Chief economist calls Bitcoin a pyramid scheme, but before you denounce him as a non-believer, ask yourself: doesn't he have a point?
When someone in the mainstream media berates Bitcoin, it often becomes an emotional alarm call for the cryptocurrency news squadron.
Suddenly, all the failed novelists who occupy cryptocurrency news desks spring into action, spewing forth endlessly optimistic and hopeful refutations. With all the sassy pride of Hillary Swank’s Freedom Writers, their optimism, while hollow, manages to reassure those on the inside.
But what if one of those outsider mainstream folk we love to demonize so much happened to be right?
Recently in the pages of Yahoo Finance, Chief Economist for Lending Tree, Tendayi Kapfidze called Bitcoin a pyramid scheme.
According to Kapfidze, Bitcoin is a solution in search of a problem, and the only way to get rich off it is to dupe others who come in after you. Kapfidze said:
It’s a pyramid scheme, you only make money based on people who enter after you. It has no real utility in the world. They’ve been trying to create a utility for it for ten years now. It’s a solution in search of a problem and it still hasn’t found a problem to solve.
How can Bitcoin be a pyramid? Didn’t you see how it pumped all the way through 2017? It achieved X,XXX% gains in one year! It obviously has utility, right?
Let’s be serious: everyone knows why the cryptocurrency market pumped in 2017, and it’s not because everyone started using Bitcoin. Nor is it because the mythical institutions rode in on horseback to save everyone with their fat fiat injections.
The (small group of) people who pumped the market in 2017 are the same people who sat back and profited from its drop in 2018.
But before you settle on those market pumpers as your enemy of convenience, ask yourself – wouldn’t you do the same?
Aren’t you too attempting to buy low, so that you can later sell high? Even the founders of major cryptocurrency projects offloaded hundreds of millions worth of their coins onto naive ‘investors’ during January 2018’s peak.
Bitcoin’s vocal proponents often fall back on the following argument: Bitcoin, unlike fiat, can’t be manipulated by fractional reserve bankers to help fund illegal wars.
But cryptocurrency holders apparently don’t see how much they have in common with the bankers and money-lenders.
Bitcoiners scramble to buy their assets early, with the single, sole intention of selling them later for a profit. As landowners, the name of the game is to dump on later generations who are obliged to pay more simply because they arrived later.
Money-lenders accrue money early, then farm it out for profit. Cryptocurrency holders who sell at the top often buy their coins back when the price inevitably dumps again. Thus they keep their coins and the profit.
Back to the Yahoo article, even the pro-crypto voice who was brought in to offer a counter-argument appeared skeptical. Bruderman Asset Management Chief Market Strategist Oliver Pursche compared investing in cryptocurrency to a lottery:
“I own five… if I’m lucky one of them will become an all-star.” Pursche added: “You go into it very soberly understanding that you can lose all of your principle and that this is purely speculative.”
How high will the pyramid grow before people realize the bags they’ve been holding are actually limestone and granite blocks?
This article was edited by Samburaj Das.
Last modified: January 22, 2020 11:40 PM UTC