Bitcoin Exchange Scam – Bitcoins Are Now Worthless
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 … Continue reading
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As for the man who wrote you such email – poor ethic soda! Stop.
You say bitcoin users are greedy? Is that only characteristic you could name for these people? And how do you name stockholders? Company people, all sorts of bankers, investors? I admit, this world is built up on greedy and accidently you have right on this! But stop mentioning bitcoiners (esspecially people who mine their bitcoins) the only greeders in this world. They are small fishes. Look for some bigger if you dare to write about them. But I think people like you are here on some purpose. To destroy new era of money and bitcoin. And I think YOU will suck, not bitcoin!.
So if some people are bad it is okay for smaller fish to be bad? That is a strawman argument. We both know what Bitcoins are used for, so lets not pretend it has a good purpose.
You understand that for a market to work you need both a buyer and a seller. If I’m selling cupcakes, I (typically) don’t double my income by doubling the price of the cupcakes because people aren’t as likely to buy them at double the price. Nothing is different if I’m running an exchange, if I manipulate the price I’m going to effect: (1) people’s willingness to use the exchange and (2) either people’s willingness to buy or sell (depending on the direction I’m manipulating the price). None of this requires the alphabet soup of statist agencies that you incorrectly imply are necessary to protect us, the market will crush exchanges that excessively manipulate prices and they will disappear far faster then Bernie Madoff (who made it through multiple SEC inquiries).
If you don’t understand Bitcoin, that’s okay. Implying that people who trade in Bitcoin are foolish or evil just makes you look silly.
I am almost sure who this exchange is. I have been warning these noobs not to use these fixed rate exchanges.. Pretty sure this is mrbitcoinsDOTcom or crypto(e)xchangeDOTcom….
Bitcoin is young and evolving. No I would no more put my life savings in them than I would in US Treasuries. But I would buy a 1000 of them. They get their value from open market supply and demand pricing (natural market driven inflation and deflation, not the benny kind) by people willing to use them as money. There is a good chance bitcoin will sort out it’s problems and become more mainstream simply because the global underground economy is mainstream and cash is under attack. A lot of ordinary people will want to see bitcoin work and get easier to use. Libertarians consider governments to be criminal thieves just like the scammers who use bitcoins are and I would bet there are many people willing to do the due diligence and caveat emptor required to overcome exchange rate scams like the one you mentioned.
“would” buy? Not have bought?
How is cash under attack? How so? What’s the story here?
I think you will find most ordinary people actually like the security and stability central banking provides. I don’t want my life savings to double OR halve while I sleep. It’s nice to know an apple will cost the same as it did yesterday.
It would be nice but unfortunately an apple will cost more and more as time goes on with inflation.
No no no no no, apples do not cost what they did yesterday, food is expensive now!
No one is saying throw your life savings to the market. But buying a coin or 2 now…. Very smart indeed.
How many Bitcoins do you have Fool1? What will you do if the Bitcoin market price decreases?.
You HAVE to realize that there are far too many ways to obtain bitcoins than just buying from this truck. There’s bitcoin mining, numerous sites to exchange tangible currency for bitcoin. The value of a bitcoin has been approx. $13 for a while now. It’s worth whatever someone will pay for one. People who are savvy enough to have a protected bitcoin wallet, and purchase bitcoins aren’t stupid enough to buy from trucks like this guy, or at an inflated price. Bitcoins will be more and more popular every day – with more and more security added to secure it’s value. It’s not for the greedy, tax dodgers, or illicit purchases. It’s a way to make sure that no matter what happens with governents, there is always the bitcoin to rely on. Personally, I believe bitcoins are the currency of the future, and an ideal society where degenerates are dealt with, and freedom is free like it should be.
Bitcoins are worth whatever people will pay for them, that’s the point. If someone sells them on their website for a dollar more then other people then it only increases the value if people will pay that. If this guy got rich from selling the Bitcoins then that only further proves that Bitcoins are NOT worthless.
It’s a speculative market. That doesn’t mean there is intrinsic value in the underlying asset, just that people hope the price continues it’s trend. Hence, speculative. The only real thing is atoms. And Bitcoin contains no atoms. So there is no underlying in Bitcoin.
Dear Sir.Nerd.
I have been reading your whole thread and was wondering now that you have been watching this new currency and have spoken to many people do you still feel the same.To me it is the age old saying “we mock what we dont understand” Yes i agree that this currency can be used for bad things.Can cash be used for bad things ?Ok that being said i have seen a rise in ligitimate things that can be bought with bitcoin.You now can go to some resturaunts and pay with your cell. If you look at the history it was used to by games to buy certain things on the web.It grew from there as i am told.Why not . I am guessing you like to have the gov. With a microscope up your WARNING all the time.I do not!.
