“We find that whole community suddenly fix their minds upon one object and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion and run after it, till their attention is caught by some new folly more captivating than the first.”
“Never believe anything in politics until it has been officially denied.”
Otto von Bismarck
“The development of Blockchain is a further technological advance in laying the material foundations for a planned socialist economy in which the mass of the population—as workers and consumers—would be able to exercise democratic control and supervision over the organisation of economic life to satisfy human needs rather than the drive for profit.”
Ruja Ignatova has the great distinction of being the greatest digital currency fraudster in the world to date, and Jamie Bartlett’s narrative-driven book will make her even more infamous. Bartlett’s The Missing Cryptoqueen was derived from a BBC podcast of the same name.
Even at a tender age, Ignatova was searching for ways to become rich quick. She was part of a very brutish and nasty social layer who worshipped at the altar of Capitalism and did not care whom they burned or cheated as long as they became rich quick.
Ignatova’s search for wealth was boosted by the advent of cryptocurrencies such as Bitcoin, which she saw as a quick way to get rich. Quite why Bartlett glorifies this viper in his book is quite beyond me. He has an annoying habit of using Dr in front of her name as if she is some kind of economic genius. In reality, she was a small-time entrepreneur who decided to move from strategy consultancy into grooming and fashion and then into grand larceny via a scam.
Ignatova faced one tiny problem she had no idea how to integrate her OneCoin Cryptocurrency company into the existing financial landscape and had even less idea how to produce a blockchain. The Blockchain is an integral part of any cryptocurrency.
As the Wikipedia article explains, it is a secure, decentralised electronic account of every crypto transaction and can be seen by all users who buy and sell digital currencies. In 2016 OneCoin attempted to hire a Norwegian expert, Bjørn Bjercke, to remedy this far from a trivial problem. Bjercke rejected the company’s offer, which was above his pay grade and said that OneCoin having no blockchain was a bit like “a car without an engine.”
Given that anyone with half a brain could see that OneCoin was a glorified $4bn Ponzi scheme ,. As Bartlett writes, “OneCoin was not a rival to bitcoin, and a closer analogy would be Bernie Madoff Investments or Elizabeth Holmes” medical tech startup Theranos. It was a brilliantly designed Ponzi scheme with no real technology. Up to a million people held thousands of OneCoin in believable-looking digital ‘wallets’, which they could not sell to anyone. The ‘price’ of OneCoin was just a number generated by Ruja’s cronies. The only thing that was real was the losses”. It is amazing that it was allowed to continue to exist and is still going despite a number of its top executives being in Jail or awaiting trial
According to Henry Hitchings, “There were dissenting voices: as early as February 2016, Britain’s Daily Mirror denounced OneCoin as “virtually worthless” – “all fur coat and no knickers”. Yet only in the autumn of 2017, following an FBI probe into Ignatova’s sometime lover Gilbert Armenta, did it become clear to investors that, as Bartlett neatly puts it, OneCoin was “three different scams rolled into one”: a Ponzi scheme, an extreme example of “shark-like” multilevel marketing and a fake cryptocurrency”.
As I said, Barlett treats this scam company and its crooked leader with far too much respect and leniency. Despite Bartlett’s vagueness over Ignatova’s intentions, it seems pretty clear to even a child that she was planning an exit strategy from the off.
Bartlett calls her a “visionary” and “painfully clever”. It is not that Bartlett is not a good journalist because he is but from a social standpoint, he is very soft on these capitalist parasites. The way he treats Ignatova is similar to the glorification of wild west criminals and killers like Jesse James and John Wesley Harding.
The book does have its moments. Bartlett described one jamboree when Ignatova came on stage to the sound of Alicia Keys anthem “Girl on Fire”. Whose lyrics talk about “living in a world … on fire, / filled with catastrophe — but she knows she can fly away”. Also, the numerous trips to the plastic surgeon were a bit of a giveaway. In her own words, she would ‘Take the money and run, and let someone else take the blame.’
