A compelling reason to avoid bitcoins

[Pottapaug1938]

With the hope that this new threat can avoid the verbal tussles which caused the earlier bitcoin thread to be locked, and with a request to the moderators to do to to this one should that happen here, I offer this opinion piece from the CNN web site:

http://www.cnn.com/2013/04/11/opinion/a ... ?hpt=hp_t3

[Burnaby49]

Supporte by Slate:

http://www.slate.com/articles/news_and_ ... lapse.html

[notorial dissent]

Tyler and Cameron Winklevoss of Facebook notoriety or fame depending upon your opinion are claiming to own about 1% or $11M worth of Bitcoin.

I also wasn't aware that as well as being a cyber currency, it also existed in hard format as well

[LPC]

Tyler and Cameron Winklevoss of Facebook notoriety or fame depending upon your opinion are claiming to own about 1% or $11M worth of Bitcoin.

Always interesting to see how people who come into large (and usually undeserved) wealth find ways to piss it away.

I also wasn't aware that as well as being a cyber currency, it also existed in hard format as well

Which seems to defeat the whole purpose of electronic money.

And could be a crime, just like the "uttering" of the Liberty Dollar turned out to be a crime.

[Famspear]

Our former village idiot, Harvester/Nationwide/Libre/johnthetaxist/johnnycash has claimed that he loves bitcoins -- and that is by far the most compelling reason I can think of to avoid bitcoins.

[Pottapaug1938]

I remember that once, when I challenged Harvester to prove a particular allegation, he said that he'd do it for 100 bitcoin.

[notorial dissent]

And could be a crime, just like the "uttering" of the Liberty Dollar turned out to be a crime.

I'm inclined to disagree here as they look nothing like any kind of "real" money at this point, actually look, and are for that matter more in the realm of proprietary casino poker chips. The closest analogy I can come up with is like having credit on EBAY, it can only be used there. As I understand it, and I will admit to really not understanding much of it, or caring for that matter, if you actually want to cash out, you have to go through a broker or some such and take the handling fee as a loss.

I am fairly convinced there are a load of other improprieties and possible illegalities involved here, but I just don't think "uttering" qualifies as one of them.

I have felt all along that this is some how a scam but for the life of me I can't quite figure it out as to how it is supposed to work and who is going to come out ahead. Unless the whole intent was to do a pump and dump sort of deal.

[GlimDropper]

I've been noticing a rash of scammy little ponzi/pyramid schemes latching on to Bitcoin. I understand about self selection in scams, like how the grammar and spelling in a Nigerian Prince email are just bad enough to insure that near anyone who replies to it may be dumb enough to fall for it. Believe me, the original version of this pitch was far more, enthusiastic:

It Is Coming…

What scared Bill Gates into retirement?

What could replace Google, Amazon, iTunes, Apple, Microsoft, and hundreds of other global corporations? What could virtually eliminate the need for PayPal, MasterCard, Visa, and every single bank on earth?

Well, duh, it's Bit Billions.

And one that just hit my radar today, The Grass is Greener Online dot com which bills it's self as the first Bitcoin MLM with a twist. What is that twist? Online virtual horse racing. Yea, you can wager your bitcoin on races who's outcome is completely determined by the people running the software. You have to love their affiliate agreement, from which I quote:

This Agreement will be governed by the laws of the United States, without reference to rules governing choice of laws. Any action relating to this Agreement must be brought in the United Kingdom and you irrevocably consent to the jurisdiction of such courts.

In some ways I can see bitcoin as a ponzi promoter's dream come true. It's almost untraceable and not subject to regulation. No more dealing with the payment processors or even, real banks (at least until you need to convert them into real money). But the price volatility could become problematic, wide swings in price could influence cash in/out behavior independent of pimp forum "I got paid" posts. I will say I'm almost looking forward to the first really big bitcoin HYIP admin pulling a runner, if the pimps think it's hard to get refunds from STP, just wait till they get a load of bitcoin's refund policy.

[LPC]

Paul Krugman thinks that Adam Smith would have hated bitcoin.

Apparently, Smith thought that gold coins were a waste of resources, and that paper money was better for the economy.

[Gregg]

I am not entirely convinced that it isn't the NSA/CIA or some other government spook agency of the US or another country. And that isn't a joke, I mean it.

[LPC]

And could be a crime, just like the "uttering" of the Liberty Dollar turned out to be a crime.

I'm inclined to disagree here as they look nothing like any kind of "real" money at this point, actually look, and are for that matter more in the realm of proprietary casino poker chips.

