“If it’s a Ponzi, get in early”: The Ideology of Scam Futures

by Lana Swartz on November 14, 2023

When he opened the seminar that prompted these essays, Fred Turner said that Silicon Valley built more than semiconductors or search engines or smart phones or sharing platforms. Indeed, he suggested that Silicon Valley’s true product is ideology. In my notes, I wrote and underlined, “Silicon Valley creates and retails visions of the future.”

This resonated with my own research. Money—the main technology I study—is one way to do futurity, as I (and many scholars including Finn Brunton, another seminar participant) have argued.  We only accept money from other people today because we think that someone will accept it from us tomorrow, and so on, into multiple tomorrows. When we invest, we are laying bets on particular visions of the future.

Retail investing, whether in crypto or meme stocks or more traditional tech industry IPOs (companies like Tesla or Coinbase are making the distinction ever blurrier), is one way that Silicon Valley quite literally retails a future. If you invest in an asset, you are both supposing and summoning a future in which that asset is worth more than you paid for. Retail investors can be active market participants in the future sold by Silicon Valley, not merely passive feminized “consumers” of that future.

Studying retail investing is one way to explore how Silicon Valley ideologies move from centers of power, such as the actual physical placed called “Silicon Valley,” and diffuse to the rest of the world. Retail investing resembles Althusser’s notion of the classic Ideological State Apparatus. It is a vector of ideology, a way of mediating it.

I have been told, by probably about four different interviewees in crypto, that they (or “someone they know”) became more of an ideological believer in the politics of crypto as they watched the line go up and the potential cash-out value of their investment grow. When the line goes down, they don’t abandon those beliefs. Instead they revise them, and qualify them to rationalize either selling at a loss or “hodling” on.

Some of these futures, of course, are scam futures. I have accidentally become an expert on scams. That’s what happens when you’re a researcher immersed in the arcane worlds of e-commerce and cryptocurrency: you get to know all the ways that scams are produced and prevented. You watch the processes of how the people who build and maintain economic infrastructures decide what’s a scam and what is just business as usual, buyer beware.

As I argued in my article on the 2017 crypto ICO (Initial Coin Offering) bubble (which I’ll draw from quite a bit in the rest of this piece), many of today’s Silicon Valley retail investing opportunities are a frenzied effort by a collective to bring about a future, even though the collective doesn’t necessarily believe in it.

Just as we saw with ICOs in 2017 and NFTs (Non-Fungible Tokens) more recently, investors aren’t just buying a crypto asset that they hope they hope to sell at a profit. They are also buying a vision of a future in which these crypto or Web3 technologies have profoundly disrupted some or all of society.

This kind of retail investing regularly involves literal scams, notably rug pulls and pump and dumps, both of which reveal a kind of arbitrage on belief in the future. Those who are true believers are focused on the long term promised future. Those who make money are focused on the short term. As one interviewee told me, “Everyone tells everyone else to hodl, but no wants to be a baghodler.”

This way of doing futurity is fundamentally characterized by ambiguity and asymmetry. Among those buying in, there is an uneven (but perhaps knowable) likelihood of benefit from the scam and an uneven (and unknowable) belief in the likelihood of its promised future.

It’s clear that those selling ICOs (or NFTs or meme stocks) are more likely to get material benefits now and in a range of possible futures than those buying and speculating in them. It’s less clear, and really impossible to know with any certainty, who really believes in the dream and who is trying to turn a quick buck buying low and selling high.

Those who stand to benefit and who are cynical about promises offered by today’s new economic formations could be called scammers, but the scam is only possible because of the effervescence resulting from the collective enthusiasm of everyone involved. In my article, I call this a “network scam.”

Were the VCs who were (maybe) duped by Theranos similarly participating in a network scam? Does the scamminess that happens when we use Robinhood on our phone following the same logic as venture capital? Can we trace a ideological flow from one site to another?

I do think it’s important to note that retail investing doesn’t just copy-paste ideologies from founders and VCs and technocrats into the heads of Robinhood users. We need to understand better how the ideologies, ramified via markets and gamified apps, changes as it is circulated and inhabited. As the entire project of media and cultural studies has shown us, it’s important not to be content with just-so stories.

