- The Spectator magazine slammed Bitcoin, calling it a threat and a “Ponzi scheme” in a scathing article published on May 24, 2024.
- The article criticized Bitcoin’s volatility, questioned its intrinsic value, and likened the mainstream accessibility of Bitcoin investing to bookmakers setting up shop in every living room.
- The author suggested that the potential approval of a Bitcoin spot ETF might inflate a fourth speculative bubble, potentially destroying the wealth of even more people, while highlighting Bitcoin’s resilience through multiple bubbles surpassing historical speculative assets.
The Spectator, a traditional British magazine, has contributed to yet another “Bitcoin obituary”, this time slamming it as a threat and a “Ponzi scheme“.
Bitcoin’s volatile recovery
In a scathing article published on May 24th, The Spectator’s Ross Clark criticized Bitcoin’s (BTC) resurgence in retail investing. Clark highlighted cryptocurrency’s volatility and ability to rapidly create and destroy fortunes, questioning its intrinsic value and stability.
The author pointed to Bitcoin’s remarkable recovery since January, despite the conviction of FTX founder Sam Bankman-Fried. 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, Clark 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 cashed out simultaneously. As written, he argued 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, The Spectator
The author warned easier Bitcoin access could lead to financial disasters and wealth transfers from gullible to fleet-footed investors. Although prices have stabilized recently, Clark cautioned against ruling out another speculative mania.
Bitcoin’s resilience through bubbles
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 the Bitcoin spot ETF might inflate a fourth bubble, potentially destroying more people’s wealth.
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 “obituary” in 2024.
From traditional finance investors to business owners, government entities, and other high-influence figures, Bitcoin “has died” 477 times since 2010 according to 99Bitcoins’ obituaries.
Recently, the leading cryptocurrency was declared dead by the European Central Bank (ECB) in a blog article reported by Finbold. At that time, BTC was trading at $51,304, and was up over 30% to $67,000 by press time.
Valid criticisms behind the hyperbole
Despite the hyperbolic nature of a “Bitcoin death” statement, many obituaries contain thoughtful and valid criticisms.
Unfortunately, BTC advocates often respond with memes and attacks rather than considering the fundamental thesis behind the criticisms. This reaction stems from the “toxic maximalism” movement.
Conversely, some critics have historically failed to demonstrate their criticisms fully, often driven by emotion and conflicts of interest.
Therefore, investors should be open to deeply studying and understanding Bitcoin or any assets they invest in. Bitcoin may not literally “die” or be an actual “Ponzi scheme”. However, it certainly has points of failure and room for improvement.
