Is investing in crypto assets a negative-sum game?

Investing in crypto assets is a negative sum game as defined in game theory and economics. Negative sum games result in a net loss across participants and multiple losers associated with every one winner.

Since crypto assets are investments the purpose of buying a crypto asset is to buy it at a lower price and sell it at a higher price to generate a return denominated in a real currency. However as an investment crypto assets have no income-cashflows therefore the only money that exists to pay out investors is money that is brought in by later investors. This makes the entire scheme a zero sum game. All money won by speculation is ultimately money that is equally lost by another participant.

This is comparable to the analogy of a game of poker and other gambling games The only money that can be won in a poker game "pot" provided by the players of the card game. The act of playing poker does not generate any money, it simply redistributes to participants according to a game of chance. If the "house" or casino takes a percentage of the pot on every round of the game played then the size of the pot must decrease over time. This turns the zero-sum game into a negative-sum game which admits a negative expected return. See also the greater fool theory.

Investing in crypto assets is statistically guaranteed to lose money for almost all market participants because as investments they have no income-cashflows. This differs drastically from productive assets such as stocks ,bonds and real-estate.

See assets comparison chart for comparison of crypto assets to conventional investments.


  1. Krugman, Paul. 2018. ‘Bitcoin Is Basically a Ponzi Scheme’. The Seattle Times 30.
  2. ———. 2013. ‘Bitcoin Is Evil’. Paul Krugman Blog (blog). 28 December 2013.
  3. ———. 2021a. ‘Technobabble, Libertarian Derp and Bitcoin’. The New York Times 21.
  4. ———. 2021b. ‘The Brutal Truth About Bitcoin’. The New York Times 21.
  5. Taleb, Nassim Nicholas. 2021. ‘Bitcoin, Currencies, and Fragility’. ArXiv:2106.14204 [Physics, q-Fin], July.
  6. Cembalest, Michael. 2022. ‘The Maltese Falcoin: On Cryptocurrencies and Blockchains’.
  7. Bindseil, Ulrich, Patrick Papsdorf, and Jürgen Schaaf. 2022. ‘The Encrypted Threat: Bitcoin’s Social Cost and Regulatory Responses’. 7 January 2022.
  8. Corradi, Fiammetta, and Philipp Höfner. 2018. ‘The Disenchantment of Bitcoin: Unveiling the Myth of a Digital Currency’. International Review of Sociology 28 (1): 193–207.
  9. Shri T Rabi Sankar. n.d. ‘Cryptocurrencies – An Assessment’. Reserve Bank of India. Accessed 2 March 2022.
  10. Diehl, Stephen. 2021. ‘The Intellectual Incoherence of Cryptoassets’. 7 November 2021.
  11. ———. n.d. ‘The Case Against Crypto’. Accessed 17 February 2022.
  12. Stivers, A. 2019. ‘The Alchemy of a Pyramid: Transmutating Business Opportunity Into a Negative Sum Wealth Transfer’.