Nevertheless, as crypto impresario Dave Portnoy put it as he was launching his own cryptocurrency, “If it’s a ponzi, get in early.” Scammers don’t usually invite their marks to participate in scams, promising that they will at least have a high relative position in the scam pecking order. In this milieu—and the one that brought riches to countless VCs through vaporware if not fraud– traditional notions of progressive consumer protection fall flat.

I grew up in Florida, a land quite literally terraformed by real estate scams. There is an osmotic threshold where scam reality just becomes a reality. Even if the promised future doesn’t come to be, some future inevitably does. What kind of future happens in the aftermath of scams? The key question on my mind these days is: how do you keep living in a future that was never meant to actually exist because it was supposed to be a scam?



Peter Dorman 11.14.23 at 4:55 pm

My introduction to libertarian monetary populism, to coin a label, was through my students. When teaching economics, I found a subset of them to be deep believers in (a) the centrality of monetary technology (actual production of paper money as well as the methodology of open market operations by the Fed) to economic outcomes in general, (b) the profound evil, sometimes conspiratorial, of government-controlled money, and (c) our coming liberation at the hands of a “free”, self-regulated money system. It was similar to old-style libertarian free banking, but also fixated on monetary forms themselves and the digital technologies that would revolutionize them. The student version was often crude, but I assumed that it derived from more elaborate doctrines they absorbed from their parents, online sources, etc.

These students, if they could afford it, often invested in obvious scams. That raises the very important question of the OP, what is the relationship between the ideology and the scam? Are those at the top of the Ponzi food chain simply very cynical exploiters of the devout multitudes, or are they believers themselves? If so, how to reconcile the objective scamminess of the investment vehicles with actual belief? (The same question is raised, BTW, by the role of scam financing in the right wing fringe in nonmonetary realms, the fake health aids, legal pseudo-insurance, and the like.)

I don’t have an answer and suspect this is the sort of question that will ultimate have to yield to empirical research. In the meantime, here’s an analogy. In the 1840s word went out that there was lots of gold in the rivers and streams of California waiting to be panned. Some of those advertising this hope were no doubt aware that the claim was mostly fraudulent, but they stood to gain by the influx of gold hounds. And that’s what happened. The people who got rich were not the panners but the shop owners, developers and others who catered to a permanently much higher anglo settler population. Path dependence induced by a falsehood.


someone who remembers the "cosbycoin hack" 11.14.23 at 5:13 pm

Remember the “honest Ponzi” and ponzicoin? They don’t even put a fig leaf on it most of the time. with infinite money available for any boy that can make a computer do what he wants 6 times out of 10, why should they?


B 11.14.23 at 5:42 pm

Read. Technical and conceptual errors of crypto.
The False Premises and Promises of Bitcoin


Derek Bowman 11.14.23 at 6:53 pm

Dan Olson has a number of well-researched videos on his YouTube channel relevant to this intersection of scam, futurism, finance and technology. Here are a few recent highlights.

“Line Goes up – The Problem with NFTs”: https://www.youtube.com/watch?v=YQ_xWvX1n9g

“This is Financial Advice” (on retail investing and conspiracy theories): https://www.youtube.com/watch?v=5pYeoZaoWrA

“The Future is a Dead Mall” (on the Metaverse and the scams/hopes of VR): https://www.youtube.com/watch?v=EiZhdpLXZ8Q


Typhoon Jim 11.14.23 at 7:22 pm

Daniel Davies’ account of operators of prime bank rate investment scams would imply that they are true believers at least in the utility of these schemes, as such people like to invest in other such schemes when given the chance. It is likely that it is a mix of believing that they can get in and out of a ponzi early and that in the hands of someone, somewhere, there must be an efficacious financial rite that unlocks the occult influences of Pluto.

My intuition given what I know of crypto people is that the proportion of belief in the story being sold is much higher if only because it is novel and plausible if you accept its novelty.