It started as an interesting question, then slipped into the void of junk. I’ll answer your question Kikotoby. Yes, I still feel the same way about Bitcoin. I believe it is bad for society in general. Great for individuals, and those who want to ruin society and societies. But bad for everyone else.
It is called a social contract, and the method of enforcement of our federal social contract is to know what others are doing and when they are breaking the laws we have made together. If we can’t know when someone is breaking a law, then we can’t enforce the law. What then? Do you believe you will gain from lawless-ness? It’s not a pretty sight.
I have said it before in another comment, but I will say it again here. We need society to function and move forward into a type 1 and type 2 civilization. This can only happen if we work together. Bitcoin works against this, and us, by empowering individuals.
Still against it.
Do you even know what an electron is? Laugh Out Loud.
Worthless bitcoin today @18 USD… Lots of love :).
Nerdr,
I feel sad about you not being able to recognize what role central banks are playing in a world today, and what role Bitcoin plays. Bitcoin is from the people, for the people. Please look around and understand Bitcoin is not a bad thing. Don’t be such a man of the system.
How can it be “for the people” when Bitcoins current primary role is enabling crime? Much of it, of course, AGAINST the people, and against the laws people created and most agree with in our society.
I think we all have this notion of the awesomeness of a cryptocurrency. I do too. But in the end, it requires a lack of criminals to be awesome like we imagine.
You mention banks. Everyone hates them, but fails to give their reasons. I’d like to hear some.
Many of the “criminals” using bitcoin to break the law are breaking unjust laws that burden society with the task of forcing individuals not to use particular substances that make them happy. Marij is a prime example that most Americans support legalizing.
Any other activity I can think of isn’t made any easier with bitcoin, since its not much more suited to illegal transactions than cash is, ie hiring a hit-man.
Why people hate banks:
1. They use the government to rig the market by getting huge bailouts at our expense
2. They got cash bailouts out of our pockets
3. They get huge loans at 0% interest from the Fed, while we suckers pay them 20-30% for credit cards
4. Their executives get bonuses while the bank is insolvent
5. Negative real savings rates at all banks(due to Fed policy but still a pain)
6. Their “service” only exists because of legal tender law. Several banks only exist because the Fed (us) bailed them out
7. For many, high and increasing fees
to name a few greviances.
1. They use the government to rig the market by getting huge bailouts at our expense.
2. They got cash bailouts out of our pockets.
3. They get huge loans at 0% interest from the Fed, while we suckers pay them 20-30% for credit cards.
4. Their executives get bonuses while the bank is insolvent.
5. Negative real savings rates at all banks(due to Fed policy but still a pain).
6. Their “service” only exists because of legal tender law. Several banks only exist because the Fed (us) bailed them out.
7. For many, high and increasing fees.
To name a few greviances.
There are many more crimes where an anonymous currency would be useful. You may be pro herbs, but are you pro other substances? What about kids? Do you want to protect them or let them be sold for Bitcoins and completely untraceable to law enforcement? You can’t have just the herbs. You get everything that comes with it.
I’m with you on the herbs, they’re not hurting anyone, so let them be. But what about everything else. We have many more laws than just the one you hear about the most on the internet message boards.
2. Yes, banks are bad. We all get that. But a centralized inflationary currency isn’t so bad. It helps the economy in difficult times like these.
Do you see how Bitcoin is deflationary by it’s very structure? It incentivizes those who have Bitcoin to buy and hold. Never to spend. This is bad for an economy.
What we need is a currency that is not inflationary OR deflationary. I’d be very interested to see a schema for how such a currency would be created.
Let me clarify my position a bit. I’m by no means pro drugs; I they do far more harm than good in general. Weed is an exception, since it can be beneficial in moderation and its good medicine for things like PTSD and chemo patients, not to mention a ready market for your local Taco Bell. Its not that I’m pro drug use, I want everyone to respect each other’s right to consume whatever substances they please. As far as children go, I’m with you on principle since kids can’t be expected make rational decisions until they’re in their mid to late teens at least. My only question there is will enforcement actually succeed without doing more harm than good.
