The Beginning Of The End
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The Collapse Of Bitcoin

BitcoinBitcoin is a virtual currency that has no intrinsic value.  The only thing giving bitcoin value is the faith that people have in it, and now that faith has been shattered.  This week, the most prominent bitcoin exchange in the entire world, Mt. Gox, totally collapsed.  At one time, Mt. Gox boasted more than a million accounts and it accounted for approximately 25 percent of all global bitcoin trading.  But now the website has been taken down, there are rumors of catastrophic losses, and many investors are concerned that they will lose all of their money.  In fact, according to one report, investors could be facing total losses of up to 367 million dollars.  The collapse of Mt. Gox is also affecting other bitcoin exchanges.  As I write this, the market value of bitcoin had fallen to about $470, but just three months ago it was trading close to $1,200.  Needless to say, a lot of bitcoin investors are going to be licking their wounds tonight.

I have never written much about bitcoin because I never believed in it.  Personally, I have always preferred to stick to silver and gold.  But I can’t blame people for wanting to create a monetary system that worked outside of the central bank-controlled paradigm that we have today.

I just didn’t have any faith in bitcoin.  I considered it something of a Ponzi scheme.  That is why I never recommended it to anyone.  Those that got in early and got out at the peak of the market made a killing.  Good for them.  But most investors are going to end up taking a bath – especially those that got in at the very end.

When you have an imaginary currency that has no intrinsic worth that is being managed and traded by organizations that have very little regulation or accountability, bad things can happen.  And we saw a perfect example of this on Tuesday

A major bitcoin exchange has gone bust after secretly racking up catastrophic losses, other virtual currency companies said Tuesday — a potentially fatal blow for the exotic new form of money.

The website of Tokyo-based Mt. Gox was returning a blank page Tuesday. The disappearance of the site follows the resignation Sunday of Mt. Gox CEO Mark Karpeles from the board of the Bitcoin Foundation, a group seeking legitimacy for the currency, and a withdrawal ban imposed at the exchange earlier this month.

A lot of people out there are insisting that bitcoin can still overcome this and that it is still a sound currency system.  More power to them.  I certainly wish them no ill will.  I just don’t agree with them.

Others are being far more blunt about the matter.  Just consider what Gary North had to say about the collapse of bitcoin…

The biggest Bitcoins exchange has gone bye-bye. It took with it the money that the investors thought was safe.

Reuters reports: “Mt. Gox had $174 million in liabilities against $32.75 million in assets. It was not possible to verify the document or the exchange’s financial situation.”

I say: “A fool and his digital money are soon parted.”

How will the investors prove in a Japanese bankruptcy court that they deserve a part of the supposed $32.75 million? After all, the transactions are all secret.

Anyone that invests in bitcoin needs to realize that they could lose everything.  There is no deposit insurance.  There is very little regulation.  Nobody is going to bail you out if some corrupt businessman takes all of your bitcoins and drops off the map.

It is truly like the wild West.

The amount of money that some bitcoin investors stand to lose from the collapse of Mt. Gox is staggering.

Coinapult and SatoshiDice founder Erik Voorhees says that he may lose about $285,000.

Bitcoin trader Kolin Burgess fears that he may lose about $320,000.

Some people are going to go from being “bitcoin millionaires” to paupers almost overnight.

Yes, I know that there are a lot of people out there that are fervently insisting that this is not the death of bitcoin.

You never know, they may be right.  In the aftermath of the collapse of Mt. Gox, six major bitcoin organizations issued a joint statement.  The following is an excerpt from that statement…

The purpose of this document is to summarize a joint statement to the Bitcoin community regarding the insolvency of Mt.Gox.

This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants.  As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.

We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age.

So will the bitcoin community bounce back and be stronger than ever?

You never know.  I certainly wish them the best.  I simply do not plan to participate.

It isn’t just that bitcoin and other alternative currencies are very unstable and offer no protection.  It is also that governments and central banks around the world are starting to crack down on something that they see as a potential threat.  For example, this comes from a Fox News article that was published just this week…

Authorities have been taking an increasingly hard look at Bitcoin and related virtual currencies including Litecoin, Namecoin, Ripple, and countless others. Some countries, including Russia, have effectively banned the currency. In other jurisdictions, authorities are weighing whether to try to tame the marketplace through licenses or other mechanisms.

It is entirely possible that the collapse of Mt. Gox could have been manufactured by a government or a central bank.

Considering the other things that have been revealed over the past couple of years, it would be naive to think that governments and central banks are unwilling to engage in such subterfuge.

In addition, consider what would happen to the other exchanges if the U.S. or the EU publicly announced a complete ban on bitcoin someday.