Kevin Cox 11.14.23 at 7:30 pm

Investing in money is a game and a gamble. There is an alternative, and that is to invest in assets. The trouble is that people with more money want us to keep investing in money – not assets – because it is inevitable that they will sooner or later acquire our money.
There is a solution, and that is to share the profits (the increase in the money) with the party that supplied the money. Humans worked out it was better to reciprocate than to steal. The capitalist system will fix itself when it remembers that sharing is better than keeping it all to yourself.


Alex SL 11.14.23 at 9:43 pm

“Network scam” is a good term – maybe it or something along these lines could lay to rest the perennial, distracting discussion whether terms like pyramid scheme or Ponzi can properly be applied to ‘crypto’ and NFTs. The key point is that many bag-holding victims become enthusiastic promoters of the scam themselves, that its design turns scamees into scammers themselves. Multi-level-marketing did the same, but crypto manages it without even a formal hierarchy.

An IMO underappreciated aspect of network scams is how they affect the ethics and sanity of the participants, for want of a better word. Any participants in a network scam smart enough to put their shoes onto the correct feet at least two times out of three must know at a fundamental level that their only way of walking away with a profit is by recruiting others who will be stuck with an equivalent loss. This is well demonstrated by their public behaviour, of course: if this was a great idea that is assuredly going ‘to the moon’, they would not need to proselytise. That they proselytise so loudly on social media is proof that they understand the nature of the scam.

This means that they do not merely get turned into enthusiastic promoters of a scam that they don’t know is a scam – they get turned into conscious liars. That surely must lead to weird cognitive dissonance and be unhealthy for their psyches.


both sides do it 11.14.23 at 10:03 pm

how do you keep living in a future that was never meant to actually exist because it was supposed to be a scam?

Donald Trump’s face on election night as what was supposed to be a grift turned into reality


Liam 11.14.23 at 11:31 pm

What kind of future happens in the aftermath of scams?

To add to the example of Florida, another scam-aftermath-future is the British, American, and (to an extent) European railway network system, which were absolutely the products of 19th century scam activity and fraud. The railway bubbles were absolutely notorious for being run by grifters, shameless liars, criminals, cheats, bribe merchants, bagmen and their dupes, but also—and this is an echo of our crypto future—beside the financial crime going on behind the curtain, they had an ability to draw in the most talented and resourceful engineers of their day.

The railway bubbles happened to leave behind the permanent ways and concrete infrastructure that now exist as real, sustainable transport networks. What happened was that as the criminals left, the State moved in…


engels 11.14.23 at 11:48 pm

To what extent does the “network scam” analysis apply to grad school/academic careers?


David in Tokyo 11.15.23 at 11:09 am

“To what extent does the “network scam” analysis apply to grad school/academic careers?”

Grad school/academia is a classic ponzi scheme, pure and simple. It don’t need no high-falutin’ words like “network”. A professor creates some number of PhDs, whether it’s a few a year (comp. sci./the hot sciences) or a couple a decade (history/lit), it’s still a lot compared to (drum roll) the number of tenured positions that that professor creates in his/her lifetime, which is exactly one, which he/she creates by croaking.

(Haven’t I said this before????)


Trader Joe 11.15.23 at 1:39 pm

Thank you for the excellent thoughts.

As a professional investor we often talk about the moment when “the hype turns real” sometimes that actually happens (like when a drug gets approved or a technology item goes gangbusters) and sometimes its just a thing widely believed to be true.

Right now for example AI collectively and weight loss drugs are items where the hype turns reals. There are tangible benefits to these things but the supposed benefits the “hype” people are valuing and paying for in stock/asset prices supposes a future many times greater than what can be empiracally proved right now.

Bitcoin and Ethereum (in my opinion) have reached the point where they are sufficiently widely believed in that despite everything the naysayers say (much of which is accurate, but also a lot of which is crap) the genie isn’t going back into the bottle. Indeed tangible regulation and guardrails are being constructed so that the genie lives forever as a tradable commodity no different than diamonds, gold or currency.

Is bitcoin a scam? Maybe at first. In my opinion it isn’t now. That doesn’t mean I recommend it as an investment for you, me or anyone else (I don’t recommend oil or gold futures either).

