Bitcoin Ponzi One Event away from Zero

GlobalIntelHub -- Bitcoin is all the rage again and it seems a new group of victims is now investing in what may be the greatest Ponzi scheme in the history of finance.  We published a book Splitting Bits some time ago that explained a lot of these arguments, but it was drowned out by the beating of the Bitcoin to the moon arguments which in many ways resemble the Dogma about Flat Earth and other PsyOps, both in the fever of those infected as well as in the well crafted social media campaigns promoting it.

Understanding why Bitcoin goes up and what it is are important to understand why it can go to zero.  First, we don't know who created it, we just know that it uses SHA-256 which is patented by the NSA.  But whoever created it, has the original keys which could destroy it.  There are zombie whale accounts that have never been used.  Are people naïve to believe that this phenomenon happened by accident?  Bitcoin transactions require verification, what would happen if there was no power on Earth for 1 week, or 2, which has happened thousands of times in our history (but before the grid was so proliferated) such as the Carrington Event.  Another issue, the price depends on constant supply of USD coming into the system, as is evidenced by the recent run up caused by a "Mysterious Whale" -

The Mr. 100 whale wallet bought at least 1,000 Bitcoin on March 15, which is 52% of the total 1,907 BTC bought by the 10 spot Bitcoin exchange-traded funds (ETFs), according to an X post by HODL15Capital.

Bitcoin accumulation sheet. Source: HODL15Capital on X

This address has been continually receiving BTC since November 2022, when the FTX exchange collapsed. The wallet has been adding at least 100 BTC nearly every day since Feb. 14. The wallet received some larger Bitcoin transfers from a secondary wallet address, which has also been adding tranches of 100 BTC since 2019. This suggests that the mysterious whale has been stacking sats since at least 2019, according to HODL15Capital, who also noted in a March 15 X post:

Bitcoin very well may double in price from here, but as it gets higher, there requires more and more US Dollars to drive it higher, to the point there isn't so much money in the world to make Bitcoin go higher, and then the problem starts, who will support the natural selling?  Bitcoin has no intrinsic value such as Oil, stocks, commodities, or Real Estate, and is not a medium of exchange.  Bitcoin is too volatile to be a Currency, and it doesn't have value enough to be an investment - so what is it?

Bitcoin requires more money being pumped in at higher levels to maintain the price, that's the same math how a Ponzi Scheme works.  To look at it another way, we're not saying you can't make money trading BTC that's a real day-traders market.  But like stocks, there's a risk that BTC can be zero overnight.  There are a number of reasons for this.

Bitcoin depends on mining, it depends on the internet, it depends on electricity, it depends on being able to verify transactions, and it depends on new capital flowing into it.

Since there's no authority behind Bitcoin, i.e. a central bank, there's only the market to support it.  If a whale investor was forced to support the price, a private investor wouldn't lose billions of dollars to maintain market stability, why would they?  That's exactly what the Fed does, and the Fed is a loser, but the Fed can create money to 'monetize' those losses so the central banking system works.

Let's contrast this with a couple of stocks, just to be fair.  Take a look at SpaceX since inception:

97,282% Return since inception

Now take a look at Costco:

23,679% return since public (that doesn't include when Costco was private, the return profile since inception for Costco is likely much larger because it's older and larger).

Both companies serve an economic need, and do it well.  They are real businesses that create jobs, and jobs create families.  Bitcoin doesn't have any employees, it has no offices, and it doesn't create any communities, it's a total abstract game.

The argument of investing in stocks vs. Crypto is that you can earn equity growth while creating economic value, and that creates communities, families, which ultimately create civilization.  Companies need capital to grow, to hire people, to build more factories, to expand, and perform research & development.  Bitcoin does none of these things.

These 2 companies are just bright examples of course there are many others.  And to be fair, there are tons of failures too, but if we compare stocks to Crypto, what is the proportion of failures vs. winners?  How many Crypto scams, Shitcoins, and other failed tokens have taken millions from investors?  There's clearly less fraud in stocks and generally speaking, stocks are based on real companies that impact the economy.

If you're thinking of investing your life savings into Crypto - or your valuable time - please consider these arguments and see if it's really a wise move.  Think about this - how many people do you know that became millionaires because of Bitcoin (personally, not that you saw on TV) vs. how many people do you know who lost all in Crypto.

To invest in disruptive early stage startups, late stage secondaries in successful companies, and other private market investments, checkout Venture Capital Cross.

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