Happyponyland.net / Bitcoin is a Scam

Hate to break it to you, but Bitcoin is, at this point, a pyramid scheme. Bitcoin is still a solution in search of a problem. Besides, if they really were some financial genius, why are they still stuck with their 9-5 jobs? If the state fails in this promise, the currency collapses and people find something else to trade with (this often ends up being US dollars, which is coincidentally also the currency of choice in the international arms trade, which plays a big part in why states collapse in the first place). It’s the exchange rate to “fiat currency” that is nuts. Stock, or cryptocurrency, or just currency in general (to whatever degree the three are even comparable) do not accumulate value just by sitting around; they need to be circulated. Ultimately it comes down to having trustworthy people in the right places (which is where cryptocurrency, with its anonymous creator(s), fails hilariously) and have them monitor each other (which is what cryptocurrency tries to automate through algorithms).

Bitcoin was the original cryptocurrency, described by the pseudonym “Satoshi Nakamoto” in a white paper, which is what the tech industry calls marketing material that mimics an academic thesis but lacks the scrutiny of peer review (I assume very few Bitcoin evangelists have even bothered to read it). This is not necessarily malicious, but curious: anyone with any experience of academic research knows that publications are the lifeblood of academia and academics are super touchy about being credited for their work, so we can probably assume “Nakamoto” did not do it for the research cred. It is believed “Nakamoto” owns over a million Bitcoin from the early mining. You haven’t invented a revenge-of-the-nerds money printing machine, no matter what Joe Random libertarian techbro will tell you over lunch. Sure, a few people that got into the game early really did Make Money Fast from it, but where did that money come from? Normal people do not have these problems. Even banks barely have these problems any more. If everyone that was mining Bitcoin in 2010 had just kept hoarding them it would never have gained traction at all; there simply wouldn’t be any newcomers to the scene to profit from.

Note that I’m using “cryptocurrency” and “Bitcoin” almost interchangeably here; for the purpose of this discussion there is barely any distinction between specific coins. Some flavours of cryptocurrency try to make themselves useful by proposing things like “smart contracts”, which are some kind of distributed microservices, but it’s still unclear if these will find any real usage. While this is indeed necessary infrastructure to make Bitcoin feasible for the real world, you’re not actually making money from Bitcoin itself but from people gullible enough to trade in Bitcoin, which just reinforces my point. So here lies the challenge: if your payment method requires a steady flow of real world cash to lubricate the system, it’s not sustainable. The fallacy here is that everyone is trying to make money off each other from the same thing, which simply doesn’t work, unlike an actual economy where we still make money off each other, but doing different things.

It’s still better than being a small-time scammer and fueling the Bitcoin craze. Remember the daytrading craze in the 90s? Here’s a basic rule for telling if something is a scam: people telling you to invest your own money, without any guarantees of return, in something they already have a stake in themselves, are trying to con you. So, to summarize: Bitcoin is extremely speculative and offers no short nor long-term guarantees. Yet with state-issued currency, the state guarantees it will remain viable and its value somewhat stable for the foreseeable future. The blockchain might be fascinating to crypto nerds who will go on forever about its supposed benefits like decentralization, tamper-proof ledgers and preventing double-spending. Bitcoin fanboys are the kind of obnoxious people that believe in all sorts of other made-up Internet bullshit like not masturbating for a month as some form of Zen exercise, or that squatting in a decomissioned WWII-era naval fort grants you diplomatic immunity due to some loophole in state relations. A lot of people without experience thought they could Make Money Fast, but ended up only making other people richer and themselves very disillusioned. It’s a technological mess that few people fully understand. It can be lucrative speculation if you happen to time your transactions just right (which is what everyone is trying to do), but it’s not something you should plan your retirement around.

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