Bitcoin is a Scam

February 27, 2014

The Emperor’s New Nuts

Recent news stories about the fictional collapse of the fictional bitcoin currency have me wondering who’s the bigger dupe: the trustifarian nerds who buy bitcoins or the journalists who write about them.

Take this recent story from the Associated Press, via the Seattle Times:

Emperor’s Old Clothes Getting New Look for Spring

The is absolutely typical of the bitcoin media hype. Reporters will talk about someone “seizing” a stash of bitcoins [read: the FBI took someone’s hard drive]. Or they’ll quote some financial “expert” who doesn’t know jack-shit about computers and the Internet but is happy to wing it in order to get his name in the papers.

It’s obvious that the Establishment has been hoaxed on bitcoin. But here’s the beauty of it . . . In order to convince themselves that they’re not actually a bunch of suckers, the hoax-ees all have to keep the hoax going and get more people buying into it. That means they have to keep yammering on about it in such a way that leads you to believe that they are taking bitcoin seriously – even if they’re trashing it at the moment – and that therefore, so should you.

Here’s a quote from the Times print edition in which some banker is talking about the latest bitcoin “crash” :

“This is extremely destructive,” said Mark Williams, a risk-management expert and former Federal Reserve Bank examiner. “What we’re seeing is a lot of the flaws. [Bitcoin] is not only fragile, it’s fragile as eggshells.”

Oh yeah? Eggshells, huh? Try fairy dust! That would’ve been a better metaphor, because compared to what bitcoin is made of, eggshells are like reinforced concrete.

* * * * *

Want more evidence of media shilling for bitcoin? Do an Internet search on the terms “bitcoin” + “wild ride.” [Or click Here.] There’s nearly a million hits on that combo, several of them in the Seattle Times coverage alone. And those hits are spanning several months’ worth of coverage; it’s not like they’re all for one story.

So what does that prove? Just that no one’s doing any original research or writing on bitcoin. Instead, one source (probably someone who is in league with the bitcoin hoaxters) planted a  story trying to bump the price up. The rest of the media (including the AP) then picked up the term “wild ride” and parroted it endlessly:

Bitcoin – wild ride – Bitcoin – wild ride

Eventually even the shilliest of media shills has to fess up and admit that bitcoin is nothing but smoke and mirrors. They usually do this between the lines, though, maybe in one of those “What the hell is bitcoin anyway?” pop-ups they have to stick in there for the yokels. In the piece I linked above, the AP admits that the value of bitcoin isn’t pegged to anything. In fact it seems that nobody even knows who started it:

Q: Who’s behind the currency?

A: It’s a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto and then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention, but proponents say that doesn’t matter; the currency obeys its own, internal logic.

–Got that folks? Bitcoin is a mystery! [Insert spooky sounds here.]

Let’s give bitcoin a little grounding in reality, shall we? Because that’s something the media isn’t very good at . . . reality. They tend to speak of bitcoin as if it were its own thing out there in cyberspace. But is that really true? Could bitcoin stand alone as a currency, without another, non-fictive currency (like, say, the dollar) to sustain it?

Here’s a scenario that involves bitcoin and at least one non-credulous person . . . Say you’re trying to sell your old Chevy Impala through Craigslist, and within minutes of your ad appearing online, a nerdy teenager shows up at your doorstep saying he wants to buy the car immediately without even kicking the tires. You quickly agree on a price, but when it’s time to pay, the kids pulls a walnut out his pocket and hands it to you. You stifle a giggle at first, but suddenly you’re worried. What else might junior have in that pocket . . .

“Um, look, I’m sorry kid, but I only take cash,” you say, backing slowly into the safety of your house.

“Oh no, mister. This is Nut-Coin,” the kid says. “It’s better than cash. Nut-Coin is accepted everywhere on the Internet, and there’s no middleman. Plus,” he adds, beaming, “it’s totally untraceable.”

The kid looks dead serious, so you decide to humor him, just to see if he’s part of some new Mormon ploy to get into people’s houses.

“Where did you get that er . . . Nut-Coin, kid?”

“Off the Inter-nut, naturally. (Duh!)”

“I see. And how much is that thing worth, exactly?”

“It depends,” he replies. “Yesterday Nut-Coin was worth five cents, but today it’s worth a million dollars. Who knows how much it’ll be worth tomorrow? Right now, as of this second, I’m sure it’s worth several times more than your car.”

(You see your chance.)

“But I’m only selling this jalopy for six large. I can’t make change for your million-dollar Nut-Coin.”

“Oh, that’s all right Mister,” he says. “You can keep the change. I’ve got plenty more Nut-Coins in my account.”

“Uh-huh. Well, look. I think I’ve decided to keep the car after all. But tell me something, sonny. Who’s guaranteeing this Nut-Coin of yours?”

“Huh? Guaranteeing?”

“I mean . . . who do I see if want to change a Nut-Coin into dollars. Or into yen. Or into pickled herring? You can do that with a currency that’s based on something real; you can exchange it for another currency or for a more-or-less static amount of goods or services.”

“I’m still not following, mister.”

“OK, look. The value of the dollar is based on the ability of U.S. government to tax its citizens and businesses, which is in turn based on the ability of those citizens to produce something that they and other people want. So . . . what is the value of this Nut-Coin thingie based on? Hm?”

“Gosh!” he says. “I never thought about it like that. I guess I don’t rightly know who’s behind Nut-Coin. Some squirrels probably. Squirrels are amazing critters aren’t they? They sure know their nuts.”

“They sure do, kid. They sure do. I’m feeling rather squirrely myself right now as a matter of fact. But yeah, look . . . I’m sorry, but like I said, I’ve decided not to sell the car after all. Did you want to talk to me about something else? The Book of Mormon maybe?”

“The Book of Who?”

“Never mind, kid. Never mind.”

To be continued.

* Take your pick.

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