I'm going to be extremely fair, and not get nasty, as the author points out the nastiness of people's replies to his statements.
I am genuinely interested in the points they have made, but I also disagree with their conclusion drawn, and I also think this is written as a part of a paid-shill service provided to us by a coordinated mountain of mercenary writers sold to the highest central-banking bidder. The evidence is there. April-to-May has been a coordinated effort to bring the market down. It is a delicate balance to both bring the market price down of the most prized assets of the cryptocurrency industry, and to allow a simultaneous new entrance of the wealthy clients to gain a foothold on the coming massive price hike in top crypto assets.
We saw the first new rush of price action as expected, when PayPal opened the easy-peasy purchase of top crypto projects directly inside U.S. user accounts. Now, Venmo is piling in. We saw a low of $3800 from the plandemic to $64,000+. Then, a highly manipulated process ensued, taking 5 weeks to reduce the price of Bitcoin, and again, other top coins, to roughly half the peak price. And yet, from this time last year, Bitcoin is still nearly 400% higher in value.
One has to wonder, if a global crisis, exploding inflation, fear and mongering aren't the test litmus for Bitcoin's survival, I'm thinking wave 1 of the 'green energy' debate is surprisingly disappointing.
So, let me ask, how many times in the past, has it been at the point of entry where all of the world's banking systems, except for the most backwards of political climates, all of the finance sector, all institutional investments, world payment systems like PayPal and Venmo, have all declared a reversal on their previous anti-crypto policies, only to fully announce the specific 4 coins they have all agreed to support, that the system then crashes and burns? Seems to me that the rich never protect their asset after they've chosen to protect the wrong asset. The fix is only in, if it is the right fix.
To attack the premise of the posted article, I have to revert to attack the premise of the premise.
#1 the argument is that Bitcoin is dead and will certainly begin the descent of death by 1000 paper cuts.
#2 the assertion is that Bitcoin is nothing but an elaborate ponzi scheme where the early whales want a pump to get out, exit scam, and leave all others hodling.
So, I'll take proper order in stride.
First, the ponzi.
I'm going to break it all down directly from the author's quotes.
Right now, Bitcoin is a textbook Ponzi scheme:
- It has no intrinsic value. You can’t eat it, wear it, or heat your house with it. Unlike gold — which at least feels nice and looks shiny on your spouse’s ring finger — you can’t even see Bitcoin.
- It is not a productive asset. It’s not a factory that produces an item. It’s not a field that produces cucumbers. It’s not a firm that offers a service. It contributes nothing to society.
- It has zero underlying value. None. It’s not backed by land or commodities or — as with national currencies like USD or GBP — the threat of violence (in the form of wage garnishment, asset seizure, and imprisonment.)
- It has minimal utility. Because the price fluctuates so wildly (what healthy currency doubles in a month?), it’s virtually ineffective as a safe representation of value or means of trade.
- Its value is solely derived from the trust that the price will continue to rise indefinitely. That there will always be new investors to buy out the old ones.
The evidence is crystal clear, and don’t trust any online Bitboy who tells you otherwise:
Bitcoin is a Ponzi scheme… for now.How Does It End for Bitcoin?
Certainly not like your usual Ponzi scheme.
Bitcoin’s “CEO” Satoshi Nakamoto — whoever he/she/the team might be — might already be dead or imprisoned in Guantanamo. (Heck, Bitcoin might be an invention of the NSA or advanced artificial intelligence for all we know.) Either way, Bitcoin isn’t a company, so it won’t be shut down.
It’s unlikely that anyone will ever “acquire the company” by cornering the market on Bitcoin. (And to do so would make the currency completely worthless because you’d have no one to trade with.)