But it is a real thing – the banking world has legitimized it and you’re wrong to think its going away. We can debate if its worth $30, $30,000 or $1 million, but that’s debating worth – not existence.


bekabot 11.15.23 at 2:42 pm

@ Peter Dornan

Yes, but there really was gold in them thar hills. Gold was actually panned. What’s more, gold is just about universally conceded to be valuable (the question of whether or not the assessment is accurate is one on which I pass). Last of all, it’s not true of gold, or at least it wasn’t then, that gold is useful in illegal transactions because it’s hard to trace. None of this is true of crypto.


Lana 11.15.23 at 3:25 pm

@liam Yes! I have been looking at this example for the book I’m working on this topic! Thank you for pointing this out.


Harry 11.15.23 at 3:38 pm

“Grad school/academia is a classic ponzi scheme, pure and simple. It don’t need no high-falutin’ words like “network”. A professor creates some number of PhDs, whether it’s a few a year (comp. sci./the hot sciences) or a couple a decade (history/lit), it’s still a lot compared to (drum roll) the number of tenured positions that that professor creates in his/her lifetime, which is exactly one, which he/she creates by croaking.”

It’s fortunate, then, that the vast majority of professors don’t produce any PhDs (or even teach in graduate programs).


Alex SL 11.15.23 at 9:12 pm

David in Tokyo,

I agree that many professors produce considerably more PhDs than their field will ever be able to employ, and they gain from that in cheap labour and co-authorships to put into their publication list, so in a sense they are engaged in a Ponzi. But the correct number of PhDs generated per teaching professor clearly has to be above one. There are PhDs who variously leave the field entirely, perhaps simply because they realised it wasn’t for them after all, stay in the field but in a research agency that doesn’t confer doctorates (imagine me pointing at myself here), or stay in the field but as consultants, managers, industry lab leaders, or public servants.

A professor can easily train five PhDs in their career without doing a Ponzi. The ones that I consider of questionable ethics are those who have three concurrent PhD students at any given year of their thirty-plus year professorial career.

Trader Joe @12,

Crypto is a scam. There are two promises, which promoters shamelessly switch between as required: (1) it is money and will replace government-controlled money to increase our freedom and (2) it will make the adherents of the crypto cult rich if they merely buy some and hold onto it. The second one is sometimes euphemistically described as “hedge against inflation”, but people don’t buy crypto because they hope it stays constant in value; they want it to “moon”.

These two promises are incompatible. If it is money, it won’t make anybody rich by holding onto it. If it has “bull run” after bull run and makes early buyers rich, it cannot work as money.

The first claim can potentially be true as a niche case for one or two cryptocurrencies that remain approximately stable in price. I am given to understand that Monero and Tether are used for a variety of criminal activities where people are willing to risk losses that wouldn’t haven with actual money in exchange for lower risk of having transactions frozen, which would reliably happen if they used bank transfers for their purposes instead. In that sense, they have been adopted as money by certain communities.

If that is success, okay then, but only in the sense that computer viruses or spam emails are a success to very few at the expense of the vast majority of people. And that still leaves thousands of other cryptocurrencies that aren’t working as money. Bitcoin in particular is completely unusable as a currency because of its extremely limited number of transactions per time unit, high transaction fees that will only have to increase as mining rewards decrease, the ease with which people can make mistakes that lose them their crypto, and the impossibility-by-design of clawbacks. It was presumably created not as a scam but as a currency by an ideologue who didn’t understand what currencies are. But because it cannot work as a currency, claims it will work as a currency now make it a scam.

Whenever the second claim of “going to the moon” comes true, as it has in past hype cycles, the early buyers who time their exit right and do not accidentally enter a wrong digit or have all their money stolen by an “exchange” will walk away with undeserved gains in actual money (undeserved in the sense of not having contributed anything to society in exchange for their riches) at the expense of the considerably more numerous later buyers who are left “holding the bag” when the price in actual money, which cannot go to infinity forever, stalls and then decreases again. It is a standard get-rich-quick-scheme. Logically, there will always be more losers than winners, so the claim that crypto will make all cult members rich makes it a scam. In other words, if crypto isn’t a scam, then the South Sea Bubble wasn’t either.

