You stopped reading too soon (emphasis added):
The scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.
Bitcoin may not strictly meet the legal definition of a Ponzi—for what it's worth, neither did Madoff's, whose Ponzi did not guarantee a return. The relevant debate, in my opinion, is whether this is meaningful. Nobody is legally going after Bitcoin miners for operation of a Ponzi scheme. The legal definition isn't particularly relevant when deciding: 1. whether it's a good investment, and 2. roughly how the investment operates. Bitcoin certainly quacks like the fraud that is a Ponzi, in layman's terms. Those rough terms, as we've outlined several times in this thread are roughly:
1. People invest into it because they expect large profits
2. That expectation is sustained by such profits being paid to those who choose to cash out—and are very vocal about this
3. However, there is no external source of revenue for those payoffs
4. Instead, the payoffs come entirely from new investment money
5. Meanwhile, the operators take away a large portion of this money
Features 3,4, and 5 mean that, in aggregate, Bitcoin is a negative-sum game. That is, an average investor can expect to lose money, much like the lottery. Features 1 and 2—while the operators (miners)
know about features 3, 4, and 5, and do not warn them of the negative-sum characteristics, makes this a game of fraud. But not only do operators not warn investors, they virtually always predict massive returns, and claim that bitcoins will have very important widespread uses in the future. Just HODL.
In the case of Bitcoin, what do investors believe is the legitimate business activity? They don't. Everyone knows there is no underlying business. They just want to own Bitcoin.
Why do people want to own Bitcoin? I'd split them into roughly three camps:
1. People who are techno-gold-bugs and really believe in the ideology
2. People who need to work outside the legal realm (buy drugs, transfer money to countries where it's difficult/expensive/illegal)
3. People who are investing with an expectation of return.
I think any reasonable person would agree that the vast majority of Bitcoin holders fall squarely into bucket #3. Would you agree?
People who fall into bucket #3 probably do not have a good understanding of why the price goes up. And that's, in part, by design. There is
very much technical and economic obfuscation and plenty of claims about an uncertain future. Is this "business activity" strictly speaking? No. But it is explanation enough to fleece the huge majority of Bitcoin holders.
What is the source of funds? Simply the price. There is no claim of profits or promise of return. If the price goes up, you win. If the price goes down you lose. Everyone knows that too.
As I mentioned earlier, even Madoff's Ponzi doesn't meet this rigorous definition. He had no "promise" of returns. Bitcoin and Madoff gave the
expectation of returns. That is what's important here.
The last one really illustrates why Bitcoin meets no definition of a Ponzi scheme. Ponzi schemes collapse when investors can't redeem their promised assets. With Bitcoin, you own the asset. You control it. It is in your wallet or whenever you want it to be. It might be valueless when you choose to sell, but you had control over it the whole time. That is literally nothing--at all--like a Ponzi scheme.
It is really hard to argue that selling something that goes down in value is fraud unless there is deception.
You seem very interested in debating the attributes historical Ponzis had, and less interested in the characteristics that made them fraudulent investments. Past Ponzis suddenly and permanently crashed because they depended on a (relatively) easily debunked lie. When that lie was exposed, it made the schemes impossible to continue. Bitcoin's lie hides behind lots of techno babble, fear mongering, and fomo. This has, thus far, allowed its price to crater 80%+ and recover, making it unusual among Ponzis, to be sure.