And since it’s mathematically impossible for Bitcoin to grow forever, that leaves us with option three: A Black Swan event causes its demise as an investment. This is the only likely outcome. Perhaps a wildly superior cryptocurrency makes Bitcoin as irrelevant as the Model T versus a Tesla. Perhaps nations or groups of nations make a concerted effort to destroy Bitcoin, or more likely, Bitcoin owners. Or maybe Bitcoin simply levels out when it reaches max coinage, shedding its identity as an investment and becoming a stable trust-based currency. In doing so, it will drive away all the exuberant speculators who are currently propping up its inflated price. No matter how it happens, at some point, millions of Bitcoin investors are going to lose billions of dollars.
First, Bitcoin has no intrinsic value. This is one of the most common, poorly argued points that exist. Ask someone who needs a better digital means to transmit an order of value from one place to another without a third party to validate that it is a single, valuable, unmimicked, unfalsified origin asset, usually the party in a 3rd world country or the poor populace of any other given country, whether Bitcoin, or their flavor of crypto, has any intrinsic value. It is one of the dumbest things a person can say while trying to remain smug. For fun, I can also debate the idea that it cannot heat your house. Again, it doesn't take a lot of brain juice to realize that the same argument against Bitcoin's supposed energy deficiencies, one could kill two crypto-birds with a single stone and realize that computational rigor generates heat. I do actually know, personally, a miner with a small home, who uses their Bitcoin mining computer not only to pay for their electric bill, but to generate the heat they are using, which would otherwise have raised both price and purpose.
To say that Bitcoin isn't valuable because you can't eat it doesn't hold any more water than the fact that you're stupid if you eat a dollar or a penny... unless you'r a kid, at which point we have to accept that they'll try anything once. To say that at least gold is something you can look at, is to suggest that there is no evidence of Bitcoin's success on everyone's computer screens viewing the public ledger, or running the software on their own node. Thus far, there has not been a single point, to their point.
It isn't a productive asset to create a 12-year-and-running accurate ledger operated by the security of a network in place of a 3rd party bank that acts as a ledger-verification through encryption? I'm sorry, but the same author claims not to hate Bitcoin, to view it as a great invention, a swell start that will not end well, but then says it lends no value to society. It means that essentially everyone using Bitcoin, including all of the MIT graduates and their corporate followers, are unwittingly using something as invisible as vapor, no offense to Vitalik, to bank on literal hundreds of billions of dollars of their future enterprise. If that is the case, and there is zero value here, you cannot claim to also appreciate the brilliance of its invention, and also consider yourself worthy of value, if in fact, the reason we are both writing on the topic, is because it exists, has value, and that is backed by the confidence of millions who use it, many who feel they need it as a quality-of-life change, and the banking sector is essentially now banking on it.
The author claims it is not backed by any valuable concrete asset. First of all, in the digital age, we all have turned to view value as more than corn crops or... cough cough hiccup fiat currency. To suggest that Bitcoin needs to be backed by fiat in order to have value, is laughable. Again, to appreciate its value is to witness whether it has, in fact, performed as designed, whether running the software works, whether the design of increasing computational difficulty continues to secure the network after several halving events, whether it does exactly as the whitepaper stated. If it failed in its mission, one could argue it was a great idea that didn't work. But, I'd recommend that nothing else in digital transmission of value, has maintained its identical initial value for over a decade, which is a century in computer years, better than Bitcoin.
I am not a Bitcoin maxi. I observe, believe, agree that many projects are improving multiple aspects of what Bitcoin set out to do. In fact, if you were to remove Craig Wright from the equation of SV, you might even find Bitcoin SV is an improvement on Bitcoin. That is another debate. But, the idea that without a tangible asset or fiat to back it's value, that the real-world of an intellectual equation fueled by correctly operating software used by thousands the world over, challenging the old guard of governments, tyrants, centralized efforts to destroy its validity, holds no value, is to suggest that E=MC2 is just a useless string of alphanumeric silliness, that the Constitution did not bring forth a future-centric value code, that the concept of money being a formal set of agreements that hold equity in place simply cannot hold.
