Bitcoin is the greatest scam in history and is nothing more than a "colossal pump-and-dump scheme." That's what Bill Harris, the founding CEO of PayPal and former CEO of Intuit, wrote in a blistering takedown of the world's largest cryptocurrency by market cap.
"Bitcoin is a scam," Harris wrote at Recode. "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."
Harris said bitcoin buyers are "losers" who are getting caught up in "the spiral of greed" and are deliberately ignoring the truth, which is that "a bitcoin has no value at all."
"The result is a massive transfer of wealth from ordinary families to internet promoters...Promoters claim cryptocurrency is valuable as (1) a means of payment, (2) a store of value and/or (3) a thing in itself. None of these claims are true," Harris continued.
In his analysis, Bill Harris said bitcoin bulls who keep propping it up as a "store of value" refuse to acknowledge that bitcoin can never be a reliable store of value because of its extreme price volatility.
"A bitcoin has no intrinsic value. It only has value if people think other people will buy it for a higher price — the Greater Fool theory."
Harris: Crypto Is Best-Suited For Criminal ActivityHarris said the media hype surrounding bitcoin and the cryptocurrency market is due to heavy promotion by crooked crypto criminals. "For the vast majority of uses, bitcoin has no role," Harris wrote.
"Cryptocurrency is best-suited for one use: Criminal activity. Because transactions can be anonymous — law enforcement cannot easily trace who buys and sells — its use is dominated by illegal endeavors."Harris also pointed out that bitcoin theft by hacking has now become more common, and it's well known that the vast majority of cryptocurrency investors do not pay taxes on their capital gains.
"Even ordinary buyers are flouting the law," Harris wrote. "Tax law requires that every sale of cryptocurrency be recorded as a capital gain or loss and, of course, most bitcoin sellers fail to do so. The IRS recently ordered one major exchange to produce records of every significant transaction."
Harris said the bitcoin mania he's observing would be laughable if it weren't for the fact that many innocent investors are getting ripped off.
"All of this would be a comic sideshow if innocent people weren't at risk," he wrote. "But ordinary people are investing some of their life savings in cryptocurrency. One stock brokerage is encouraging its customers to purchase bitcoin for their retirement accounts!"
Bill Harris echoed the sentiments of Jamie Dimon, the CEO of JPMorgan, who slammed bitcoin as a "fraud" in September 2017. Dimon later backpedaled a bit and said blockchain, the technology behind bitcoin, can be useful, but he remains a bitcoin skeptic.