I do not know a whole lot about Bitcoin, but there is always a chance something new is a scam. If people are looking to use it then they should do as much research before hand to get all their facts straight. Right now, there are many scams out in the world and it is important to be on our toes.
“Funny Money: Why Bitcoin Is a Scam Why Bitcoin Is a Scam
You probably heard of the digital cash after it was rocked by sudden changes in value. A few weeks ago the value of the bitcoin briefly plunged to negative eight cents to the dollar as hackers crashed exchanges and digitally ransacked electronic wallets to the tune of $9 million. A single victim claims that hackers absconded with some 25,000 of his bitcoins, worth, absurdly, approximately $375,000 at present dollar-to-bitcoin exchange rates.”
Most retail merchants will not buy into this. There is no regulatory body to protect people’s money. This is a total farce for techno heads that don’t like traditional banking systems and want to revert to bartering – I will give you one of my Bitcoins for two of your chickens. All banking systems are highly regulated for the protection of your money; but, somehow Bitcoin doesn’t need to be. Get real!
Then there is the problem of converting my Bitcoin balance to real cash. I guess an intermediary like Coinbase will convert my Bitcoins to cash at my bank for a modest fee of 0.5% per transaction. Let me do the math here. Let’s say I need $20,000 deposited into my USAA Bank Account and I have the equivalent of $20,000 in Bitcoins – at a per transaction fee of 0.5%, I would pay $100 for that transaction. Why? Let’s change that to $1 million – the fee is $5,000. I don’t have to pay that at my Bank, i.e., I can do ACH transfers anywhere in the world for no fee, and wire transfers for around $25.
What about earning interest on my Bitcoin balance? Will I have a Bitcoin checking account and a Bitcoin savings account? Will I earn interest on my Bitcoin funds in my Bitcoin savings account? I do at my Bank. What interest rate will Bitcoin pay and who will pay that interest?
And, then there are the myriad of illegal money transactions that will be done on Bitcoin that can’t be properly tracked. Just pure nonsense; all Governments need to shut down Bitcoin. And, don’t be fooled; there are many ways that this could be accomplished – Congress will pass additional legislation if needed.
Yes, I think that Bitcoin is a scam and makes people believe that they are receiving free money. Bitcoin is just as open to being scammed as normal, tangible money and I think that just because it is a different way of offering currency people think that they are getting a deal when they are not.
The difficulty with Bitcoin is the production of Bitcoins, which are unregulated and not transparent to the world. There is nothing to prevent a sudden surge in Bitcoins being dumped by a creator, a major cash-in, and anyone who pays in legal fiat will be left with nothing. Oh, Bitcoins.
There is no supporting, stable (= governmental) infrastructure. Security depends upon software deployed on readily hacked Microsoft Windows platforms. Security depends upon continual re-verification of transaction logs that can be forged and destroyed. "Money" has value because an entity with control over the economic behavior of millions or billions of people--and with governance over trillions or quadrillions of dollars--is willing to back it. Bitcoins are beyond foolishness. Why not peanutbuttercoins?
A real national currency, if not backed by gold silver, is backed by the economy and military might and legal system of the issuer. This is backed by nothing, but "faith".
And also looking at the various exchanges there is a large gap, for example on one exchange now the bid/asked ( in $) is 115.5by 115.8, and on another it is 113.3.. By 113.3..--a potential instant profit on arbitrage--what is that all about??
It's a self referencing recursive system of calculating nothing for the sake of creating value from nothing. It's kid a mythical perpetual motion machine the only possible value it will bring humanity is it will drive the quest for faster, more cost effective hardware. Maybe when the hype and dilation wears off we will have ways of solving real world computing problems faster and cheaper than we do now. Maybe that was the whole idea, and the bitcoin mining muppets fell for it.
It's not similar, that was a money for doing Google searches thing, but here it gives me a bit of the same vibe, Just put your computer to work on its own in order to make easy money for you.
Also, no centralized backup like a government? I don't see how's that a good idea, this whole bitcoin thing could disappear tomorrow and you can't complain anywhere because there's no one backing it out, at least your cash is backed up by the people that commands pretty much everything around you, the government, with all the good and bad that comes with.
Sure the dollar is mostly 'digital' today, and of no intrinsic value, but at least it's backed by the US Government as others have said. It's also inherently deflationary, which doesn't encourage anything other than hoarding and speculating. But or me it all comes down to this: 25% of all current Bitcoins are owned by ONE person, and 70% are not traded at all. If this 'currency' were ever to become the global standard in some fantasy world, that one person would be a multi-trillionaire. All for doing some number-crunching years ago when the work was easy. If that sounds reasonable to you, I have some dehydrators in Death Valley I could sell you real cheap.
Polticians will never ban bitcoins. It is a great means for them to get invisible bribes by
property developers. Anonymous Austrian bank accounts have been gone since 9/11
Not only drug dealers, mercenaries and paedophiles loves it. The senators will denounce
it publicly but then watch the bitcoin exchange rate for a good time to cash in their bribes
Bitcoin is a pure information system and 100% open source. Basically it is a simulation of gold, but without the all the baggage that gold comes with (not seizable, heavy or counterfeitable). Bitcoin sets the bar very high as a currency and due to no middle men the transaction costs are very low.
Ignore it at your peril.
