By Mike Holly, Americans Against Monopolies

June 30, 2025 Updated July 16, 2025

Satoshi Nakamoto, the pseudonym of the person or group who invented Bitcoin, has made their prosecution, for running an illegal Ponzi scheme, virtually impossible by inventing a self-sustaining system with restricted supply and hiding their identity even more effectively than a mafia don.

Summary

The European Central Bank claims the privatization and decentralization of money offered by Bitcoin has its theoretical roots in free banking, as proposed by Frederick Hayek of the Austrian school of economics. However, Hayek proposed competing currencies. Bitcoin is only one dominant cryptocurrency that probably couldn’t have been sustained without criminal activity within government-monopolized banking markets. More significantly, the Bitcoin rules, that excessively restrict the supply of bitcoins to encourage the buying of the currency at increasing prices, are a Pyramid or Ponzi scheme grounded in monopolistic, and not free-market, ideology that will make a few rich at the expense of many others. Unfortunately, accusations against Bitcoin for being a scam have not focused on the fraud of proponents that hype, and don’t warn, about the effects of restricting bitcoin supply, particularly the volatility created by price-inelastic supply and demand. Critics have also underestimated the potential for Bitcoin to inflate into a massive bubble that is doomed to implode and decimate the U.S. economy with increased wealth disparity.

Legal Concerns

Although Bitcoin may have needed criminal activity to help overcome government-monopolized banking, crime is still a possible indication of a scam with questionable value. It is well known that criminal activity contributed significantly to Bitcoin's early use and notoriety. The anonymity offered to bitcoin users has been inviting money laundering and other crimes that have brought national restrictions and bans on its use. The anonymity of its founder, who pre-manipulated the Bitcoin supply, has raised suspicions that it could have been created in 2009 by criminal organizations or rogue nations seeking to steal from the world. In 2017, Bitcoin went mainstream after the bitcoin price increased by about 20 times before falling back to four times in 2019. The price was pumped up by what could be described as an illegal “Pump and Dump.” A recent study headed by a University of Texas professor of finance found bitcoin’s valuation was pumped up with Tether coin. In 2024, a United Nations report described Tether as a "preferred choice" for illegal cryptocurrency trades by crime syndicates. In addition, FTX used celebrities to promote cryptocurrency, especially bitcoin, before they were convicted of fraudulent selling and stealing.

But Bitcoin is itself a scam that could be illegal. Bitcoin restricts the mining of the digital currency, and caps the supply at 21 million bitcoins. The Bitcoin creator owns the most cryptocurrency in the world with an estimated 1.1 million bitcoins (or approximately 5% of Bitcoin's maximum supply and valued at over $100 billion), though the exact number is difficult to determine due to the nature of blockchain analysis. The restriction of bitcoin supply was an extreme attempt by the founders to prey on human psychology that places a higher value on scarce resources, like gold. Bitcoin buying is influenced by the "Fear Of Missing Out," or FOMO. When Bitcoin's price surges, investors, driven by the fear of missing out on potential gains, may rush to buy, leading to inflated prices. This emotional buying can result in significant losses if the market corrects.

The powerful phenomenon is known as the scarcity principle. During human evolution, scarce resources were vital for survival, and prioritized. When something is rare or difficult to obtain, it is often perceived as more valuable or desirable, leading to a heightened sense of interest and demand. Scarcity taps into a fundamental fear of missing out on potential benefits or opportunities, driving individuals to act quickly to secure the resource before it's gone. If others are perceived to be actively pursuing or competing for a scarce resource, it further amplifies its desirability and creates a sense of social validation. Typically, the psychological impact of losing something is more powerful than the pleasure of gaining something of equal value. People are more driven by the fear of losing the opportunity to acquire a scarce item than by the potential gain of possessing it. 

Bitcoin is like a worldwide version of a Precious Metal Scam that illegally creates a sense of urgency to purchase gold and other metals by citing limited supplies just as investors fear the economy. Gold and especially Bitcoin skyrocketed in 2020 and 2021 due to bogus Covid lockdowns, and again since 2023 due to irresponsible U.S. deficit spending.

Bitcoin may be an illegal Pyramid or Ponzi scheme. A Ponzi scheme is legally defined as a fraudulent investing scam that relies on a constant flow of new investors to pay returns to earlier investors rather than from legitimate profits. Many economists and others have claimed that the mathematical inevitability of Bitcoin is like Ponzi schemes that favor early adopters, rely on the hype of high returns to attract participants, and collapse when the flow of new members slows or stops. Bitcoin could already be the largest Ponzi scheme in history, far surpassing the $65 billion stolen by Bernie Madoff. However, a 2014 World Bank report concluded that bitcoin was not a deliberate Ponzi scheme. University of Chicago law professor Eric Posner has explained that "a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion." But that means Bitcoin could be considered an illegal Ponzi scheme if either of the two major claims made by sophisticated Bitcoin proponents are fraudulent (i.e., deception for financial gain):

First, Bitcoin proponents often inflate the value (price) of the cryptocurrency by falsely claiming or implying that it could become the national or even global monetary system. The Bitcoin founder had the grandiose goal of replacing the current monetary systems run by centralized governments, that have been devaluing currencies through the excessive printing of money. But unlike free banking or gold, Bitcoin has little justification for replacing government fiat currency for widespread use, because it tries to control inflation by excessively restricting the supply. Supply restrictions would cause the inflation of the bitcoin price, and the deflation of prices for goods and services, thus encouraging consumers to forgo purchases and slow economic growth. Historically, gold-based monetary systems may have temporarily slowed economic growth, but the supply of gold soon increased through actual mining.

