Tendayi Kapfidze, chief economist at Lending Tree in a recent interview with Yahoo Finances, has said that Bitcoin is a pyramid scheme. According to him, people in the Bitcoin market only made money based on other people entering the market after them. The chief economist went onto claim that Bitcoin has no real utility and its a solution looking for a problem which it hasn’t found in the last decade. He said,
“They’ve been trying to create a utility for it for ten years now. It’s a solution in search of a problem and it still hasn’t found a problem to solve.”
Criticism of Bitcoin is nothing new, right from the launch in 2009 Bitcoin has faced a lot of scrutiny from various sections of the society, especially from the financial sectors. Most of the people believe Bitcoin price is speculative because it does not have any tangible or intrinsic value like gold. Most of the governments and financial institutions believed the same, however just within a decade, Bitcoin has been recognized as an asset class by the SEC and various other regulatory bodies.
Bitcoin’s Pyramid Scheme Comparision Shows Lack of Understanding
Kapfidze claimed that Bitcoin is not solving any problem at present which again is far from the truth, as it is only because of Bitcoin that most of the countries are looking to launch CBDC to make their cross-border remittance services more efficient and much faster. Bitcoin is compared to pyramid scheme shows the lack of understanding of the blockchain technology powering it. The claim that people only make money based on others investment is also wrong, since most of the larger population invested in it after the bull run and all-time high in 2017, however, BTC price tanked right after that.
Mark Cuban made similar comments not so long ago, claiming Bitcoin has no real value while he did ask people to invest in it back in 2017. Many other naysayers like JP Morgan, have already gone back on their statement to launch their cryptocurrency.