In April 2018, Vox.com published an article by Bill Harris (former CEO of PayPal) titled “Bitcoin is the biggest scam in history”.
The article at the time was also picked up by Forbes and resonated strongly in public opinion, although it did not cause impacts on market prices.
Even PayPal opened up to Bitcoin
On 24 April 2018, the price of BTC opened at $8,900 and closed at $9,600, thus an increase of almost 8%, though it closed the next day at $8,000.
At the time it was already quite clear that Bill Harris was most likely wrong but today, with the price of Bitcoin up to $47,000, those claims have really aged badly.
PayPal itself, which Harris left in 2000 after only one year as CEO, opened up to Bitcoin last year, allowing first the buying and selling of BTC and then even payments.
Bitcoin was considered a scam by PayPal’s former CEO
In that article Harris explicitly claimed that Bitcoin was a bubble ready to burst, calling it a “colossal pump-and-dump scheme” in which phantom “promoters” would inflate the price and create a speculative frenzy.
He even went so far as to equate it with ICOs, indicating a very poor understanding of this asset.
He said that Bitcoin was not accepted anywhere as a means of payment, while today it is legal tender in El Salvador.
He said that dollars, pounds, euros, yen and renminbi were better stores of value than BTC, while in the last three and a half years they have all lost value to bitcoin.
Harris argued that bitcoin was better suited for criminal activity, as law enforcement could not easily track who was buying and selling, whereas today all the world’s major exchanges have KYC.
The former CEO of PayPal explained that most of those who used bitcoin in large amounts were criminals, while today the single largest holder of BTC is Grayscale, which is a licensed company operating on traditional financial markets.
He said that even ordinary citizens buying bitcoin were breaking the law because they would have to record every sale of cryptocurrency as a gain or loss, whereas the law no longer requires them to do so.
He said that it takes about an hour to confirm a bitcoin transaction, and that at most five transactions per second were allowed worldwide, while with Lightning Network they are already reaching rates comparable to traditional fiat currency payment circuits.
He said that transferring $100 in bitcoin used to cost about $6, while with LN it now costs less than $0.01.
“All of this would be a comic sideshow if innocent people weren’t at risk. But ordinary people are investing some of their life savings in cryptocurrency. One stock brokerage is encouraging its customers to purchase bitcoin for their retirement accounts”.
Someone who had invested $1,000 in bitcoin on 24 April 2018 would find themselves with around $5,300 today.