Nov. 9, 2017
Issues with crypto-currency Bitcoin
Worth watching-Just saw a 1.25 hr documentary on Netflix- 'Banking on Bitcoin'
It explains what it is and how and why it was developed.
- Libertarian geeks wanted a system that cannot be controlled by governments or banks. (right there is why governments are a threat to it.
- The founder, Satoshi Nakamoto, remains a hidden person or persons, though some claim to have outed him. (Maybe he is from the clandestine services of some country?)
-The system uses encrypted, distributed recording and verification of any transaction. 'Miners' are the many computers that race to verify and record the transaction in the ledger (Blockchain technology)
- Bitcoin Trading houses and VC money are now involved. (They can be hacked and are about as trustworthy as the banks the libertarians wanted to supercede)
- The silk road- was set up to trade anything and maybe did, (Drugs, weapons, slaves, money laundering, anything.). Hidden from the governments of the world, using Bitcoins (See why governments hate the idea.)
The value of Bitcoins is defined by the transactions that occur. Volatility is due to speculation, (now there are futures) and actual payments to other parties).
There are enough enthusiasts/devotees out there to offer some value whatever happens in the short term. (They are like gold bugs- The Set up smacks of Tulip Mania and the South Sea Bubble. Fortunes are being made until the music stops.)
Threats to the value of Bitcoins and the extent of value growth:
- Governments may actually be in the system from the beginning. It may suit them to observe and manipulate.
- No system is hacker proof, At least none has been so far.
- Theft by traders and by hackers from traders is a risk
- Rival systems could replace it.
- Government action could include making it illegal and then any user would commit a criminal offence. (Once electrodes are attached to the soft parts, disclosure of transactions, contacts and insights into technology might follow).
- People like me don't like libertarians, VCs or speculators and that will limit the market.
- Ordinary folk may not trust it any more than they do banks. They may think they understand banks, few will understand this.
- The price and acceptance is as vulnerable to a loss of confidence and a run on value as any other.
- False news can be posted to discredit the system- (EG 'Nice honest people don't use this' Maybe that is not false news).
Money can be made but I'm not interested.