On January 14, 2015, Matt O'Brien published a column in the Washington Post's Wonkblog attacking Bitcoin as a Ponzi scheme. O'Brien argued that venture capitalists pouring millions into the protocol w
On January 14, 2015, Matt O'Brien published a column in the Washington Post's Wonkblog attacking Bitcoin as a Ponzi scheme. O'Brien argued that venture capitalists pouring millions into the protocol were hawking a fantasy to offset their own losses.
The core of his argument rested on recent price declines. O'Brien treated falling Bitcoin prices as a death knell for the currency. He proposed that a central bank could stabilize Bitcoin better than decentralization ever could.
This framing ignored comparable economic collapses happening in the same moment. Greece's economy had contracted 60% following its euro withdrawal. The Russian ruble fell 7.9% in a single week. O'Brien did not apply the same doomsday logic to these currencies.
O'Brien cited a piece by Max Nisen at Quartz and Business Insider showing Bitcoin's underperformance against the ruble and crude oil. From this, O'Brien concluded: "If Bitcoin was a currency it would be the worst performing currency in the world." Nisen had also argued that business schools should not become innovation labs.
Both writers work for outlets aligned with defending existing financial structures. Jeff Bezos purchased the Washington Post in 2013. The Amazon CEO has championed innovation, writing: "The most radical and transformative of inventions are often those that empower others to unleash their creativity – to pursue their dreams. These innovative, large-scale platforms are not zero-sum – they create win-win situations and create significant value for developers, entrepreneurs, customers, authors, and readers."
O'Brien's attack on Bitcoin seemed contradictory against this backdrop.
O'Brien characterized Bitcoin as a scheme for libertarians to shuffle wealth between themselves. He claimed Bitcoin had no inherent value while ignoring that fiat currency shares the same feature. The cash in a wallet possesses no intrinsic worth.
He also overlooked a material fact: roughly 70,000 businesses worldwide accepted Bitcoin as payment. Merchant adoption alone conferred practical value on the currency.
O'Brien misrepresented Bitcoin's mechanics. He wrote that Bitcoin enabled money transfers without bank confirmation, then suggested banks were preferable for this service. He pegged bank fees at 2%.
Bank transfers cost $15 to $60 as minimum fees. For most transactions, bank expenses exceeded 2% by a significant margin.
O'Brien did identify one genuine Bitcoin vulnerability: mining economics. As Bitcoin's price climbs, more miners enter the network. This raises the computational difficulty of solving new blocks. Miners must then spend more capital, often borrowed from banks, to remain competitive.
But O'Brien then contradicted himself. Falling prices, he suggested, would devastate miners. This doesn't follow from his own earlier point. If rising prices trigger an influx of miners and rising difficulty, then falling prices should reduce the miner population and lower the barriers to profitability for those remaining.
Finally, O'Brien invoked the Federal Reserve as a necessary stabilizing force. He implied Bitcoin would collapse without central bank intervention. The Federal Reserve's record offered no support for this claim. It failed to cushion the shock of the Great Depression. It failed to prevent the 2008 stock market crash. It has been powerless against every recession since 1929.
O'Brien selected facts with care. He assembled them to portray Bitcoin as either fraudulent or doomed. He omitted that Bitcoin's price stood ten times higher than two years prior. He ignored that merchants and consumers were adopting the currency at an accelerating rate.
