'Bitcoin Is a Scam... a Colossal Pump-and-Dump', Says Former CEO of PayPal and Intuit

Siamak Masnavi

Bill Harris, former CEO of Intuit (1995-1999) and PayPal (1999-2000), in a post for Recode, calls Bitcoin (BTC) a scam and "a colossal pump-and-dump scheme, the likes of which the world has never seen."

In this article, Harris, who is the founder of online personal wealth management company Personal Capital, argues that "a bitcoin has no value at all" since it fails as a means of payment (very few places accept it, in addition to the problem of price volatility), it is not a good store of value (again, due to its extreme price volatility), and it lacks any intrinsic value.

He claims that the best use case scenario for cryptocurrencies is "criminal activity" since crypto transactions are harder for the authorities to investigate. He says that's why Bitcoin's heaviest users are criminals. To prove his point, he points out that crypto exchanges are not that safe, that many ICOs are scams, and that much of remote hacking involves cryptojacking.

Next, Harris explains that even the non-criminal portion of Bitcoin's users are not that innocent since most of them don't bother to report the sales of their bitcoins to the tax authorities.

He then moves on to complain about how slow and expensive it is to send someone bitcoin.

And, finally, as if all of that was not enough reason for him to dislike Bitcoin, he says that Bitcoin is "absurdly wasteful of natural resources" since the process that creates them -- mining -- is computationally expensive and requires a lot of electricity.

Bitcoin’s Crash Led to Over $1.6 Billion in Liquidations on BitMEX

The price of Bitcoin dropped from over $7,400 to a $4,100 low in a 24-hour period, before recovering to over $5,500 at press time. The price crash saw over $1.6 billion in liquidations on crypto derivatives exchange BitMEX.

According to data from Datamish, a total of $1.17 billion worth of longs were liquidated yesterday, March 12, the so-called “Black Thursday” that saw the price of BTC start to crash. The cryptocurrency wouldn’t hit its $4,100 low until today at 02:00 (UTC), which means the liquidations kept on going, with $485 million liquidated so far today.

Notably, the cryptocurrency’s recovery has also taken a toll on leveraged short positions. While on the Black Thursday $14 million in shorts were liquidated, so far today an additional $2 million were wiped out. In total, over $1.6 billion in leveraged positions were liquidated on BitMEX.

Bitcoin's priceSource: CryptoCompare

Other cryptocurrencies accompanied Bitcoin’s price drop, which saw the cryptocurrency space lose around $93.5 billion in 24 hours. Behind the price drop are believed to be various factors, including a significant drop in all major U.S. equity indices, which went into bear market territory for the first time in a decade this week. The Dow Jones Industrial average fell by 10%, the most since the Black Monday in 1987. These drops continued even after the Federal Reserve announced a simulative bond-purchase plan.

On top of this, the World Health Organization has declared the COVID-19 a pandemic, and in response to the situation U.S. President Donald Trump revealed a travel ban from Europe to the U.S., which excluded the United Kingdom.

The sell-off affected the safe haven asset narrative Bitcoin had, as investors moved their funs to U.S. Treasuries when things went awry. The drop, however, is believed to have been inflated by the long squeeze it caused, as it added to the downward pressure.

Featured image via Unsplash.