Here Come the Bogus Bitcoin Scare Tactics

From Coindesk

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The run-up in bitcoin and other crypto assets has offered cynics of all stripes a chance to look smart by condemning cryptocurrency as a "Ponzi scheme" that could "cause a recession.”

These arguments are not new, but they are ignorant.

It is time that we stop allowing people who do not understand (or simply ignore) the truth to comment on this market as if they know something us greater fools simply cannot see.

Ponzi scheme

People who don’t like bitcoin try to call it a Ponzi scheme or a fraud because then they no longer have to discuss its merits. Jamie Dimon does this.

This week, Bert Ely did it too. His opinion piece in The Hill is subtly titled, "Bitcoin is a Ponzi Scheme and Will Collapse like One."

Unfortunately, these same people have never looked up the definition of "Ponzi scheme" or "fraud" because, even if bitcoin will fail or result in investors losing all their money, it does not meet the definition of either a Ponzi scheme or a fraud.

Ely's big claim is that bitcoin "will stay afloat only as long as enough people buy the fiction that bitcoin represents real value." He neglects to say how this is any different than the U.S. dollar or the Venezuelan Bolivar. His central thesis relies on the basic premise of ANY medium of exchange: it only works as long as people will accept it for goods and services.

Even if we let Ely simply change the definition of a Ponzi scheme to fit his argument or ignore the fact that we can buy things like sheets, toasters and tennis shoes with bitcoin, he is simply defining ALL currencies. Nobody accepts dollars because they like green-colored paper, and the idea that government or an army can compel confidence in currency is utterly naïve.

It is also proven false by the Venezuelan bolivar, the German mark and the Zimbabwean dollar. Once we realize this, it is fun to read the rest of Ely's article.

For example, let's edit a passage from Ely to fit the analysis above:

"All Ponzi schemes eventually collapse, of course, when sufficient amounts can no longer be raised from new investors to pay off earlier investors. The same will occur with [the U.S. dollar and the Venezuelan bolivar]. …. Investors will pull back from buying [dollars and bolivars] causing their prices to begin a sustained decline. This overdue disaster will occur because all [U.S. dollars and Venezuelan bolivars] have no intrinsic value."

Read more: https://www.coindesk.com/come-bogus-bitcoin-scare-tactics/

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Remember how Jamie Dimon was bad mouthing bitcoin while his firm was buying it up at cheaper prices thanks to him?

Leave your thoughts in the comments below.

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