Nobody denies the existence of crypto, by the way, but underlying your argument seems to be the regrettably common assumption that people paying actual money for something demonstrates its value. That is to confuse price and value. The entire point of a scam is to get people to pay a price for something that has no value, so arguing that a price demonstrates absence of a scam is circular reasoning.


roger gathmann 11.16.23 at 6:51 am

Peeps underestimate the Great Scam of the OOs – the ever disappearing WMD that “justified” the American invasion and occupation of Iraq. I would venture a guess that the if you drew a venn diagram of those figures – mostly white libertarian incling men – who believed that up to and beyond its nullification as a convenient fiction and a venn diagram of those who beliecve in the crypto scams, they would contain the same members – save for the age difference. State sponsored scams have a way of both undermining public trust and seeding “private” scams. We – the U.S. – has never recovered from the Iraq war – or Global War on Terrorism, the acronym of which even sounds like a scammercoin: GWOT.


Trader Joe 11.16.23 at 11:42 am

@16 Alex

Respectfully, you are conflating valuation with existence and usefulness. Is Bitcoin at $37,000 a winning investment? For most people probably not, but as you say some may yet profit from it.

Is Bitcoin a thing which can be bought and sold between two willing parties at an agreed upon price? Does it facilitate the movement of currency across borders without exchange costs? Does it have price discovery? Can it be hedged? Yes to all of these.

You may chose to never own it. Most people may choose to never own it. But it does exist and major mainstream companies from Visa and Paypal to Blackrock and Fidelity investments have spent millions building infrastructure and support for when regulations ultimately catch-up to its reality.

Don’t conflate whether someone makes or lose money with whether it is a financial tool/asset. People make and lose money every day in gold, oil and stocks but we don’t deem all of these scams.


Alex SL 11.16.23 at 12:22 pm

Trader Joe,

I do not know who you are arguing against who has doubted that “it does exist”, but nobody like that seems to be in this reply thread. The point is that it is a scam, which you denied at #12. It is a scam because it is promoted with promises that cannot possibly be fulfilled, like “we will all get rich quickly without effort” or “this will become the world currency despite allowing only up to two transactions per human across each human’s lifespan if that ever happens”. If mainstream companies promote blockchains with lies, they will still be a scam. If a president tries to build a ‘Bitcoin City’ special economic zone based on lies, it will still be a scam. A thing can exist and scam a lot of people and yet, despite it scamming many, many people, it remains as much of a scam as when it scammed fewer people.


bekabot 11.16.23 at 7:03 pm

“People make and lose money every day in gold, oil and stocks but we don’t deem all of these scams.”

Well, gold and oil aren’t scams. Gold and oil are physical materials with agreed-upon uses. When you mine gold the mining isn’t a metaphor and when you drill down into an oil deposit it isn’t a figure of speech. Gold and oil can be scammed with, but they themselves can’t be scams, because they themselves are real things. The value of gold may be mostly notional (like that of stocks and greenbacks) but it has the distinction of having been thought to be valuable, consistently, for millennia. That’s what gold-bugs like about it, in fact. They realize that it’s a clog. They recognize that a currency can go over the moon, and that’s what they want to prevent. (Good for them.) The same sort of thinking used to inform the high-school economics classes I sat through (which seem to have been discontinued along with the classes in civics) where we were taught that the way to secure a currency was to back it up with some kind of commodity — like gold or oil. (We were also taught that the ultimate guarantor of a currency’s soundness was a nation’s productivity, but that’s another post.) Once yoked to a commodity, a currency was less likely to take off for outer space in such a way as to stop being useful to earthlings. That’s the philosophy I grew up with. It’s attracted a great deal of ridicule since then, I notice — but I’ve only ever heard it made fun of — not refuted.


Trader Joe 11.17.23 at 11:42 am

@19 Alex

Where’s the scam? If I someone sells me bitcoin at #37,000 and I buy it in a fair trade – one party believes the value will rise and the other believes it will fall. One person will be right and the other wrong. Zero sum. Just like happens every day for thousands of listed securities.

