CRYPTO CURRENCY: Scam—Sophisticated extortion of money from naive “investors”

How crypto enthusiasts are lying to themselves about the revolutionary nature of their movement and why bitcoin will never be more than a gambling tool

Photo: Jaap Arriens/ AFP


If markets remain the dominant economic pattern of behavior, as technological automation replaces jobs and other human inputs, we will continue to see increased activity in the financial sector, thus moving away from jobs and income that have real tangible economic utility. It is logical to ask: If automated systems create efficiency at the level that less energy and people are needed in the production sector to get things done, and they are reoriented to financial speculation and other forms of financialization such as cryptocurrency trading—why would that be bad? Well, it’s bad because it’s just plain crazy.

The great advances in efficiency that we have seen technologically and thus economically in our society should motivate us to change the structure to take care of everyone, create a safer environment, relieve stress, reduce the work week, and all those things that are talked about. They’re been talking for too long. Instead, today more and more attention is being paid to the engineering of non-productive activities, and we are on the way to the fact that everyone’s job will soon become sitting at a computer and strategically trading money as people do on the stock market. Imagine that one day it becomes the only remaining economic activity, and as absurd as it sounds, financialization trends are moving towards it.

Photo: Eduard Muzhevskyi/Science Photo

What has happened is that the idea of buying and selling for profit has taken on a life of its own in the abstract. Every year, metaphysical financial assets become more attractive than real production, which is why most corporations today invest a large amount of their excess capital in financial derivatives. The financial sector alone now generates 30 to 40 percent of all corporate profits. The financial services sector, which literally does not have to exist in the physical world in earthly economic terms, is on its way to becoming more profitable in terms of GDP than actual manufacturing itself. Although this industrial branch has grown from 10 to about 40 percent of GDP in the last 50 years, employment in the financial sector has remained at about five percent.

This is a ton of money going to very few people, which clearly shows that the financial industry is one of the biggest drivers of socioeconomic inequality. It is also worth noting that the financial sector, more precisely the trade in financial assets, is the most destabilizing economic force on the planet. The natural boom-and-bust business cycle dynamics of a market economy do not have the ability to single-handedly collapse an economy in the way that the financial system and Wall Street constantly do.

Proponents of cryptocurrencies see the application of blockchain technology as an ideal way to eliminate the dominance of the financial sector, which is logical. If we remove intermediaries, such as banks, through direct peer-to-peer exchanges and smart contracts, this could theoretically reduce the influence of centralized financial institutions, which could ultimately help reduce income and wealth inequality. This certainly makes theoretical sense on paper, but because of these idealistic assumptions, people easily get lost in the theory and don’t pay attention to what actually happens when trading cryptocurrencies, specifically bitcoin.


Historically, investing in something means that people direct capital to help a production organization, hoping that it will pay off when that company becomes profitable by selling its goods or services. This eventual return is called a dividend and comes in the same amount for each share. However, as the market system evolves, it gradually accepts its most basic structural function – the act of trading. Thus, due to this self-organizing gravity of the system, the idea that a share of the company itself could be priced and then traded for profit became increasingly popular, while dividends became less common. The focus of today’s stock market is, in fact, simply gambling on those shares as a financial instrument whose price is based entirely on the subjective opinions of those who buy and sell.

This kind of game is accepted as normal today; trading in abstract non-existent so-called assets that produce absolutely nothing in the process. News and pundits analyze the stock market every day as if it were a key economic institution, not a deviation from the taste and smell of Las Vegas. People who claim to invest in the stock market, commodity market, or any other financial derivative – bonds, options, futures, and, of course, cryptocurrencies – are not actually investing in the intended sense of the word. You can’t invest in something that doesn’t do anything. These are sophisticated games of chance, where money is taken from other people who are also gambling in the hope of getting lucky.

Buying shares is not an investment, it is a game of redistributing money without creating anything. The market does not create value, it only transfers money between players. Only when a company goes public and sells off its entire stock does it directly benefit from the investment. This is where the direct relationship between the company’s share price and the company itself ends, and public speculation based on subjective information begins.

In real markets in real life, economic value comes from three things: labor, capital resources, and demand. Demand means perceived utility. When you buy a chair, its price will generally reflect the labor energy put into it, the resources used to make it, and the existing demand for it. In the case of shares or securities, the value is determined by subjective feelings but is usually based on news or information that actually relates to the company; performance, business reports, profitability, etc.

However, in the world of cryptocurrency, even that loose, last remaining basic association with something real disappears. Value becomes universally subjective, arbitrarily determined by a wide range of interpretations, whims, feelings, social trends, idealism, and general cause-and-effect dynamics of the crypto participants themselves. In other words, despite the certain benefits of crypto as a currency, any quantification is completely meaningless.