“What we need is a currency that is not inflationary or deflationary” The problem I have with this proposal is (1) it was attempted as an early Federal Reserve policy and failed, and (2) it doesn’t work in theory. Money is not a yardstick that people can fix in the ground for all eternity. Money is a good, which follows the laws of supply and demand just like anything else in the market. An ideal money, then, would be one that perfectly supplies all the market demand for money with not a cent extra. Now exactly what people use as money will partly be determined by, as you mentioned, the relative stability of the money. People used gold and silver because it was stable and didn’t lose value. While bitcoin doesn’t currently share that advantage, it’s certainly capable of being more stable than fiat money. Additionally, it has several advantages over paper money which could make it increasingly desirable to use in future.
“Banks are bad” Banks are great when they can actually go bankrupt! My only beef with the banks is that they’re taxpayer funded monopolies.
“A centralized inflationary currency isn’t so bad” I beg to differ. In fact, I think the decades of inflation play a big part in explaining the distribution of wealth problem. Money is a good, so it follows the law of supply and demand. Here’s the problem; goods that have high turnover, like bread and milk, rise in price faster than goods that have low turnover, like cars or wages. In an inflationary period, the effect becomes more concentrated the lower down the income scale one is, since prices in the supermarket are rising much faster than wages. Meanwhile, the rich don’t suffer, since they spend proportionally less on the high turnover goods. The rich have thus proportionally benefited, though everyone is worse off than before, since workers now have less real income to spend. Inflation also discourages savings, which are the source of economic growth. Real interest falls so far behind rising prices that people are induced to spend all their money, instead of deferring consumption and investing in future productivity.
“It incentivizes those who have Bitcoin to buy and hold. Never to spend.” This depends, since the rate of deflation should be both predictable and small. People will be inclined to spend less than they do with dollars, but I would consider that a huge improvement. Especially if safe interest bearing investments develop, the tendency to hoard will be greatly reduced,since opportunity cost would favor investment over hoarding. Also, if high turnover goods make up enough of the market, it won’t be a big problem at all since everyone needs to buy food every week. Overall, I think an economy of shrewd consumers suspicious of parting with their hard earned coins would be far more healthy than the recent paradigm of drunken sailors looking to dump their money in inflated investments.
You do not realize the central bankers cause most of the suffering in the world. Shame on you sir.
In what ways are central bankers responsible for most of the suffering in the world? Please explain.
Nerdr,
I am responding to your comments about banks being better than bitcoin. I will agree that bitcoin, as it stands today, is much more difficult to use than a bank. This still doesn’t make centrally controlled bank money better than a currency that is based soley on supply and demand, and a SOCIAL CONTRACT that says both parties are agreeing that bitcoins are acceptable for trading for goods and services. Central banking currency is a completely worthless, atomless, made up number. Bitcoin is also atomless and has no intrinsic value, but it is a fixed amount of currency that will never increase (once all blocks are mined). Central bank currency not only has no intrinsic value, but the bank can create more currency at any time for any reason, and this drives down the value of the already “existing” currency. This is one of the main reasons the US is in such dire straights right now. The federal reserve bank is creating $85 billion dollars a month and this money is not backed by anything. Soon, your precious “real central currency” will be completely useless. Banks are taking over the world and bitcoin offers real hope that we can find a system that works and is outside the control of central authorities. We will never be able to work together for a better civilization if we are being trapped by the banks and central governments. We cannot evole will still bound by our current system of control. So far this system has given us economic depression, ever increasing loss of freedom, and central governments taking money from the lower classes and giving it to rich bankers who’s companies are “too big to fail.” Bitcoin offers us a way out of this system. It offers us freedom and privacy as well, something we have far too little of today.
Peace.
Bitcoins. What happens to Bitcoins that are lost? They are gone forever. But the final supply of Bitcoins is fixed. So the remaining Bitcoins will go up in value as wallets are stoeln or hard drives crash. This is why people buy Bitcoin. It is a speculative market based on greed. Everyone is hoping and pushing Bitcoins so they can sell and make a profit for no work. They are all waiting for a tiny fall in price. When it happens they will all sell again and the market will crash.
Inflation keeps people working hard. Keeps people productive in society. You do not want a society full of people doing nothing. Without inflation the old will have all the money, the young will have nothing. Inheritance? Old people will live longer. What about orphans? They start even worse in life.
Inflation rebalances society so those producing most current, new value get the most money.
How will an anonymous currency lead to a better society?.
You do realize what the scammer is saying is impossible, right? It may work for the very short term, but such a scheme would fall in on itself very fast.
First understand a trade requires two parties to agree on a price. Sellers put up sell orders at whatever price they like and buyers put buy buy orders at whatever price they want. Where they meet is the market price. The buyer gets bitcoins and the seller gets USD. The transaction is instant and both sides will know how much they got and how much they were supposed to get.
