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Business/Finance
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Title: Bitcoin is a ‘pyramid scheme,’ says an economist
Source: [The Block]
URL Source: https://finance.yahoo.com/news/bitc ... -says-economist-070015526.html
Published: Jan 2, 2020
Author: Yogita Khatri
Post Date: 2020-01-02 11:38:36 by Ada
Keywords: None
Views: 2849
Comments: 22

Bitcoin is a ‘pyramid scheme,’ says an economist

Tendayi Kapfidze, chief economist at Nasdaq-listed online lending marketplace Lending Tree, has said that bitcoin is a “pyramid scheme.”

“You only make money based on people who enter after you,” Kapfidze told Yahoo Finance in an interview published Thursday. He added that bitcoin has “no real utility.”

“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,” said Kapfidze.

Bitcoin has earned many monikers in its 11 years of existence - a "scam" (by Bill Harris, founding CEO of PayPal); "rat poison" (by Berkshire Hathaway vice chairman Charlie Munger) and "rat poison squared" (by billionaire investor Warren Buffett), among others.

Yet, a recent report from Bank of America names bitcoin the single best investment of the last decade. The report said if you invested $1 in bitcoin at the start of 2010, it would now be worth more than $90,000. Last year alone, the value of one bitcoin rose more than 85%, making it one of the top-performing financial assets in the world.

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Begin Trace Mode for Comment # 4.

#1. To: Ada (#0)

It's funny because the only finance experts news media can find to comment on bitcoin are those "deep state" people who've established their success in the world of fiat currency. They can't interview a 25 year vet from any crypto firm's board of directors because crypto was only created some 10 years ago and any businesses based on crypto are only 2-3 years old at most. So there are no pro-cypto voices in the media world to counter biased opinions like these.

To say it's a pyramid scheme is laughable, as the qualification of that:

“You only make money based on people who enter after you,” Kapfidze told Yahoo Finance in an interview published Thursday. ”

That's true of gold too, and pretty much any commodity. Stocks at least pay dividends which doesn't rely on downline buyers but with the P/E ratios these days, that doesn't count for much.

He added that bitcoin has “no real utility.

Yes it does. It facilitates transactions worldwide with no intermediaries, is oblivious to sanctions, and at a fraction of cost. It's also a method of storing wealth that is very difficult for governments to seize.

>“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,” said Kapfidze.

That's hogwash. Bitcoin was devised in response to the 2008 financial crisis, which was a problem just short of being the "Mother of all Problems", that problem being fiscal irresponsibility and theft by Congress.

Now Bitcoin does have its problems. Namely, transaction speeds, while far faster than bank wires, is woefully inadequate for retail, point of sale use. Transactions can take 30 mins to an hour which is far too long for paying for groceries at the checkout counter. There's also the number of transactions per second. Visa/mastercard services, being centralized, can handle 10's of thousands per second while bitcoin is maybe less than a dozen. For crypto to truly compete with CC's and cash, it needs to bridge those gaps. But it should, with time. How long, I don't know, but tech is always getting better.

Pinguinite  posted on  2020-01-02   13:55:14 ET  Reply   Untrace   Trace   Private Reply  

How are bitcoins mined?

Ada  posted on  2020-01-02   14:31:10 ET  Reply   Untrace   Trace   Private Reply  

If you are interested, here is a video by Mike Maloney that is very well presented, illustrated and entertaining. It gives a good foundation of crypto. It's about an hour and 15 mins.

I think he is off a little bit when he discusses Hashgraph tech as a perfect replacement for blockchain, as he's a finance guy and not a computer guy, but it's still a good watch.

Pinguinite  posted on  2020-01-02   17:07:31 ET  Reply   Untrace   Trace   Private Reply  

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