After considerable thought, I’ve decided to put the Bitcoin Exchange Scammer comment back up as I believe it’s in the public interest, especially so given recent events on Bitcoin Exchanges.
For those unaware, every now and then, I receive a comment through the wonderfully inefficient Nerdr.com spam filter from someone who couldn’t quite find my email address. That’s fine and most times it’s a small fire that’s quickly put out, or a start-up proposal to consider. All good fun.
Yesterday was a little different. I came across a message that sent a shiver down my spine. As much as I have discussed the pros and cons of Bitcoin, I never once realized this could be happening. It was a comment intended for the Bitcoin Shutdown article and originated from what appeared to be an actual Bitcoin Trading Exchange owner.
Now I’d take this with a grain of salt (heck a sack of it judging by some of the comments left here last week), but it seems like the real deal from what I could dig up. I’ve removed the Bitcoin Exchange name for obvious reasons and cleaned up the grammar and spelling as best I could.
THE BITCOIN EXCHANGE SCAM:
“Hi Nerdr, I could not find an email address to contact you and have some information for you.
Let me first say who this message is from. I own and run a Bitcoin trading exchange. Here many users buy Bitcoins and sell Bitcoins for dollars. As you know it has been a great time for Bitcoin trading with a large rise in value over a very short period of time.
First I started like the others. I wanted to trade the bitcoins for the dollars on the Bitcoin forum like others. Then I started my own Bitcoin website to do this. Some people from the Bitcoin forum used it and were happy. Some told their friends and so on and so on. It grew like a mushroom. I want to say again, first it was all good and clean, no mess, very honest.
Then I had my big idea. I wanted to make more money. The number on the exchange. A number. I could change it in the programming. Not too much, because their are other exchanges to balance, but a little would be okay to do. So I did it. I increased the Bitcoin value a little. Say from $1 to $1.05. No one noticed and many were happy to see it go up. I was making people happy and the forum enjoyed the fun times with many dreaming big money! haha.
Now I change the Bitcoin price by hand nearly everyday now. I increase the number and more people give me money. Sometimes I let the files do this. It is a miracle like I have a bank haha. I give them numbers and they give me money. I thank god everyday.
They are greedy. I don’t care if I cheated them. I wonder is it bad? I have a nice life now and will marry soon. We will buy our first house soon with my Bitcoi money the greedy have gave me.
I am blessed to be alive.”
MY OPINION:
I’ve said it before and I’ll say it again; their are 3 main users of Bitcoin:
- The Money cleaners/tax evaders.
- Those involved in non-legal activities.
- The Greedy.
It seems our friend is going after the greedy.
We all know Bitcoin is a sham, it’s a pyramid scheme, but I never thought to consider the exchanges to be on such shaky ground. I guess something about them encouraged trust, we think of them with the same respect we hold for the DAX or FTSE 100, but when one considers why we revere these Bitcoin Exchanges the argument falls short and the mental house of cards we’ve built comes crashing down.
Bitcoin Exchange
Bitcoin Exchanges have no audit process, no way of keeping them honest, no trail and no verification procedures. It’s just a number like he said. It’s all trust, based on a house of cards and this is one of the issues I’ve been harping on about from the beginning. Why do you trust the exchanges? What gives Bitcoin it’s value?
An anonymous currency requires trust between users. Especially when used online. If I pay you N Bitcoins, I have to trust you will send the goods in exchange. Think about who you will be sending those Bitcoins to. Without trust, there is nothing. The key to remember is the Bitcoin system relies on trust, yet you are dealing with the most untrustable and criminal of people, exactly those who seek an anonymous currency like Bitcoin. For those who are still unaware, there is no honor among thieves except in Hollywood.
Bitcoin Scam
It is possible that last weeks Bitcoin Black Friday event (10th June 2011) was a market manipulation. If you owned an exchange and were running low on Bitcoins, what would you do?
I’ll tell you what I’d do. I’d drop the prices on the exchange, buy up as many Bitcoins as I could get from Idiots looking to sell, then jack the Bitcoin price right back up and make a killing. And I’d do it everytime.
And you would too.
