FT Calls Bitcoin a Pyramid Scheme on the Cryptocurrency’s 8th Birthday

As expected, the $1000 price brings mainstream media attention to bitcoin, not all of it good.

On the 3rd of January, 2009 Bitcoin’s creator Satoshi Nakamoto started off the blockchain by mining the first ever block (now known as the Genesis Block) which means Tuesday was the cryptocurrency’s 8th birthday.

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A lot of mainstream media attention came to bitcoin on this day but the multiple-year survival and growth of the project was not the main focus of it. As expected, the round $1000 BTC/USD exchange rate was the trigger that put the cryptocurrency on their maps again.

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Bloomberg, New York Times, CNBC and others all covered the three year record price (which since advanced to over €1000). However, one writer used this occasion to trash bitcoin all together. The Financial Times’ Capital Markets Editor, Dan McCrum, called the cryptocurrency a worthless pyramid scheme.

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The main argument that McCrum made in his article (beyond a paywall) is that bitcoin’s market cap, now at a new record of over $17 billion, is small compared to the combined value of all national fiat currencies in the world. He compared it to the Uzbekistani currency and a low key US medical records company and determined it is therefore not of real value. This is strange and seems to defeat his own argument as the government of Uzbekistan won’t scrap its currency and no successful company will delist its shares just because they are “only” worth $17 billion.

And as for the real life impact, Twitter is valued at just $10 billion. Would anyone claim it has not changed the world in many ways, from the Arab Spring uprisings to allowing US President-elect Donald Trump bypass established media gatekeepers?

McCrum ends his case by saying that if bitcoin is an investment tool it can’t be a currency, and that the only reason for raising the BTC/USD exchange rate is that the cryptocurrency is acting as a pyramid scheme – therefore its true value is nothing.

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