Bitcoin may indeed be something truly new in the world of economics and finance. However, memories of past "financial innovation" schemes help to tarnish the image of Bitcoin. And while no one is calling the leading crypto currency an outright scam anymore, governments are still wary and trying to protect users from big mistakes in personal finance.

Beyond the talk of "tulip mania", there are more recent schemes that work to increase Bitcoin skepticism.

Russian Pyramids and Bitcoin Investments

Eastern Europe and Russia saw their share of pyramid schemes, also known as Ponzi schemes. Investment vehicles promising easy returns, but relying on the inflow of new investors to survive, found fertile ground in post-communism countries still reeling from economic instability. Because Bitcoin's price also increases with newcomers, it has been compared to a financial pyramid.

Sergei Shvetsov, the first deputy governor of Russia’s central bank, said he is worried about investor protection. "We see Bitcoin gradually turning into an asset acquired for the purpose of obtaining a high yield in a short period of time, meaning it has signs of a financial pyramid," said Shvetsov.

Just like pyramid schemes, Bitcoin has invited many to enter their life's savings with dreams of making it big.

And this has made Russia skeptical, banning cryptocurrencies for years to prevent another blow to consumer finance, just as the country was entering a period of economic recovery and some excess investment money.

Hong Kong Bogus Investment Opportunities

Hong Kong saw a boom of unlicensed investments, booming in 2015, only years before the arrival of Bitcoin exchanges, crypto companies and ICOs. Since then, scams from unlicensed investors have only increased. What unlicensed investment scams have in common with Bitcoin is a method using loud publicity, social media presence and promising high returns.

No wonder Hong Kong banks may be skeptical and refusing to service Bitcoin companies, having encountered an earlier breed of scammers. For now, the losses amount to $2.82 million- a rather low sum, in the range of personal finance. But Bitcoin has arrived on the scene just at the time when the Hong Kong financial authority was already growing tired of warning about get-rich-quick schemes.

Pink Sheet Stocks and Marijuana Companies

Pink Sheet companies are very agile- they are known for changing tickers and showing up with a new batch of shares to lure fresh buyers for a one-off pump and dump scheme. At several points in their history, some altcoins have resembled that approach. Strangely, Bitcoin has not done anything like that, but in the years around 2011-2014, a lot of new coins showed up with a pre-mine, each one promising to displace Bitcoin.

Around 2014, running a marijuana business was all the rage and marijuana company Growlife was flying high, just around the time PandaCoin was also peaking. Both crashed, Growlife has been defunct since, but PandaCoin continues.

Yet the arrival of companies like Medical Marijuana,Inc. (MJNA) was an event similar to the boom of ICOs, where "blockchain" remained the keyword, instead of "medical marijuana". Around 2014, the US Securities and Exchange Commission finally cracked down on paid pumps, and was primed for the ascent of ICOs in late 2016 and 2017.

China: Overheating Economy and Unlicensed Microloans

China's newly found wealth and liquidity are not without their troubles. Micro loans boomed in China, distorting the market for interest rates with the entrance of many unlicensed operators. But Chinese micro lending had a predatory side, targeting users with limited funds.

The scheme is not unique to China, but has found fertile ground there and grown. No wonder that Chinese regulators are wary of schemes that lead to potential extortion and losses.

The Credit Default Swaps and Risky Mortgages

The world economy was just unraveling from one of the previous bubbles, reeling in shameful freefall as a set of toxic instruments, called "credit default swaps" had flooded bank balance sheets. No one knows how much value would have been wiped out if the central banks had not intervened to provide liquidity and confidence to banks and as the years progressed, to dilute the effect of the toxic financial innovation.

Almost a decade after, just as the central banks were preparing to breathe easy once again, Bitcoin came in with a retinue of altcoins, tokens, projects and a claim to the next wave of financial innovation. No wonder the European Central Bank and other regulators are bristling once again, after facing another round of cleaning up the aftermath of a bubble and the wipeout of value and economic confidence.

What turmoil can be caused by Bitcoin and altcoins is anyone's guess. At this point, the total market cap of the cryptocurrency market has increased to between $200 and $300 billion. To compare, Enron had a peak market cap of $60 billion and the fallout affected many.

A fallout in the world of cryptocurrencies would be like the crash and burn of a very large corporation- with the added stress of abandoning high hopes. The other scenario is that cryptocurrencies may turn out to repair some of the flaws of a system where financing always creates bubbles as the default story.