Using the example given, lets say the current market rate is 1.00. So 1 bitcoin buys 1 dollar. And thats the price agreed on in the market. If he were to increase the listed market price to 1.05, meaning 1 bitcoin now buys 1.05 dollars. Who would actually complete the sale? The market price is set when you have a buyer and seller. I’m sure sellers are willing to sell for higher prices but a real buyer still need to buy it.
All the buyers are still buying at 1.00. If the exchange owner put in inflated buy orders at 1.05 then those sale orders at 1.05 would expect to complete. But how would that transaction complete if there is no real buyer at that point? The seller will notice the discrepancy when the trade hasn’t completed. Or if the correct amount hasn’t been transferred to his account. This will instantly raise red flags.
The exchange owner can attempt to take funds from other users to cover the difference, but again this will only work in the short term. People will notice and red flags will be raised. Such a scam is non-sustainable.
You clearly do not like bitcoins yet you shouldn’t let that get in the way of reasoned thought. I’m afraid you may be too gullible. I mean really, if is such a great scam where he’s able to buy homes with it, why would he tell anyone? It makes as much sense as the scam.
In the future you really should consider these things more. Gullibility is a dangerous trait and will lead to a lot of misfortune in the future. And of course one always needs to be aware of ones biases. They are blinders that prevent logical and well-reasoned thinking. In this case you’re clearly affected.
You nailed it. I can hardly do better, so this will be my last post on this blog.
if you feel this guy is a scummer, they guys in the Prague are plain EVIL thieves. So is it better or worse the situation for bitcoins? Arguably any worse!.
(just for the record, I was going to give the same argument that such a scam can only work under the assumptions the buyers (in this case) are morons!
Not that we have few of those and the scum won’t work, but really? How different is the situation from having a currency exchange bureau down the street? Please come to Prague, Europe. Please try exchanging your precious USD
So you received one strange email and then decided that bitcoins were a pyramid scheme? Your analysis of bitcoin is incomplete, your reasoning – unsound, your conclusion sounds emotional (fearful) and is illogical.
I am not prepared to state that bitcoin will replace the dollar, but there is a difference between foolishly putting your life savings into bitcoin and putting in as much as you can afford to risk.
Bitcoin is valuable for the same reason that paper money is valuable – because people believe in it. It’s based on encryption an is one of the most singularly beautiful ideas ever conceived by a human mind. Mt. Gox has an excellent reputation for an exchange and I trust them as far as exchanging funds goes. My experience with bitcoin has been that in less than a year I’ve more than doubled my small investment – up 215% to be precise. IF that rate of return continues its possible that in 7 years i could be aitting on almost 2 million USD. Obviously I am going to continue, if I lose it all? No sweat, people waste more than I’m investing on a weekend in Vegas or a months worth of cigarettes and alcohol.
If you don’t trust bitcoin maybe trust your money to the banks, stock brokers, government (social security system) and real estate agents – those industries are filled with honest hard working people brimming with integrity.
So you admit you have no real use for Bitcoins and only use it as a speculative investment vehicle.
Well, what happens when it starts to drop in price? I will tell you. You sell. Everyone sells. The price crashes and it is a race to see who gets the information to sell first. Speculative markets are nothing new. You have not hit a gold mine here because the value is speculative. In the financial industry this is called paper value. That is you only REALIZE the gain/profits once you sell. Until then you could wake up to anything.
As a speculative, high risk, high return investment vehicle Bitcoin is great. But it is high risk, and as you admit, you have no real use for them other than for speculative investing.
“you have no real use for Bitcoins”
For now, there is indeed not many real uses for bitcoins. But more and more websites accept it for payment. And I guess many Cypriots, and perhaps other Europeans, could use it to put their money away from governments. ( and for the love of god don’t tell me this is not a legitimate use to protect your money from a bunch of THUGS who try to STEAL your money on your own bank account !!).
I believe there is a huge POTENTIAL there ; I don’t see why I should wait for bitcoins to be mainstream and worth $5000 before I buy some.
In the “real world,” banks liks HSBC make millions off of more dangerous criminals than BitCoin users could ever be.
In the “real world,” trillions are spent every year in the buying and selling of currency, often preempted by propaganda which represent self-fulfilling prophecy (e.G. The price of the Yen will be going down due to such and such, then people invest less heavily in the yen, it goes down, regardless of whether such and such even happened. Somtimes such and such isn’t even probable but still is effective).
