Bitcoin: The $1 Trillion Gambling Enterprise

Bitcoin is gambling.

Everything else you read about Bitcoin is either utopian fantasy, wishful thinking, nonsense, marketing, technobabble, or false propaganda.

Bitcoin is not a medium of exchange. It can’t be because the price is too volatile. Only a tiny fraction of 1% of bitcoin transactions are used for legitimate real-world transactions. The transaction costs are too large and transaction time too slow for anything but major transactions.

Bitcoin is not a store of value. A store of value does not regularly drop 20% in one day.

Bitcoin does not qualify as an “investment” since no underlying asset exists. As a Bank of Finland publication clearly stated in 2018, Bitcoin is simply an accounting system for a non-existent asset. In 17th Century Holland, the price of tulips rose to extraordinary heights and then collapsed in 1637. It was called Tulipmania and is the accepted term for economic bubbles built on assets of inherently little value. At least there was an asset, a tulip bulb; GameStop at its peak share price still had thousands of retail stores.

It is irrelevant that only a maximum of 21 million Bitcoin exist. Each is worth zero and the total value of them remains zero no matter how many there are.

Any true utility of Bitcoin for a few legitimate transactions is far outweighed by the massive risk to the punters who speculate in this risky game.

Credulous people are taking the bait and gambling away their life savings. Every day that this bubble is allowed to grow, thousands more wide-eyed innocents are drawn into a game where only the House — those operating the Bitcoin gambling casino — wins. We recently had hearings into the recent GameStop mania. Can the Bitcoin bubble burst be prevented?

Gambling — and, have no doubt, this is gambling — is regulated in the US and throughout much of the world. Where are the regulators?

Promoters tell you that Bitcoin is anonymous. This is not the case. Law enforcement or anyone else can trace any Bitcoin transaction and, with a court order, access the name of the person cashing out their Bitcoin chips in any developed country. Bitcoin is far more traceable than cash. It is worth noting one of the few lines about Bitcoin that is true: it is a “distributed public ledger” recorded on “The Blockchain”. Thus, the truth that Bitcoin is not anonymous has been hiding in plain sight. Every Bitcoin transaction since the first one in 2009 by the fictitious Satoshi Nakamoto is publicly recorded for all to see. That’s how special counsel Robert Mueller of the Mueller Report, from half-way around the world, was able to identify the Russian citizens and indict them by name.

We need to learn from the caution of “The Gambler” (in Kenny Rogers’ song) in his final words: “You’ve got to know when to hold ’em. Know when to fold ’em. Know when to walk away –- And know when to run.”

Bob Seeman is co-founder of RIWI Corp., an electrical engineer, a California attorney and a former Head of Strategy of Microsoft UK.

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