Who benefits? Who’s the scammer and who’s the scammed? If someone makes a good or bad investment decision that doesn’t mean their counterparty was scammed.

Believing an asset will rise in value isn’t a scam. Why own gold. Why own oil. Why own shares of XYZ. One party thinks the value will rise, the other thinks it will not. That’s a market.

The things you are saying may have been true a decade ago when it was an untested vehicle trading on largely unregulated exchanges. This is not really true anymore for the vast majority of transactions. Bring your understanding up to the present.


engels 11.17.23 at 7:49 pm

Believing an asset will rise in value isn’t a scam.

Could I interest you in some tulips?


Alex SL 11.18.23 at 12:12 am

Trader Joe,

I have explained where the scam is in previous replies, and if you care to understand, it would be easy for you to take a quick tour of the Bitcoin and crypto reddits to get a feeling for the absolutely unhinged claims made and cultish behaviour displayed in those spaces, to watch a few videos or interviews of Sam Bankman-Fried, Michael Saylor, ‘CZ’, or Alex Mashinsky and see if they come across as trustworthy and if their past claims have held up, or read or watch critics like Molly White, Cas Piancey, Bennett Tomlin, or David Gerard. SBF’s “we put money in a box” interview is particularly striking, because it seems as if he really did believe that Ponzi schemes will work forever if you use crypto instead of actual money. It has strong “you oldsters don’t understand that this time it is different” energy, which is, of course, what the marks are made to think in every new speculative bubble.

Again, for one last time:

Bitcoin (and other crypto) is being advocated as a currency, when it cannot function as a currency. That’s a scam because it is a false claim. Incoherently at the same time, Bitcoin (and other crypto) is being advocated as a get rich quick scheme – buy in, hodl, and you will become rich without effort. That’s a scam because it is a false claim; most people have to lose by necessity for the minority to get rich. Cryptos are advocated as a safe and fast way of transacting without middlemen, when in reality they are horrifically unsafe to use, very slow, with high transaction fees, and have middlemen in the form of “miners” and software developers, only with much less enforcement of regulation and safeguards than for the middlemen in actual money transactions. That’s a scam because it is a false claim.

Blockchains have been (I think that hype is over) advocated as a revolutionary new software architecture for businesses, when in reality every application with a bockchain can be improved by removing the blockchain. That was a scam because it was a false claim. The main selling point behind DAOs is that they can do things that actual corporations can’t get away with, like steal other people’s intellectual property, because, look!, we are decentralised, nobody in particular is responsible. That’s not how intellectual property laws work, so that’s a scam, because it is a false claim. They also claim to be able to automate away trust relationships, and that is false too, because somebody writes the code.

NFTs were advocated as a get rich quick scheme, see above, but also as a way for artists to get something like royalties automatically, when that wasn’t really automatically part of NFTs and would still have to managed by the system around them, as always. That was a scam because it was a false claim. The vast majority of generated image collection NFT projects were at any rate rug-pulls; I assume I don’t have to explain how the seller running off with the money without fulfilling the promises under which he sold the NFTs is a scam. The real purpose of NFTs was to find a couple of new bagholders who bring actual money into the crypto system when they buy Ether to buy NFTs. So, that was a scam.

Perhaps you can understand an analogy. Imagine there is an enormous multi-level-marketing scheme that promises to its hundreds of thousands of cultish followers on social media, at enormous, carefully choreographed events, in interviews, in influencer videos, and in advertisements, that anybody who joins can get rich easily by selling talismans to their friends, because these particular talismans cure cancer and autism. This would be a fraud, because, no, not everybody can do that, because everybody on the planet cannot become rich by selling talismans to each other even if they work as promised. That is not how the economy can possibly work. In reality, a few people at the top will get rich by defrauding the other 98% who are left stuck with boxes full of unsold talismans. Also, this would be a fraud because a talisman doesn’t cure cancer and autism.

