Dear Nouriel Roubini, Here's Why Bitcoin Is Not A Ponzi Scheme

NYU professor Nouriel Roubini, famous for his prediction of the 2008 financial crisis, tweeted today that bitcoin is, among other bad things, a "Ponzi game." Roubini is not the first and won't be the last person to make this accusation, so it may be worthwhile to briefly explain why this belief is mistaken.

Briefly put: Bitcoin looks like a Ponzi scheme in the same way that a whale looks like a fish. In reality, though, they are two entirely different animals.
  

Why an end to Bitcoin's growth need not result in its collapse (unlike Ponzi schemes and bubbles)

Hardly a day goes by without somebody accusing Bitcoin of being a Ponzi scheme, or being like a Ponzi scheme.

At first sight this may seem like an odd charge: A Ponzi scheme is a fraudulent, secretive operation masquerading as an investment scheme while Bitcoin is an open-source currency and protocol.

Moreover, a Ponzi scheme is operated by one person or organization while Bitcoin is decentralized and not controlled or operated by any one person or organization.

Also, in a Ponzi scheme people are promised that their investment is low-risk while just about anybody in the world of Bitcoin will tell any prospective buyer that the risk is huge and that they should not invest more money than they can afford to lose.

Lastly, in a Ponzi scheme the (non-existent) returns are typically very steady while Bitcoin is notorious for its enormous volatility in price (and hence returns).

The same logic?
But while most critics would probably agree that Bitcoin is not a Ponzi scheme in these four respects, they would point to a more fundamental similarity, a basic logic that Bitcoin has in common not just with Ponzi schemes but also with manias and bubbles (e.g. here & here & here & here & here), a logic that goes a little something like this: