Bitcoin Hit Piece After Bitcoin Hit Piece

Mainstream news is reporting hit piece after hit piece on BITCOIN. It’s a non-stop parade of pundits all coming out to scream the horrors of bitcoin and how it is nothing but a bubble.

But remember, these are the same kinds of pundits that rallied around the dot-com bubble singing its praises, and the same pundits that failed to see the subprime mortgage housing bubble until it was too late. Their credibility is lacking, to put it politely. Just to illustrate the degree of ignorance, allow me to indulge in a few laughs…

Here’s an article from The Telegraph

‘Bitcoin is clearly a bubble’
Many people in the developed economies yearn for a financial system that does not have the option to rob them.

By Andrew Oxlade

9:06PM BST 05 Apr 2013

That is why gold has been so much in demand during the financial crisis – and popular with shrewd sceptics in the years before.

The clarion call of those “gold bugs”, shrill in normal times, sounds more reasonable in the “new normal” – the age of unrestrained money printing and financial repression (using monetary policy to shift the wealth of citizens to government).

This explains why Bitcoin – a global “cyber currency” – has exploded in popularity. The temptations of this phenomenon are easy to grasp: we crave an opportunity to hold wealth in a currency that cannot be devalued by printing more of it.

Bitcoin, alas, is not that. More Bitcoins can be created by those who have a powerful enough computer, although there is apparently a ceiling on the total currency.

People are ignoring the warnings, with the price charging higher. It is clearly a bubble – a tempting vessel for money, arriving during the perfect storm of currency debasement and the seizure of savings in a eurozone state – Cyprus.

As in every bubble before – from the South Sea Company bubble of 1711 to the dotcom boom and bust at the end of the millennium – investors eagerly part with their money on the conviction that prices will rise and they’ll step off at the right time. But no one knows whether today is the day investors wake up to their error.

The wise money will steer well clear.

In the highlighted portion, the author demonstrates utter ignorance about bitcoin. No, there is not an “apparent ceiling”. There is a hard ceiling limit of 21 million bitcoins that can possibly be created for the rest of eternity.

In talking about “those who have a powerful enough computer,” he again illustrates utter ignorance about bitcoin and further ignorance about technology in general. The predicted end of bitcoin mining (digitally “printing” or creating bitcoins) will end around 2140. Now, it is possible that quantum computing or some other as of yet uninvented form of computing could shorten that significantly. However, it doesn’t really matter as the difficulty factor in mining bitcoins increases as more are created, and it doesn’t particularly matter whether you are dead for 10 years or 100 years when the last bitcoin is mined. You’ll probably still be dead.

When the author says, ” The wise money will steer well clear,” I really have to wonder, if he’s that ignorant, would the best bet be to do the exact opposite of what he’s advocating?

But he’s far from the most ignorant or the most hostile out there. There is a great abundance of nay-sayers. Every day there is a new hit piece, so why not just pick another one at random to have a little fun with?

Venture Beat came out with a pack of lies. Oops? Did I say lies? I meant… No. I meant lies.

Coinbase phishing attacks are the 3rd Bitcoin security problem this week

Sorry, but the security issue has nothing to do with bitcoin.

There have been Paypal phishing attacks pretty much non-stop since Paypal began. How would this be for a headline?

Paypal phishing attacks are the 300 millionth US dollar security problem this week

Perhaps just a tad insane? The recent security issues surrounding bitcoin are not bitcoin related issues. But, what they do illustrate is that bitcoins are VALUABLE and that people will go to great lengths to steal bitcoins. If bitcoins had no value, would people try to steal them? Hardly. These kinds of dishonest hit pieces insult one’s intelligence, as the authors must really believe that you are either incredibly stupid (if you’re in IT or a geek) or incredibly ignorant (we are all ignorant of many things) to believe such blatant lies.

One of the dominant themes in bitcoin hit pieces is that bitcoin can be used for “illegal activity”. Here’s a CNBC hit piece as an illustration:

Bitcoin Great for Narco-Dollar Traffickers: Pro

Published: Friday, 5 Apr 2013 | 7:58 AM ET
By: Matt Clinch

Digital currency bitcoin has seen a spike in interest coinciding with a huge rally, but it has divided opinion greatly with analysts differing on whether it’s an advancement in the monetary system or just a large Ponzi scheme that should be avoided.

Davide Serra, founder and CEO of Algebris Investments, is firmly in the latter group, likening the recent surge in bitcoins to tulip mania in the 17th century, when the market for plant bulbs reached extraordinarily high levels in the Netherlands before suddenly collapsing.

If you’re a narco-dollar trafficker you’re going to love it, because basically it’s a way to smuggle money through,” Serra told CNBC Friday.

Bitcoin is a virtual currency allowing users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining.

“Someone who tries to buy it comes on TV, pushes the story and hopefully tomorrow you can sell it for a higher price. That’s not a currency—that’s a ponzi scheme,” Serra said.

According to Serra, the system relies on selling bitcoins at a later date to “a greater fool.”

No central bank, no pension fund, no institutional investor will ever put a dollar into this thing,” he said.

