Bitcoin ‘Fraud Cycle’ Is ‘Speculation Masquerading as Breakthrough’

Hedge fund mogul Jim Chanos claimed Bitcoin was “masquerading as a technological breakthrough” in a new interview with Bloomberg June 4. Chanos said that in the event of a global crisis, it would be “better” to own food, or a government-backed (fiat) currency.

Speaking to the Institute for New Economic Thinking and quoted by various media outlets, Chanos, who last year stated he “didn’t understand” Bitcoin or blockchain technology, issued stark warnings about cryptocurrency investment.

“We’re now nine years into this bull market, same as the ’90s, so I suspect that now things are starting to percolate,” he told Bloomberg. He also called the past year’s increased public interest in Bitcoin part of the “fraud cycle,” adding:

“This is simply a security speculation game masquerading as a technological breakthrough in monetary policy.”

Chanos added that in the event of a global crisis, governments would step in with fiat currency as lenders of last resort, an option unavailable to cryptocurrency, given its decentralized nature:

“For those who believe that you need to own digital currency as a store of value in the worst-case scenario, that’s exactly the case in which a digital currency will work the least. The last thing I’d want to own is Bitcoin if the grid goes down.”

The well known short-seller, who predicted the fall of Enron, joins an ever-decreasing pool of steadfast Bitcoin naysayers.

Goldman Sachs CEO Lloyd Blankfein, who in December 2017 told Bloomberg Bitcoin “isn’t for him,” has since presided over a policy of increasing exposure to crypto assets.

Berkshire Hathaway CEO Warren Buffet and vice president Charlie Munger nonetheless remain committed to denouncing Bitcoin investment in increasingly grotesque language, with Munger most recently comparing crypto trading to dealing in “freshly harvested baby brains” last month.



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