Bitcoin ETF's spell the demise of Bitcoin

Try as they might to promote the BTC Ponzi scheme

The language of the registration statement for the ARK bitcoin ETF tells the tale.

Throughout the registration statement, it is clearly stated that while real money comes into the fund to buy shares redemptions will only be “in kind” - that is, you can put money in but only get Bitcoin out. The whole ETF has a “Hotel California” aura to it, just like all of the private Bitcoin exchanges. Money in - nothing but worthless digital tokens coming out except in rare circumstances when an exchange goes bankrupt, its sponsors steal the money and lie about the exchange’s purpose and holdings (e.g. FTX, Celsius) or an exchange actually redeems a Bitcon for real money, something they are loathe to do unless they can find a greater fool to buy the Bitcoin.

This should not be a surprise. The Bitcoin system has very little real money in it, all of which came from the initial sale of Bitcoins to people foolish enough to buy them believing the token had value. A metaphor helps readers understand the Ponzi scheme inherent in Cryptocurrency tokens.

Create a new cryptocurrency token and call it Bitscam. Give it the same properties as Bitcoin and encourage people to “mine” it with the same incentive - one new Bitscam for the first to prove the integrity of its Blockchain. Tell people its value is “tethered” to gold (it doesn’t matter what you say, people will believe it because it is “crypto”). Sell a few of the original Bitscam’s at $40,000 a token and pocket the $40,000 telling Bitscam investors the money is being used to buy the gold Bitscam is tethered to. One Bitscam will be backed by 20 ounces of gold. Investors can’t get their hands ont he gold, but you can assure them it is there in a “secure account”.

Watch the “gold rush” as cryptocurrency nutcases pile in and you sell about 2 million Bitscam’s for $32 billion. Create an ETF like ARK above where people can “invest” in Bitscam with real money but any redemptions will be “in kind” so you can keep the cash and any gold you actually buy since “in kind” means by delivering a Bitscam token which your “Authorized Participant” will get by buying it from another investors through your exchange. You may have to pay a bit more but you have $32 billion on hand and you can take out your “fees and charges” and the unwashed masses can trade with each other with abandon, creating tons of brokerage commissions for your “Authorized Participants” to keep the scheme alive while you move to the Bahamas, use millions to buy a luxury property at Ocean Club, buy a yacht, hire your college buddies at salaries they couldn’t earn on Wall Street, pay yourself handsomely, and give speeches to investors while using other money to make donations to members of Congress and the Administration to lobby for even looser regulations. The return on investment on briges paid to Congressmen is far higher than anything enjoyed by industry. “Regulatory capture” has become an American sport and members of Congress have better investment returns than Warren Buffett or Peter Lynch.

Over time, the $32 billion is consumed by fees, charges and commissions, your own expenditures and the bribes paid to U.S. government officials in Congress, the Administration and in regulatory bodies. To keep people interested, use your “exchange” to run a box of wash trades in Bitscam to either inflate or deflate its “trading price” to encourage investors to either buy more units of your ETF allowing you to cover redemptions with new money coming in, or to make the “investors” believe they have lost money (which they expect since you were clear about the risks). Given the size of the scam, you can likely keep it going for decades.

Okay, Bitscam is a dead giveaway so choose a less offensive name like FTX. Oh yeah, that’s been done already, cost investors billions and saw Sam Bankman-Fried get outfitted for prison overalls in bright orange. Maybe try wearing a suit instead of shorts, getting a haircut, and being a little less evangelical in those promotional speeches, since scammers typically try to pass themselves off as “different” by presenting themselves as odd ducks but with underlying genius. Throw in a few references to the Bible since there are millions of “believers” who may be persuaded you were ordained by God to save humanity by freeing people from the shackles of the fiat monetary system.

One clear message from the ARK registration statement is the sponsors avoidance of having to redeem anything in cash. Your cash goes in, no cash comes out. This perpetuates the Ponzi scheme which would collapse like a house of cards if investors could actually get their money out instead of ARK, cryptocurrency exchanges and the whole cryptocurrency charade needed a constant supply of new money coming in to exist. If regulators had insisted on the ability of cash investors to redeem units for cash, the whole cryptocurrency world would enjoy a short and colorful life since the amount of actual money in the system is less than 10% of the so-called “market value” of the tokens that have been issued.

Some say this is also true of fiat currencies but as Bernie Madoff famously quipped, the U.S. government is the largest Ponzi scheme on Earth. He is right and the Biden Administration’s reckless borrowing is bringing that Ponzi scheme close to collapse and all it will take is a “buyers strike” and the U.S. dollar will follow the Turkish lira and the Zimbabwe dollar down the rabbit hole of rampant inflation turning the bills in your wallet into worthless paper.