Bitcoin has devolved into a “pyramid scheme,” warns analyst who foresaw the dot com crash

Monday, August 7, 2017
By Paul Martin

by: Ethan Huff
Monday, August 07, 2017

Everybody’s catching bitcoin fever these days as the cryptocurrency craze reaches new heights. But a financial analyst who’s been watching the digital alternative to fiat currency unfold over the past several years says that people should be careful because cryptocurrency isn’t real, and in many ways resembles what some have colloquially referred to as a pyramid scheme.

While seemingly innovative on its surface, the cryptocurrency format is hardly a guarantee of financial security, warns Howard Marks. As risky as things like Federal Reserve Notes are, since they, too, are backed by nothing but a promise of value, cryptocurrencies like bitcoin are similarly questionable because they don’t technically exist.

Sure, there are some valid uses for bitcoin, especially once its value stabilizes and its format is standardized. But do investors, and especially those buying into the concept for speculative purposes, really want to risk losing it all? This is what Marks suggests could happen, drawing from earlier predictions he made about the dot com bubble burst at the turn of the new millennium. (Related: Bitcoin is constantly changing, and it’s important to keep up with what’s going on. Stay tuned at

Marks wrote in a recent memo:

People tell me these currencies are solid, because (a) they’re secure against hacking and counterfeiting and (b) the software used to generate them strictly limits the amount that can be created. But they’re not real!!!!!

Cryptocurrency value only exists relative to fiat value, both of which are made up

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