The idea that the value of bitcoin actually reflects some kind of radically important societal shift toward a more sustainable and humane economic pattern is simply stupid and hypocritical. Even if there is truth to the potential of bitcoin or any cryptocurrency to achieve such goals, none of that will happen because the fundamental lure of crypto enthusiasts is asset upgrades, not currency usage. In technical reality, ironically, the only thing that gives bitcoin its value is, i.e., price, i.e., fiat (state) money that is pumped into it. If it weren’t for the gambling interest in taking other people’s money, bitcoin would never have gotten this kind of attention.

Photo: Str

Another convenient myth today is the idea that the stock market or any financial instrument, including cryptocurrencies, somehow creates wealth. What is wealth anyway? Some will say that it is an ability, not a result. However, in the traditional conception, wealth is seen as the result of ownership, i.e., excess. Someone with a 50-room mansion or a billion dollars in the bank was considered rich; the more surplus, the more wealth. The fact is that no financial instrument, again, creates anything, but only redistributes existing money. Every financial instrument is just a balloon that inflates and deflates depending on how much money is put into it.


Propaganda of bitcoin as “virtual gold” in the sense of storing value, i.e., protection against inflation, is also highly questionable. When you buy gold, it doesn’t do anything magical, but market participants by the inertia of habit push money into it in times of crisis, hoping that it will be less affected by inflation. But inflation still exists, and money is still devalued. All you’re doing is after the price goes up, you’re extracting in your favor the extra money that someone else invested in the same thing after you. So how does it actually play out in some higher benefit? In the strict concept of the idea of securities, there is literally no such thing as a “safe haven for investments”. Something cannot be a safe haven if one side wins and the other loses in a zero-sum game.

Also, given the way today’s economy works, based on the insanity of endless growth and bathed in waves of continuous cyclical crises, it may not be a very good idea to have a deflationary currency—which bitcoin is (limited to 21 million “coins”). Imagine if the government was unable to inject additional money into the system due to the COVID-19 crisis; that would be a disaster. The idea of currency limiting monetary expansion is actually, given the economic (sad) reality, still a terrible idea. Unfortunately, the only tool the government has to correct the inevitable periodic breakdowns of our great financial system is monetary stimulus – a necessary evil due to the fundamental lack of integrity of capitalism itself. Crypto cannot be a solution to inflation.

The fantasy of revolutionary infrastructural change assumes that bitcoin, or some other cryptocurrency, will somehow magically come into the favor of state power to promote it, as many idealists like to say, into the new global reserve currency. Some people assume that just using bitcoin as a substitute for fiat money in everyday life will become so popular that everyone will start doing it, completely absorbing the sovereign currencies. Even if bitcoin were to take over some 80 percent of the world’s currencies, this does not change the nature and position of state power. The fact is that until crypto is accepted to pay government taxes, its full adoption will never happen – therefore the framework of institutional power will always remain.

Without a complete replacement of fiat currency, crypto will always have to be converted back into money for government purposes, thus preserving the existing system. And if the government does decide to adopt cryptocurrencies, as we’re seeing with the rise of central bank digital currency pilot programs around the world, the essence of the decentralized cyber-punk fantasy is lost. Governments will introduce code variations they want and crypto versions that serve the government’s commercial interests.

A significant portion of the crypto community is deluded into thinking that what they are doing is revolutionary, out-of-system activism. And while the distributed ledger of consensus (DLT) and blockchain has the potential to be part of development ideas outside the existing system, the current system has easily adapted them into forms of gambling instruments. All the dominant patterns of behavior surrounding bitcoin do not challenge the very structure of the system, as evidenced by the fact that the gambling aspect of cryptocurrencies is much more commonly practiced among the public than any form of currency use. It is enough to take a look at the recent NFT (virtual unique) mania, as a result of which a digital image of a stone was sold for 1.3 million dollars, and the entire metaverse i.e. virtual reality is conceived as capitalism on steroids.


There is an old saying: “There is nothing more dangerous than one with righteous ignorance because of the idea that morality is on his side.” In the case of bitcoin advocates, many of them not only believe that they have virtue as partners in the context of some kind of activist excitement to change the world, but this public spectacle and hype are further enhanced by the direct monetary reward of the dopamine hit they receive as they watch the currency’s price rise and their wealth increases.

If someone makes a million dollars owning Apple stock, there’s a very good chance they’ll be a fan of that company on that basis alone, and the same psychological force is at play in the crypto community, where people pathologically lie to themselves about their true motivations. The higher the price of one’s portfolio rises, the more irrational the assumption about the asset’s virtue. Bitcoin enthusiasts actually think that by buying this thing, increasing its price, and influencing others to buy, they are somehow contributing to social progress.

