A scheme where previous owners sell an asset to later owners is not a Ponzie scheme. It's simply capitalism.

You can tell the difference between a Ponzi scheme and capitalism with the following test: what happens when the money stops coming in? In a Ponzi scheme the system collapses. No one has any asset of any value at all. In capitalism the asset just costs less.

An example is bitcoin. When people flee bitcoin after an exchange goes down or China passes an unfavorable law, bitcoin still has value. In all cases bitcoin holders have been able to go to an exchange and trade bitcoin for some other asset.

In a Ponzi scheme this can't be done--the asset is literally worthless.

I hope that helps.

Steemit is absolutely brilliant.  It's hard to imagine how it could fail and easy to see how it will likely have over 100,000 users in a year.  Not a ponzi scheme.  As you stated... any new system of money could be viewed that way.  This is less of a ponzi scheme than bitcoin as this has a built in use case that is being used right out of the gate!

Hi @churdtzu,

Thanks for writing and sharing this with us, and what a great title. Is Steemit a Ponzi Scheme is worth a discussion, especially for those just joining Steemit, or for those who have been on the sidelines uncertain whether or not to join or participate by contributing to the community.

I'd have to agree with @chaospoet, I don't feel like a pawn at all. We are all working together to help build and establish the platform and currency. When we contribute to Steemit, we not only contribute to the community by being helpful and sharing our expertises, experiences, and strengths, but we are also helping build the cryptocurrency as well.

The definition of Ponzi Scheme according to Google is: a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

With that being said, and I'm not sure about everyone else, but I haven't invested any money in the platform, but I'm still reaping the benefits, so how can Steemit be a Ponzi Scheme when it doesn't even remotely come close to the definition of a Ponzi Scheme?

And then we have those who complain about the whales, but why even complain when they aren't taking any money from us. If anything, the whales are helping. Yeah, some of us started with nothing but I guarantee you that if you stick with Steemit and contribute regularly, you will eventually have a breakthrough and reap the benefits that the platform gives so freely.

My suggestion to anyone who is doubtful of the platform, try it and give it time. Post content regularly, join the conversation, share and upvote content that you love,and you will be successful on Steemit in some way, form or shape.

Upvoted!

Thanks again for writing this and sharing it with us.

Great post! Though I would phrase the Steem Power dynamic differently. Steem Power is not a currency so it is incapable of inflating or deflating. It is a direct, 1-to-1 IOU for the cryptocurrency (which would more accurately be described in this system as a crypto-commodity-money) called Steem. As more Steem are generated by the Steem algorithm, more IOUs can be distributed. The majority of those IOUs take the form of Steem Power. But just because IOUs are distributed, that does not mean that the underlying commodity-money will inflate or deflate in value just like distributing derivatives (which technically Steem Dollars and Steem Power ARE) does not necessarily create inflation. The question is whether the growing population and the value it produces will create sufficient demand for the underlying Steem to counter the increasing money supply. The fact that none of the criticisms of Steem involve productivity or population growth shows how unsophisticated they are. Video about this coming shortly :)

@churdtzu steps up to the plate. He's been pretty hot so far this season... 

Pitcher winds up and the pitch!

Wow. Back, back.. that ball is GONE.

When I hear the word Ponzi
It is not to the gangly mug shot I'm drawn
Instead my mind flashes to Fonzi
<img src="https://i.ytimg.com/vi/XetXRIvhk_Y/hqdefault.jpg"/>
Steemit does not make me feel a pawn

No dime from my pocket or bank have I spent
So when they say Ponzi I am uncertain what they meant

So some are wealthy as they sit
How has that harmed anyone, even a bit?

Whether the money comes from mathematics of zero through nine
or from great content created from the heart and the mind
Any backed currency math or creation should be fine
Any new paradigm resistance to change you find

NO.
https://steemit.com/introduceyourself/@charles-ponzi/charles-ponzi-businessman-and-con-artist-is-now-on-steemit

Charles P.

I've been buying and trading Crypto for over 4 years. I've heard it all before. 

Oh, you missed out when Bitcoin was $5? It's a Ponzi. Competing coin is interfering with a coin you are backing? It's a Ponzi
Don't understand crypto? Must be a Ponzi? It's not backed by a government? You guessed it, Ponzi

There is a book which name escapes me now, about Human thinking but all our concepts are imaginary.

tremendous post. sharing on facebook.

As an commoner, man from the streets, so to say, I think the ponzi-accusations come to mind when seeing all the high payouts posts are earning and even as a guy who understands all the mechanics behind the payouts and Steem Power, one just has hard time believing this all can be real. Now, I have heard of steemit being in the phase of currency distribution. If you could make a post about that and all the information available on it, I'd appreciate it greatly. I also would feel much better about the whole system, when posts are earning few k's max and not 20k's for simple introduction posts, as then the price of steem would be in place where it is supportable. And I expect this scenario to happen in coming year or two, which I personally hate as I hold steem power. Hopefully I'm totally wrong, which has happened before for me in cryptospace.

In ALL ponzi schemes the newbies have to pay money and the prior newbies are paid with these new funds. As long as new newbies are coming in, everything looks fine. As soon as it stops,or even slows down, it collapses.

With steemit, newbies are not asked to pay anything. it is the reverse, they are paid! So if steemit was trying to be a ponzi, it really did a bad job and did it backwards.

most people have not even read https://steem.io/SteemWhitePaper.pdf, but are quick to conclude it must be a ponzi as it does sound too good to be true. However steemit is not a ponzi and it is pretty good. We just have to grow the userbase faster than the inflation rate and the price of STEEM will actually go up. most people get a vested interest by vesting and we all work toward the same goal.

The only thing steemit has in common with a ponzi is both ponzi and steemit have vowels in them. also ponzi has 5 letters and steemit 7, both are prime numbers.

Well, isn't the world economy some sort of Ponzi scheme? One generation cashing out, leaving the debt for the next one

The money comes from the inherent value of the distributed social media network. There are plenty of ways to monetize steemit and generate further revenue, but that is not to say it does not have value generated right now by the content that is published on it.

Interesting post.  People who don't have the time or energy to invest in investigating a system often go to the old standby of the "ponzi scheme", even with those shares that have skyrocketed, the people who had their finger on the pulse and got in early benefited the most.  Of course thinking that money is the only way to add value is a fallacy.  Time, creativity, attention are all equally valid currencies on the Internet.  I think Steemit has struck the right balance.