- FT article discusses Albanian Ponzi Schemes
- Author somehow links it to cryptocurrencies without a clear connection
- Regulation in the crypto industry remains a contential topic
BELGIUM (CoinChapter.com) — There have been numerous opinions on cryptocurrencies over the years. Of course, some of these opinions are more valid than others, depending on how well-researched they are. Drawing parallels between a failed Albanian alternative money experiment ending up like a Ponzi Scheme and Bitcoin is a bridge too far, though.
The Albanian Ponzi Scheme History
There is always something worthwhile to learn regarding previous attempts at disrupting the financial sector.
In Albania, an alternative finance industry emerged decades ago to rival the banking system. On paper, the idea was soli, yet it quickly turned out it was nothing but an elaborate pyramid scheme. Good marketing and nearly impossible promises are always something to be wary of. When it is too good to be true, it is best avoided altogether.
What makes the Albanian Ponzi Scheme history interesting is how it hinted at a degree of financial freedom and decentralization. Unfortunately, some people – with little knowledge on these matters -will quickly draw parallels to modern cryptocurrencies.
Users are in complete control of their money, yet the value of crypto assets remains speculative first and foremost. Calling the crypto industry a Ponzi Scheme is uneducated and uninformed at best, though.
One obvious thing is how regulators scrutinize Bitcoin and other cryptocurrencies today.
Many see this as a problem, even though it can be a significant advantage as well. A recognized legal framework for cryptocurrency will prevent scams, Ponzi Schemes, and other malicious activities from taking place. Unfortunately, the crypto industry has seen its share of criminal activity repeatedly, creating new headaches for those who regulate this industry.
There is also the link to organized crime, which continues to haunt cryptocurrencies like Bitcoin and Monero. Central banks have warned of these dangers, yet that doesn’t warrant painting these currencies as Ponzi Schemes whatsoever. There may be some conceptual parallels, but that is as far as the equation goes.
What People Keep Getting Wrong
Reading through the FT article further, there is a mention of how the industry is only sustainable when new money keeps coming in.
While new investors are a welcome addition to this industry, the older investors are not resting on their laurels. More specifically, a Ponzi Scheme will see older investors cash out as soon as new money enters the market. Unfortunately, with Bitcoin and other cryptocurrencies, that is not the case.
Many long-term holders in this industry will keep accumulating every dip.
Furthermore, the dollar-cost averaging method employed by both existing and new investors continually earns BTC. It is a sign of apparent demand for decentralized financial solutions that operate beyond the grasp of banks and governments. The Bitcoin rich list shows addresses are holding a significant amount of the supply and are not moving their coins in recent years.
Moreover, the article passes over the crucial differences between cryptocurrency and these Albanian Ponzi Schemes. First, Bitcoin and crypto are not get-rich-quick schemes, as the industry has yet to mature after eleven years.
Institutions are only now showing little interest in these markets, confirming there’s more work on the horizon. Second, Crypto is a store of value and a hedge against inflation, despite its inherent volatility. Any basic research will highlight those aspects.