Former Paypal CEO Calls Bitcoin a 'pump-and-dump scheme'

One of PayPal's founders has described the technology as, "a colossal pump-and-dump scheme, the likes of which the world has never seen"

David Nurieli
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Founding CEO of Paypal Holdings Inc., Bill Harris, has joined an ever-growing list of bitcoin critics when he posted his article on Recode, and has labelled cryptocurrency as a colossal pump-and-dump scheme.

“I’m tired of saying, “Be careful, it’s speculative.” Then, “Be careful, it’s gambling.” Then, “Be careful, it’s a bubble.” Okay, I’ll say it: Bitcoin is a scam.”

In Harris’ post, he has made the case that bitcoin had no inherent value. He focused specifically on three attributes –

1. Means of Payment. Bitcoins are accepted almost nowhere, and some cryptocurrencies nowhere at all. Even where accepted, a currency whose value can swing 10 percent or more in a single day is useless as a means of payment.

2. Store of Value. Extreme price volatility also makes bitcoin undesirable as a store of value. And the storehouses — the cryptocurrency trading exchanges — are far less reliable and trustworthy than ordinary banks and brokers.

3. Thing in Itself. 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.

This is not the first time someone has called Bitcoin a scam. In virtually all of these cases, the statement is a direct result of either a lack of understanding of the technology or simply a bias against cryptocurrencies. Bill Harris comments about Bitcoin being “the greatest scam in history” is not something people will appreciate.

Harris does raises a valid point when he has said that some cryptocurrencies are pure frauds. In recent years, we have seen numerous projects disappear into thin air after their developers made a lot of money. Unlike what Harris believes, however, Bitcoin is a legitimate cryptocurrency, albeit one which is subject to manipulation and speculation.

Bitcoin, at time of press, is priced at $9,280.99 and this is with the latest news that Mt.Gox has offloaded 16,000 BTC and now with Bill Harris comments, it would be interesting to see if the markets will react.