There are no controls, no structure and no systems in place to keep things honest on the Bitcoin exchanges. No Securities and Exchange Commission. No Financial Services Authority. Bitcoin is unregulated and not the right place for a regular Joe to be placing money. Especially when they gain little value from Bitcoins anonymity, unlike those intending nefarious acts. Add in Bitcoin pricing volatility and you have a currency that is unusable for real world trade.
Having said that, without the Bitcoin Exchanges, how else will Bitcoin users value their “currency”? They can’t. Bitcoin valuation, as with any currency, requires a central base to assign that value.
A currency requires agreement on value, even if it is just perceived with little or no tangible mass behind it.
Even if it is just a database our friend can change at will.
What do you think? Would you put your life savings into Bitcoin?
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Bitcoins are truly worthless. They have no value as a currency, due to their wild price swings. They resemble a commodity… except they aren’t anything tangible. They’re subject to manipulation due to the nature of the design (a botnet, or a hearty ASIC investment, and you control bitcoin.) They’re only as redundant as the owner makes them (most users aren’t so wonderful at backing up their system).
It’s a neat social experiment, and cryptocurrency may be the future… but Bitcoin in its current form is not. Make take a lot of people getting burned badly before they realize this, though. Sucker born every minute.
The exchanges can’t just set the global rate like that. People have to be willing to pay a given buy price, or sell at a given sell price. Yes, in a small pool with relatively few exchanges, there is still the potential for a large exchange or consortium of exchanges working together to manipulate the price.
But that is very unlikely because (1) they would also have to have a massive number of greedy/oblivious buyers and sellers, and (2) they would have to be well coordinated and/or control a huge chunk of the global trade volume.
Unfortunately, the events of the past few weeks gave them both #1 and #2, simply because millions of ignorant people suddenly discovered Bitcoins and moved into the market using largely a single exchange.
While nothing is certain, such an event is less likely to happen the more time goes, as an increased number of experienced users will minimize factor #1, and the fact that nearly anyone can create an exchange independent of the others will minimize factor #2.
I think it’s far too early to pass sentencing on Bitcoin.
Bitcoin is a deflationary pyramid scheme used for non legal activities. Sad to say it’s sentence has been passed, just a case of time. It’ll hit hard and fast, like with the online games situation.
One big sweep.
Who will they go for? Exchanges? Software creator? Users?? My money is still on exchanges.
The scam is this…
You give money, they give “credit”… You try to cash-out your “credit”, they say… “Someone already cashed it out”… OMG I was robbed!
Yea, the second you gave them cash for “fake money”, you were robbed.
(Note, they DO pay-out small transactions, in hope that you TRUST them with MORE MONEY. Them who? Russian and German Mafia… Potheads… Mexican Cartell? Yea, because they are just waiting to give you $120 for that $50 cash you gave them last month. It makes perfect sense!)
No, the fact is, they “lie” and say it is worth $100, what was $50… Because they scammed another $50 from someone, and (if they actually payed-out), would possibly be able to give you $100… But they won’t.
It is monopoly money for you and your friends… It is pure tape if given to a stranger… It is simply a stale donation, if just given away (If they can actually cash-out. Cash out to who? Who wants your bitcoins? Who the hell is paying $120 for your coin… No one, that is why the price falls. Because no one is paying out.)
Is, and always will be a scam… You can’t even find a real answer about bitcoins, even after you dig for hours through hundreds of links. Useless programs, useless dead sites, useless “bankrupt bitcoin dealer”… bankrupt… what? You just took our money and bitcons, cashed the bitcons, and kept the money.. Bankrupt my donkey, you got all the money!.
There’s a german mafia?.
Yea, it’s called the Gestapo, Skinnnheads, JugoslawischeDD Mafia, and various other things…
They were the ones who “handled Zimbabwe” currency printing, and (Print one for you, one for me… one for you, one-two for me… one for you, one-two-three for me…)
Then went to Zimbabwe, and sold them their own money for 1/10th the price to the citizens, for GBP, Euro, and USD and goods. Thus, the hyper-inflation.
Now, they, (the German mafia figures), sell the useless printed money that they couldn’t sell back to the Zimbabwe residents, on ebay, as bundles of “untouched money”.
(You can remove the link… lol…)
thedailybeast dothere com /newsweek/2008/07/01/where-the-money-isn-t.Html
Then look-up Zimbabwe currency…
Actually, I support bitcoins, just not the many “Markets”, which are frauds. There are honest and thriving markets that keep bitcoins solid, stable, and constantly rising in value.
