It has been hailed as an easy get-rich-quick scheme, but according to one financial expert, Bitcoin is the greatest scam in history. Bill Harris, founding CEO of Paypal, said the so-called cryptocurrency has ‘no value’, and claimed it is part of a huge ‘pump-and-dump’ scheme. Bitcoin targets ill-informed buyers ‘caught up in the spiral of greed’, bitcoin machine hollywood to Harris, leading to a huge shift of wealth from ordinary families to internet scammers.
Harris’ claims follow similar warnings made last month by Bank of England governor Mark Carney who said Bitcoin showed the ‘classic hallmarks of a bubble’ and that only ‘fools’ are investing in it. It has been hailed as an easy get-rich-quick scheme, but according to one financial expert, Bitcoin is the ‘greatest scam in history’. In an opinion piece for Recode, Harris wrote: ‘Bitcoin is a scam. In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen. In a pump-and-dump game, promoters ‘pump’ up the price of a security creating a speculative frenzy, then ‘dump’ some of their holdings at artificially high prices. And some cryptocurrencies are pure frauds. The losers are ill-informed buyers caught up in the spiral of greed.
The result is a massive transfer of wealth from ordinary families to internet promoters. One of its selling points is that it can be used to buy things anonymously, and cryptocurrencies are frequently used by criminals to buy drugs and guns. WHO IS FOUNDING PAYPAL CEO BILL HARRIS? Bill Harris was appointed CEO of X. The company merged with software firm Confinity three months later to form the online payments service Paypal, with Harris appointed CEO. Bill Harris was ousted from the CEO role just two months later in April 2000, with Musk taking over the role while Peter Thiel was appointed Chairman. Harris has since founded digital financial firm Personal Capital, based in San Francisco, California.
But Harris, founder of California-based financial firm Personal Capital, said the idea that a Bitcoin has value is wrong. He wrote: ‘It helps to understand that a bitcoin has no value at all. None of these claims are true. For the vast majority of uses, bitcoin has no role. Dollars, pounds, euros, yen and renminbi are better means of payment, stores of value and things in themselves. WHAT IS BITCOIN AND HOW DOES IT WORK? They are stored in what are called virtual wallets known as blockchains which keep track of your money.
One of the selling points is that it can be used to buy things anonymously. Every time a new maths problem is solved a fresh Bitcoin is produced. Some people create powerful computers for the sole purpose of creating Bitcoins. And all transactions are recorded publicly so it is very hard to counterfeit. 17th Century and the dot com boom of the early 2000s to be the biggest bubble in history. But the bubble appears to have now burst and questions remain over what market there is for it long-term.
Some shops and restaurants are accepting for purchases, but overall this is a tiny part of the market of the real economy. While there are concerns Bitcoins can be hacked. Bitcoin saw its value go through the roof last year – beating the 17th Century dutch Tulip Mania, the South Sea bubble and the dot com bubble of the early 2000s to become the biggest economic bubble in history. In a speech delivered via video-link to the Inaugural Scottish Economics conference last month, Bank of England governor Mark Carney branded cryptocurrencies a ‘failure’ and a lottery. The governor warned that the ‘currencies’ showed the ‘classic hallmarks of bubbles’ as he called for them held to the ‘same standards as the rest of the financial system’. The Bank of England governor warned that the ‘currencies’ showed the ‘classic hallmarks of bubbles’ as he called for them held to the ‘same standards as the rest of the financial system’. In a speech delivered via video-link to the Inaugural Scottish Economics conference in Edinburgh, Mr Carney branded cryptocurrencies a ‘failure’ and a lottery.
The prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool,’ he said. The Governor added: ‘A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system. The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system. Being part of the financial system brings enormous privileges, but with them great responsibilities. Mr Carney said that, in his view, crypto-assets do not ‘appear to pose material risks to financial stability’. Despite his strong criticism, Mr Carney conceded that the distribute ledger technology which underpins cryptocurrencies can act to help the way payments are made evolve. Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems.