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UK’s oldest news magazine slams ‘Bitcoin a threat to us all’ and a ‘Ponzi scheme’

source-logo  finbold.com 24 May 2024 11:05, UTC

The traditional British magazine, The Spectator, may have contributed to another “Bitcoin obituary” in 2024, slamming it as a threat and a “Ponzi scheme.”

In a scathing article published on May 24, The Spectator‘s Ross Clark criticized Bitcoin’s (BTC) resurgence for retail investing. Particularly, Clark highlighted the cryptocurrency‘s volatility and ability to create and destroy fortunes rapidly, questioning its intrinsic value and stability.

The author pointed out Bitcoin’s remarkable recovery since January, despite the conviction of Sam Bankman-Fried, founder of FTX. Moreover, Clark attributed this recovery to the Grayscale Bitcoin Trust, an exchange-traded fund (ETF) that simplifies Bitcoin for retail investors.

While acknowledging the fund’s role in leveling the playing field, the author expressed concerns about its potential financial repercussions. He likened the mainstream accessibility of Bitcoin gambling to bookmakers setting up shop in every living room.

Is Bitcoin a Ponzi scheme?

Notably, Clark emphasized that Bitcoin is a zero-sum game, where paper fortunes can be made but not realized simultaneously. As written, he argued that Bitcoin lacks intrinsic value and is essentially a tech-reinvented Ponzi scheme.

“In that situation, those who were quick to sell would become rich at the expense of those who were slow to sell. Bitcoin earns no income and has no intrinsic value – it is, for all its cleverness, really nothing more sophisticated than a tech reinvention of the Ponzi scheme.”

– Ross Clark, for The Spectator

The author warned that easier Bitcoin access could lead to financial disasters and wealth transfer from gullible to fleet-footed investors. Although the price has stabilized recently, Clark cautioned against ruling out another speculative mania.

In closing, the Spectator article highlighted Bitcoin’s resilience through multiple bubbles, surpassing historical speculative assets like tulip bulbs and South Sea Company shares. Clark suggested that the Bitcoin spot ETF might inflate a fourth bubble, potentially destroying the wealth of even more people.

Bitcoin obituaries

Throughout its history, Bitcoin has been deemed a failure and declared dead by critics and skeptics. Interestingly, Bitcoin’s price has increased by $21,000 since the last time it happened in 2024.

From traditional finance investors to business owners, government entities, and other high-influence figures, Bitcoin “has died” 477 times since 2010. This data is from 99Bitcoins’ obituaries.

Recently, the leading cryptocurrency was declared dead by the European Central Bank (ECB) in a blog article reported by Finbold. On this occasion, BTC was trading at $51,304, and it was up over 30% to $67,000 by press time.

Bitcoin criticisms and points of failure

Despite the hyperbolic nature of a “Bitcoin death” statement, many of its obituaries contain thoughtful and valid criticisms.

Unfortunately, the BTC advocates create memes and personal attacks against their critics instead of considering the fundamental thesis behind their occurrence. This is a cultural inheritance from a movement called “toxic maximalism.”

Conversely, some critics have historically failed to demonstrate part of their criticisms, often driven by emotion and conflicts of interest.

Therefore, investors must be open to profoundly studying and understanding Bitcoin or other assets they are investing in. Bitcoin may not “die” and may not be a “Ponzi Scheme,” as The Spectator stated in its last article, but it certainly has points of failure and potential improvements.