Now, the fact that Bitcoin, among many other things, is a speculative instrument, is not soundly debatable. People do speculate on the price. Some serious HODLers will, at some time, prove that they do in fact have a number at which they will cash out. But, it is people's belief in Bitcoin first, and the fact that it continues to deliver, that continues to give it value. There are people who held thousands of Bitcoins when they were worth a fraction of a penny, and continued to hold when it reached $1, $10, $1000, $10,000 and it is now still 3X more valuable than that, and 86% of those earliest addresses ALL still HODL. That has to mean by definition, it is worth more than it's price speculation alone. They would have sold, too early, every time a new landmark was reached, if the only thing keeping the network alive is speculation.
But, let's pretend speculation alone is the only thing that matters about Bitcoin. So what? There are enough people on planet earth who's lives, and livelihood, depend on finding a means to earn value to pay for goods, services, homes, food, utilities. If you are suggesting an entirely new economic system that does not require some form of labor converted to some form of payment, then what is the purpose in arguing that the opportunity in an investment is valueless? It really does not make sense. The fact that there are exchanges to buy and sell Bitcoin means people on both sides of the order book see its value, and it means the platform with tech wiz kids and millions of dollars invested see a value in providing the order book. Those who both borrow and lend add value. But even more, liquidity is one of the most priceless commodities in transactional culture. If no one finds value in an asset, its liquidity will dry up and no one can get rid of theirs. That, is a ponzi scheme. The question is which year the Bitcoin will dry up, and will it be because of regulation? Probably in China, Turkey and Iran... a few times, maybe more. But, meanwhile the horrifying scares come in the form of bans, green police and talking heads guaranteed to be research-free, and the price is still nearly 10X it's lowest plandemic point. You cannot explain that away as a ponzi scheme.
Now, let me be generous and lend credence to the fact that the early whales DO have a plot to pump the price and cash out, that is, those who haven't simply been HODLing all this time. But, the vast majority of the time, they dip right back in to give the pump another go. Rarely do you find people with giant stakes in crypto going for a one-time pump and dump. That actually, is what the worthless ponzi projects do with ICO's and the like. They raise capital, get listed, and early owners dump their coins, the coin loses value, and believers are stuck holding useless coins, until perhaps one or two more pumps come along before the delistings happen. Yeah, everything but Bitcoin, Ether, Litecoin and Bitcoin Cash may end up dying off as regulation protects the top 4. In fact, in truth, the author may be right that it all gets killed and goes away. All it takes is enough people scared off to cause a network to lose its value. But, again, there is evidence that the baseless ponzi accusations died off more than 12 years ago, and make less sense every day that Bitcoin survives deadly attacks in media and misinformation campaigns like this seemingly otherwise intelligent author.
Now, ironically, the author shoots themselves in the foot by ending the dispute of their argument, by discrediting the very points that mean it is a ponzi. First, the CEO didn't get in to get out, or those old addresses would be serving more of that purpose probably when they were worth more than a few billion dollars. I mean seriously, how much belief in one's own "scheme" does it take in order for them to reap zero value from what they created?
Also ironic, if they did not resolve the double spend volume, the ponzi-er would be the first to be able to scam all of the exchanges and get double their value in fiat. Finally, the author reverts to new arguments within an argument all together, saying sure it probably won't fold on itself like a ponzi, but rather better Bitcoins will make it irrelevant or countries will gang up to end its use. Is that to say that the 386 was a ponzi because the 486 came along? Is it to say that something, like let's say the black plague, is a ponzi, not a killer disease, because all governments of the world would agree to protect their citizens against it? I could continue giving a list of reasons there isn't a single valid point made in this article, but anyone who did read it and disagreed, must have noticed that the entire purpose of the article, to prove Bitcoin is a ponzi, did nothing but make valid points about how it is, in fact, not one. At best, shill. At worst, paid mercenary shill.
