Bitcoin gamblers had a bit of a scare (and everyone else had a premature laugh at their expense) when the site PonziCoin appeared to shut down and take everyone’s money, but then the admin refunded everyone’s money.
With Mt. Gox’s high profile collapse all over the headlines, journalists are ready to jump on any new Bitcoin scandal, so when word spread that people had been sending money to a site called PonziCoin it seemed like more evidence that the Bitcoin craze defied all logic.
PonziCoin was a gambling site
But PonziCoin wasn’t a business, it was a game. The rules of the game are pretty simple. If you want to play all you have to do is deposit a bit of money – once there have been 24 hours with no new deposits the game ends and payouts are awarded with the earliest deposits winning and the latest ones losing. It may be a strange game, but it doesn’t seem worse than other forms of online gambling.
Earlier today people started getting refunds, but that doesn’t necessarily mean the site wasn’t a scam. The site owner’s version of events (he got hacked, so sorry, here’s everyone’s money) may be sincere, but there has been speculation that he hadn’t expected so much attention and decided that backing out was safer than trying to get away with the money. It’s also not clear if the game will continue after this. When asked by one of the users, the site admin posted “I’m not sure – PonziCoin has taken a pretty big beating. It’s been a tough time.”
Bitcoin itself has been called a Ponzi scheme
Whatever else may have happened, PonziCoin shows how big the division is between Bitcoin’s core users and the financial markets that are still trying to figure out if digital currencies are the real deal. Everyone in the financial world knows what a Ponzi scheme is (and it doesn’t help that people sometimes refer to the schemes as Ponzi games). Not being a part of the Bitcoin community, which can be irreverent to say the least, people didn’t stop to wonder if the name was some sort of inside joke (it’s far from being the first Bitcoin ‘Ponzi game’).
It’s hard to see the media back and forth as anything but a proxy for traditional financial experts who believe that Bitcoin itself is a Ponzi scheme and that the last person caught holding the bag will lose big.