Cryptocurrency Is A ‘Get-Rich-Quick’ Ponzi Scam: Don’t Fall For It

2013 was the year of memes, selfies, and Miley Cyrus twerking at the Video Music Awards (VMAs). A lot of what happened then shaped pop culture. It was the year of Deepika Padukone, and it marked one hundred years of Bollywood. It was the time when the doge meme was popular. The meme is a Shiba Inu dog looking at the camera like it’s been caught in the act. Coincidentally, it was also the time when cryptocurrency newly began to occupy people’s lives. The doge, being a popular meme, somehow converged with cryptocurrency, gaining popularity to give us the dogecoin.

Elon Musk, the owner of Tesla, and title-holder of the richest person in the world, has been a proponent of dogecoin and a self-proclaimed “Dogefather.” One tweet by the billionaire sent the value of the coin soaring by up to 25 per cent. But despite his love and promotion of dogecoin, the cryptocurrency does not sell the most. Bitcoin does. And it has to do with Bitcoin being the first decentralised cryptocurrency ever to be launched back in 2009.

Musk believes Dogecoin is more effective than Bitcoin in transactions. In an interview with TIME magazine, he said that, “The total transaction flow that you do with Dogecoin has much higher potential than Bitcoin.” But however you see it, cryptocurrency is losing steam. It’s akin to a Ponzi scam.

Cryptocurrency, in simple terms, is a money transaction without government or banking involvement. Unlike physical money, cryptocurrency is decentralised. It is an encrypted data string, based on blockchain technology, that denotes a unit of currency.

Cryptocurrency is created and secured through cryptographic algorithms. These algorithms “mine”–process and validate transactions by a network of computers or specialised hardware such as application-specific integrated circuits (ASICs). Put simply, a computer network–a peer-to-peer network–verifies transactions.

That means, to use Bitcoin or any crypto coin, you need to buy it first. Then you need to use it for transactions. Essentially, you make the coin work through buying and exchanging. These transactions are all recorded. Each transaction is virtually stored. These are called blocks that are stored in a chain. That’s why it’s called blockchain technology.

In January 2022, the cryptocurrency lost $205 billion within 24 hours. Like the ups and downs of Sensex and Nifty, cryptocurrency is also very volatile; the value fluctuates a lot. The problem is the lack of government regulation and environmental concerns.

The lack of government regulation makes cryptocurrency the most favoured technology for tax evaders and criminals. This fear was expressed through a Twitter thread by the creator of dogecoin, Jackson Palmer. Palmer has vowed to distance himself entirely from cryptocurrency. In the thread, he said:

Despite claims of “decentralization,” the cryptocurrency industry is controlled by a powerful cartel of wealthy figures who, with time, have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace. The cryptocurrency industry leverages a network of shady business connections, bought influencers and pay-for-play media outlets to perpetuate a cult-like “get rich quick” funnel designed to extract new money from the financially desperate and naive. Cryptocurrency is like taking the worst parts of today’s capitalist system (eg. corruption, fraud, inequality) and using software to technically limit the use of interventions (eg. audits, regulation, taxation) that serve as protections or safety nets for the average person.

Cryptocurrency seems to be a multi-level marketing scam made for the rich, which also helps them bypass taxes. Two birds with one stone. For people like Elon Musk who keeps whining about paying taxes, this works very well. Not for the average person. The average person has to face the heat of cryptocurrency. Literally.

A blockchain consumes much more electricity than normal. One Bitcoin transaction consumes the amount of electricity a U.S household would for 75 days. This is just one transaction coming from one crypto coin. And the U.S. is a developed country. Many countries in the world lack electricity which makes their cumulative consumption much less. The carbon footprint of Bitcoin per year is pretty much the same as the carbon footprint of Argentina as a whole.

Sweden has proposed banning crypto mining (collecting bitcoins through winning puzzles and other means) in the EU because of environmental concerns. Cryptocurrencies caused a rise in electricity prices in New York, rendering people unable to pay. A similar incident occurred in China where crypto caused supply shortages and blackouts.

Mozilla recently decided not to use Bitcoin due to a lack of legitimacy. Now the hype for both crypto and non-fungible tokens (a crypto-based way of commissioning artists) has died down. It is highly doubtful that crypto will keep up in the future or replace real currency given all the scepticism and the environmental worries.

Real currency, through banking and governing, is important to safeguard the money of an average citizen, Removing it would be fun and anarchical as an idea, but it does not work in the long-term – except for the rich.

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