(PDF) Bitcoin: An Innovative Alternative Digital Currency

Intellectual honesty? Bitcoin calls Litecoin a Pyramid Scheme

Bitcoin calls Litecoin a Pyramid Scheme
Since the aforementioned reasons mean Litecoin has no future potential, it effectively functions as a pyramid scheme, rewarding those who get in sooner at the expense of those who adopt it just before it finally fails (and are left with nothing). This is not the case for Bitcoin, since it has significant potential to become a long-term currency and continually be beneficial to adopters no matter when they begin using it.
Seems like an inaccurate statement, but despite seeing multiple requests in the discussions section to remove this criticism, it's still there. Litecoin neither qualifies as a Pyramid Scheme nor as a Ponzi Scheme:
Pyramid Scheme And I quote
As its name indicates, the pyramid scheme is structured like a pyramid. It starts with one person - the initial recruiter - who is on top, at the apex of the pyramid. This person recruits a second person, who is required to "invest" $100 which is paid to the initial recruiter. In order to make his or her money back, the new recruit must recruit more people under him or her, each of whom will also have to invest $100. If the recruit gets 10 more people to invest, this person will make $900 with just a $100 investment.
Litecoin doesn't promote itself as an investment opportunity, nor does it require people to recruit other people in order to secure "residual income." There is no recruiter and there is no kick-up to the top. Ultimately, even if Litecoin is a bad idea, it still does not qualify as a Pyramid Scheme.
Ponzi Scheme
  1. A fraudulent investing scam promising high rates of return with little risk to investors.
  2. The Ponzi scheme generates returns for older investors by acquiring new investors.
  3. This scam actually yields the promised returns to earlier investors, as long as there are more new investors.
  4. These schemes usually collapse on themselves when the new investments stop.
Note that for it to be an actual Ponzi Scheme, it would have to pose as an investment opportunity promising a high rate of return. Litecoin doesn't promise that, nor is it intended to be an investment opportunity. There is a big distinction between a bad idea and a Ponzi Scheme. If people invest in something inherently flawed, they do so at their own risk and nobody is promising them any returns. The same is true for Litecoin: it's designed as a digital currency and not as an investment opportunity.
It's quite disheartening to see this kind of criticism going coming from the Bitcoin wiki when we've seen so many similar claims. Even the Bitcoin wiki offers similar defense against people labeling it as a Ponzi Scheme:
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category. Although it is a virtual currency, some people see it as an investment or accuse it of being a form of investment fraud known as a Ponzi scheme. A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.
So let's be intellectually honest and not label Litecoin a Pyramid Scheme or a Ponzi Scheme simply because we find it inferior to Bitcoin. Please stand up for intellectual honesty and expect a higher standard of intellectual discourse from the Bitcoin community.
[EDIT] Sorry for the title, I didn't think it would cause such a negative response nor did I think that it would feed the trolls, but I guess it did. Anyway, I hope that the merit of the post is not lost.
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