Ripple CTO Disproves “Bitcoin is a Ponzi Scheme” Sentiment

Ripple CTO, David Schwartz, has waded into the Bitcoin (BTC) “Decentralized Ponzi Scheme” debate, using the coin’s economic incentivization argument to buttress his claims.

While Bitcoin has some critics, Comedian and Conspiracy Theorist Owen Benjamin took the narrative a step further when he declared that Bitcoin is a “decentralized Ponzi scheme not a decentralized currency” over the weekend.

While his comment was well-matched by counterclaims by members of the Bitcoin community, Ripple CTO’s argument stood out.

Smart Support for Bitcoin

With how the debate shifted, Owen Benjamin posited that the United States Dollar is a better currency than Bitcoin because people tend to spend the weakest currency based on the “currency velocity” phenomenon.

– Advertisement –

Commenting on this, Schwartz said the narrative is wrong, as people do not spend the weakest currency but spend what other people want to have the most. Notably, a purchaser of a good would spend the USD because it is the demanded currency.

“When I buy a car, I pay with dollars because that’s what the seller most wants and so gets the best terms. There are lots of things I’d prefer to get rid of than dollars, but sellers won’t accept them,” he explained.

This position bolsters the notion that Bitcoin as a currency is highly valuable and not yet in high demand, which lends credence to its position as a store of value. Besides, some prominent leaders in the financial world like BlackRock’s Larry Fink have called Bitcoin an asset that marks a “Flight to Quality,” further bolstering the argument from Schwartz.

Additionally, the Ripple CTO explained that it pays not to sell something one owns since the means of payment is in dollars which typically drops in value over time.

This position invalidates the Bitcoin as a Ponzi Scheme thesis as peddlers of Ponzi Schemes typically explore the next best alternative to offload their products in a bid for quick gains at the expense of newer subscribers.

Bitcoin: to HODL or Smash?

As a sequel to the debate, Schwartz raised a question on his X handle seeking to know whether or not his followers, mostly the XRP Army, will prefer to HODL or smash Bitcoin.

While the post generated a diverse reaction, the underlying sentiment by most of his followers is that they would rather HODL the premier digital currency. 

At the time of writing, Bitcoin is worth $42,249.19, down by 4.14% at the time of writing with market cap and trading volume pegged at $825,027,778,400 and $25,669,630,110 respectively.