Robert McCauley, a scholar from Boston College and Oxford, argued Monday that Bitcoin (BTC-USD) is worse than a Ponzi scheme because the eventual use case for the cryptocurrency remains unclear, while its high energy use makes it a "negative-sum game."
Expanding on a piece he published last week in the Financial Times, McCauley told CNBC that the approximately $20B spent on mining to date "is gone."
McCauley's case comes in two parts. First, he contends that the basic outline of Bitcoin trading resembles the structure of a Ponzi scheme, in that early investors are paid out by late-comers, with no economic value created in between.
Second, the Boston University non-resident senior fellow at Global Development Policy Center asserted that the expense related to maintaining the Bitcoin (BTC-USD) system, especially in electricity use, meant that it will cost society over the long run.
"Every day, there's money being paid to miners by investors. And every day, that money is mostly going up the flue. It's mostly going up in smoke," he said. "And that's all social cost. That's all loss."
McCauley, who also works as an Oxford University faculty member, noted that the collapse of some Ponzi schemes still allowed victims to recoup a portion of their funds. To make this point, he highlighted the Bernie Madoff scam, which has returned about 70 cents on the dollar at this point.
In contrast, he contended that a total collapse of Bitcoin would leave no assets left to be divvied up among the remaining investors.
Asked if Bitcoin (BTC-USD) could still prove its economic value and change his opinion of the cryptocurrency, McCauley suggested that he's still waiting for it to prove its usefulness.
"It's been a while, we've been waiting for the use case," he said. "New ideas are coming down the pike for what it will get us eventually. But we're still sort of waiting."
For a contrary opinion on the future of Bitcoin (BTC-USD), read the latest commentary from cryptocurrency investor Anthony Pompliano, who says he thinks in terms of Bitcoin each time he makes a purchase.
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