Oh dear. News out today reports that ex-PayPal CEO Bill Harris is claiming that Bitcoin is ‘The Greatest Scam in History’. Have a look at the full report by Harris in Recode, here- https://www.recode.net/2018/4/24/17275202/bitcoin-scam-cryptocurrency-mining-pump-dump-fraud-ico-value
Here’s what Harris believes:
“I’m tired of saying, Be careful, it’s speculative. Then, Be careful, it’s gambling. Then, Be careful, it’s a bubble. Okay, I’ll say it: Bitcoin is a scam. In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen. In a pump-and-dump game, promoters “pump” up the price of a security creating a speculative frenzy, then “dump” some of their holdings at artificially high prices. And some cryptocurrencies are pure frauds. Ernst & Young estimates that 10 percent of the money raised for initial coin offerings has been stolen.”
Interesting how he’s gone from Bitcoin, to raising issues regarding ICO scams, something that is indeed far removed from Bitcoin.
Harris outlines some fundamental reasons for why he believes Bitcoin is a scam. Firstly, he suggests that Bitcoin ‘is accepted almost nowhere’. This totally disregards other uses of cryptocurrency, for money transfer etc and is simply just focusing on Bitcoin as an adopted cryptocurrency, something that is taking shape and may very well happen in the future. More and more entities are taking on Bitcoin and cryptocurrency platforms, Harris seems to have tunnel vision here and I can’t quite see how this is a valid argument.
Next, Harris argues that Bitcoin is less reliable than a traditional bank as a store of value, yeah okay, everybody knows that, so how does this make it a scam? Moreover, who is using Bitcoin and cryptocurrency to store money, that’s not really how cryptocurrency operates. So, this, is yet another strange argument…
Finally, Harris argues that Bitcoin has ‘no intrinsic value’ He refers to the greater fool theory, which outlines that something only has value, if people think other people will buy it for a higher price. Interestingly, this does apply to many commodities, in fact you could argue that this is the essence of value in itself, either way, whilst some of this point is valid, it has no bearing on Bitcoin being a scam, therefore, it is irrelevant.
His argument goes on for some time, he does highlight problems with the efficiency of Bitcoin mining which is something many companies are indeed working towards improving. What Harris seems to disregard is that this is all fairly new technology. Fiat currency has been around for thousands of years, cryptocurrency is brand new, there are plenty of creases to iron out, general compatibility and the environmental impact are two of those things.
His arguments referring to all Bitcoin users as criminals takes a blinkered view towards something with real world applications, that could even help to reduce crime.
I could go on all day with this, I suggest you read the article for yourself. It is a shame to see such a high profile person write with such a lack of vision. Some arguments are indeed valid, but none of them really justify his claim that Bitcoin is a scam, therefore, I am afraid to say, Harris is wrong here. I assume you will all agree.