Hell, China manipulates it’s currency all the time.
We have people spending thousands of dollars for internet connections so they can buy and sell the same stock shares within milliseconds of each other to catch a cheap profit.
Now certainly there are advantages to a government backed currency, but there are also inherent advantages to a currency that governments cannot manipulate.
Also, the SEC only catches a fraction of the violators, and the biggest ones often cannot be touched — remember this:
www dot bostonglobe dot com/business/2012/12/19/too-big-jail-execs-avoid-laundering-charges/QTDXdFMYiFdCkAMIRannxI/story.Html
So, that being said, I would argue that the average bitcoin user, and indeed the most invested of bitcoin users, do not have billions invested and are likely wayyyyyyyy less nefarious than say investment bankers
“Rock on london! Rock on chicago! Wheaties, breakfast of champions” – Wesley Willis.
Talking about moving into type 1 to type 2 civilization. We are not “in this together”. THE PEOPLE DONT WRITE LAWS. The only “crime” used for bitcoins is drugs. And most people dont beleive that drugs are bad. But they are against the law. Slavery was legal back in the day, was it right? NO. Love you and central banks. LET FREEDOM RING BABY!!!.
Bitcoins are only used on a website namely Silk Road a ebay for any drug you may like other than this bitcoins bears no relation to money at all so I’ve put it in 1 bracket which is the truth end of I’m done so the moral to this bitcoin story is to be able to love yourself with the drugs you can obtain with then now you tell me is that good or bad oh I thought so?.
What?? I dont usually correct people on their grammar because i dont write perfect either (as you can see i dont like punctuation or apostrophes ) but i have no idea what the hell you are trying to say other than that Bitcoins are only used to buy drugs on SR, which is not true. You can use BTC to buy anything. You can use it as a form of currency on your website to take donations etc.. You only mention the SR cause im willing to bet you read some article about the SR and thats how you found out about BTC. Yes many BTC transactions are for underground purchases but you can use it for anything. It’s not widely used because it isnt an officially recognized form of currency like the dollar or yen etc…As far as loving ourselves with the drugs we can obtain uhhhh yeah it is good otherwise what the hell is the point?? Go wag your hypocritical finger somewhere else….
(dig the human test, beats captcha…)
a) I’m not in one of the three categories you list;
b) I wouldn’t put my life saings into BitCoin, but I would put a proportion in;
c) BTCs do have a value – for years I was thinking about a digital currency that might have a restricted supply – and then, bob’s your uncle, one pops up on the newswire! – so I bought in.
D) Tulips also have a value – and so it is possible that BTCs may go the way of “Tulip Mania” or indeed the “South Sea Bubble” (a company with rights to South American trade) – but trade with South America is still useful and profitable, and Tulips are still bought as flowers for gifts or planted in gardens. Nowadays the value has returned to meaningful amounts. We all have an interest in making sure that the value of BTC is in this “meaningful” range, others may wish to test its genuine value by seeking to use it for real transactions.
Interesting events taking place today in the Bitcoin world. Consider this: Supply of Bitcoins is limited (and also capped at around 21 million). A cabal can easily develop, and I suspect has. Market manipulation is easy, there are no protections. Marketing Bitcoins out is also easy. Greed is in us all, we all want an easy dollar.
The play: Say 50% of Bitcoins are in the hands of a small group. Racking up the price of Bitcoins to where they are today ($33). Many, many speculators and idle “investors” are getting in on the action, driving it up further. Then the group sell out and crash the market. The speculating masses panic, sell. Now Bitcoin are cheap again, so the group buy up all they can. Repeat. Instant profit, no work required, repeatable.
Can’t happen? It already did.
A) What category would you say you are in if not the usual 3?
B) Why BTC? Speculation or have you found a use for them?
C) With the ease of making a digital currency, why not just start BTC v2.0?
D) Meaningful amounts…how would you define a meaningful amount for a digital currency with no inherent value? Why would you pin 1 BTC = $33 today and 1BTC = $30 last week? Based on what?.
The “manipulation” you describe could be done on any smaller NASDAQ/NYSE stock with less than $50000… If it did work. You have absolutely no guarantee the price will continue to fall just because it felt in the last minute. That would mean “if it felt, it will continue to fall”, which is of course not true, it’s not THAT easy to predict market prices. It can as well rise back and leave you with half your initial investment.
