First some short explanation, and then the questions.

If I bought stocks, bonds or fiat currencies I hold securities by which those who put them on the market, have the liability to me. Stocks are put on the market by companies. Bonds by corporations and governments. Fiat currencies by banking system and borrowers. By putting their securities on the market, the said entities essentially borrowed capital from the market, which is why they have the liability to return it back. This happens when they withdraw securities from the market. So if I am a market participant holding their securities, the capital is returned to me when companies buyback stocks or liquidate the business, when corporations or governments pay me bond's face value, and when the banking system and borrowers sell me the seized collaterals or goods, services or labour to get currency units for liquidating the issued loans. Numbers in this case only represent the amount of capital a security issuer borrowed and has the liability to return.

Bitcoin on the other hand, is not a security. Its issuer/issuers have no liability to withdraw bitcoins from the market, and in the process, return the capital to bitcoin holders. So if I hold bitcoin, I basically hold number for being number. I hold a product similar to gold, a picture, wheat or crude oil. People buy these products for what they are, for their intrinsic value. And unlike with securities, once people bought them, no entity has the liability to buy them back in the future. So, the only way people can benefit from them is by utilizing their intrinsic value. But, here a crucial problem arises regarding bitcoin.

Gold I can utilize for jewelry, electronics, dentistry and so on, a picture for pleasing my aesthetic senses, wheat for making all sorts of foods, crude oil for manufacturing everything from plastic to petroleum. Besides, a single unit of these products is pretty cheap. However, in the case of bitcoin the only way I can utilize it is by watching it. That's all. Once I buy bitcoin, my wallet application reads a number from the blockchain, and shows it on the screen of my mobile phone. And all I can do, is to watch that number. To watch it like a picture is watched. When I sell bitcoin to other people, the new holders can also just watch a number on the screen. So, essentially no human being on Earth is capable to do anything after purchasing bitcoin, but to watch a number. Obviously, watching a number is not as aesthetically pleasing as watching a picture of a beautiful girl or a sunset.

And now the questions: if I can purchase a picture of a sunset for a couple of bucks on Shutterstock and watch something aesthetically rich, why on Earth would I purchase number "1" for $37,000 and watch something aesthetically poor? Why would I pay so much money for a single unit of a product that in comparation to gold, a sunset picture, wheat or crude oil has so low utilization capacity?

https://youtu.be/p37Wg6h2PJ4

The linked video explains the difference between traditional financial instruments and bitcoin. Both traditional financial instruments and bitcoin are essentially numbers stored on some media. Either on plastic, paper, metal or digital. However, there's one huge difference between the two. Traditional financial instruments are redeemable by the issuer. Meaning, the issuer withdraws instrument units from the market, and in the process pays the redemption value to the holders. Once the units are withdrawn they ceased to exist. New units are then created again, and the whole process repeats itself. Also, a fixed or expected redemption value is what we use to determine whether a particular market price of an instrument is cheap or expensive.

On the other hand, bitcoin is not redeemable by their issuers. The issuers of bitcoin never withdraw its units from the market in order to pay something to holders, which is why bitcoin has zero redemption value. What that means is two things. First, any price of bitcoin above zero is infinitely expensive (price of bitcoin devided by zero redemption value gives infinity). Second, bitcoin is similar to a losing lottery ticket, to a stock of a bankrupt company, to a currency of a former county or to a casino token of a bankrupt casino. That's because, all mentioned instruments are numbers on some media, but their units are not redeemable by the issuer. Just like the bitcoin units are not.

https://youtu.be/aBl-O_3g_58

The video explains how the phenomenon of representative equivalence and the myth of fiat money being just paper bills or electronic entries on the bank accounts, enabled the craziness in which people trade real things for imaginary ones. Bitcoin of course being the imaginary thing.

(tl;dr
When people talk about Bitcoin what they actually talk about is statement about Bitcoin. But Bitcoin itself doesn't exist. If I say" John owns 10 Ferraris", this is a statement. It's a statement about ten cars in John's ownership. But in reality, John doesn't actually own Ferraris. So, we can make statements about nonexistent things. And that's exactly what Satoshi's software does. After POW, this software writes that John, that is, his blockchain address, has quantity xx of a thing that Satoshi named Bitcoin. But John is not able to show xx Bitcoins the same as he is not able to show 10 Ferraris in his ownership. All he can show are statements. Statements about nonexistent things.)


