Cryptocurrency Con

Here’s Our Question of the Day—

• What’s a currency, but not a currency at all?
• What claims to have unique value, but you cannot see it, smell it, hold it, or spend it very many places.
• What typically does not exist in physical form like paper money or Gold.
• This “thing” is not issued by the U.S. Government or any country in the United Nations nor any central authority.
• What is this “mystery money” that the FBI’s Criminal Investigative Division has an entire team dedicated to preventing and combating this form of money laundering and frauds.

The correct answer is Cryptocurrency. It’s also the wrong answer for investors.

Bitcoin, first released as open-source software in 2009 was the first decentralized cryptocurrency. Since the release of bitcoin, over 6,000 altcoins (alternative variants of bitcoin, or other cryptocurrencies) have been created. 

Cryptocurrency works like this. You give me real money, say $100,000 U.S. Dollars, I give you a computerized receipt, I’ve encrypted the numbers in accounts kept on thousands of computers across the world. I tell you the price goes up and down all the time. I don’t tell you why all the volatility. Most of the time, I tell you cryptocurrency is making you a lot of money. Of course, I won’t buy back your cryptocurrency. Worse yet, using cryptocurrency is illegal in most countries.

There are very few places In the world you can exchange my cryptocurrency for cars, groceries, Gold, Silver or any standard medium of exchange. Sound confusing, well…

Perhaps Wikipedia Can Explain Cryptocurrency Better

“A cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.”

If I were planning a ponzI scheme, that’s exactly the mumbo jumbo, high tech, confusing, marketing speak that works. A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.

Bitcoin, first released as open-source software in 2009, is the first decentralized cryptocurrency. Since the release of bitcoin, over 6,000 altcoins (alternative variants of bitcoin, or other cryptocurrencies) have been created and almost all have had unhappy endings.

Cryptocurrency wastes unbelievable amounts of Computing power and electricity. Here we are 10 years into the creation of this “thing” and still no one’s using it for much except gambling that the coins they bought will go up and they can find someone else to buy them. It’s called the greater fool’s theory.

To quote Tom Dyson from POSTCARDS FROM THE FRINGE September 18, 2020–

“History will show, I think, bitcoin has no value, except as an artifact in the museum of money and a chapter in the book of speculative manias.”

It doesn’t work. And the bubble burst three years ago. I would sooner throw away $10,900 on a new camper or a trip to the poker tables in Las Vegas than incinerate it in bitcoin’s slow decline.

Many of the people we’ve met on our trip around America own bitcoin. Even Pete, at 82 years old, owns some bitcoin. They consider it to be a sort of “digital gold,” except with much more upside potential… But it’s another sign of the speculative times we live in.”

Or course, we could both be wrong. Crypto may be the miracle it’s hyped up to be… but don’t bet on it.