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Bitcoin: The World’s First Get-Rich-Quick Scheme Where Everyone Agrees It’s Not A Get-Rich-Quick Scheme

Author

jeffrey charrier
May 22, 2025

Summary

· Bitcoin’s security model is doomed to fail — miner rewards halve every four years, making long-term network security unviable without massive price or fee increases.

· Bitcoin is too slow to function as real money — Its base layer processes only 7 transactions per second, making everyday payments like buying coffee impractical without relying on complex, fragile, second-layer solutions.

· The Lightning Network is a band-aid, not a cure — It addresses transaction speed but introduces liquidity, centralization, and security issues, failing to solve Bitcoin's practicality problems as mainstream money fully.

· Bitcoin isn’t used as money — and that’s a big problem — Its value hinges on widespread usage, yet most people hoard it like an investment, not a currency.

· The dream is bigger than the tech — Bitcoin sells a compelling story, but in reality, it's a volatile, inefficient asset propped up by belief, not intrinsic utility.

Introduction

Bitcoin is hailed as the future of money. It’s a “revolutionary technology that will give you a Lamborghini,” but behind the hype lies a structural flaw that thwarts its long-term viability. This paper takes a clear-eyed look at Bitcoin through a beginner-friendly lens. It explains what Bitcoin is and why it’s unlikely to succeed as a mainstream financial system. From scalability issues to declining miner incentives, this paper is a reality check for those seduced by the optimism without seeing the underlying risks.

What is Bitcoin?

Bitcoin is a non-sovereign, limited supply, decentralized digital “store of value.” It is an alternative to savings accounts, bonds, or cash under the mattress and has been adopted as a hedge against runaway inflation. It is a response to global monetary irresponsibility from central banks and governments. 

Bitcoin is a way to transact without verification from a third party, such as a bank. It operates through the blockchain, a public ledger that tracks all transactions, and works because individuals worldwide, called miners, verify these transactions. The miners are incentivized to verify transactions because they can earn Bitcoin by doing so. 

Bitcoin is valuable because it has the potential to be a better alternative to fiat currency. Its potential lies in its trustless system, where no one person or entity has influence. It is “backed” by trust in the network and its participants, as opposed to the dollar, which is backed by the “full faith and credit of the US government.” 

Bitcoin is also inherently democratic and “hard” money. Money that is “hard” means it is difficult to obtain. Gold is “hard” because it is expensive to mine, and we can only acquire so much each year. Fiat is considered “soft” or “easy” money because nothing limits how much we can print besides the availability of ink and paper. 

Bitcoin is considered the most “hard” money because its supply will always be limited, and it is very costly to acquire new Bitcoins.

Because Bitcoin is trustless “hard money,” many describe it as perfect.

Bitcoin tells a convincing story, and it's easy to understand why so many people love it. The idea of transacting money that no one controls is exciting, and it would undoubtedly combat many problems with the current financial system. Americans take a pay cut each year due to inflation, and Bitcoin is viewed as the solution.

The Lightning Network

The Lightning Network was created to address Bitcoin’s scalability issues.  By design, Bitcoin’s base layer is very secure but slow, capable of processing only seven transactions per second. Because of this, if you attempted to purchase a coffee with Bitcoin on-chain, it would take a minimum of ten minutes for the transaction to be processed. Obviously, waiting ten minutes for your payment to be processed is impractical, so the Lightning Network was born. The Lighting Network is a second layer built on Bitcoin’s base layer that creates payment channels capable of millions of transactions per second. Instead of recording every transaction on the blockchain, two parties will lock up Bitcoin in a multi-signature wallet, allowing them to transact off-chain. Think of it like a tab at a coffee shop. No transactions are recorded on the chain until you close your tab, allowing for cheaper and faster transactions. 


The Lightning Network doesn’t require you to establish a channel with every store you want to transact with.  For example, if Alice wants to send money to Starbucks for her coffee but doesn’t have a direct channel with them, she can utilize Bob’s channel since she is already connected to him. Due to the design of the Lightning Network, Bob must have enough Bitcoin in the channel to cover Alice’s transaction.

This makes transacting with Bitcoin more convenient, but some issues are worth pointing out.

Security—This is the biggest and most devastating threat to Bitcoin’s long-term viability. I cover this issue later in the article under “Why Bitcoin is almost guaranteed to go to zero / the likelihood of Bitcoin becoming mainstream.”

Liquidity constraints—Participants must have sufficient funds locked in payment channels to make payments. If Bob’s channel lacks sufficient Bitcoin, it cannot route Alice’s transactions. At today's market prices, the average channel capacity sits at around $2000, so larger purchases are likely not possible.

Channel management—Opening a channel requires users to lock up their Bitcoin, which is inconvenient because these funds become temporarily inaccessible. The average person can't afford to lock up their money, and Bitcoin’s narrative is to make transactions more fluid and easier, not more restrained. 

Centralization/Aggregation of liquidity - Large, centralized routing nodes will likely form as the Lightning Network grows. As a result, large nodes become attractive intermediaries for routing transactions because they can handle larger payments and are less likely to have liquidity shortages. These large nodes will likely gain control over routing transactions, which would go against Bitcoin’s main purpose.

Security concerns (Watch Towers) - To prevent fraud, vendors and consumers must monitor channels to ensure the other party doesn’t try to close the channel with an outdated balance. This requires constant vigilance or reliance on “watchtower” services, which introduces additional trust issues.

While the Lightning Network makes transacting Bitcoin easier, it still has issues. Because there's no shortage of creative innovation, I’m sure the problems with the Lightning Network will eventually be solved. However, one fundamental issue with Bitcoin’s entire design would prevent it from being a long-term solution, which I will cover next.

