by Chris Matthews
Author Jeffrey Robinson argues that the bitcoin movement will end in tears for the little guy.
Jeffrey Robinson has made a name for himself investigating fraud on the grandest scales.
His books on international money laundering and the pharmaceutical industry pulled back the curtain on the nefarious behavior of some in the banking and pharmaceuticals industries. Now, he is turning his attention to bitcoin, with a new polemic called Bit Con: The Naked Truth About Bitcoin.
Of course, unlike the schemes of felonious bankers, bitcoin—the technology and the currency—wasn’t conceived as a malicious scam. But Robinson is convinced that when all is said and done, it will become the vehicle for hucksters to trick both innocents and bitcoin’s ideological backers out of millions.
Fortune spoke with Robinson about the year he spent researching bitcoin and why he thinks the currency will ultimately dissolve into worthlessness. The interview has been edited for length and clarity.
Fortune: What drew your interest to bitcoin?
Robinson: About two years ago, given the books I’ve written about money laundering, people kept telling me that bitcoin was the next big thing in money laundering. So I thought I really should find out about it, and I looked at everything that was being said, and none of it added up. Actually, it’s not good for money laundering to start, but it’s also not what it claims to be in other ways. It’s not a real currency and it’s not a real commodity. When you heard the hype coming from the community, and … that people were spending money on this stuff, they needed to know the truth.
Your career has been spent writing about various frauds and cons. If bitcoin is a con, who is the con man?
It’s a con in that it’s not a real currency, but let me back up. There are actually two bitcoins. There’s the blockchain-technology bitcoin, which I think is fantastic, and the future, and all sorts of businesses are investing tens or hundreds of millions of dollars in Silicon Valley and around the world to build businesses on the back of the blockchain technology because it’s so wonderful and can move assets frictionlessly. But then there is this aspect of the pretend currency and the pretend commodity. Part of the con is in the pretend commodity, because this is a completely shallow, liquidless market. When you know that there’s, what, 13 million coins in circulation, and more than 50% of the them are owned and managed by about 950 people, you realize how shallow the market it is and how subject the market is to manipulation.
It’s essentially a pump and dump scam. And then I see these snake oil salesmen like the Winklevoss twins get on TV and tell people that bitcoin is going to be worth $40,000 per coin. And nobody is challenging them, asking, “What are you smoking?” Bitcoin isn’t an investment, it’s a slot machine. Or, more accurately, a loaded roulette wheel.
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