Bitcoin is a ‘pyramid scheme,’ says an economist

Bitcoin • January 2, 2020, 2:00AM EST
Oleg Samoylov/ shutterstock.com

Tendayi Kapfidze, chief economist at Nasdaq-listed online lending marketplace Lending Tree, has said that bitcoin is a “pyramid scheme.”

“You only make money based on people who enter after you,” Kapfidze told Yahoo Finance in an interview published Thursday. He added that bitcoin has “no real utility.”

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“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,” said Kapfidze.

Bitcoin has earned many monikers in its 11 years of existence - a "scam" (by Bill Harris, founding CEO of PayPal); "rat poison" (by Berkshire Hathaway vice chairman Charlie Munger) and "rat poison squared" (by billionaire investor Warren Buffett), among others.

Yet, a recent report from Bank of America names bitcoin the single best investment of the last decade. The report said if you invested $1 in bitcoin at the start of 2010, it would now be worth more than $90,000. Last year alone, the value of one bitcoin rose more than 85%, making it one of the top-performing financial assets in the world.

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Yogita Khatri is a senior reporter at The Block, covering all things crypto. As one of the earliest team members, Yogita has played a pivotal role in breaking numerous stories, exclusives and scoops. With nearly 3,000 articles under her belt, Yogita holds the records as The Block's most-published and most-read author of all time. Prior to joining The Block, Yogita worked at crypto publication CoinDesk and The Economic Times, where she wrote on personal finance. To contact her, email: [email protected]. For her latest work, follow her on X @Yogita_Khatri5.