Originally Posted by The Porn Nerd

People throw around this term "Ponzi scheme" without really knowing what it is. A "Ponzi scheme" (named after a guy named Ponzi) goes like this:

You give me 100K.
Next guy gives me 100K
I give you 10K from the second guy.....
And so on til everything gets fucked up.

With Bitcoin you are purchasing a bit of technology, but a LIMITED piece (with Ponzei schemes there's no 'end' in sight, no limits). This 'thing' (Bitcoin) has an arbitrary value some humans place on it.

"Hey I've only got X# of these things. I will sell one to you for $100."
"OK, then I will hype it up and sell it to another guy for $110....got any more I can buy?"
"Yes, but now it's $200 since I only have a limited supply..."
And so on.

Instead of "Ponzi" call it "futures" (which is why the Chicago Mercantile Exchange is trading Bitcoin). Like, the price of tomatoes. Who says they are worth $0.20? Throw in market influences and there you have it.