People who believe that it is wrong to value a financial instrument because people view it as an investment, also tend to have a bias against trading assets, as if the attempt to earn more from one's mental energy and determination, means there is no value attached. The argument is actual lunacy, to misinterpret volume generated liquidity as a ponzi scheme.
Now, article two. The argument that Bitcoin is old technology. That actually, is partly why people trust it. It still works. Every day, 24/7 Bitcoin has a network running, around the world, thousands of nodes, the ledger is posting, the hashes are hashing, the keys are decrypting (sorry folks, the next article will be even more TLDR for the ill-equipped at logic and patience, and it will be the reason people are wrong about the difference between cryptography and encryption). The fact that it is old, means it has been proving the thesis of its paper all of this time, more than 11 years. If the author asserts it is brilliant, but outdated compared to new items, then that is a completely different argument than to say it has no value and is only used until the scheme folds. A ponzi scheme is, by definition, a scam. If Bitcoin were a scam, it would have well been discovered by now. The other option is to say that everyone in the space, including Saylor, Musk, Wright, Buterin and a long list of others like Ant and gang, are all wrong because they are too dumb to recognize the domino ponzi effect, not because the principles only work as foundation to something new and better.
The author states that proof of work is archaic and going out. That argument has been meeting a lot of pro and con this past 5 weeks, and one has to at least recognize that the most scientific arguments are in Bitcoin's defense, not in the con-column.
It uses as much energy as a city. Do you know how many cities there are on planet earth? Do you also say the internet is dead? Email is a dog to be taken out back and shot because we have chat? If so, why do we still use email for some things and text for others? For those arguing Bitcoin's energy, there needs to be a deeper understanding of the sources for the initial arguments, and a valid concern for how Bitcoin seeks out the source for efficiency. One of the strongest arguments in favor of proof of work, lies in the fact that its energy use is directly tied to how hard it is to mine and validate the ledger. The monetary value is directly tied to the difficulty, which is directly tied to the ASIC's ability to process. Energy is a validation of the network's security, which means that the system only benefits users and operators by finding the best energy source and making that source more valuable. Greener energy initiatives, if that's your thing, will be born out of the most financially valuable assets that require energy. It is a closed-loop in support of itself. It is almost an argument that Bitcoin is the future, not the past.
I have written in the past, but will write once again, about how 'betting' or gambling on Bitcoin is not the same as trading or investments, but to a point the author may not understand, this is actually where we would agree on a concern, if his argument were more elaborately planned.
I do actually have concerns over leverage, futures, and ETF's, because these are the traditional greedy banking system's clever way of distilling Bitcoin's value to give them an edge. Once again, centralization finds a way where there was an obstacle. It will elongate the time it takes for Bitcoin to brush up against its limited supply, and it will eliminate a vast hundreds of billions of necessary dollars permanently out of the crypto ecosystem. But, to the point that all speculation is betting, or gambling, is to once again completely misunderstand the argument. There are different degrees of investors, and to each there are set goals. The inexperienced or unsophisticated investor does not work according to a plan, a system, so they can be led by the nose by scammers. Even the groups that pump coins could be seen as ponzi's, depending on how they earn. But, the author misses the opportunity to make those accurate assessments.
Bitcoin can be studied, wise investments made, if one should only look at it. It has taken 10 years to go from $1 to $64,800. Somewhere in there, someone could actually choose to view a pattern, stick with it, and make a fortune. And, at the end of that process, both the user now millionaire could exist, while Bitcoin continues transacting, buying, selling, offering liquid assets for people to speculate. Bitcoin's early adopters who ARE whales speculating, are likely still going to speculate today, and probably will do so in 2022. If Bitcoin folds or dies, it will not be because it was lacking value, antiquated or was a structured scam, but for a human-defined intentional attack against something better than centralized processing.