There are just too many risks.

Like I said, I wish those well that are involved in bitcoin or any of the other alternative virtual currencies that are floating around out there.

Hopefully some of those virtual currencies will succeed.

But most average American families simply cannot afford to put their hard-earned money into schemes that could evaporate literally overnight.

So what do you think about bitcoin?

Please feel free to share your thoughts by posting a comment below…

  • Patriot One

    It’s just another fiat currency, no it’s not even a currency. It’s a digital creation with no backup, gold nor government. If you believe in these things I’m making Patriot Ones, send me your hard earned money and I promise to put it to good use.

    Bitcoin investers got suckered. I think it’s likely to fall apart by Friday.

    • retardnation

      So much ignorance, it’s impossible to even address.

    • Chuck

      While I agree with you about gold being an historic value, there is more and more gold being discovered everyday. There will never be more bitcoins than the algorithm permits (Approximately 21 million). I believe that, barring a superior product entering as competition, one day a single bit coin will be worth over $1,000,000…maybe even more than $1,000,000,000. Depends on how many people end up using it, but it has many advantages over any kind of money that is now in circulation. Until then it will go up and it will go down, but the long term trend is up.

      • Guest

        There is more and more gold being discovered every day? Really? Where? In Flavor Flav’s mouth?

        • Chuck

          It is called mining…let me guess you went to public schools. Each year, approximately 2500 tons of gold are mined throughout the world.

      • Patriot One

        In that case it’s like a closed fund and if 21 million is it then Bitcoin has no commerce value as a unit of trade.

        21 million divided by 7 billion hummm! 0101010101………….

        I’ll wait and see how many Bitcoin millionaires are left next week.

        • Chuck

          You will have to wait longer than a week. They are only a little over half way to completing all the bitcoin mining for available coins. In a few years they will be done, and then the prices could skyrocket. The only thing that will stop the price from going through the roof is a competing superior product, or lack of acceptance from people in the marketplace.

          • Patriot One

            Its just too volatile to use as a currency. Why would someone accept payment in bitcoin today that may be worth 20% less tomorrow???

          • Chuck

            That is what the exchanges are for. As time goes forward, the wild swings in value will settle down and bitcoin’s value will stabilize. We are many years from that time at the present. In the meantime, holding on to bitcoin isn’t all bad. I don’t advise anybody to invest money they need for month to month, in bitcoin. But as an investment, how many other investments can you name that would have given you at least a five fold increase in value (500%) since September 2013? And, this is with all the negative stuff that has recently occurred.

          • Patriot One

            Well good luck Chuck. The currencies of the world will be in question soon and Bitcoin will be another footnote in history.

          • Chuck

            Or, it could be the medium of exchange for quite some time into the future. If we knew for sure it wouldn’t be called speculation.

          • P

            services such as bitpay convert your local currency into bitcoin and back again within the same transaction so that the conversion is automatic and instantaneous, hence little to no currency risk at all for transactions. as for investment, there are already some working on derivatives for bitcoin to smooth out the volatility, but the volatility decreases everyday and will decline as supply and circulation increase.

          • Patriot One

            And what’s the value today???

        • P

          1BTC is divisible into satoshis ie. 0.00000001BTC, of which the total supply would apparently reach 2.1 quadrillion. but the bitcoin protocol could be modified with new software to handle smaller amounts in the future. bitcoin is expected to reach its supply cap in the year 2140, by which time I’m sure the world population will be considerably more than 7billion. but remember also that bitcoin won’t be the only crypto-currency in town, and there could be dozens of crypto-currencies in circulation by that time, some may far surpass bitcoin.

    • Camarena

      Don’t worry! The media has declared bitcoin dead a countless number of times yet it always bounces back. It’s a digital creation with a secure protocol and framework. I don’t think bitcoin investors got suckered. It’s still up a lot from where it was a few months ago.

      • Malcolm Reynolds

        “It’s a digital creation with a secure protocol and framework”
        NOTHING is secure in a digital environment. You’ll notice that Mt Gox was hacked to the tune of 350 million which is one reason they went *poof*.

        • Camarena

          Sorry to inform you, but bitcoin was secure. This was all Mt.Gox. The protocol ws made TO TRUST NO ONE. They were hacked because of their incompetence. I don’t know why people kept money there anyway, Mt.Gox have been showing signs of trouble for at least a year now. You’re not supposed to keep money on an exchange. It’s not a bank. Look up second market. This will be a new exchange in the U.S. for the big boys in business.

          • Malcolm Reynolds

            “Sorry to inform you, but bitcoin was secure. ”
            LMAO! Thanks for the laugh. good luck.