The hit piece continues, but of course it comes out swinging with the “bubble” angle, then goes on to slander it by associating it with narcotics.

The funny thing is, haven’t the fiat currencies been used for a lot longer for drugs? Where was the hit piece on “Canada dollar gaining popularity with drug traffickers” or other similarly insane article title? Bitcoin is a medium of exchange and is hardly responsible for whether people want to buy or sell drugs.

Now for his comment on central banks, pension funds and institutional investors… I happen to know of at least 1 deal that is being put together with exactly those people in mind, and that what the author has stated is simply false, if not a flat out lie. (While I would love to comment on the deal, it is confidential. I simply happen to know enough about it.)

About the “Bubble”

Countless articles call bitcoin a bubble, but I have yet to see anyone address the underlying assumptions that would justify that claim. Perhaps if the standards that have been applied to other markets applied to bitcoin, then certainly there would be a common foundation for those claims to rest on. But those standards do not exist the same for bitcoin.

Bitcoin is a free market currency, and there is nothing like it in the world. Well, there are some other crypto-currencies, but other than those, none.

Not even gold & silver are comparable anymore. JP Morgan has paper silver short positions that dwarf the amount of available physical silver. No, silver and gold are already highly manipulated outside of actual gold and silver through paper shorts. Can this happen to bitcoin? Yes. Will it? The jury is out on that one. The market is only going up, so short positions simply don’t make sense right now. The market needs to level off with less upward volatility for shorting to become possible. There are some exchanges that make it possible, though we are nowhere near seeing that quite yet.

Some other markets, have caps on how much a stock can go up or down. That doesn’t exist for bitcoin as we’ve seen.

Bitcoin is also new to the market and there is a very limited supply of them available. What we are seeing is the initial valuation of the bitcoin after a couple years of testing the waters.

There is a great deal of investment in bitcoin from a lot of people. While mtGox is the largest exchange, the currency itself is decentralized, is not subject to regulation, cannot be regulated, and has no single point of failure like centrally controlled currencies do, i.e. the central banks that can tank currencies through printing money, e.g. Zimbabwe, the United States of America (the Federal Reserve). With the freedom that comes with bitcoin, and the massive investments from so many people world wide, and a lack of any single point of failure, it is hard to imagine a downside to bitcoin. Ooops. Nope. Not if you’re part of the establishment and are threatened by bitcoin, then bitcoin itself is a downside.

The Establishment’s View

That bitcoin threatens the established powers in banking, finance, and government has not been entirely lost by all the establishment pundits. Some are very aware.

Bitcoin Really Is an Existential Threat to the Modern Liberal State

…Nonetheless, Bitcoin raises some interesting questions. One is whether it might undermine the modern state — which, for many of its libertarian-anarchist advocates, is the whole idea…

From the horses mouth, to your screen. The pundit there still doesn’t quite understand that tax is theft though…

Taxation: How do governments collect taxes on transactions in Bitcoin? The answer is they don’t, and they can’t. Crypto-currency’s strong protections on anonymity make it impossible for any state to know who is buying what, who is paying whom, who earns what, and who has what in savings. That poses a direct challenge to the power of states to levy taxes.

The problem is that Bitcoin makes tax evasion easier. States could enforce reporting of Bitcoin income for individuals and businesses, as they try to do for cash, which is also hard to track. But encryption and the peer-to-peer network structure make Bitcoin even harder to follow than physical cash, and digital cash is much better than the physical kind for storage and transactions, so the scale of the challenge could end up being much bigger.

Few articles even bother to put any thought into bitcoin, so I must hand it to Mr. Soltas, as he has apparently taken the time and effort to actually understand what bitcoin is and what it can do for us. Even if he’s on the wrong side of the fence about tax there. 🙂

He ends his article with a wonderful taste of what could be:

In the next chapter of the history of currency, money might very well turn on its creator, and roll back government.

There are a few other well thought out articles and reporting on bitcoin in the MSM, but most of them miss the point about freedom. Instead, they try to slur freedom with accusations of “tax evasion” (i.e. refusing to allow yourself to be financially raped by the local criminal organization that many people call “government”) or “illegal activities” or “drugs”.

The hit pieces will continue. There is a lot at stake here. The most important of which is freedom.




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2 thoughts on “Bitcoin Hit Piece After Bitcoin Hit Piece

  1. But at the end of the day, SOMEBODY controls the issuance of Bitcoin, even if it’s the IT geek overseeing the server, no? I’m not trying to disparage Bitcoin, as I think it is a powerful idea, but obviously if it threatens the banksters’ hegemony then they’re going to find a way to either bury it or take it over themselves, I would think…

    1. Not quite. It’s peer-to-peer, so NOBODY controls bitcoin. This is the beauty – there is no controller out there ready to squish you. Now, you can mine BTC, and you can control the BTC that you own, but you have no control over anyone else’s BTC.

      It’s very similar to gold that way – you have and control your own gold, but not mine, and there’s nobody that really dictates the price of gold. Ok, well, there is always manipulation, but there is no central authority that dictates the price of gold.