Transaction fees are expensive. Yes, but lightning network helps, taproot helps, and there are a million ways to avoid fees. The banking sector has largely made this a moot point if anyone wishes to discover the why and how. But, for those who are investors, a long hold, looking to cash out later, they hardly care about a 0.2% purchase fee for what could be $100, $1000, $100,000 bought on exchange. It can be given custody, or for a few bucks it can be transferred to a hard wallet with private keys. If a user needs to transact often, daily, for instance, to trade Bitcoin aggressively, they do so on the order books of exchanges, at incredibly low transaction fees, because they are not interacting directly on-chain, and the exchanges deal with deposits and withdrawals as separate transactional events from buying and selling.
If we're talking about transaction fees in the first world market sense, bankers have solved that problem, either handling on-the-spot fees that compete with credit cards or e-cash like PayPal, or they actually waive a piled-on fee in order to store Bitcoin as the transacting payment, because in the short term Bitcoin is worth more to them as a hedge and lending instrument, than cash. In the long term, the goal for banks and bankers is to hold as much Bitcoin as possible, with the recognition that it is going to bump up against permanently limited supply, at which point the winners are those who have some, while everyone else wishes that they did. In truth, that is the opposite definition of a ponzi! Whoopsidaisy.
While the author and I agree that there is an edge of monopoly involved in Bitcoin, their attack has actually transgressed into an argument against free market capitalism. Bitcoin is not an instrument to play out the game of rich man, poor man. Everyone can get a Sat, and everyone who does so and holds one, is showing an allegiance in a confidence in the asset. Their confidence is not misled because rich people can have more, in fact that is unintentionally an argument in favor of Bitcoin's underlying value; not against. The more a person tries to build a premise that Bitcoin is just manipulated, antiquated speculative money, the more it tends to prove that it has lasting power, government and regulatory resilience built into its design, tyrants try to ban it, fear-mongers try to use it as a platform to push carbon taxes instead of actually embracing its design towards efficiency, and every angle I am witnessing dies at the front-lines.
It is true, that governments will continue to increase regulation and taxation. It's gross. It sucks. It is wrong. But, it is true on wealth tax, death tax, capital gains tax, and anything really that's under monarchs and progressive government regimes. So, we blame the asset or its class? That really is another argument in its favor and not against. Bitcoin is a target, because governments want to control it, governments also want in, they want a piece of the pie, and they want to tax anyone else who has some. Doesn't that mean that they see the danger of its value? I mean, Bitcoin has risen the most in price and it is here the longest. It is the biggest threat to centralization.
Altcoins eat market share. Well, the main arguments are almost always against Bitcoin, not Raven, not ADA, not EOS or others. I wonder why that is? Bitcoin did slip below 40% dominance. It has slipped into the 30's 2-3 times in its 12 years. The thing is, it takes literally hundreds of other top-tier non-scammy coin projects to add up to 30-45% of the market share. Ether is the second under normal circumstances, and has never come close to 30% market share. Just how many better coins, newer coins, would it take for any of them to bring Bitcoin down to, lets say 10% of the market? If we took all of the XRP's, Litecoins, Ethers, and a few dozen others that come and go, none of them have mathematically any principle capable of dwarfing the other coins by more than 10% of the market. The argument that alt coins are going to out-dominate Bitcoin is to make the very point, that Bitcoin is the one holding most of the market. Why is that? Well, if someone is not just a paid mercenary against the validity of Bitcoin, they could look at the very fact that coins are primarily traded against 2 main assets, or one could argue 3: USD(t) and Bitcoin. Bitcoin trades against fiat, and every single other coin trades against Bitcoin. They all trade against the dollar or a coin variant. Yes, they also can trade against Ether, they CAN trade against LTC, XRP and others, but all you need to do is view the volume and ask someone how much risk they want to take, that their order be filled before the price has dropped so drastically that the deal is a bad one. People use the market pairs that pay them the best. Is that bad math or economics? I don't think so.