There is one important thing that you have not touched on that im going to go ahead and touch on for you. It does not matter whether it is bitcoins, or USD, or EUR. ALL forms of currency are used for the EXACT same things. If you actually believe that bitcoins are any kind of majority against USD or EUR then you are sorely mistaken. Do you think that the mafia or the mob pay ANYONE in bitcoins? How about the hum traff ring in thailand? Bitcoins are just another form of currency, nothing more and nothing less. The only difference between Bitcoins and USD or EUR as of this moment, is that 1 bitcoin = 39.20 USD according to preev.Com. And the reason why they are worth so much is because there is a FINITE number of bitcoins. They cant just print out more bills like every major government. There is no inflation with bitcoins, just a thriving market that is now coming to fruition because of ASIC mining. Every form of currency is used for “bad things”. And to tell you the truth, you really seem to have nothing more than a slight inkling of understanding when it comes to the bitcoin market and how it works. You only see the pitiful little people who setup schemes to trick other people out of their coins. I happen to own and operate a mining pool of 4 AVALON ASIC 1 rigs. At the very base of this system, there is no corruption. There is nothing more than code. And dont try to tell me that i fit into one of your “three categories” of bitcoin users. That is the worst explanation i have heard in a long time. Bitcoin is currency, therefore people who know how to use an exchange could possibly make money from it, just like USD or EUR. Personally, i dont care about what other people do with their coin, or how they obtain them. I mine my coins, and have for years. It is a spectacular side income, and it definetely makes life easier in this economy. And as for your little comment about the trade exchanges, dont make me laugh. The only people who fall for that rabble are new users. And since there are quite a few new users these days, theres plenty of room for the scam artists. But they’ll all get figured out, just like before. I love that you attest to have so much information about bitcoins, yet your article only hits on the points that make people who know nothing about bitcoins nervous. Nice try.
Yes, real currencies can be used as payment for services society dislikes, but they have a traceability that Bitcoin does not. Even cash is traceable at certain points because it requires a physical presence. This is the key point to remember in all this. I have nothing against Bitcoin as a system, it is the traceability for law enforcement that causes the problems.
One of the main reasons Bitcoins are worth so much right now ($39) is because of speculators running up the price. Those new to financial markets are easily fooled, we all know that. But anyone who knows even the basics of a market PD (pump dump) knows exactly what is happening here. Even to the point of minority holders covering the marketing costs of the PD, since Bitcoin holders are usually members of forum and message boards.
Consider this, what value could Bitcoin possibly be producing that makes it worth $39 per unit? Is the anonymity it offers and the unit restrictions you mention worth $39 a piece? Or is it simply greed? Where’s the value?
The second most significant point with Bitcoins: because of a cap on the maximum number of Bitcoins creatable by the system, there is a strong incentive to buy and hold, and not to USE. A key part of inflationary currencies is they incentivize holders to SPEND the currency. This creates a viable, working currency and prevents speculative buying and hoarding. Inflationary currencies are PRO economy, unlike Bitcoin, which due to it’s deflationary structure is pro hold. Because of this, no one will ever spend a significant number of Bitcoins. It’s just too valuable to sit and hold…until the inevitable crash comes when a whale sells out.
If everyone buys and holds after putting money into the system and then tries to get new members to sign up and “invest”, well, that’s a pyramid. And looking at the structure of Bitcoin, it really does seem engineered to work that way.
Lastly, imagine if tomorrow the Bitcoin price went down to $5 again, like it did in the last Bitcoin crash. How would you feel? Would you still be supporting Bitcoins? You would hold your Bitcoins hoping the value goes up again, right?.
I see the internet as the first step towards us becoming a Type 1 civilization, and a currency born out of the internet that is not centrally controlled, that is just another step. The only ones benefiting from the current old currencies are the ones who control it, banks, governments, and paper hoarders. But the truth is, I see their banking fees as a way to compensate for the ever decreasing value of the might USD they hold onto. I sell digital items and accept bitcoin, and give 20% off the total for those who pay with bitcoin as a way to encourage people to use them. What category would i fit into? True, if i sit on them long enough and the price rises, and i do, and i pay my bills with them, and i sit on them. Now i wont trust all my money in them, but i wont trust the bank either. There is just no way bitcoin is not good for the people. What i dont have to give the middleman, i pass down to others.
And right now i have to say. Bitcoin is about as worthless as $44.44 right now, maybe worthless in near future, but probably worthmore.
A type 1 civilization can not be built from anarchy and lawlessness. It can only be through a cohesive society working together to achieve it’s goals.
Do you see how you are incentivized by the structure and cap on max Bitcoins to never spend them? If it will be worth 10 extra oranges tomorrow, why buy today?
