Bitcoin

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Bitcoin is a classic private currency scam. It fails to offer stable values, security from theft, privacy from government and ease of use. With prices near $17,000 per bitcoin (Dec. 2017), it is in a huge speculative bubble. It has enormous problems with transaction bottlenecks, transaction costs, and electricity usage compared to alternatives such as Visa.

Links

Simple critique of Bitcoin [More...]
For all its technotarian groovyness, Bitcoin suffers from classic private currency flaws that make it a scam.
Bitcoin predictions. [More...]
At some point in the not-so-distant future, a nation will issue its own crypto-currency that is exchangeable one-to-one with its ordinary currency... Even the rumor of these currencies will make Bitcoin plummet.
A Pick-Up Mini Internet Symposium: **More Than** Five Posts on BitCoin Triggered by a Question from Adrienne Jeffries of The Verge… [More...]
Tyler Cowen, Nick Rowe, Hal Varian, Brad DeLong, John Levine and Joe Weisenthal all discuss aspects of Bitcoin and its future.
Academics Spy Weaknesses in Bitcoin’s Foundations [More...]
Game theory suggests the rules governing Bitcoin may need to be updated if the currency is to endure.
Adam Smith Hates Bitcoin [More...]
"[...] people think it’s smart, nay cutting-edge, to create a sort of virtual currency whose creation requires wasting real resources in a way Adam Smith considered foolish and outmoded in 1776."
An Economist's Take on Bitcoin and Cryptocurrencies: It's a Giant Scam and the Mother of All Bubbles [More...]
"My take on bitcoin is the standard boring economists' take: bitcoin and other cryptocurrencies are the mother of all irrational bubbles... However, as we see with bitcoin, which isn't driven by any kind of fundamental economic value, as it pays no dividends and has high transaction fees, bubbles can happen and markets aren't that efficient."
Anti-Corruption Digest: Bitcoin [More...]
Anti-Corruption Digest's index of bitcoin articles. Bitcoin is (as predicted) a major cybercrime and money-laundering tool. That is probably fueling the high prices (2017) for bitcoin. Demand for money laundering is very high.
BadEconomics, search for libertarian, Austrian Economics, and Bitcoin. [More...]
The BadEconomics reddit routinely scoffs at libertarian economic claims, Austrian Economics, and Bitcoin.
Basecoin: the worst idea in cryptocurrency, reborn [More...]
"The concept is so profoundly ill-conceived that I’d venture to say the “Stablecoin” is the closest thing the crypto world has for an answer to the Hitchiker’s Guide to the Galaxy’s Ravenous Bugblatter Beast from Traal, a creature known not only for being extremely vicious and hungry, but also for being denser than a neutron star. "
Bitcoin an even bigger waste of energy [More...]
"As far as I can determine, the only thing that has changed [in 2 years] is that the Bitcoin bubble has got massively bigger and that the associated waste of energy is now much more widely recognised than when I first wrote about it." A few other alternatives to "proof of work" are mentioned.
Bitcoin and Illegal Activity [More...]
How much illegal activity is financed through cryptocurrencies? The estimate is 20% of the dollar value of transactions and 50% of holdings.
Bitcoin Exposed [More...]
Paultard silver promotion versus Bitcoin evangelism. 26 reasons why Bitcoin is not as good as silver, when neither is a particularly good investment. A pox on both their houses!
Bitcoin Is Broken [More...]
Two researchers at Cornell have published a paper describing an attack strategy called Selfish-mine that creates immediate higher profits, encouraging others to join in a pool, which eventually gives the pool control over the Bitcoin blockchain.
Bitcoin is ludicrous, but it tells us something important about the nature of money [More...]
Bitcoin's inelasticity of supply means it would have the same macroeconomic problems as gold, causing deflation.
Bitcoin is no Great Mystery [More...]
"One wonders why any libertarian would get excited about it (as it turns out, most do not!). [...] Bitcoins are just another speculative activity for those producing and buying them. It is just another type of gold buggery -- except even more ridiculous.
Bitcoin Is Soaring. Here's Why It Is Not Ready For The Big Time [More...]
"Bitcoin’s transaction fees are so high because the peer-to-peer network that powers the currency has very limited capacity by the standards of modern digital infrastructure." Limited to 1/500 of Visa's current transaction rate.
Bitcoin mining likely uses more energy than it takes to keep New Zealand's lights on [More...]
"A supporter of Bitcoin, Carlos Domingo, hit back with a calculation suggesting that the entire global financial system uses about 100TWh per year, or three times as much as the Diginconomics estimate for Bitcoin... [but] the global financial system serves the entire world. By contrast, the number of active Bitcoin investors has been estimated at 3 million." That makes normal systems 1000 times more efficient.
Bitcoin Proves The Libertarian Idea Of Paradise Would Be Hell On Earth [More...]
The bit coin experience is characterized by radical instability, chaos, the rise of a boss-class of criminals who assassinate people they don't like, and a mass handover of wealth to a minority even smaller than the 1% that currently lauds it in the United States.
Bitcoin to revolutionise the economy [More...]
It is completely incorrect to describe Bitcoin as a “pyramid scheme.” Technically, it’s a “pump-and-dump.” Some excellent sarcasm too.
Bitcoin, Magical Thinking, and Political Ideology [More...]
"Bitcoin has become synonymous with everything wrong with Silicon Valley: a marriage of dubious technology and questionable economics wrapped up in a crypto-libertarian political agenda that smacks of nerds-do-it-better paternalism."
Bitcoin: The Cryptopolitics of Cryptocurrencies [More...]
A clear debunking of many ideological claims about Bitcoin. "Bitcoin’s incredible volatility and lack of regulation, celebrated by cyberlibertarians, actually prevent the cryptocurrency from being used in just the way its advocates claim."
Bitcoinmania at FT Alphaville [More...]
The Financial Times blog on Bitcoin shenannigans. Properly skeptical.
