This Israel Minister has a Lost Faith in Bitcoin, Calls it a Ponzi Scheme

Patrick Rodgers
By Patrick Rodgers
Posted on Dec. 6, 2018
This Israel Minister has a Lost Faith in Bitcoin, Calls it a Ponzi Scheme

Participating in a recent event organized to recognize most promising startups in Israel, the former Prime Minister compared bitcoin to a Ponzi Scheme. Ehud Barak, in an event organized to recognize Globes most promising startups in Tel Aviv gave the statement while answering for whether medical marijuana is a bubble like bitcoin. Barak served the term in national office from 1999 to 2001. He is now an investor as well as chairman of, the medical cannabis company InterCure Ltd. 

Blockchain, Not Bitcoin

“Blockchain itself is a mathematical technological concept and an interesting and important methodology,” the tech investor said. “Cryptocurrencies — bitcoin and all the others — that’s a Ponzi scheme.”

Barak said he doesn’t believe that “it’s possible to make a currency in this way in the current generation.” Accordingly, he will not invest in crypto. “I wouldn’t invest in anything that’s related to cryptocurrencies,” he said.

However, like many crypto skeptics, Barak thinks blockchain is a potentially game-changing innovation that could disrupt many different sectors, including business, healthcare, banking, and supply-chain management.

“Whoever has the patience and understands blockchain deeply can find a lot of uses for it, from keeping sensitive medical information through to contracts,” he noted.

Wall Street Veteran is Shorting Bitcoin

Ehud Barak’s anti-crypto stance mirrors that of Wall Street financial analyst Gary Shilling, who also dismissed bitcoin as “a grand Ponzi scheme,” as CCN reported. And Shilling is putting his money where his mouth is: His eponymous New Jersey investment firm, A. Gary Shilling & Co., is shorting bitcoin.

Shilling said bitcoin is a scam that fails as a currency because it lacks three fundamental requirements of a legitimate currency:

  1. It’s not a store of value.

  2. It’s not a medium of exchange.

  3. It’s not universally accepted.

“A currency has to have a store of value,” he reasoned. “With the volatility in bitcoin prices, I don’t think it has a store of value.”

Barak’s Foe Benjamin Netanyahu Is a Crypto Fan

Meanwhile, Ehud Barak’s political nemesis, current Israeli Prime Minister Benjamin Netanyahu, is a fan of cryptocurrencies who thinks bitcoin and blockchain could render banks obsolete. 

In December 2017, Netanyahu — who has been prime minister since 2009 — said he believes traditional banks will eventually disappear. “Is the fate of banks that they will eventually disappear? Yes. The answer is Yes,” Netanyahu said in Hebrew. “Does it need to happen tomorrow, and do we need to do it through bitcoin? That’s a question mark.”

“Blockchain can perform all the functions of a bank without the need for an inefficient central institution that charges transaction fees.”

Netanyahu always had an affirmative viewpoint when it comes to blockchain technology. He has previously worked as a consultant with the Boston Consulting Group Netanyahu.

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