Why Bitcoin is almost guaranteed to go to zero / the likelihood of Bitcoin becoming mainstream

Bitcoin is unlikely to sustain itself because the only thing keeping the network secure (the miners) is being squeezed out of the market.

Miners keep the network secure by verifying the transactions and rejecting fraud.  The more miners there are, the more secure the network is. The fewer miners there are, the less secure and vulnerable the network is to compromise.

The mining reward is cut in half every four years, so the Bitcoin mining industry becomes half as profitable. A business (Bitcoin mining) that becomes half as profitable and more difficult every four years is unsustainable.  

For this to not be an issue, one of two things must occur: Bitcoin would have to double in price every four years to offset the decreased Bitcoin rewards to maintain the same level of security, or transaction volume would have to be so high that the fees would compensate for the lack of Bitcoin compensation.  Considering the possibilities of both scenarios, one at a time, it’s practically impossible for Bitcoin to double in price every four years.  After 40 years, Bitcoin would need to demand a $2 quadrillion market value to maintain today’s level of security, which is one thousand times the market value of Google and about four times the aggregate value of all the wealth in the world, to put it into perspective.  As far as transaction fees go, this scenario is also questionable.  Currently, approximately 15,000 businesses worldwide accept Bitcoin as a payment method.  For transaction fees to effectively replace Bitcoin compensation, Bitcoin must be transacted at gargantuan volumes.  If we assume an average transaction fee of $1.50, Bitcoin will have to be transacted 33.3 million times (while it’s currently around 500,000) each day for miners to receive the same financial incentive they do from current Bitcoin compensation.  Also, all these transactions would have to take place on the chain to allow miners to earn, and we’ve already covered why this isn’t practical, especially considering the network can only support seven transactions per second.  If transactions exceed this threshold, they accumulate in the mempool, a queue for unconfirmed transactions, resulting in longer confirmation times and higher fees. Already, we have seen transaction fees reach over $100 per transaction, and Bitcoin hasn’t experienced transaction volumes anywhere near mainstream.

However, it is plausible that Bitcoin may appeal to a small market segment, such as ultra-wealthy individuals willing to pay a substantial fee for convenience when making large purchases. Yet, even if that’s the case, nothing guarantees that Bitcoin will be the preferred digital currency over alternatives like XRP. 

So, in short, Bitcoin’s long-term viability depends on its becoming a mainstream currency worldwide, which I believe is highly unlikely.

Additional Thoughts

Bitcoin is not intrinsically valuable

Another problem with Bitcoin is that nothing keeps people from deciding that something else is more valuable than Bitcoin. “Value” is defined by Bitcoin maximalists as something everyone agrees is valuable, which is a flawed, circular reference. In the eyes of the greatest investors, value is what you get from the price you pay. You don't get anything from Bitcoin besides the greatest story ever told about how the government is stealing from the common people, and the proposed solution is deflationary money (Bitcoin). The reason this story is so great is that it’s true! At least partially so. The government printing money steals value from the people, but the rub is that Bitcoin is not an effective answer. We know that initial ground-breaking technology is constantly replaced by newer, better technology; think AOL, Blackberry, and Myspace. How can anyone be confident that this cryptocurrency, which is very difficult to use as a daily currency, won't be replaced by something better? I’m concerned about the people putting all their eggs in Bitcoin and betting their lives on it.  It’s shocking how frequently I hear about people converting their 401k into Bitcoin.

Bitcoin isn’t being used for what it was designed for, and that’s dangerous

Although initially designed as a currency, people now treat Bitcoin like an investment. Many buy it, few transact it, and this is where it gets dangerous. If no one transacts this “money,” it’s entirely worthless. The only things that give money value are its transactability, the wide adoption of said money, and its immutability. Even though Bitcoin is immutable, the argument that money is not valuable if people do not transact it is still valid.

Bitcoin’s “get rich by doing nothing” narrative mimics that of a bubble

Crypto technology is likely here to stay, at least as a tool for efficient value transfers, but bubbles form when ordinary people believe they are entitled to extraordinary wealth by doing no work- Tulips, FTX, Bitcoin…Bitcoin as a “wealth generation strategy” is delusional.  Bitcoin isn’t anything more than a sock drawer where everyone keeps hiding their savings, convinced the drawer is gaining value just because someone said so on Twitter.

“Far more important than the rate of interest in the supply of credit is the mood. Speculation on a large scale requires a pervasive sense of confidence in optimism and conviction that the ordinary people were meant to be rich.” Pg. 169 The Great Crash 1929. This quote describes the mood preceding the Great Recession and accurately reflects the current attitude towards Bitcoin.

Bitcoin is too volatile to be mainstream

Volatility makes it unsuitable for everyday transactions, where price stability is essential. Imagine paying for groceries with Bitcoin one day, only to find its value has plummeted the next. Businesses would struggle to price goods and services consistently, and consumers would face unpredictable purchasing power, making it an unreliable “store of value.”

Conclusion

Bitcoin is a smart idea built on real frustration with the modern financial system, but when you look past the hype and examine the mechanics, serious flaws become apparent. Its network security model is unsustainable, its transaction capacity is severely limited, and its adoption is driven more by speculation than utility. While the underlying technology may shape the future of finance in some way, Bitcoin itself is more likely to become a stepping stone than the destination because Bitcoin, in its current state, cannot succeed as a global currency. Enthusiasts should be wary of treating it as a sure thing and recognize that in the world of innovation, first movers are rarely the last standing.

Resources

Miners' Compensation and transaction fees https://www.blockchain.com/explorer/charts/miners-revenue

Bitcoin reward is reduced by 50% every 4 years (Bitcoin Halving) https://www.coinbase.com/learn/crypto-basics/what-is-a-bitcoin-halving

Alice, Bob, Coffee shop illustration https://opennode.com/blog/bitcoin-transactions/