The illusory truth effect, refers to a phenomenon in which people, when hear the same false information repeated again and again, often come to believe it is true. Also, repetition of a such information increases its likelihood of being judged true. Even the most educated individuals are still prone to this effect. They may be skeptical of a false information the first time they hear it, but the more they are exposed to it, the more they start to feel like it’s true, and their previous knowledge is not able to prevent this. This effect is especially powerful in today’s times of social media, where it is incredibly easy for false information to spread quickly to millions and millions of people all over the world. Bitcoin is a textbook example of this effect in action. Namely, we are exposed to headlines like: “Large companies are now investing in Bitcoin”, “The value of Bitcoin has risen ” or “Tesla bought bitcoin”. We talk about Bitcoin. We know there are millions upon millions of dollars involved around Bitcoin. We read books and articles about Bitcoin. And so on. However, all the things just mentioned rest on the information that Bitcoin exists. While in reality, there is no such thing as Bitcoin. If you think that Bitcoin exists you are the victim of the illusory truth effect. Everyone that makes headlines like the above, writes books or articles about Bitcoin, is victim as well. The information on Bitcoin’s existence has been repeated so many times that nobody is aware of the fact that this information if entirely false. Here, we will show that Bitcoin is a fictional or nonexistent thing. That nobody ever bought or sold Bitcoin. And that all people have ever done in this whole Bitcoin thing is transfer false statements on quantity created by a computer program of an anonymous author.

The best way to start explaining the nonexistence of Bitcoin is via an example. Suppose you are a business owner and you receive a digital invoice from your software supplier. The invoice lists a dozen items. Upon inspection of the list, you notice the item named “Microsoft Office 2019 license” with the quantity “10” next to it, and you realize that you never bought the licenses. You neither ordered nor received them. Licenses in the said quantity never came into the possession of your company. So, what the supplier did is sent you fake digital data (fake quantity). Fake, because the data informs you that you got digital asset (licenses) in a specific quantity, while in fact you didn’t get them. Exactly the same thing is happening in the world of Bitcoin. Namely, an anonymous author called Satoshi Nakamoto wrote a computer program that sends quantity data to the virtual addresses of people who maintain a database with these quantities and addresses. The database is called blockchain, while the maintainers are called miners. The said data informs the miners that they got specific quantity of a “digital asset” called Bitcoin. Bitcoin is supposed to be the payment for the miners, their reward for the maintenance. But here we have the same problem as in the invoice example. The miners never get Bitcoins. They only get quantity data on Bitcoins. The same as your company got quantity data on licenses but not the licenses themselves. And although in that example, the invoice quantity data was fake, we at least know what the Microsoft Office licenses are. Here, we have blockchain quantity data, but nobody even knows what Bitcoin is. Nobody knows to what thing in the real world this quantity data belongs. Only name was given to it: “Bitcoin”. Generally speaking, quantity is defined as the amount of something. So here, “something” is Bitcoin. But besides the amount and address in the blockchain, nothing exists anywhere that is in the ownership of address holders. So, what the Satoshi’s computer program sends to miner’s addresses is fake quantity data. Data on a fictional thing called Bitcoin. And from miner’s addresses, such data is then transferred to the addresses of other blockchain members. If you are one of the members, and you see “0.54” and “BTC” in your wallet, “0.54” is supposed to be the quantity of Bitcoin, and “BTC” a short name for it. But if one were to now ask you, where is the thing in your ownership that has quantity “0.54” and name “BTC” you wouldn’t be able to show it. That’s because Bitcoin doesn’t exist. Simply, what you have in your wallet is quantity of a fictional or nonexistent thing.

Generally speaking, what Satoshi Nakamoto did is pretty trivial. He wrote a computer program through which he is saying something to people. He is saying it in the form of quantity data. In our invoice example, your software supplier also said something to you in the form of quantity data – that your company got licences in a specific quantity. Data is simply a statement expressed formally. So, what Satoshi Nakamoto does with his computer program, is formally saying to blockchain address holders that they got Bitcoins in a specific quantity. But saying something doesn’t make it true. The same as your software supplier must prove that your company gained ownership of their licences, otherwise their statement is false, Satoshi Nakamoto must also prove that blockchain address holders gain ownership of his Bitcoins. But he is obviously not able to do that given that address holders got nothing from Satoshi except his quantity data, that is, his statements. That’s why Satoshi’s statements in the blockchain are false. Simply put, Satoshi instructed his computer program to tell lies to people. He instructed it to store fake quantity data. And doing something like that is what almost everyone can do. After all, that’s why we have the explosion of crypto currencies, or more precisely, the explosion of fancy names and fake quantity data. All that crypto creators do through their crypto softwares is telling lies to people.

Many people are lured into this whole crypto thing because the quantities between crypto accounts are transferred the same way as quantities between banking accounts. This creates the illusion that it’s all about sending and receiving quantities. That it is all about transferring data. But, nothing could be further from the truth. Namely, when people have quantities in their bank accounts they own something that actually exists, something that can be shown. They own debt. And this debt is paid to them in the form of goods, services, or labor provided by the borrowers. Here’s how. In a banking system, new quantities are crated when banks grant loans to the borrowers. Borrowers get quantities on paper bills or on deposit accounts. This is how debt is created. Once created, the investors invest in this debt. How they invest? Well, they trade goods, services, or labor with the borrowers. In that way the investors get quantities on deposit accounts, or on paper bills. So, if you have a positive balance in your bank account, or a paper bill in your hand, you essentially invested in the debt of the borrowers. Once the debt is in the market, the quantities are traded between the investors and this is how the debt ownership changes hands. Finally, given that there is debt owed to the investors, this debt gets paid back. How it gets paid back? Well in the same way it was invested in it – through the trade of goods, services, or labor. Namely, borrowers need back the quantities they previously traded because they are required (forced via collateral) to repay their loans. In order to get the quantities back, they trade their goods, services or labor with the investors. And this is how they pay the debt to the investors. Once the debt is paid, the borrowers have the quantities needed to repay their loans. With the loan repayments the quantities went back to the banks that created them. In that way, the quantities are withdrawn form circulation. With new loans, quantities are put back into circulation, and the whole process of debt creation, debt investment and debt payment repeats itself.