Second, even more problematic, Bitcoin proponents often falsely claim or imply it can provide another safe-haven asset, like gold. Since the supply of gold is largely fixed in the short-term but not in the long-term, while bitcoin is fixed largely in the short-term and completely in the long-term, the supply curve is likely even more inelastic for bitcoin than gold, which means changes in price have a smaller effect on the quantity supplied. In addition, since bitcoin has been artificially created as even more rare and thus more desired than gold, consumers may be willing to pay more for bitcoin than gold, making demand even more inelastic for bitcoin than gold, which means that changes in price have a smaller effect on the quantity demanded. When government monetary and/or fiscal mismanagement threatens the economy and the demand for safe-haven assets increase, the inelastic supply and demand causes prices to increase for gold but skyrocket for bitcoin. However, the inelastic supply and demand curves also mean prices will decrease back toward their previous value on much the same path, and probably at least as rapidly, when the market considers the price too high (e.g., when government curtails mismanagement, altcoins are used instead, etc.). Moreover, while gold has some value through other uses, bitcoins have no value if the currency fails, even if the technology used in Bitcoin has some value now, which is debatable. Since the price of bitcoin is much more volatile and has less value compared to gold, it will wipe out much more investment and likely investors, and thus shouldn’t be considered a safe-haven asset.

Bubble

Even if proponents were to tell truth, Bitcoin is still an unethical Greater Fool Theory, which posits that investors can profit by buying assets during a market bubble with the expectation that they can sell them later to a "greater fool" at an even higher price. Examples have included the 17^th century Tulip Mania in the Netherlands, and the U.S. dot-com and housing bubbles that lost an estimated $5 and $6 trillion, respectively. Like most financial scams, the current $2 trillion of bitcoins serves little or no public good, but rather has use to essentially steal money from unaware future investors, who may not understand when to buy and sell. Since sophisticated investors are now buying bitcoins, it is likely that even fewer “fools” can profit and Bitcoin will likely eventually implode. Although the history of cryptocurrency has been marked by many unsustainable bubbles already, a much bigger Bitcoin bubble has likely begun.

The emerging bubble is especially disturbing because it is being propped up by President Trump, who the cryptocurrency industry has bought with campaign and family donations. Although Trump called Bitcoin a scam in 2021, he now claims bitcoins can act as a store of value. The Trump administration plans to allocate Bitcoin to U.S. Treasury reserves. Perhaps just as disturbing, Bitcoin is now supported and/or bitcoins are being bought by sophisticated institutional investors, including financial institutions like JPMorgan Chase and other banks, asset managers and investment advisors like Blackrock and Fidelity, hedge funds, and even pension funds for workers.

Bitcoin is becoming the favored investment. Ray Dalio, the founder of the world's largest hedge fund, primarily recommends buying bitcoins and gold. Other big names are making incredible claims. Fundstrat's Tom Lee says Bitcoin is headed for $150,000 to 250,000 by the end of the year, $500,000 in five years, and as much as $3 million (or a bubble of about $60 trillion total) in the long term. ARK Invest CEO Cathie Wood said Bitcoin could reach $1.5 million ($30 trillion total) by 2030. Robert Kiyosaki (“Rich Dad, Poor Dad”) predicts a bitcoin price of over $1 million ($20 trillion total) by 2030 or 2035. Michael Saylor of MicroStrategy, a highly-leveraged Bitcoin speculator, predicts $21 million Bitcoin ($400 trillion total) by 2046. The sons of President Trump, Donald Jr. and Eric, predict Bitcoin will reach $170,000 in 2026 and eventually $1 million, respectively.

These extreme predictions of bubbles reaching $20 to $400 trillion indicate the U.S. debt situation, caused mostly by the high prices demanded by the U.S. government-monopolized health care and education industries, is expected to deteriorate. Facing re-election, along with a possible recession and stock market crash threatened by the Fed’s response to inflation, Biden stimulated the economy with extremely high (non-pandemic) deficit spending in 2023 and 2024, guided by bogus Modern Monetary Theory. Trump’s proposed higher deficit spending, guided by bogus Supply-side economics (and perhaps monetary financing), will likely require the massive printing of money and result in high inflation. Although gold is one of the few defensive investments for protecting against high inflation, Bitcoin could outperform gold temporarily, if Bitcoin is not exposed as a scam. Trump is essentially forcing people, especially the retired, to prevent his inflation from wiping out their life savings by investing in a massive unsustainable bubble that benefits the Trump family.