While the book is not without merit, it has some serious structural weaknesses. Its primary one being there is no analysis. Bartlett’s attitude towards the origins of Cryptocurrency or Blockchain leaves a lot to be desired. The origins of Cryptocurrency are worth a few volumes. In the book, Bartlett downplays the significance of the founder of the Blockchain, Satoshi Nakamoto, and he treats him as a shady character. The fact that Bartlett fails to mention that the founding of the Blockchain and then Cryptocurrency was preceded by an extremely complex academic paper. Nakamoto’s paper is not mentioned in the book, and nothing from academia is mentioned.
It is worth quoting at length from Satoshi Nakamoto’s paper. He writes, “commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust-based model. Completely nonreversible transactions are impossible since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make nonreversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.“
It should be noted that Nakamoto’does not bear responsibility for the current crypto turbulence, which is causing the collapse and bankruptcy of many Cryptocurrency companies. As Nick Beam points out, it is “an indication of a much broader deepening crisis of the financial system as the massive inflow of trillions of dollars from the Fed and other central banks over the past decade has promoted new and ever more arcane forms of speculation and in the Case of OneCoin outright swindling and criminality. Numerous reports from financial media have tied the wild, uncontrolled printing of money to the massive growth of Cryptocurrency.
According to one report from the International Monetary Fund(IMF),” the total market capitalisation of crypto assets has increased exponentially from less than $20 billion in January 2017 to more than $3 trillion in November 2021. Much of this increase has occurred during the COVID-19 pandemic as trade in crypto assets has accelerated, leading to a twentyfold increase in the market capitalisation of crypto assets between March 2020 and November 2021.”
Therefore it is no accident that figures like Ignatova have taken advantage of this phenomenon for their enrichment. She may be the first and biggest, but she will not be the last. The academic economist Robert Reich, the labour secretary in the first Clinton administration, called the crypto markets nothing more than Ponzi schemes saying, “There are no standards for risk management or capital reserves, and there are no transparency requirements. Investors often do not know how their money is being handled. Deposits are not insured. We are back to the wild west finances of the 1920s.” Gary Gensler, Securities and Exchange Commission chief, said of crypto investments that they are “rife with fraud, scams and abuse.”
The fraud and scams within Cryptocurrency have, of course, had their counterparts in the so-called real capitalist economy. Despite the promoters of Bitcoin and other cryptocurrencies saying they represent the future of finance, again, as the Marxist writer Nick Beams points out, “this wealth is not the outcome of an increase in productive activity, signifying the underlying health of the real economy, but rather is a symptom of its increasingly diseased character. Whatever the virtues and advantages of the blockchain technology, on which Bitcoin is based, in establishing a ledger system in which companies can make rapid transactions and may have wider applications, the cryptocurrency mania is not an expression of efficiencies deriving from this technology. It can only be understood by placing it within a wider context. The past year has seen an orgy of speculation while the global economy has suffered its deepest contraction since the Great Depression, with consequences for years to come as the global COVID-19 pandemic continues out of control. Vast fortunes have been made on financial markets completely disconnected from the underlying real economy.
Unlike Bartlett, Socialists believe that the new technological advances contained in Blockchain could well be developed to organise and plan production in a socialist economy. Under blockchain technology, information on available resources and needs in different areas could be gathered in ledgers and then used to organise production globally rationally. Despite having a “nicely mixed character of prophet and swindler.”
Karl Marx, Capital Volume (Penguin Books, 1991)
Crypto, Corruption, and Capital Controls: Cross Country Correlations-IMF-Marwa Alnasaa, Nikolay Gueorguiev, Jiro Honda, Eslem Imamoglu, Paolo Mauro, Keyra Primus, and Dmitriy Rozhkov -WP/22/60
Cryptic Connections: Spillovers between Crypto and Equity Markets-Tara Iye-IMF
 Extraordinary Popular Delusions and the Madness of Crowds
 See Crypto, Corruption, and Capital Controls: Cross Country Correlations-IMF-Marwa Alnasaa, Nikolay Gueorguiev, Jiro Honda, Eslem Imamoglu, Paolo Mauro, Keyra Primus, and Dmitriy Rozhkov-WP/22/60
 Cryptic Connections: Spillovers between Crypto and Equity Markets-Tara Iye