Bitcoin’s zero-sum game [More...]
"Since bitcoins are not useful as a medium of exchange, or desirable in themselves, their true value is zero. The highest price at which bitcoins have traded is around $20,000. At the time of writing, the market price is halfway between that level and zero. Pay your money (or not) and take your chances. "
Bitesize: The very volatile value of cryptocurrencies [More...]
"Existing cryptocurrencies have generally failed as stable stores of value. Conversely, inflation risk of fiat currencies can be largely eliminated by inflation targeting and holding interest bearing deposits."
Blockchain’s Broken Promises [More...]
"Since bitcoins are not useful as a medium of exchange, or desirable in themselves, their true value is zero. The highest price at which bitcoins have traded is around $20,000. At the time of writing, the market price is halfway between that level and zero. Pay your money (or not) and take your chances. A"Boosters of blockchain technology compare its early days to the early days of the Internet. But whereas the Internet quickly gave rise to email, the World Wide Web, and millions of commercial ventures, blockchain's only application – cryptocurrencies such as Bitcoin – does not even fulfill its stated purpose."
Bubble, Bubble, Fraud and Trouble [More...]
"So is Bitcoin a giant bubble that will end in grief? Yes. But it’s a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology. "
Crypto Cynics Stand to Profit the Most [More...]
"Bubbles, therefore, may be a uniquely predatory financial phenomenon -- a natural and perfectly legal equivalent of a Ponzi scheme that happens every time a new asset class or a new type of investing becomes legal or technologically feasible."
Fool's Gold [More...]
"Bitcoin is a fantasy [...] More than anything else, it resembles a Ponzi scheme -- and the wild claims made on its behalf reveal a great deal about a libertarian strain of thinking with deep roots in the American psyche."
How and why Bitcoin will plummet in price [More...]
Tyler Cowen makes a strong marginalist argument for why values of crypto currencies will plummet. Prices of currencies will be limited by marketing costs of potential competitors. "In short, we are still in a situation where supply-side arbitrage has not worked its way through the value of Bitcoin. And that is one reason -- among others -- why I expect the value of Bitcoin to fall -- a lot."
I'm Changing My Mind About Bitcoin [More...]
Joe Weisenthal changes his opinion from "joke" to "unknown future". He points out that the current increase in value is due to Chinese money laundering or circumventing of capital controls: he cites Tyler Cowen as saying this could change radically due to crackdowns or liberalization.
In Search of a Stable Electronic Currency [More...]
"The central problem with Bitcoin in its present form, though, is that it doesn’t really solve any sensible economic problem." Discussion of three alternative, more useful functions for electronic currencies.
Is the cryptocurrency Bitcoin a good idea? [More...]
Adam Cohen writes: "... this is not a good idea, this is a scam. Someone out there is trying to become very rich off of this system, and anyone who participates will be playing hot-potato until the inevitable collapse."
Is There a Cryptocurrency Bubble? Just Ask Doge. [More...]
The creator of Dogecoin thinks Bitcoin is in a speculative bubble.
Quizzical [More...]
"It’s an environmentally destructive Ponzi scheme that isn’t usable as a currency even for believers... Bitcoin is now a “crypto asset” which is even more obviously a Ponzi fantasy than the original currency story."
Ross Ulbricht aka Dread Pirate Roberts and Silk Road (1 link)
Eagle Scout become libertarian become bitcoin drug dealer become buyer of murder. An example of how Bitcoin can not guarantee anonymity. As "Dread Pirate Roberts", he created the Silk Road unregulated market for drugs and other black market deals.
The Bitcoin Bubble and a Bad Hypothesis [More...]
"Bitcoin is perhaps the finest example of a pure bubble. [...] The closest parallel is the fictitious dotcom company imagined in Garry Trudeau’s Doonesbury, whose only product was its own stock."
The Doomsday Cult of Bitcoin [More...]
"Ask any of these Bitcoin believers about any of the recent incidents, and they will defend the currency with religious fervor. [...] But these are head-fakes, meant to distract from Bitcoin's disastrous move to the mainstream while consoling believers about the current state of affairs.
The Greatest Investment Opportunity Since Dogecoin [More...]
A nice satire on the greed of bitcoin investors.
The Rise and Fall of Bitcoin [More...]
Benjamin Wallace at Wired describes the early history of bitcoins, including a peak, crash, theft and hacking.
The Stable-Coin Myth [More...]
"All of this will be familiar to anyone who has encountered even a single study of speculative attacks on pegged exchange rates, or to anyone who has had a coffee with an emerging-market central banker. But this doesn’t mean that it is familiar to the wet-behind-the-ears software engineers touting stable coins. And it doesn’t mean that the flaws in their currently fashionable schemes will be familiar to investors."
The worthlessness of Bitcoin -- a real world usage case
"Before you make a run on Coinbase to remove all your real money, finish reading this post I put so much effort into -- then run."
Why I want Bitcoin to die in a fire [More...]
"BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind.... Which is fine if you're a Libertarian, but I tend to take the stance that Libertarianism is like Leninism: a fascinating, internally consistent political theory with some good underlying points that, regrettably, makes prescriptions about how to run human society that can only work if we replace real messy human beings with frictionless spherical humanoids of uniform density...."
Your Bitcoin is NOT Anonymous: IRS Moves To Track Bitcoiners With New Chain Analysis Tools [More...]
"In fact, so exposed is the blockchain to Big Brother monitoring and interference, that the Internal Revenue Service has now implemented blockchain analysis tools to help them track down individuals who are profiting off the crypto currency and not declaring these profits on their tax returns."

