Jordan Belfort cries wolf at Bitcoin, calling it a scam
Image source: pixabay - Papafox
Former penny stock holder, Jordan Belfort, warns Bitcoin investors in his latest interview on CNBC about how Bitcoin's anonymous nature allows scams to occur around it. Belfort was a former criminal who has been convicted for scamming investors and stock market manipulation.
“I was a scammer. I had it down to science, and it’s exactly what’s happening with bitcoin. The whole thing is so stupid, these kids have gotten themselves so brainwashed,” Belfort told CNBC.
Source: newsBTC - Cole Peterson
We should carefully examine what the Wolf of Wall Street has to say. Belfort predicts that Bitcoin would simply disappear within the year. He said: “This thing [Bitcoin] is going to evaporate like a mirage. There’s a lot of really honest people who are going to get slaughtered.” Source: newsBTC - Cole Peterson
In a pump-and-dump scheme, price manipulation today is quite different from Belfort's time in 1999 before the dot-com bubble burst. To see a conglomerate of Bitcoin whales working together, selling off their Bitcoin, losing its value overnight, or 'run away' with your Bitcoin wallet sounded almost like another one of Ocean's heist movies.
The establishment of the blockchain, mining using computational power to prove the transaction and a collection of private keys and cold wallets, are some of the points Belfort may have overlooked.
Image source: pixabay - drassi
I have hoped that Belfort presented a stronger case rather than shouting for Doomsday, asking Bitcoin investors to run. The last doomsday cult for the millennium Year 2000 saw frantic killing events to be orchestrated around the world. I would read a 100-page argument on "Why Bitcoin Will Fail" but I would not listen to the cries of a wolf.
Belfort is also quite wrong about making claims on the anonymous nature of Bitcoin. While Bitcoin's public keys hide the names and identities of the trader, KYC-verified exchanges are now heavily regulated to ensure that traders are identified. This meant that 'anonymous' traders would have to give away their identity when trading cryptocurrencies into fiat. Start spending Bitcoin? That will alert authorities to 'flagged' wallets.
The blockchain has every piece of information written with immutable 'ink', hence the ledger could not be edited by a hacker. To do so, hackers need to perform a 51-percent attack using high levels of computational power to cause a "double spending" issue. Large coins such as Bitcoin, Ethereum would require so much mining equipment to pull off the attack. Read more about 51-attack here: https://www.coindesk.com/blockchains-feared-51-attack-now-becoming-regular/
Image source: pixabay - Pexels
Another wolf, Bill Harris, former CEO of Intuit and founding CEO of PayPal and Personal Capital has listed a few of his reasons why Bitcoin is a scam.
The reasons include:
- Pump-and-dump and manipulation tactics
- Volatility and no stability or trust provided by any instituition
- Greater Fool Theory - Bitcoin has no intrinsic value
Source: recode - Bill Harris
No. 1, I have given my argument for manipulation schemes as above.
No. 2, Bitcoin is decentralized and does not require trust from a financial institution due to the Proof-of-Work protocol
No. 3, Diamonds have no intrinsic value as well until someone called it "a girl's best friend"
Convinced or not convinced, to listen to the cries of a wolf crying wolf, to determine if Bitcoin is your next best friend -- all very premature at this stage.
No one is asking you to dump all your money into Bitcoin anyway.