Yes, greed only appeared on the scene after the arrival of bitcoin. Now if we can all just go back to the dollar and euro and all of our troubles will finally be over.
Every ounce of logic in my brain tells me the bitcoin craze will not last and the whole Ponzi scheme will come collapsing soon. Yet, looking at the largest Bitcoin exchange out there (mtgox.Com), its value keeps going up; even after it drops temporarily. That tells me people are buying and holding. As if it is a long-term investment. I have posted some derogatory comments elsewhere and immediately was ridiculed by Bitcoin believers and defenders. Some people are making real good money (and yeah sure, some are losing). Early investors have long cashed-in and gone underground. Satoshi Nakamoto must be a billionaire now and will he ever pay tax on his gains? Of course not. I wonder how is he hiding his money, and what prevents him from issuing an endless supply of bitcoins to himself?.
Shh…
You have misunderstood the block chain and BitCoin protocol. If you UNDERSTOOD BitCoin you could be like me and make some good money, you just have to be firm with yourself on what price you buy and sell at. Don’t be greedy. Basic will power and market analysis will take you much further than listening to all these expert speculators with their “ounce(s) of logic”. I would absolutely love you to show me how Bitcoin isn’t a long-term investment. The reason that BitCoin is spooned up right now is due to lack of security and awareness of the marketplace, and what pump/dump schemes look/sound like, but you think it’s gonna stay that way when you got people with 100million in BitCoin?? The real problem is that it is largely tied to the United States Dollar because that’s what its traded for most often.
At the moment we’re living in a peculiar moment of time where this entire country’s economy is just in the air…falling but haven’t hit the ground yet. When the dollar crashes, people will FLOCK to BitCoin as long as there is electricity and internet. Initially bartering will make a come-back but eventually demand to use bitcoins for goods and services will become so high that countries across the world will FLOCK to BitCoin to join in. It’s pinned to the underworld drug-market with anonymity and ability to plaundery money, it’s not going ANYWHERE. If you’re smart, you buy and you hold. If not, keep hold of your USD. Gold is overvalued and you can’t sell it on the internet anonymously without tax fees. BitCoin is here now. Learn to adapt or perish.
I’ll take this one, why do you think the US dollar will crash?
Do you seriously think we’ll go as far back as bartering? There is no way bartering will work in the modern day. Especally not in a first world economy like the US.
If you thought Bitcoin was a good investment, long term, why would you ever sell? Why have you not invested every cent you have into Bitcoin? Could it be doubt?
Bitcoin is around $105 right now.
Should read “It seems our GREEDY CROOKED friend is going after the greedy.
And you would too? No, I wouldn’t.
Sound like the E-GOLD fiasco. Why people just don’t buy/sell actual currencies is beyond me. I short sold the AUD/USD at a smidgen under 1.04. I bought again a tad above 1.02. Only 2c gain you say!?!?! Well, time that by 10 standard lots and well, I earned almost $20,000 in less than a week. GUESS WHAT!!! I CAN CASH OUT MY REAL $COIN$ AT ANY TIME TO ANY BANK IN THE WORLD!!!! Now beat that bittards
.
Ah, now it’s a true currency…this guy is acting exactly like the Federal Reserve.
Dear prospective bitcoin user. Go type “exchange bitcoins for cash” into google search. You see all the red flags going off in your brain now? Run like hell before you get duped. Bitcoin is and always will be a scam created by REMOVED.
Total ponzi scheme. The Winklevii, always looking for the quick fix, big hit will lose all their not-so-hard earned money. Bitcoin is supposed to be the medium of exchange, so why should value fluctuate wildly? It’s more like airline miles
.
So the news rush on Bitcoin has slowed way down. It’s no surprise that the price of
Bitcoin has stagnated at $113 for a week. It’s all about the hype.
It took nearly every major news outlet in the world to raise the Bitcoin price from $30 to $200. It won’t be that easy ever again.
We had a bitcoin account and it was hacked via emails. We lost $ in the amount of five figures and spent more time with sorting it out than I care to admit. Bitcoins is corrupt with hackers and who knows what else. The whole scam should be shut down.
Via emails? You mean you were fished?
Also, you said ‘we’, a company or personal wallet?.