Quotations

If, say, Google Cayman Islands were to start GoogleCoin, and announce that it would always stand ready to buy back GoogleCoins at a fixed real value, it could make a (small) fortune and, I think, eliminate BitCoin’s business in a month…
Brad DeLong, "A Pick-Up Mini Internet Symposium: **More Than** Five Posts on BitCoin Triggered by a Question from Adrienne Jeffries of The Verge…"
Bitcoin is Beanie Babies for Libertarian Nerds
Anonymous
It is really very satisfying to see the same idiots who call Social security a ponzi scheme lose thousands of dollars in an actual ponzi scheme. [bitcoin]
Righteousbros (pseudonym)
It is unfortunate that the kind of computing Bitcoin pioneered has been given the name "cryptocurrency", and has been associated with all sorts of technofinancial scheming. When you hear "cryptocurrency", don't think of Bitcoin or money at all. Think of Paul Krugman's babysitting co-op. Cryptocurrency applications deal with the problem of organizing people and their resources into a collaborative enterprise by issuing tokens to those who participate and do their part, redeemable for future services from the network. So they will always involve some kind of scrip. But, contra Bitcoin, the scrip need not be the raison d'être of the application. Like the babysitting co-op (and a sensible monetary economy), the rules for issue of scrip can be designed to maximize participation in the network, rather than to reward hoarding and speculation.
Steve Waldman, "Econometrics, open science, and cryptocurrency"
I don't understand. How did this unregulated, imaginary currency invented by an anonymous hacker and backed by the full faith and credit of YouTube comments ever go wrong?
Stephen Colbert on Bitcoin, "The Colbert Report" 4/17/2013