An economist has labeled Bitcoin a ‘pyramid scheme,’ in sentiments published by Yahoo Finance Thursday.
In 2017, Bitcoin spiked to reach a peak price of $20k, 9,000,000% in returns since its launch in 2009. Even in the bearish market that has followed in 2018, BTC still recorded an 85% price increase in 2019. The performance makes bitcoin one of the best financial assets in the year that just ended.
Bitcoin pyramid scheme
But speaking in an interview the Yahoo Finance aired on January 1, Lending Tree chief economist Tendayi Kapfidze called the top cryptocurrency a ‘pyramid scheme.’
Kapfidze told Yahoo Finance:
“You only make money based on people who enter after you,”
According to Kapfidze, bitcoin has had no real solutions to offer in the ten years since its inception. He said he believes the crypto is a ‘scam’ and has “no real utility.”
He notes in the interview that [bitcoin developers] have tried “to create a utility” for ten years. However, there’s no solution to show for all the time and intellectual resources put into it.
“It’s a solution in search of a problem and it still hasn’t found a problem to solve.”
Since the ‘bitcoin pizza’ days, crypto has evolved to see more and more adoption within the mainstream, including at Ivy League universities. Apart from ordinary merchant integration, banks and financial institutions are looking to crypto to improve on their legacy offerings. Improved regulations have also seen central banks lean towards leveraging blockchain for central bank-issued digital currencies.
But critics think otherwise and can’t go beyond the accusation that bitcoin is merely speculative. That has earned cryptocurrencies (especially bitcoin) high profile criticisms and even outright dismissal.
In April 2018 ex-PayPal CEO Bill Harris called it a “scam” and in May billionaire investor Warren Buffet told CNBC that bitcoin was probably “rat poison squared.”
Own crypto to learn about it
While Kapfidze dismissed bitcoin as a pyramid scheme, Bruderman Asset Management Chief Market Strategist Oliver Pursche felt otherwise.
According to him, crypto has its failings yes, but could still grow beyond its speculative nature.
Pursche, who admitted to owning several cryptocurrencies, is against the idea of going into crypto looking “to become a billionaire or a millionaire as a result of it.” Instead, he said:
“You go into it very soberly understanding that you can lose all of your principle and that this is purely speculative.”
He believes owning crypto allows you to learn about it, and then use the opportunity to pay attention.
Bitcoin currently trades at about $7,153 and has a market dominance index of 68.2%.
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