Economist Calls Bitcoin A Pyramid Scheme, Despite Being ”Best Investment of the Decade”

Economist Calls Bitcoin A Pyramid Scheme, Despite Being ”Best Investment of the Decade”

LendingTree’s Chief Economist, Tendayi Kapfidze, has been making the rounds in the news lately. Specifically, this comes after he publicly said that Bitcoin, the premier cryptocurrency, is a ”pyramid scheme”. 

Kapfidze parrots common anti-crypto talking points

Although such accusations are nothing new, little proof remains to back up such sensational statements. Moreover, this comes as a recent report from Bank of America said that Bitcoin had, in fact, been the ”best investment of the decade”.

These spectacular statements from Kapfidze came in an interview with Yahoo Finance. In the interview, Kapfidze strongly advises against investing in the premier cryptocurrency. Furthermore, he also reiterates some of the most common, if erroneous, criticisms against Bitcoin.

These comments came after another co-panelist at the Yahoo Finance interview, Oliver Pursche, detailed his own crypto holdings. He then said that ”there’s something here [in the crypto sector]. I just don’t know what it is.”

”I know exactly what’s there. It’s a pyramid scheme,” Kapfidze succinctly responded, arguing that Bitcoin investments are a zero-sum game. ”You only make money based on people who enter after you,” he then went on.

”Bitcoin has no real utility”

Additionally, Kapfidze parrots one of Warren Buffett’s favorite anti-crypto talking points – arguing that Bitcoin does not have any intrinsic use-value:

”It has no real utility in the world. 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.”   

This criticism alone would likely be shot down quickly by a cryptocurrency supporter. The fact is that cryptocurrencies, and blockchain technology as a whole, is quickly finding utilities across multiple industries.

However, it is worth noting that LendingTree is America’s largest online lending place, and connects borrowers with lenders. As such, the company is very much a part of the traditional finance sector that cryptocurrencies threaten to disrupt.

Nevertheless, the crypto market is highly speculative. The entire asset class is prone to high volatility, and other traits of high-risk investment assets. With that said, however, calling Bitcoin a ”pyramid scheme” is taking this reasoning a step too far. 

The implication of this is that Bitcoin is a part of a fraudulent scheme that seeks to defraud crypto investors. Moreover, the mere fact of how cryptocurrencies are revolutionizing cross-border transactions or democratizing banking shows just how wrong this assumption is.