What you are arguing is that because some people buy talismans in the hope of re-selling them at a profit to an even greater fool later, this gigantic MLM convincing its followers they can all get rich is not a fraud; in other words, as long as there are some people left who still hope to join the ranks of the fraudsters instead of the defrauded, there can’t be a fraud! And you are arguing that because people can indeed buy talismans, the claim that the talisman they buy cures cancer isn’t a fraud.

I am extremely puzzled why you don’t see that this is your argument and that it doesn’t make sense. The promises used to sell crypto are lies. That is the criterion for deciding whether something is a fraud or not, not whether some people still haven’t figured that out.

Your analogies, on the other hand, do not work because they involve commodities that have actual uses. Gold has a bunch of weirdoes attached to it, but it is used in a variety of industries and as an ornament or for decoration, most enthusiastically in India. Oil, for better or for worse, drives combustion engines. Shares give you part-ownership in a company that provides valuable products or services. None of that is true for Bitcoin etc. The only reason cryptos are a thing at all is because fools think an even greater fool will pay more for them later; if you remove that, the market collapses, leaving perhaps one or two cryptos out of thousands that would continue to be used for criminal transactions. That is not at all the same as going long or short on a commodities market, and I am puzzled you don’t see the difference.


J-D 11.18.23 at 4:10 am

Where’s the scam? If I someone sells me bitcoin at #37,000 and I buy it in a fair trade – one party believes the value will rise and the other believes it will fall. One person will be right and the other wrong.

There are lots of situations where people buy and sell with the buyer expecting the price to rise and the seller expecting it to fall and where there’s no scam; there are also lots of situations where people buy and sell with the buyer expecting the price to rise and the seller expecting it to fall and where it is a scam. If I sell something expecting the price to fall while the buyer expects the price to rise, it might not be a scam, but it might be a scam. The fact that the buyer expects the price to rise and the seller expects it to fall is not enough information by itself to show that it’s not a scam. If the buyer of a bitcoin expects the price to rise and the seller expects it to fall, that’s not enough information by itself to show that bitcoin is not a scam. If that’s all you’ve got, you’ve got nothing. You give the impression of not wanting to believe that scams ever happen. However, sometimes scams do happen, whether you want to admit it or not.

Is bitcoin a scam? I don’t know how we could tell, but I do know that we can’t tell just from the fact that people voluntarily buy and sell them: that’s exactly what I would expect to happen if it were a scam. Not all voluntary transactions are scams, but all scams are voluntary transactions: if they weren’t voluntary, we wouldn’t call them scams, but something else.


AnthonyB 11.18.23 at 8:32 pm

When you sell a futures contract, you may be betting on a price decline or you may be selling to lock in a profit on a contract you bought. Either way, the other party to the contract is doing the same thing mutatis mutandis. (It is unlikely you will ever know the identity of your counterparty; if you’re trading on the floor you will know the identity of the trader. A clearinghouse will be involved.). Futures trading is a genuine zero-sum game. In a trader bar, you’ll see a table of happy fellows; they may be happy for the same reason we are unhappy: gold futures went down (for example).


J-D 11.19.23 at 4:39 am

Is bitcoin a scam? I don’t know how we could tell …

Yes, that’s what I wrote, but when I wrote that I hadn’t read the comment by Alex SL which now appears immediately before mine, and which seems to me to give good reasons for concluding that bitcoin is a scam.


Trader Joe 11.27.23 at 2:26 pm

Alex @23

Thank you for your very detailed response. I’m certain I’ll not change your mind about the validity of Bitcoin (or its many friends) so will not endeavor to do so. If you aren’t interested in owning them, don’t. No one will compel you to do so.

I would only assert that quite a bit of your commentary is highly dated with respect to blockchain in particular (another discussion altogether but blockchain is used daily in numerous industries). Beyond that your perception of why people buy/sell digital currency is confined to a comparatively small cadre of small-time traders who likely (as you say) have no clue what they are doing.

The growth in transactions in digital currency is the result of sponsorship by regulated financial institutions. This is where the future of the asset lives and why, despite your protestations, its likely to increase in value and impact over the next several decades. Lets check back in a decade and we’ll know for sure who is right.

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