When will you sell your Bitcoins if you have an expectation they will keep rising in value? It’s the traders dilemma. The only time you will sell is when you must for external reasons, or when the price drops by enough percentage points to make you worry. Your Bitcoins are only worth something when you convert them into something tangible. Respected traditional currencies, or real product. Until that point, it’s just a number in the cloud.
Your argument for it being a scam is that the exchange owner charges a fee on top of the actual value of the bitcoins.
This is standard practice for any currency or stock exchange and is not exclusive to bitcoins.
Stock Brokers charge fees for any load funds or stocks, and for those that don’t have loads, up to 10% is taken off the top of your yearly earnings in the form of MER (Management Expense Ratio).
Banks of course charge fees just for holding your money for transactions, let alone actual exchange fees (wire transfers anyone?).
Even holding your money in cold hard cash sees a “fee” of on average 5% a year for the past decade, this is a subtle fee called inflation.
By definition, charging a fee at an exchange is not a scam.
CHILDISH INSULT REMOVED. – dude, we don’t need this here. – Nerdr
Good day.
That’s not what the article says at all Rational Man. The scam was what the Exchange was doing behind the scenes. I suggest you re-read the piece.
Good article! With bitcoins at $45 and pushing towards $50 more people will get sucked in to this scam. However, looking at price action it is amazing how bitcoins have went parabolic within the span of two years – two bubbles in 24 months should ring the common sense bell.
Looking at bitcoins using TA, bitcoins are outside the weekly Bollinger Bands that would imply price should drop back inside them. Look for a pullback in the near future.
It is, of course, inevitable. But there is profit to be made if you can hit the timings right or you hold between cycles. Meaning, essentially, play with money you’re willing to lose.
I agree, money can be made if one knows the market. I was thinking about buying some, Nov 2011, when they went down to $2-$3 range, but didn’t pull the trigger. I couldn’t put my money into something I didn’t trust.
“But there is profit to be made if you can hit the timings right or you hold between cycles” A person who has experience in trading could do this, but it seems to me, many bitcoiners are geared towards hi-tech, than trading. Thus, there are going to be a slew of bagmen, with a few who know their way around the financial markets with a pocketfull of cash, most likely as you wrote, “the exchange owners”. Not saying this is bad, because this is how trading works, one wins the other losses.
I feel bad for the people who have put their trust into bitcoins, only to be scammed out of their money by swindlers. If I was a conman, operating a bitcoin exchange would be at the top of my list, since bitcoins are anonymous, no oversight, no regulations, one person controls the price and not the market, it’s a crooks dream.
Bitcoins should experience a waterfall sell off once the correction starts, like rats jumping off a sinking ship. For some unknown reason they don’t sell off like I think they will, or keep going up without correcting, which they could, I would think something funny was going on.
Good grief, you people have no idea how exchanges work. If the price in an exchange is too high there will be too many sellers and not enough buyers.
The effect of this is that both the buyers and sellers have an incentive to go elsewhere because it takes too long for the sellers to sell at the inflated price, and the buyers obviously don’t want to buy at the inflated price.
Therefore, to “fudge” the price in any remarkably degree would spell ruin for the exchange; as competition would quickly destroy them.
You put way to much effort into spreading tales about bitcoin. We are still in the early stages of this experiment. I think you should rant about something you actually know. It’s not like I’m going to put my life savings into this, small investment and hold for the long term, see what happens. The truth about the USD brought me to bitcoin. Your blog has only made me more curious. Time will tell.
People who invest in bitcoin are greedy and evil? Sounds like you have an agenda. I will investigate the stats myself thanks. ;).
Do you have any Bitcoins? Why did you buy them? Greed and breaking some laws are the two major reasons I can think someone would want Bitcoins. If there are more you know, I’d like to hear them.
You can stand on a boat in Lake Michigan and send and receive $100,000 worth of bitcoins from China.
If you can’t see the value in that, and understand where this technology is headed, then feel free to be left behind. TCP/IP doesn’t need me, neither does Bitcoin.
Then your laptops slips and falls in the water. Oops, $100,000 gone.
Haha. For one thing, you refuse to recognize the value in what I pointed out, secondly if you use a third party, like Mt. Gox, there’s no fear of accidentlly dropping anything in the water, thirdly, even if you don’t want to use a third party, there’s very little chance you’re going to drop $100,000 into a lake unless you’re an idiot, fourthly, the idiocy of users doesn’t negate the value of any product or service.
Nice try, Nerdr.
You trust Mt Gox? Why?
