Bitcoin: Unlicensed Gambling

Bitcoin: Unlicensed Gambling by Bob Seeman & Roger Svensson. CyberCurb, Vancouver, 2021. ISBN: 9798532267220

2 Pages Posted: 8 Oct 2021

See all articles by Bob Seeman

Bob Seeman

affiliation not provided to SSRN

Roger Svensson

Research Institute of Industrial Economics (IFN)

Date Written: July 12, 2021


Promoters claim that bitcoin is a new type of money, reduces transactions costs by abandoning intermediaries and will become a safe asset that they call “digital gold”. In this book, we dissect these claims and explain what bitcoin really is. Economic theory states that money should reduce transaction costs for payments, loans, and relative valuations, which requires a stable value. We show that the extreme price volatility and the high transaction costs – especially the time component – make bitcoin almost useless as money. Bitcoin increases, instead of reduces, transactions costs. Furthermore, an intermediary exists – the miner – who charges a transaction fee.

The fundamental value of assets is based on their cash flow or utility, which applies for shares, bonds, real estate, and intellectual property. Gold is the best-known store of value and a hedge against financial crisis and inflation. Bitcoin has no cash flow or utility, and statistics show that it is no hedge against anything. It is, in fact, pro-cyclical and its crashes of 50 % in 2018 and 2021 are unmatched by any of the main fiat currencies in the last 50 years. Bitcoin has no intrinsic value and is not anything at all like digital gold.

Bitcoin is an open Ponzi scheme. The Ponzi is “open” since it is public knowledge that there are no assets at all backing a bitcoin. To the promoters of bitcoin, the lack of assets is “a feature and not a bug.” The main function of the bitcoin network is simply unlicensed gambling, where new players redeem those who entered earlier. It is a zero-sum game. Finally, the bitcoin system has no responsible issuer. So, if the system breaks down, holders have nobody from whom to claim – or to whom to assign blame.

Although bitcoin is nothing other than a public and decentralized ledger of accounts and transactions, the bitcoin network and its promoters have been very successful in increasing the market value of a bitcoin from 10 to 30,000 USD in 10 years. Promoters of bitcoin use methods that include: 1) distracting investors from which functions bitcoin has or does not have; 2) directing attention to irrelevant technobabble; and 3) manipulating trade and prices in the bitcoin market. Marketing of a strong brand and visual illusions in the form of physical glittering coins make the impression that bitcoin is something valuable. But we show that it is not. The average investor is succumbing to these successful methods and risk their house, savings, and pension.

We show that bitcoin is also used for criminal activities such as ransomware payments, tax evasion, and money laundering. The bitcoin network consumes vast amounts of electricity and critical advanced computer chips, which consumption creates negative externalities in the form of higher prices and shortages in other sectors. With no fundamental function, not even providing governments with tax revenue specifically due from the unlicensed gambling that bitcoin really is, bitcoin’s actual value for society is negative. We propose that, before there is more damage to the public, government gambling regulators immediately enforce existing regulations and take action to investigate those who operate the bitcoin network.

Keywords: Bitcoin, money, cryptocurrency, asset, gambling, regulation

JEL Classification: G12, G18, E42, E50

Suggested Citation

Seeman, Bob and Svensson, Roger, Bitcoin: Unlicensed Gambling (July 12, 2021). Bitcoin: Unlicensed Gambling by Bob Seeman & Roger Svensson. CyberCurb, Vancouver, 2021. ISBN: 9798532267220, Available at SSRN:

Bob Seeman

affiliation not provided to SSRN

Roger Svensson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
+46-8-6654549 (Phone)
+46-8-6654599 (Fax)


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