There is rhetoric in the crypto community that bitcoin will even overtake crime on Wall Street. How exactly would bitcoin have prevented the 2008 crisis caused by stockbrokers dabbling in mortgage trading? Can it solve the outrageously abusive bonuses and extreme incomes of hedge fund managers? Will it prevent central bank employees from buying securities for which they have confidential information? Of course, no change in the type of currency will have any real effect on the varying degrees of criminal behavior that we commonly see on Wall Street or in any other domain of the existing system that encourages selfishness, greed, and aggression.

A socioeconomic system does not change simply by replacing one of its main levers. Since, in fact, the very concept of markets and currency, in general, is the underlying catalyst for the disease of power and violence we see every day, they are the ones that must ultimately be removed. This is what system-level change will require if humanity expects to be sustainable in the future and to create social justice and thus social stability.


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5 thoughts on “CRYPTO CURRENCY: Scam—Sophisticated extortion of money from naive “investors”

  1. What Is Cryptocurrency?

    A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers.

    A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

    Understanding Cryptocurrencies

    Cryptocurrencies are digital or virtual currencies underpinned by cryptographic systems. They enable secure online payments without the use of third-party intermediaries. “Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

  2. How Does a Crypto Exchange Work?

    When you set up an account with a crypto exchange, it enables you to buy and sell cryptocurrencies like bitcoin (BTC), ether (ETH), litecoin (LTC), polkadot (DOT), dogecoin (DOGE), and so on. Depending on the exchange, you can purchase crypto using a fiat currency like the U.S. dollar, or trade one form of crypto for another.

    The bigger and more established a service is, the more likely it is to offer a range of cryptocurrencies. Still, you may want to check that your desired crypto is available before setting up an account.

    On a crypto exchange, you can use ordinary fiat currency to buy crypto, or you may be able to trade one crypto for another. You may be able to convert your crypto back into regular currency, leave it in your account for future trades, or withdraw it as cash. Available services can vary, depending on the exchange or app you use. For example, some services don’t allow you to move your crypto off platform to your own crypto wallet.

    Unlike traditional exchanges that have set trading hours, cryptocurrency exchanges are active 24 hours a day, 7 days a week.

  3. What is a crypto wallet?

    Crypto wallets keep your private keys – the passwords that give you access to your cryptocurrencies – safe and accessible, allowing you to send and receive cryptocurrencies like Bitcoin and Ethereum. They come in many forms, from hardware wallets like Ledger (which looks like a USB stick) to mobile apps like Coinbase Wallet, which makes using crypto as easy as shopping with a credit card online.

  4. What is blockchain technology and how does it work?

    A blockchain is a distributed database or ledger that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.

    One key difference between a typical database and a blockchain is how the data is structured. A blockchain collects information together in groups, known as blocks, that hold sets of information. Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain. All new information that follows that freshly added block is compiled into a newly formed block that will then also be added to the chain once filled.

    A database usually structures its data into tables, whereas a blockchain, as its name implies, structures its data into chunks (blocks) that are strung together. This data structure inherently makes an irreversible timeline of data when implemented in a decentralized nature. When a block is filled, it is set in stone and becomes a part of this timeline. Each block in the chain is given an exact timestamp when it is added to the chain.

  5. What industries blockchain technology could transform?

    The future of blockchain is near, and banking isn’t the only industry affected. See how law enforcement, ride-hailing, and others could also be impacted.


    What began as the basis of cryptocurrencies such as Bitcoin, blockchain technology — a virtual ledger capable of recording and verifying a high volume of digital transactions — is now spreading across a wave of industries. In 2021, funding to blockchain startups surged 713% YoY to reach $25.2B.

    Bitcoin’s popularity helped demonstrate blockchain’s application in finance, but entrepreneurs have come to believe the tech could transform many more industries — from insurance to gaming to cannabis. Ultimately, the use cases for a transparent, verifiable register of transaction data are practically endless — especially since blockchains operate through a decentralized platform requiring no central supervision, making them resistant to fraud.

    Now, with the arrival of the metaverse, blockchain technology will become more significant, as cryptocurrencies and non-fungible tokens (NFTs) will enable purchases and value storage in virtual reality.

    65 big industries blockchain could transform

    Stock trading & hedge funds
    Crypto exchanges
    Wills & inheritances
    Loans & credit

    Automotive manufacturing
    Car leasing & sales
    Public transportation
    Air travel
    Aerospace & defense

    Industrial IoT
    3D printing
    Construction, architecture, & building
    Real estate
    Energy management
    Waste management
    Oil & gas

    Health information exchanges
    Vaccine distribution & monitoring
    Claims management
    Research & clinical trials

    Government & public records
    Gun tracking
    Law enforcement
    Federal mail
    Public assistance

    Food & beverage
    Gift card & loyalty programs

    Crops & agriculture
    Animal husbandry
    Logging & timber

    Messaging apps
    Education & academia

    Music/entertainment rights & IP
    Video streaming
    Social media content
    Sports management

    Cloud computing & storage
    Internet identity & DNS
    Internet advertising
    Human resources
    Business & corporate governance

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