Bitcoin is a scam? What experts really think.

Bitcoin is a scam? The real value behind the world’s first cryptocurrency

Why people call Bitcoin a scam

Since its creation in 2009 by the mysterious Satoshi Nakamoto, Bitcoin has been called many things: revolutionary money, digital gold, and a financial lifeline. Yet every time a crypto crash makes headlines, critics return to the same accusation: Bitcoin is nothing more than a Ponzi scheme dressed in code. When the price falls from US$60,000 to US$20,000 or lower, investors panic, sceptics claim victory, and headlines scream that “Bitcoin is a scam”.

One of the loudest voices against Bitcoin is Peter Schiff, a long-time advocate for gold. Schiff argues that Bitcoin has no intrinsic use, no underlying value, and survives only because new buyers keep joining the market. His argument reflects a widespread belief: unlike gold, oil, or farmland, Bitcoin cannot be worn, burned, or consumed. It only exists as numbers on a blockchain.

But is that enough to call it a scam? To answer, it is necessary to look at Bitcoin’s origins, its unique properties, and its real-world applications.

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Bitcoin’s creation and the problem it solved

Bitcoin was born in 2009 during the global financial crisis, when faith in banks and central governments was at historic lows. The anonymous creator, Satoshi Nakamoto, introduced Bitcoin in a whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System.

The aim was not to replace gold or create a jewellery substitute. It was to solve a digital problem: how to transfer money online without relying on banks or middlemen. Bitcoin introduced blockchain technology, a public, tamper-proof ledger where transactions are verified by computers worldwide.

This solved the “double-spending problem” in digital money. Before Bitcoin, you needed a central authority to ensure you did not copy and spend the same dollar twice. With Bitcoin, the blockchain itself prevents fraud. This innovation is why Bitcoin has been called “the internet of money”.

The argument against intrinsic value

Critics like Schiff argue that Bitcoin is worthless because you cannot make a watch, a computer chip, or dental filling with it. Gold, by comparison, has centuries of industrial and decorative uses.

This criticism, however, misses Bitcoin’s design. Bitcoin is not a commodity like gold or wheat. It is a network protocol, a way of storing and transferring value digitally, without trust in third parties. Its utility lies in being a decentralised financial system.

People do not value Bitcoin because it can be turned into jewellery. They value it because it allows them to send millions of dollars across borders in minutes, without requiring a bank’s approval. In countries with inflation, currency devaluation, or authoritarian governments, Bitcoin has been used as a lifeline.

Price volatility and accusations of a Ponzi scheme

Bitcoin’s critics are correct about one thing: its price history is full of booms and busts. From under US$1 in 2010 to over US$100,000 in 2025 and down again in crashes, Bitcoin is notoriously volatile.

This volatility fuels accusations of it being a Ponzi scheme. Schiff highlights that the majority of buyers are motivated by speculation. They purchase Bitcoin hoping its price will rise, so they can sell at a profit. He compares this to gambling or buying lottery tickets.

Unlike Ponzi schemes, however, Bitcoin does not require a central operator who pays old investors with money from new ones. The network runs independently, with or without new buyers. What resembles a Ponzi is the human behaviour around it: the constant need to recruit new believers who will buy Bitcoin at higher prices.

The ETF era and market risks

Schiff warns that the rise of Bitcoin exchange-traded funds (ETFs) could accelerate a future collapse. Unlike earlier crashes where Tether and other stablecoins provided liquidity, ETFs deal in real dollars. If institutional investors lose confidence, ETFs may be forced to sell large amounts of Bitcoin quickly, triggering a “trap door” effect where the price collapses with no buyers in sight.

This risk is real. Bitcoin’s market is still small compared to global commodities or equities, and sharp sell-offs can wipe out billions. The crash of 2025, where US$19 billion was liquidated in hours, shows how fragile the system remains.

The safe haven myth

Bitcoin has often been marketed as “digital gold”, a hedge against inflation and government mismanagement. Schiff strongly rejects this claim. Gold has a track record spanning thousands of years as a store of value. Bitcoin’s 15-year history is marked by extreme volatility.

Data shows Schiff has a point. During periods of inflation or market stress, gold tends to rise or hold value. Bitcoin, on the other hand, often falls with tech stocks, behaving more like a speculative asset than a safe haven. When inflation hit multi-decade highs in 2022, Bitcoin lost more than half its value.

The case for Bitcoin despite the criticism

Despite Schiff’s objections, Bitcoin is not without real-world value. It offers benefits gold and traditional systems cannot match:

Censorship resistance

No government or corporation can block a Bitcoin transaction.

Scarcity by design

With a capped supply of 21 million coins, Bitcoin is immune to inflation caused by money-printing.

Borderless access

Anyone with an internet connection can use Bitcoin, even in countries without reliable banking.

Financial inclusion

Bitcoin allows millions of people without bank accounts to store and transfer value.

While speculative behaviour drives most trading, these features provide reasons why individuals and institutions continue to hold Bitcoin.

Historical comparisons with bubbles

Sceptics often compare Bitcoin to past bubbles such as tulip mania in the 1600s or dot-com stocks in the 1990s. Each saw prices soar beyond reason before collapsing.

The dot-com bubble, however, did not kill the internet. Out of the rubble emerged giants like Amazon and Google. Similarly, even if 90% of cryptocurrencies fail, Bitcoin’s underlying technology, blockchain, may remain foundational to future finance.

Is Bitcoin gambling, an asset, or money?

Schiff compares Bitcoin to gambling, sports betting, or meme stocks like GameStop. This analogy captures the speculative frenzy but ignores Bitcoin’s function as money. Unlike a lottery ticket, Bitcoin can be used for remittances, savings, and cross-border payments.

Still, calling Bitcoin “money” is premature. Few merchants accept it directly, transaction fees can spike during network congestion, and its price volatility makes it impractical for everyday use. Instead, Bitcoin today is best described as a speculative asset with monetary features, one that may evolve into a stable currency if adoption grows.

Lessons for investors

The debate over whether Bitcoin is a scam boils down to perception. For those seeking a productive asset that generates cash flow, Bitcoin disappoints. It pays no dividends, earns no interest, and produces no industrial output. Its only return comes from selling to someone else at a higher price.

For others, Bitcoin’s decentralisation, scarcity, and independence from governments make it a valuable hedge. Even Schiff admits that Bitcoin has pulled investment away from gold, proving it holds psychological and financial weight.

The final verdict: Is Bitcoin a scam?

Calling Bitcoin a scam oversimplifies the issue. Unlike classic scams, Bitcoin is transparent, open-source, and functions exactly as designed. It does not promise guaranteed returns or hide how it works.

The scam-like behaviour comes from individuals and companies around it: fraudulent exchanges, pump-and-dump schemes, and influencers hyping “get rich quick” promises. These actors exploit Bitcoin’s volatility, leading many to lose fortunes and conclude the system itself is fraudulent.

Bitcoin is not a scam, but neither is it a safe, stable investment. It is a high-risk experiment in digital money, one that may fail or transform the financial system. The truth lies between extremes. It is neither a worthless hot potato nor a flawless replacement for gold.

The future of Bitcoin

As long as humans seek alternatives to government-issued money, Bitcoin will have a role. Its price may soar and crash repeatedly, but its underlying innovation remains. Whether it becomes a permanent fixture of global finance or fades into history like speculative bubbles before it will depend on adoption, regulation, and trust.

For now, the wisest view is this: Bitcoin is not a scam, but it is not digital gold either. It is a speculative financial tool with unique properties, and like all tools, it can build wealth or destroy it, depending on how it is used.

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