Former UK Prime Minister Boris Johnson has caused controversy after describing Bitcoin as a “giant Ponzi scheme” in a recent column for the Daily Mail. In his article, Johnson argued that the cryptocurrency’s value depends mainly on a steady flow of new investors entering the system.
Claims like this are not new. Bitcoin has been called a Ponzi scheme many times over the past decade, often by critics who question whether a decentralized digital asset can truly function as money. Yet the accusation has repeatedly been explained by economists, researchers, and industry experts who point out that Bitcoin does not fit the definition of such a scheme.
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The Story Behind Johnson’s Argument
In his column, Johnson supported his criticism with a personal anecdote. He described a man from his local village who invested about £500 in Bitcoin after meeting someone in a pub who claimed the money would double.
Instead, Johnson says the situation became confusing and expensive. The investor reportedly faced various fees while attempting to recover the funds and eventually lost around £20,000. Johnson used the example as a warning that people who do not fully understand cryptocurrencies can easily run into financial trouble.
However, the stories involving scams or misleading promises are not unique to Bitcoin. Similar situations occur regularly in traditional financial markets and are usually the result of bad actors rather than the structure of the asset itself.
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Johnson Questions Bitcoin’s Value
Beyond the anecdote, Johnson also questioned whether Bitcoin has any real underlying value. He compared it to assets like gold or collectibles, which have a physical presence and historical demand. Bitcoin, he wrote, is simply “a string of numbers stored in a series of computers”.
This criticism is a common misunderstanding about how digital assets function. Bitcoin does not rely on physical properties for value. Instead, its value comes from its scarcity, its decentralized design, and the fact that it can be transferred globally without relying on banks or governments.
There will only ever be 21 million bitcoin in existence, a limit enforced by code. This fixed supply is precisely what gives the asset its appeal in a world where traditional currencies can be constantly printed by central banks.
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Why Bitcoin Isn’t a Ponzi Scheme
The biggest problem with Johnson’s claim is that it misunderstands the definition of a Ponzi scheme. A Ponzi scheme is a form of fraud where a central operator promises investors guaranteed returns and pays earlier participants using money from new investors. The system collapses once new participants stop entering.
Bitcoin operates in a completely different way. There is no central organizer, no company collecting funds, and no promise of profit. The network is open-source and decentralized, meaning anyone can participate without relying on a central authority. Michael Saylor, chairman of Strategy, explained that in the comments:
Price of Bitcoin is determined purely by supply and demand in the market. People may buy Bitcoin hoping its value increases, but the system itself does not guarantee returns or redistribute funds between participants. Because of these differences, studies by multiple organizations such as the World Bank and the Swiss Federal Council have concluded that Bitcoin cannot be classified as a Ponzi scheme.
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Common Criticism
Ultimately, the accusation is nothing new – Bitcoin has faced skepticism since its creation, and many prominent figures have dismissed it at various points in its history. But Boris Johnson’s arguments overlook how the technology actually works – and why Bitcoin has managed to survive and grow for more than fifteen years despite constant criticism.
