob for too long then you're just an idiot who'll be left "hodling the bag".)

And "I'll just time the market and liquidate all at once someday" is also a stupid plan, but admittedly infinitely better than "hodl forever like Michael Saylor told me to".

Thanks for coming to my dank dark basement, unsanctioned TEDx Talk.