Bitcoin is open sourced. All the details are in the paper and no one is out there to con you or anything. Even if the founder wants to generate more bitcoins now he can't without going through more than 50% consensus. You can choose not to buy in to it but that's different from a scam.
It's also designed to be used as a currency, not an investment. Right now it's at its infancy hence the value fluctuates a lot but it's not designed to help people make loads of money. If you are getting in hoping to get really rich (and didn't) then it's really your own fault.
Bitcoin also doesn't magically help money launderers and drug dealers either. Guess what's better than bitcoin for that? Cash. Cash transactions are untraceable and private unlike bitcoin, so unless we want to ban cash not sure why bitcoin is blamed for that. The hard part of money laundering is usually not in tracing the money anyway, but rather justifying your source of income. For example if you have no job and suddenly bought an expensive house (with cash or bitcoin) you better have a compelling story to tell IRS...
Its a protocol people, and one of the best ones yet invented, the only people calling this a scam are the ones who don´t know anything about it. Is it risky to invest your money into? Yes. Does that make it a scam? No. This shouldn´t even be on the table for debate
With bitcoin people are actually in control on their own money. It allows for less dependency on third parties and middlemen who always take a slice of the profit for themselves. If you're looking for the scam, you need only look at the fiat currencies used by countries. The reason people are buying bitcoin is because they realize it's utility as a currency.
I'm surprised that so many people at the end of 2013 still seem to not understand what Bitcoin is. Oh well, at least I see things changing.
If Bitcoin is a scam, then the US dollar is a far greater scam. As long as there is internet access, bitcoin can do what gold does 10 times better.
Bitcoin has the potential to displace or even completely replace Western Union. It has the potential to greatly displace gold and other precious metals as a store of value.
It is controlled by no single party and is both decentralized and distributed. Who is the scammer, if there is no one in charge of it?
Bitcoin is a bubble, and so is every other form of money. A bubble is when people buy an asset, not to use it, but to trade it for some other asset at a later date. Like Las Vegas real estate in 2007, or Amazon.Com stock in 1999, or tulip bulbs in 1637. And also like US dollars and like gold. If an asset is held only to trade it away later, and it fails to become money, the bubble pops and it becomes worthless. If it becomes money... Well, the bubble can continue, weathering every adverse condition imaginable for 6000+ years, as with gold.
Sceptics can read the source code, and evaluate it. Everything in bitcoin is completely open, that's the beauty of it.
If it is a scam, why can I buy actual things with it right now?
There's going to be a bumpy road ahead, much like any new technology before it goes mainstream.
Its a decentralized (meaning nobody can scam you) digital currency that floats like a real currency, except no one country backs it, the people who own bitcoins back it, and add value to it at the same time. They can exist completely without any one central authority. Completely decentralized, yup.
Saying that Bitcoin in itself is a scam is just ignorant. Now saying that some people viewed as innovators of Bitcoin gone rogue are scammers is more appropriate. People as mark kerpeles (mt. Fox) and such. They used Bitcoin as their scam. Much like people used cash as their scam or gold as their scam.
I have made my own cryptocurrency(s**t coin if you will) for fun and to grasp a better understanding of the protocol and how it works. I haven't found anything malicious in that code or anything that would give somebody the upper hand.
Now if you are thinking, "well somebody can edit the code to steal your coins or make fake coins" that is not how it works. Yes they can make a "fork" of Bitcoin but it will be on a separate blockchain. Meaning you cannot transfer those "forked" coins to the original Bitcoin.
Well what is the blockchain? The blockchain stores all the wallet addresses, transactions, miner power and so on. It cannot be edited but only added onto with new wallets, transactions, miners etc. It is not a website, but stored inside of the application itself on each and every computer or miner with the application. The websites you can find the blockchain on only show a graphical representation of what the blockchain has stored in it. The blockchain can only be changed if 51% or more of the users(miners) decide they want this new blockchain as the main blockchain. Called a 51% attack. This means the more people who use Bitcoin, the more secure the protocol is. Which, at this time, it is very secure and Bitcoin itself has proved unbackable.
The only way people can "hack" Bitcoin is to hack the websites or wallets and use their data or stored coins for themselves. This happens in everyday life everywhere and should be null.
Now, onto the wallets. The wallets are NOT the Bitcoin protocol. They only use the Bitcoin protocol as a base of information. You could use command prompt for your wallet if you know how to code it. This is why you can find multiple wallet providers with different features and security. They are not changing the protocol itself, but telling the protocol where to send the coins and storing that info in the blockchain. It is possible that a rogue wallet provider can program something malicious into the wallet itself to steal your wallet data to steal your coins but if you stick with well known wallets, you will not need to worry. Online wallets can be dangerous so it is best to keep your wallet on a physical computer or USB.
If someone makes a fake wallet that doesn't actually store real Bitcoin in it, you would be able to tell just by viewing the blockchain on a website.
I have more to say, but not enough room on here. I will post about the human side of the ordeal I the comments.
It isnt a scam, Its a very smart idea.
No government back up, that means the government ends, youll still have your money. Think of it this way, the confederate states created their very own currency in the little bit of time they were around, once the US won the civil war, that currency was worthless. That can not happen with bitcoin, as it isnt designated to any government/country.
WWIII, youll still have your bitcoin acceptable in places.