As we can see, when people transfer data from one banking account to another, what they actually transfer is the ownership of debt. The quantity data itself only represents or quantifies the debt, and without debt, there wouldn’t be data. So in the case of banking accounts we have two things: digital data (quantities), and intangible asset (debt ownership). Debt ownership is the thing that actually exists. That’s why we call it an asset. Asset is something that exists. On the other hand, in the case of crypto accounts we have digital data (quantities), but the thing on which the data is supposed to be, is nonexistent. And this nonexistent thing is given a name: Bitcoin, Dogecoin, Litecoin, whatever. So, when you think that you bought some crypto currency, you haven’t actually bought a currency. Only fake quantity data was sent to your address. Crypto currencies are fictional. They exist only in imagination, like Harry Potter or Starship Enterprise.

With that said it is easy to figure out what the crypto schemes are all about. They are about getting existent things in the exchange for nonexistent ones. Fancy names and fake quantity data are the tricks how to get them. You simply write a computer program that stores quantity data into a database and then you invent some fancy name to create the illusion that there is an existent thing behind the quantity. Then, you convince people of your creation being digital, because nowadays, calling something “digital” implies that it is new, innovative and revolutionary. You also convince them that your creation is an “asset”, “money” or “currency”. You even convince them to spend enormous amounts of electricity to keep your scheme running. Then, people start giving you the existent things (goods, debt ownership, company ownership, …) or provide you services or labor. And all you do in return, is sending them fake quantity data created out of thin air by your computer program. How is all that possible? Well, it is possible because people are the victims of the illusory truth effect. They hear the repetition of a specific name again and again, for e.g. “Bitcoin”, and they come to believe there’s an existent thing behind the name, such as currency, commodity, money, digital asset, tokens, coins, etc. When in reality, there is nothing except fake quantity data.

The same is true for investing. People hear the repetition of a phrase “investing in Bitcoin”, and they come to believe that actual investing is going on. While in reality all people are doing is paying off the existing blockchain members, and then wait for new members to pay them off the same way. Paying off the existing members is obviously not the definition of investing. The definition of investing is when investors put their assets, services or labor in an existent thing form which they can then expect the return. We saw that in fiat currencies, they put them in debt of the borrowers (existent thing), and their investment is then returned as goods, services, or labor provided by the borrowers. In stocks, they put them in a company (existent thing) and their investment is then returned as dividend, buyback value or liquidation value paid by the company. In bonds, they put them in debt of the bond issuer (existent thing), and their investment is then returned as principal paid by the issuer. In gold, they put them in a precious metal (existent thing), and their investment is then returned as usage of that metal in jewelry, electronics, computers, dentistry, medicine, aerospace, etc. So in actual investments, the investors can return their investment from the thing they invested in. They are not condemned to wait for new members to pay them off. That is why we can say that one invested in fiat currencies, stocks, bonds or gold. On the other hand, we cannot say that one invested in Bitcoin. It is impossible to invest in something that doesn’t exist.

With all that said, it is obvious why the whole Bitcoin scheme is a ticking bomb that can go off at any time. Namely, we have the whole army of members who put the existent things in the scheme (miners alone put in about 130 terawatts of electricity a year). Alternatively, members put in services or labor. All these people expect the existent things, services or labor back. Because, by being blockchain members they own none of the above. That is why they desperately need new members who will voluntary enter the scheme and provide them the said things. Meaning, the existing army of people requires another army of people to pay them off. But, as the first army grows, there are less members to form the second army. Eventually, the turning point will happen, people will realize what is going on, and no one will be willing to become the blockchain member anymore. Then, the whole scheme will collapse and the existing members will be left with nothing.

To conclude, the illusory truth effect, together with the tricks of fancy name and fake quantity data, created the illusion of the existence of a thing called Bitcoin. For that reason, people thought that the whole thing differs from classical Ponzi or pyramid schemes, where nothing exists to pay off the existing members, and thus, a constant influx of new members is required. But, as it turns out, exactly this is the case with Bitcoin scheme. Nobody can be paid off from blockchain membership because nothing exists behind the fancy name and quantity data. That is why a constant influx of new members is required to pay the existing ones off. All schemes where the existing members can be paid off only from the inputs of new members, eventually come to a turning point after which they collapse. Bitcoin scheme, and all crypto schemes for that matter, will come to this point as well. It is just a matter of time.