Angry And Confused Writer Calls Bitcoin “The Swindle Of the Century”
There are some who understand bitcoin and others who don’t. The people who don’t understand bitcoin often resort to calling it a scam or a pyramid scheme.
Entrepreneur recently featured an article called “Bitcoin: The Swindle of the Century.”
In that article, Quantam Solutions CEO Richard Van Staten claims that the entire idea of investing in cryptocurrency is a scam. He claims people buying into crypto and blockchain are buying “into the craze”.
Van Staten goes on to explain that bitcoin is a complete scam and that nobody should invest in bitcoin.
Let’s take a closer look at Van Staten’s argument to see if it has any merit. Is this just another angry analyst mad he didn’t buy into bitcoin early? Or is bitcoin really the biggest scam in human history?
Bitcoin Was Created By A “Japanese Developer Named Satoshi Nakamoto”
Van Staten’s article starts off with an ignorant bang. He calls bitcoin creator Satoshi Nakamoto a “possibly fake Japanese developer.”
Van Staten goes onto explain that it’s unclear “whether Nakamoto is an actual person”.
Obviously, that’s not a great start for someone looking for an educated take on bitcoin. In 2009 and 2010, just months after the release of bitcoin, it was pretty obvious that Satoshi Nakamoto wasn’t a Japanese developer. In forum posts, Satoshi used words like “bloody hard” and other English idioms. He typed in grammatically correct, colloquial English. Since 2010, few in the community have believed that Satoshi is Japanese, and fewer still have believed bitcoin was created by a single person.
In fact, in all of the “who is Satoshi Nakamoto” stories, there isn’t a single mention of a Japanese developer connected to the project. In almost every instance, the evidence points towards an English-speaking member of a Commonwealth country – like Australian Craig Wright.
We’re not off to a good start with Van Staten’s article, but let’s keep reading.
Crypto Investing “Is Where The Real Swindle Happens”
Van Staten goes onto explain how crypto investing is a scam:
“It's not only the idea that Bitcoin will replace the existing currency system that's extremely questionable. The entire idea of investing in cryptocurrency is where the real swindle happens.”
Van Staten’s biggest issue with cryptocurrency investing, as far as we can tell, is that it attracts people looking to make a quick buck:
“From VC to armchair investors, the idea is to buy in when prices are low and sell when they are high. So, it's only natural that an unregulated and complex field like crypto attracts a lot of excitement for a certain type of investor, maybe someone who's not as money-savvy but has caught on to the transformative power of the internet. The online aspect only democratizes it further: When anyone can buy in, anyone can profit.”
Obviously, crypto isn’t the only industry that attracts day traders and uneducated investors. Marijuana company stocks are another market fueled by speculation and attracting “get rich quick”-style investors, for example. Yes, there is real value behind plenty of marijuana companies, just like there’s real value behind plenty of crypto companies. We can’t help that gullible people are attracted to markets where they’ve heard stories of ordinary people making millions of dollars through small investments.
“Cryptocurrency Is A Fraud”
Van Staten goes on to complain about cryptocurrency being a fraud:
“At the heart of it, cryptocurrency is a fraud. We've all been sold on Bitcoin as the official future currency of the internet, its evangelists painting a picture of a world where our spending is safely anonymized and no longer subject to the whims of international bankers and governments.”
It’s true: crypto evangelists envision a future where the USD is devalued, where fiat currencies don’t exist, and where everyone uses cryptocurrency as a daily payment method.
Van Staten admits that this isn’t a bad idea:
“Sounds great, sure, but at its essence, crypto has proven to be something else entirely.”
Van Staten brings up the point that crypto is “not a true medium of exchange” in the same way that fiat currency is. He admits that bitcoin can be exchanged for goods, but that these transactions,
“amount to barter deals with opportunistic retailers who are likely more eager for the publicity that comes with announcing they’ll accept bitcoin.”
Van Staten Mentions That Jamie Dimon Called Bitcoin A Bubble
Van Staten takes an even more ridiculous approach with his next paragraph. He references JP Morgan CEO Jamie Dimon, who was famously critical of bitcoin during its bubble in 2017.
Van Staten clearly sees Dimon as a reverential authority in the space:
“No less an authority than JP Morgan CEO Jamie Dimon has identified crypto as a bubble just waiting to bust. When that does happen, good luck paying for your pizza with whatever's left.”
It’s true. Jamie Dimon has been critical of bitcoin in the past. He called bitcoin a fraud in 2017. Dimon ended up being correct: the value of bitcoin has dropped 80% since its highs in December 2017.
Van Staten, however, is ignoring a crucial point: in January 2018, Dimon said he regretted calling bitcoin a fraud and believes in the technology behind it. He walked back on his previous comments.
Bitcoin Is A “Radioactive” Investment “And Not To Be Touched”
Next, Van Staten goes into full investment advisor mode by describing bitcoin as a “radioactive” asset that is “not to be touched”.
Van Staten clearly believes that there’s no value to investing in bitcoin, although he doesn’t exactly explain why he feels that way. Bitcoin has genuine value as a decentralized way to transfer assets worldwide at minimal cost.
If bitcoin is useless and a radioactive asset, then why do people in Venezuela use bitcoin more than any other nation in the world? Bitcoin is solving real problems in today’s real world – and we’re still in the early days.
Van Staten admits that the underlying blockchain technology beneath bitcoin has value. He awkwardly explains how blockchain technology works and claims that bitcoin’s blockchain “represents the safest data transfer medium ever created online.”
Nevertheless, Van Staten still believes bitcoin has no value. Here’s how he sums up his hit piece on bitcoin:
“Once the Bitcoin craze blows away, we'll be left with a truly transformative tool: a new, safe way to conduct business online. The evangelists weren't completely wrong, only misguided. The bitcoins themselves won't be changing our world, but the blockchain built to host them absolutely will.”
Ultimately, Van Staten’s analysis shows a fundamental lack of understanding about bitcoin and blockchain technology. Van Staten ignores the benefits of bitcoin, deriding it as a “radioactive” investment asset that nobody should ever touch.
Despite his negative view of bitcoin, Van Staten is strangely positive about blockchain technology and claims it will change the world. He’s simultaneously praising blockchain’s positive traits while dismissing those same traits in bitcoin.
And, despite praising blockchain technology, Van Staten is dismissive of the thousands of other coins in the crypto space. He seems to believe all cryptoassets are junk – even the ones capable of securely processing thousands of transactions per second. How can you believe in blockchain technology but simultaneously trash every cryptoasset in existence? Beats me.
Van Staten’s article reminds me of when I would need to write a last minute essay in college. I would quickly Google basic details of the topic. I’d find a couple of random quotes from knowledgeable figures. I’d smash it all together. Then, I’d email it to my professor and forget everything I wrote about the topic.
It’s hard to understand what Van Staten is trying to say in his awkwardly-written piece. From calling Satoshi a “Japanese programmer” to taking Jamie Dimon’s quotes out of context, Van Staten’s article in Entrepreneur is filled with misconceptions about crypto, bitcoin, and blockchain.