Bitcoin Is No More Than a Ponzi Scheme According to Economist

01/02/2020

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According to Tendayi Kapfidze, chief economist of LendingTree, Bitcoin is a pyramid scheme and has no real use.

Ponzi scheme

Since November 2013, Bitcoin has been the victim of a manipulation similar to the Ponzi scheme.

You will remember that Bernard Madoff had started a business from scratch that allowed him to raise $50 billion that collapsed like a house of cards. There were no assets behind these funds.

The mechanism is simple: an exceptional return based on nothing. Investors must continue to fill the coffers until the music stops. In this case there is no shortage of chairs, but they all fall at once. There is no economic or financial reality behind Bitcoin: only a value of convenience between the parties.

While Bitcoin is increasingly “recognized” by financial institutions – a recent Bank of America report calls it the best investment of the last decade – some economists still consider digital currency a common scam.

This is particularly the case with Tendayi Kapfidze, a leading U.S. financier who has worked for large banks and is now chief economist at LendingTree, the largest online loan market in the United States.

“It’s a pyramid scheme. You only make money off the people who come after you. It has no real use in the world. They’ve been trying to create a utility for this for ten years. It’s a solution in search of a problem and it hasn’t yet found a problem to solve,” he said in an interview with YahooFinance.

Kapfidze joins the Bitcoin Critics Club

Other personalities from the world of finance such as Warren Buffett, Nouriel Roubini, Ken Griffin, Bill Gates, Paul Krugman and Benoît Coeuré have also been hostile to the digital token. However, most recognize the opportunities offered by its underlying technology, the block chain.

In 2019, the price of Bitcoin appreciated by more than 87%. A relative performance compared to the +240% registered last June.

Today, Bitcoin is considered more of a speculative asset than a scam and is now on the menu of several major financial institutions such as ICE, through its subsidiary Bakkt, and Fidelity.

A 2019 survey by Fidelity revealed that 22% of US institutional investors owned crypto-currencies and 40% were interested in investing in this new asset class over the next 5 years.