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Bitcoin "greatest scam in history" says founding PayPal CEO

Bitcoin “greatest scam in history” says founding PayPal CEO

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The affinity for Bitcoin is swinging in both directions with one venture capitalist protesting that it will be bigger than the internet while a founding CEO of PayPal calls bitcoin the greatest scam in history.

The former being Tim Draper — an early investor in Tesla, Hotmail, and Skype — who proclaimed that bitcoin will be bigger than the Iron Age and the Renaissance. The latter is Bill Harris, former CEO of Intuit and founding CEO of PayPal and Personal Capital.

Harris, in a guest opinion piece on recode.net, called bitcoin a “colossal pump-and-dump scheme the likes of which the world has never seen.” The former CEO pointed out that, according to Ernst & Young, 10 percent of the money raised for ICO’s (initial coin offerings) has been stolen.

Harris adds that while crypto enthusiasts claim bitcoin has value, he argues that cryptocurrency actually has no value at all. He makes three points that back his claims.

The first being that bitcoin is no means of payment since the cryptocurrency isn’t accepted in most places, and other types of cryptocurrencies almost nowhere at all. His second point is store of value. Harris argues that Bitcoin’s volatile market price makes storing it irrational adding that crypto exchanges haven’t proven to be reliable and trustworthy.

His second point has weight behind it as seen by the recent heist of $3.5 million dollars from Indian-based crypto exchange Coinbase.

The third point made by the former PayPal CEO is that bitcoin has no intrinsic value. Harris says Bitcoin can be explained by the greater fool theory, which states that something has value only if other people will buy it a higher price.

Harris does, however, say that there is a place for bitcoin in the world.

“Cryptocurrency is best-suited for one use: criminal activity,” Harris writes in the post. “Because transactions can be anonymous — law enforcement cannot easily trace who buys and sells — its uses are dominated by illegal endeavors.”

That last remark may be old news as earlier this month Quebec Chief Scientists Rémi Quirion — in a post on a Canadian government research funded website — posited that claims of bitcoin’s illegal activities are blown out of proportion. 

There is no definite answer as to how cryptocurrency will play out in the future, some countries have flat-out banned it while others have enacted regulations to monitor the digital currency. And in the U.S. more recently, New York’s State Attorney General Erick Schneiderman launched an inquiry into thirteen cryptocurrency exchanges to probe their policies and practices.

One thing is certain, there’s plenty of pundits on both sides of the fence arguing bitcoin’s legitimacy in the world.

 

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