Jordan Belfort, the man whose life inspired the Scorsese film ‘The Wolf of Wall Street’, says that the cryptocurrency Bitcoin is a scam.
Jordan was once a stockbroker who led a $100,000,000 stock manipulation scam that landed him a stint in the big house. His memoirs were made into the aforementioned film, with Leonardo DiCaprio playing him.
He claims that the value of Bitcoin is probably going to plummet. He told Financial Times that the virtual money are “perpetuating a massive scam of the highest order.” He went on to say that 85% had good intentions, but there are 5 to 10 percent only out to scam innocent victims.
Just during December, Bitcoin has climbed almost 80%, rivaling the best percentage terms, it has ever seen, back in 2013. The price has risen significantly in the past year, in excess of 1700%, which causes some, including Belfort, to worry that the market will soon burst.
On BitStamp Exchange on Friday, an all time high of $18,000 was reached, which was up 9 percent from the day before.
Experts are warning of the risks of investing in such a volatile medium.
Belfort sees Bitcoin as a big danger because people are looking at is as the next big thing. This is where people can take advantage. He told CNN he thinks it will definitely rise in the short term, but crash at some point, comparing it to the debacle in 17th century Holland when tulip bulbs rose in value like crazy, then dropped rapidly.
The end of the tulip mania came when investors started trading futures. After a short time of going up, it all crashed down.
“It’s almost a guarantee, ” he says that Bitcoin’s value will skyrocket, then go up higher than ever, and eventually crash hard.
He went on to say that that it is possible for people to make a lot of money, if they can get in, and be disciplined enough to get out rather quickly than following human nature of greed, wanting more and more.
Jordan Belfort isn’t alone in his assessment of Bitcoin’s future.
Andrew Bailey is the head of the Financial Conduct Authority in Britain and he told BBC that anyone involved in Bitcoin should be prepared to ‘lose all their money.’
Paul Krugman, Nobel Prize winning economist, also agrees that Bitcoin is in a bubble, worse that the one the housing market was in. He says nobody understands it, but that is probably a good thing. He claims there is no “anchor” for its value, and says that, so far, “there is no evidence proving that it’s helpful in conducting economic transactions.”
If you haven’t heard of Bitcoin, you’re not alone.
Bitcoin is made by mining. This entails a computer, with intensive computing power to solve a wildly complicated math puzzle. I won’t pretend to understand it, but that’s how it works. Before they became popular, miners could solve the puzzles from home pretty easily. Now, they require much more sophisticated and faster computing.
Some people, myself included until I began my research, view Bitcoin in the same way we view stocks or other investments, but that’s not how it works. If you own Bitcoin, it can be spent online anywhere. You can use it to buy McDonald’s if you’re so inclined.
It is becoming more and more mainstream and accepted nearly everywhere. Even so, it will be a long time before any digital currency would be in a place to replace tangible money.
Bitcoins are in short supply. As of Friday there were just over 16 million in circulation. Economists think there are many factors that are driving up the value. The fact that world governments and banks can’t trace or tax them is one of them.
Bitcoin is really worth that much in dollars, however, but some people are beginning to think that it may be the biggest financial bubble of all time. U-T political cartoonist Steve Breen is one of those people.
Bitcoin is the first decentralized digital currency. The system works without a central bank or single administrator. It runs on peer-to-peer transactions which take place through cryptography, this eliminating the middle man. These transactions are verified by network nodes and recorded in a public distributed ledger known as a blockchain. It is unknown who Bitcoin was invented by, but they are listed under the name Satoshi Nakamoto.
This worldwide payment system is worth 1 Bitcoin to over $18,000 currently.
Bitcoins are used in exchange for other forms of currency, products, and services. As of February 2015, upwards of 100,000 merchants accepted bitcoin as payment. Research estimates that now, there are 2.9 to 5.8 million users of a cryptocurrency, most of them using Bitcoin.
I will just watch from the sidelines to see if the experts’ predictions come true. I hope anyone invested in Bitcoin escapes unscathed if the crash does take place and I is proven to be a scam, as the real wolf of Wall Street predicts. This is definitely a story worth paying attention to.