That's not what the statute (18 U.S. Code § 486) says:

Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States, or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

A casino chip is not "intended for use as current money," so it's not a violation, but I think that the bitcoin is intended for use as "current money" within the meaning of the statute.

And I think that there is some rationality in saying that electronic bitcoins are legal and physical bitcoins are a crime. If you're sophisticated enough to go onto the Internet and trade in electronic accounts, you should be sophisticated enough to take the risk that the bitcoin might turn out to be worthless. But should all merchants in all shops be required to know that the coins they are being given might not be worth anything? I think it's enough of a rationale to survive constitutional scrutiny.

Putting it differently: Congress might not want to try to control what games people play on the Internet, but they can certainly control what coins are circulating within the United States.

[notorial dissent]

And I think that there is some rationality in saying that electronic bitcoins are legal and physical bitcoins are a crime. If you're sophisticated enough to go onto the Internet and trade in electronic accounts, you should be sophisticated enough to take the risk that the bitcoin might turn out to be worthless.

I understand, and agree for the most part, with what you are saying here. But.... I think it would be much harder to make a case of uttering in this instance since it does not look or pretend to be US currency, and they are not trying to spend it in place of US currency, unlike our old friend batty Bernie. I think the analogy is closer to a gift card, in that they are only usable ONLY within the system itself, or at a merchant that actually takes them, so there really is no crossover in to the main economy. I think they are highly suspect and questionable, as to value and usability, and for staying valuable, much as with a gift card, no guarantee that they will remain usable either.

But should all merchants in all shops be required to know that the coins they are being given might not be worth anything? I think it's enough of a rationale to survive constitutional scrutiny.

????? Where did you come up with this from???? As far as I can tell there is, and has been, no attempt on the part of the bitcoiners to use them outside of their little fantasy world. The physical bitcoins, which I didn't even know existed until literally a day or so ago, are, at least if I read the article correctly, nothing more than the equivalent of the Olive Garden gift card someone gave me, pretty to look at and hold, and of absolutely no use unless I use it at Olive Garden. The same analogy you propose applies to merchants who accept bitcoin as to people who buy them, caveat emptor.

[notorial dissent]

According to a newspaper report the Bitcoin bubble may have burst, worth about $10 at the beginning of the year it was at $260 on Wed and at $55 on Thur of last week. Depending on when you got in and for how much, that could have hurt.

[The Observer]

Gold prices have also fallen, so I imagine many of the gold bugs out there are starting to lick their wounds. And I wonder what our good friend Von Nauthaus is going to offer by way of explanation of why those Liberty Dollars are falling in value.

[notorial dissent]

Von Nutbert will either come forth with a long winded diatribe saying nothing, or will totally ignore it as it doesn't fit in with his fantasy world, and contradicts his sales spiel. I'm leaning towards the latter. Either way he is still a loser.

[tracer]

Gold prices have also fallen, so I imagine many of the gold bugs out there are starting to lick their wounds.

They're still higher than they were in early 2009, and MUCH higher than they were in 2007.

In fact, when gold prices first took off in 2009, I was convinced it was a "price bubble" that was going to burst at any time.

So, I sold some 1 ounce gold American Eagle coins for the "outrageously high" price of $1150 each, figuring the price would collapse at any instant and I could buy 'em back for around $800 each or so.

[Pottapaug1938]

Gold prices have also fallen, so I imagine many of the gold bugs out there are starting to lick their wounds.

They're still higher than they were in early 2009, and MUCH higher than they were in 2007.

In fact, when gold prices first took off in 2009, I was convinced it was a "price bubble" that was going to burst at any time.

So, I sold some 1 ounce gold American Eagle coins for the "outrageously high" price of $1150 each, figuring the price would collapse at any instant and I could buy 'em back for around $800 each or so.

This is one of the reasons why most investment professionals advise against trying to time the market -- you never know when you'll be caught leaning the wrong way.

[The Observer]

Gold prices have also fallen, so I imagine many of the gold bugs out there are starting to lick their wounds.

They're still higher than they were in early 2009, and MUCH higher than they were in 2007.

In fact, when gold prices first took off in 2009, I was convinced it was a "price bubble" that was going to burst at any time.

So, I sold some 1 ounce gold American Eagle coins for the "outrageously high" price of $1150 each, figuring the price would collapse at any instant and I could buy 'em back for around $800 each or so.

But how many of the gold bugs were buying gold in 2009? I bet hardly any. It was only after India and China had already bought heavily that any of the hoi polloi noticed and started purchasing gold at the inflated prices, probably late 2010 and 2011. Guess where they are sitting right now? Not in the seat you were occupying.