Why Ethereum is a scam and Bitcoin will succeed

I’m going to tell you why I think Ethereum is a scam. And if you’re reading this, then you probably already know why. But first, let me explain who I am and where my interests lie.

I’ve been involved with cryptocurrency since 2011. In fact, I was one of the earliest adopters of Bitcoin back in 2010. Back then, I thought it was just another way to pay online stores. I didn’t realize it could change a fundamental mechanism of our society.

But I was fortunate enough to run a business that eventually accepted Bitcoin as payment, and the first thing that struck me about Bitcoin was its community. That community was the most honest and sincere group of people I’ve ever been involved with. No manipulation, no dishonesty, no ulterior motives. Just innovation, teamwork, and people working for something they believed in.

When Ethereum came out, I was very excited at first. More people experimenting with this technology! This is great! But over time, it became very clear that there was something very wrong going on.

It started out with the ICO mania of summer 2016. Around that time, I wrote articles warning people about the potential consequences of this experiment. Yes, you could make a lot of money in a short time. But if the experiment failed, it would all be gone just as quickly. And make no mistake, I believe that this is going to end in failure.

When the DAO happened in 2016, I thought that was it. This was the proof that Ethereum was going to fail. The split to Ethereum and Ethereum Classic was the proof that the community was going to fail. Every time something else happens, I say to myself “Well, now it’s definitely going to fail for sure.” But it keeps failing up to this day, and yet newcomers still “invest” in Ethereum. Why?

The answer is simple: deception. The people involved are either deceiving others or themselves, and I don’t know whether to classify them as naive or manipulative. Perhaps a little bit of both.

Deception of the Highest Order

Let’s start at the top, shall we?

Vitalik Buterin is a genius, there is no question about it. When he talks about the technology and how it’s going to change the world, he speaks with confidence and clarity. He knows what he’s doing.

But when he starts making statements about the future of the world, that’s where he loses me. His articles about how “building a blockchain island” makes sense from an economic perspective is just the latest in a long line of silly ideas. It’s delusional, just like his articles about how governments won’t simply go away soon.

I’ve seen this same pattern before, with no other than Ron Paul. The man was a genius when it came to the subject of monetary policy. He had answers and knew what he was talking about. But when he spoke about the world and what it would be like “When we win,” it was just as delusional as what Vitalik has said.

They’re both intelligent men. But in the case of both of them, I’m not sure if it’s a case of self-deception or just outright dishonesty. Perhaps it’s a mixture of both. Whatever the reason, they’re both wrong about how the world “should” work, and that’s a major problem.

None of these blockchain islands are going to succeed.

It’s one thing to be optimistic about the potential of a technology. I’m more than optimistic about Bitcoin and cryptocurrency in general. I’m confident that it’s the future of money. But I draw the line when it comes to talking about how the future is going to work in general. The fact of the matter is, it’s all based on lies and wishful thinking.

The monetary policy lie

The world of Ethereum is filled with lies. The price of Ether is based on lies. The core lies at the very foundation of it:

“By having a limited supply, Ethereum tokens are more valuable as demand increases.” This is a lie.

The monetary supply of Ethereum is based on lies. More importantly, the entire concept is based on lies. There is no guarantee that it will be valuable. There is no guarantee that decentralized applications will take off. There is no guarantee that it won’t be replaced in a year. There is no guarantee that a new vulnerability won’t be discovered in a matter of days. There is no guarantee that a similar system won’t be created that is better than Ethereum.

Everywhere you turn, there is dishonesty. The day after the DAO fork, we were all celebrating. The price isn’t based on supply and demand, it’s based on speculation. “Investing” in ETH is like flipping a coin. Half the time you’ll double your money, half the time you’ll lose everything.

Bitcoin on the other hand at least is based on an excellent idea: A currency with a fixed supply that can’t be manipulated by any single entity.

Why Bitcoin will succeed

Cryptocurrencies are, in their core, a rejection of the current financial system. So why are so many of them based on Econ 101 fallacies?

There are two types of coins: those with a practical purpose and those backed by convincing marketers. Most cryptocurrencies fall into the second category with no real long-term value.

Bitcoin is the exception. It’s a practical currency and has a limited supply.
When it comes to the future of money, there is Bitcoin and there is everybody else.

Bitcoin isn’t the future of money. It’s the last money.

The funny thing about this is that it doesn’t matter if Bitcoin is adopted or not. It’s already succeeded in its goal. The whole world will either move towards a similar system or adopt a complete digital currency. The future is inevitable.

But of course you also have Ethereum, which is attempting to do something similar while at the same time creating a platform for others to build on top of.

That’s the lie I was talking about earlier. They’re trying to make money without a practical purpose. The only reason you’re “investing” in this is because you’re betting that people will continue to “invest”. That’s classic Keynesian economics…which hasn’t worked for decades and will never work.

They’re attempting to do something that can’t be achieved: creating value out of nothing.

It will fail spectacularly.

And the best part is, everyone will go back to Bitcoin afterwards because it’s better than the corrupt financial system.

TL;DR

Altcoins are a scam. Bitcoin is king.

I’m a Bitcoin permabull.

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