The argument that central banks will kill Bitcoin is a legitimate concern, but one I think that has strong hints proving it wrong. First, people aren't likely to speculate on CBDC's. The purpose of the digital fiat is to once again back them by central banking, the very thing we are fighting for freedom to escape. We are using good investment models to choose something OTHER than the system already in place. The likelihood that the global economies are going digital further adds to the likelihood that it will be faster, cheaper, easier to onboard to and from fully regulated exchanges. CBDC's can cheapen, quicken ACH and Wire transfers, making them obsolete. To think that the digital dollar is a substitute for Bitcoin is to both not understand banking and to not understand an asset worth investing in.
The dollar is not something that people invest in with the hopes it will rise in future value. Argue against that, I dare you. That being the case, we have a few examples for more than 3-4 years now, that this theory has been tested against crypto. USDC, Tusd, USDT, Pax and others all exist as a digital dollar traded right there on crypto exchanges. They represent the value of fiat. They may differ in their exchange value by a fraction of a percent from one another, but they all are used as a stable trade against something that is a winning or losing asset. Coins go up, coins go down, but digital dollars are there to represent a pegged price that does not change. For my understanding, despite legal attacks and general hatred for Tether, stable coins have been working for years and are still the only thing that compares to the value transacting in Bitcoin. The idea that using the CBDC in place of Bitcoin is a Bitcoin killer, to me is like saying that cat food is going to disappear and cats are all going to die because the Fed just printed more money. One affects the other, but the fact that cat owners value cat food doesn't mean it is in a war of values with the dollar. In the same case of a black swan event, more people are going to care about TP, canned food and Bitcoin than they are the dollar. I guarantee it.
Perhaps the biggest fallacy and irony in the author's argument against Bitcoin and Ethereum are in their closing statement:
I can only hope that the next generation of speculators will forget about BTC and ETH and allocate elsewhere — ideally to real-world eco-investments that blitzscale us to 100% renewable energy, lift billions from poverty, increase real democracy, and usher in a circular economy that works for everyone and everything.
The goal is to seek assets based around renewable energy, lifting people from poverty, and creating a circular economy. I don't know if there is a hint that they believe in a green socialist system, or that they think they understand real democracy, but one of the absolute worst forms of tyranny comes from corrupt governments trying to coerce the masses into a false narrative over democracy. There is a reason that there are arguments for representative distributed governments instead of direct democracies. The true freedom of a believed decentralized democracy, is that every person may have the same opportunities, access, and chance for freedom. That is also what is provided by capitalism. The problem, is that people who believe the system or the assets are flawed, don't understand the underlying source of human nature. They think that if you fix Bitcoin with a better Bitcoin, people will stop stealing, dying of hunger, and everyone will have plenty. And, if that is the case, then time will prove to us that there is zero value in a scarce asset. If plenty is the true determining value of wealth, then we should all simply decide right now on the new standard and enjoy! But, why isn't that working? I just decided we should all have exactly the same amount! I just voted as such.
I don't want to drag the argument out any further. Most of you stopped reading a long time ago. That is fine. For the truly dedicated, I hope I have made some points for your value. The truth is, Bitcoin could very well fail. The right events, the right convergence of messaging, whether false or not, could steer so many people away that they jump ship. But, the argument that Bitcoin is something different than what it is, that it has failed on some level by showing its lasting power, or that the best argument against it is market share or the possibility that a Bitcoin killer is right around the corner, seems to have failed for over a decade now, and the truth is that more good projects just invite more big money into crypto, where everyone starts with a crash course in Bitcoin. If Bitcoin fails, it will be bad for green initiatives, banks, whales, the poor, speculators, ponzi groups, and every single other coin on the free market. If the only thing left standing is the CBDC, I promise you there will not be another asset representing real democracy lifting people out of poverty. It will mean that global governance won, and everything else is a flattening of the human curve permanently.
And on that note, crypto Gordon Freeman, for now... out.