Dogecoin's Co-Founder Says Crypto Is Like A Pyramid Scheme

Since its origin as a joke in 2013, Dogecoin has found itself a rising, memetic star in the world of cryptocurrency. Boasting the undying love of Elon Musk and a market cap of an estimated $54 billion dollars, surpassing several well-established companies including Philips, eBay, Ferrari, and even Twitter, according to a recent report from Forbes, Doge has become a crypto staple, revered by some finance enthusiasts.

Yet even with this astounding success and the unwavering support of the Tesla CEO, who has been known to send stock prices skyrocketing with a single tweet, not everyone is feeling “very wow” about the crypto. Earlier this week, one tech icon took to social media to speak out against the meme-tastic currency and boldly compare crypto as a whole to a Ponzi scheme – the co-founder of Dogecoin himself, Jackson Palmer. His thesis? Rich people ruin everything, even the crypto he helped invent.

“After years of studying it, I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents through a combination of tax avoidance, diminished regulatory oversight and artificially enforced scarcity,” wrote Palmer on Wednesday as a part of a broader thread dissecting why he would not be returning to crypto. 

Part of this problem, he argues, is because the industry is full of rich people and is “controlled by a powerful cartel of wealthy figures," as Palmer calls them. Despite claiming crypto is decentralized, he asserts, these wealthy people “have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace.”

“The cryptocurrency industry leverages a network of shady business connections, bought influencers and pay-for-play media outlets to perpetuate a cult-like ‘get rich quick’ funnel designed to extract new money from the financially desperate and naive,” he elaborated in a later post. While he acknowledged that these types of financial dealings have existed for quite some time, he says that cryptocurrency is different, as it “is almost purpose built to make the funnel of profiteering more efficient for those at the top and less safeguarded for the vulnerable."

“Cryptocurrency is like taking the worst parts of today's capitalist system (eg. corruption, fraud, inequality) and using software to technically limit the use of interventions (eg. audits, regulation, taxation) which serve as protections or safety nets for the average person,” he continued. 

Considering he spent 10 tweets not only dunking on the rich, but also the sheer existence of cryptocurrency, Palmer's thread quickly went viral, angering several cryptocurrency supporters including Coindesk's Preston J. Byrne who penned a rebuttal dismissing the Dogecoin co-founder's sentiments.

“Is Palmer right? In some cases, sure, but this is still a cheap shot, one first made – unconvincingly, in my view – six years ago by Virginia Commonwealth University academic David Golumbia,” he wrote. “Yes, crooks and fascists use bitcoin; they also breathe air and use TCP-IP. Yes, they were disproportionately prominent in the early cryptocurrency days; this is no longer the case.”

As such, he chalked the thread up as a cancel-culture era hit piece on what he says is a neutral entity. “Palmer’s critique hits all the right notes, using all the right language that would under normal circumstances could set off a letter writing campaign of the type that makes most PR departments panic ('Did you hear, our service is being used by – gasp – right-wingers!?'),” he wrote. “This necessarily precipitates a deplatforming and groveling public apology, a pattern that, in the recent past, has resulted in the removal of politically radioactive individuals – Alex Jones comes to mind – from web platforms, payment processors and banks alike.”

However, not all experts condemned Palmer's sentiments. In the aftermath of the thread, Dogecoin's other co-founder, Billy Markus chimed in on the matter, asserting that his colleague's “points are generally valid aside from the pointless American politics piece.”

“There’s a lot of terrible people who are involved in the crypto space, and I completely understand why he would feel negative about it,” Markus elaborated. “I understand his perspective and we both saw mostly the negative side of all this."

As CNBC Make It noted, this is far from the first time Markus has spoken out about Crypto's shortcomings. "The crypto community can be pretty elitist and not very inclusive, and we wanted to make a community that was more fun, lighthearted and inclusive,” Markus, who is no longer associated with Dogecoin, told the financial publication earlier this year when discussing the crypto's genesis. “It worked, and is why the dogecoin community consistently maintains a presence.”

Top Image: Shutterstock

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