What if they decided to close tomorrow? Bitcoins aren’t like money. You have none of the standard protections and insurances you expect from a modern banking system. A Bitcoin Exchange closes and your money is gone.
Very little chance has nothing to do with it. Once an event has occured the probability of it occuring was always 100%. If you lose that electronic wallet, even from something as regular as a hard drive crash on your home PC, it’s gone. Ask around on Bitcoin forums and many have tales of losing their wallets.
Also, those bitcoins lost come out of the 21 million maximum allowed.
Fourthly, it can affect the value if the percieved value is based on reputation of users.
Fifth, bitcoin is only secured until quantum computing arrives. What happens then?
Sixth, you may have noticed the recent split in the Bitcoin network. That wasn’t an accident.
I hope you recognize you’ve changed the subject several times trying to avoid the fact that I pointed out specifically how useful Bitcoin is.
Bitcoin can be transmitted across the world through international boundaries without the need or consent of a third party at almost no cost to either party and without any counter-party risk.
Again, if you can’t see the usefulness of that, then you’re just going to be left behind.
It is useful, I never said it was not. But is it good for society?.
You know nothing of evil monetary scientists have perpetrated over the last 100 years. Read up sonny, the real crooks are Bernanke and his cronies. We don’t need central planning and to be governed in all that we do.
What are you talking about? What evil?.
Good thing there is a central bank setting the value of gold.
Oh, wait. That’s set by supply and demand, just like bitcoin.
Some exchanges may fudge the price, just like some gold sellers add a profit margin. If they put in too much margin, people buy from elsewhere.
That’s how markets work.
Not saying bitcoin has no flaws – it has many.
Gold price is not set by a central bank, but supply is also technically not limited forever. More gold can be mined up to an unknown maximum. Bitcoin is capped at a very real maximum. In fact the rate of mining is known too.
Remember, gold has a real world use, it’s an excellent electrical conductor, Bitcoin does not. And the gold markets are also highly susceptible to speculative spiking.
How do you know the Bitcoin exchanges are not colluding to artifically fatten the price of Bitcoins?.
Bitcoin isnt real, huh? Does tcp/ip exist? Does it have value? Email? The internet? Bitcoin is just a protocol.
TCP/IP isn’t trying to replace cash money and I would argue Bitcoin is more than just a protocol.
Well I do like Bitcoin!
And you should never cheat a paying customer. You will ruin the business.
There is this old Jewish proverb:
You can cheat a customer 1 time, but you can do business with a customer a 1000 times.
Always be carefull who you do business with.
It’s short term and long term thinking. Consider this: If you do not expect a particular business market to remain for long then you will cheat your customers. Right? For example, if you were selling furniture, you would treat every customer well, because they can be a customer for life.
Several things about his email strikes me as being FOS. He is calling people greedy and then telling you he is getting a house with the money he manipulated. He doesn’t sounds intelligent enough to be able to run his own exchange.
You also neglected (perhaps through no fault of your own), to mention the theft that goes on with the existing “audited” system. Which is also a, pyramid scheme, used mainly for the greedy, tax avoiding money changers. That’s how all economies get manipulated, except for those that were purposefully taken out out because they were too “fair”.
I say you test him, see if he has any actual control over what he says he does.
Have him set the sell value at a specific number that is statistically impossible, three times, to be agreed by email before he does it, for 15 minutes only.
Get him to set the sell value to something a trailing sequence of prime numbers…
$47.235711131
$47.719232931
$47.374143475
If he can’t/won’t then your email contact is FOS.
That’s rather a loaded question, ” Would you put your life savings into Bitcoin?”. Nobody who isn’t retarded would put their whole life savings into one thing. Especially a new currency that hasn’t had time to work out all the problems yet. So no I wouldn’t. I mine for a few days, and maybe get something cool from SR but I’ll save that for another argument. The point is Bitcoin, a currency while still in its infancy is no more illegal than bartering with cattle or gold. It’s just easier to do over the internet. Also I don’t think Silt Toad accepts cattle or gold as currency, but you could probably sell them and get more Bitcoins.
If an exchange worked the way this article describe, then if the exchange increased the price they would have to buy those bitcoins at the inflated price thus ripping themselves off.
Every new currency with such low trading volume is going to be volatile. I see plenty of reason to buy and hold bitcoin. It is the best method ever for transferring and laundering money in the history of mankind. This will make it **PRICELESS** to certain members of both the upperworld and underworld. Every BTC you buy, you are buying a portion of the most sophisticated wealth-tunnel ever seen! I don’t even care about short term price, I am buying more and not selling!!.