“Cryptocurrencies are like ‘pet rocks’.” ~ Jamie Dimon, CEO and Chairman, J P Morgan Chase
A blockchain is a digital ledger associated with an asset, recording the history of that transaction in that asset…who bought it and from whom. In other words, blockchains are simply append-only spreadsheets maintained across decentralized “peer-to-peer” networks, writes Sohale Andrus Mortazavi, in an article entitled “Cryptocurrency Is a Giant Ponzi Scheme”.
What distinctive about blockchain is that the ledgers are supposed to be decentralized: they aren’t sitting on the computer ‘or ledger’ of a single bank or company. They are in the public domain, sustained by protocols that induce many people to maintain records on many servers.
Cryptocurrency blockchains allow users to maintain a shared ledger of financial transactions without the need of a central server or managing authority. Users are thus able to make direct online transactions with one another as if they were trading cash.
Cryptocurrency blockchains generally don’t allow previously verified transactions to be deleted or altered. The data is immutable. Updates are added by chaining a new “block” of transaction data to the chain of existing blocks.
In theory, blockchain and cryptocurrencies were supposed to offer a lower cost and more secure method to keep track of transactions. But, cryptocurrencies don’t produce anything of material value. Investors can only cash out by selling their digital coins to other investors.
Which makes them an experiment in the “greater fool” theory of investing, in which investors attempt to profit on overvalued or even worthless assets by selling them on to the next “greater fool”. Price manipulation plays as much or more of a role than demand in driving prices higher.
Furthermore, the parent company of Tether and Bitfinex, is printing tethers from thin air and using them to buy up Bitcoin and other cryptocurrencies in order to create artificial scarcity and drive prices higher. Sam Bankman-Fried’s company FTX imploded due to similar fake proprietary tokens artificially inflating and propping up risky trades by FTX’s affiliate Alameda.
Tether has effectively become the central bank of crypto. Like central banks, they ensure liquidity in the market and even engage in quantitative easing — the practice of central banks buying up financial assets in order to stimulate the economy and stabilize financial markets. The difference is that central banks, at least in theory, operate in the public good and try to maintain healthy levels of inflation that encourage capital investment. By comparison, private companies issuing stablecoins are indiscriminately inflating cryptocurrency prices so that they can be dumped on unsuspecting investors (greater fools).
Cryptocurrency has been one of the greatest destroyers of wealth in the financial history of mankind. ~ Jay Adkisson
This renders cryptocurrency not merely a bad investment or speculative bubble but something more akin to a decentralized Ponzi scheme. Unbacked stablecoins are being used to inflate the “spot price” — the latest trading price — of cryptocurrencies, like Bitcoin, to levels totally disconnected from reality. If cryptocurrency and NFT markets cannot keep luring in enough new money or capital becomes to expensive due to rising interest rates to cover the growing costs of mining (think Ponzi scheme), the scheme will become unworkable and financially insolvent.
Cryptocurrency has been one of the greatest destroyers of wealth in the financial history of mankind, writes Jay Adkisson, in Forbes.
“Many Bitcoin promoters are simply shilling and attempting to pump the price of Bitcoin up because they themselves are invested in cryptocurrency companies.” ~ Jay Adkisson
“It is hard to imagine cryptocurrency being a suitable investment for all but those who are sufficiently wealthy that they can burn wads of cash off a bridge and not be distressed by it,” writes cryptocurrency watcher Charles Padua. Many Bitcoin promoters are simply shilling and attempting to pump the price of Bitcoin up because they themselves are invested in cryptocurrency companies.
Bottomline, Bitcoin itself may not be a total fraudulent scam, but how Bitcoin and all cryptocurrencies are being promoted and sold by its legions of ‘conflict of interest’ advocates to the average retail investor is the definition of a scam and Ponzi scheme.
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