Cryptocurrency’s engineered scarcity converts success as a currency into a pyramid scheme.

Evidence

Betrayal of its early emancipatory promise was hard-wired into the nature of cryptocurrencies. Nakamoto’s ambition had been that Bitcoin should take off as a parallel currency. To succeed, people would need to want to use Bitcoin to buy train tickets, drinks and even houses. But to engineer the scarcity that he believed was necessary to give Bitcoin value, Nakamoto built into the Bitcoin code a fixed upper limit in the total number of Bitcoins – 21 million to be precise. Its limited supply meant that as soon as the demand for Bitcoin rose, so would its exchange rate with dollars. At some point, when the dollar value of Bitcoin rises above some threshold, it makes sense to keep your Bitcoin and use dollars to buy train tickets, drinks and houses, as well as more Bitcoin in the hope that its value will rise further. It was inevitable that the moment a cryptocurrency began to succeed as a currency it would stop working like a currency and would turn instead into a pyramid scheme, with its early adopters growing richer as more and more people bought into it. — Yanis Varoufakis, Technofeudalism, 688

Categorization

• XREF: Connects to the reader’s reading on platform capitalism and digital rent/feudalism — this is the internal mechanism by which crypto became an engine of rent extraction rather than exchange. — connects to: Eighty percent of crypto ICOs proved fraudulent yet shitcoin trading thrived — W. David Marx, Blank Space: A Cultural History of the…, 737; Blockchain innovation gets co-opted by the very finance institutions it aimed to replace. — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 689; Artist cooperatives were financed through a pyramid scheme using new tenants’ deposits — J. Hoberman, Everything Is Now: The 1960s New York…, 1081 (+3 more)
• corroborated: 2 independent passages support this claim — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 688

Broader Connections

• Crypto markets surged and Trump launched meme coins worth billions. #exemplifies (0.85) — W. David Marx, Blank Space, 837
• Blockchain innovation gets co-opted by the very finance institutions it aimed to replace. #complicates (0.80) — Yanis Varoufakis, Technofeudalism, 689
• Eighty percent of crypto ICOs proved fraudulent yet shitcoin trading thrived #exemplifies (0.75) — W. David Marx, Blank Space, 737
• Artist cooperatives were financed through a pyramid scheme using new tenants’ deposits #exemplifies (0.75) — J. Hoberman, Everything Is Now, 1081
• The tech industry reintroduced scarcity into the internet’s supposedly abundant space #exemplifies (0.75) — W. David Marx, Blank Space, 723
• The internet functions as a factory producing the self as commodity #exemplifies (0.72) — Grant Bollmer, Katherine Guinness, The Influencer Factory, 18