Bitcoin critics are nothing new, especially given the hysteria that has followed cryptocurrencies last year. Often, such negativity arises due to fear – fear largely of the unknown, but also, apprehension of change. We humans are creatures of habit; thus, if anything threatens that stability or consistency, our fear response is suspicion.
That said, I was surprised to read a fresh headline regarding former PayPal CEO Bill Harris. Apparently not a proponent of cryptocurrencies, Harris labeled all blockchain reward tokens as scams. In case you may have felt that there was some room for alternative interpretations, he reaffirmed his utter bearishness by writing in a Recode post:
In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen. In a pump-and-dump game, promoters ‘pump’ up the price of a security creating a speculative frenzy, then ‘dump’ some of their holdings at artificially high prices.
And some cryptocurrencies are pure frauds. Ernst & Young estimates that 10 percent of the money raised for initial coin offerings has been stolen.
Tell us how you really feel, Mr. Harris!
And he did. Harris further asserted, “It helps to understand that a bitcoin has no value at all.” Just to reaffirm his contempt for bitcoin and cryptocurrencies, he added, “losers are ill-informed buyers caught up in the spiral of greed.”
I’m not entirely sure what inspired the former PayPal CEO to sound-off on the blockchain like he did. All I can do is speculate. Perhaps he missed the boat on cryptocurrencies and he’s venting his frustrations. Or, he’s genuinely concerned about the risks posed by unscrupulous ICOs.
Either way, Harris commits a common error when attacking cryptocurrencies: conflating bitcoin with ICOs.
To be sure, the once PayPal head is off-base when claiming that bitcoin is a pump-and-dump. Such schemes don’t last nearly as long as bitcoin has. And almost always, when the dump has occurred, a re-pump is all but impossible. With bitcoin, we’ve seen soaring highs and devastating lows play out over several years.
But the more important point is that Harris’ conflation of bitcoin with ICOs demonstrates considerable ignorance towards cryptocurrencies. The ICO is merely a component of the blockchain revolution. The platform can be used to promote pump-and-dump schemes, and to be fair to Harris, most ICOs are probably just that.
However, that doesn’t discount the fact that ICOs can also serve legitimate purposes. Thus, you cannot call the platform a scam; merely, that some individuals choose to use the platform for scammy purposes.
This is the same logic that gun-control proponents use when they blame so-called “assault rifles” for mass shootings. The rifle itself is just a platform; it’s the deranged lunatic behind the trigger that’s the problem. Addressing symptoms won’t do anything to actually resolving the issue.
Unfortunately, a head exec associated with a major organization like PayPal will generate headlines for their opinions. But keep in mind that’s all this is: an opinion. Like anuses, we all have one.