    • btceezy

      It cannot be farther from a fiat currency. In fact it has the properties of gold, fiat currency, and several classes of financial assets.

      Might want to do some homework before attacking things you clearly do not understand.

      Good luck with the fiat money in your bank account though, Im sure when the chips are down the bank will be happy help themselves to some of it, or all of it.

      • Patriot One

        So educate me. What is the backup for Bitcoin? Where does Bitcoin derive it’s value? It sure looks and acts like a speculative item.

        • mijj

          you need to seperate the ideas of “value” from “utility”.

          Any money, including fiat, has value because people value it. It’s not a property of the money. If a person believes a decorative scrap of paper is valued by other people, then that person will value it. If the only quality that scrap of paper has is it’s decorative property, then it’s value rests purely on imagination.

          Bitcoin has value because other people value it, but also, like gold, it has a foothold in objective reality. Ie. it is created into the validating blockchain according to an independent mathematical algorithm. And that gives it concrete utility which fiat doesn’t have. It’s dependable because it can’t be counterfeited (even by a central issuing “authority”). And it has utility in physical reality in that it can be transmitted without 3rd party parasites or censors.

          So, because Bitcoin (and other blockchain money) have concrete utility, Bitcoin value will be more than emotion based. Ie. even the most widespread scare propaganda won’t kill Bitcoin because the utility of Bitcoin doesn’t depend on faith.

          • Patriot One

            I think Bitcoin is going to run out of people who see the value. I can see just by this thread that some are desperately trying to talk up Bitcoin and it’s value. The only reason Bitcoin went to $1200 was talk and speculation. Thus far I’m not getting educated. Hopium is not an intrinsic value.

          • mijj

            it doesn’t need anyone to talk up the value. It only needs utility. If it has utility, then people will use it.

            Bitcoin is used to transmit money (regardless of exchange rate) to anywhere in the world without authoritarian censorship or 3rd party parasites.

            Therefore, Bitcoin will persist. Fiat exchange rate is irrelevant.

  • Rodster

    No surprise regarding Bitcoin and I share Michael’s sentiment. I never saw any value in virtual currency. It was digitized virtual FIAT currency. My most pressing question has been what if?

    What if the Internet is taken down for nefarious reasons. How do you get access to your money?

    • Chuck

      It is not fiat currency in that there is a finite amount that can ever be created. With fiat currency, the problem isn’t in the currency itself, it is in the fact that governments have always produced more and more further debasing and ruining the value of the currency. This will be impossible with bit coin, although as we have witnessed, you should do some research before you store your bit coins in an exchange.

      It is very possible to store them on your hard drive, or and external hard drive, your laptop, or your phone, or all of the above. The exchanges are only needed to convert to another currency.

      • Malcolm Reynolds

        “further debasing and ruining the value ”

        So what exactly is the value behind fiat bitcoin?

        • mijj

          tut tut .. Bitcoin, like gold isn’t fiat. It isn’t created on the whim of a psycho in authority. Unlike the $.

          • Malcolm Reynolds

            tut tut…
            No, it’s created by some half-way anonymous psycho with basically no oversight – like every other ponzi scheme in history. Good luck with that.

          • mijj

            maybe you should read up on how Bitcoin works. Fiat is created on a whim, without constraint by a bunch of psychopaths. Bitcoin is created according to an objective algorithm into the blockchain. No individual can change how the Bitcoins are created. If it isn’t created according to the algorithm, it isn’t part of the blockchain (and not Bitcoin). People can’t randomly create Bitcoin and shove them into the Bitcoin blockchain.

          • Malcolm Reynolds

            Good luck with that.

          • Malcolm Reynolds

            ” Fiat is created on a whim”
            Hello – you dolt. Typical fiat is created by govt whim.
            The crap you’re claiming isn’t fiat is created out of thin air by a.n.y.o.n.e that does the mining. They may be claiming there are only going to be X number of bitcoins, but LMAO!

          • mijj

            tsk .. you shouldn’t fall back on your imagination – if you want info on how things work you should look it up.

            The government doesn’t create the US $ – the fed does. Ie. a bunch of people can decide, on a whim, to create money. That’s why it’s called fiat. Because the source of the money is imagination. The source of Bitcoin is a mathematical algorithm which is beyond the meddling of any individuals. Ie. the source of Bitcoin is mathematical reality, not a bunch of greedy, manipulative psychos.

          • Malcolm Reynolds

            Umkay, Thanks for setting me straight.

            run along now little bitcoin troll.

          • Bid Tiddes

            I have mined over 600$ in Doge this week(will switch for profitability), I trade Doge for BTC then buy silver with it that’s delivered to my house in under 2 weeks, but have also traded BTC for USD and then to my account with paypal. My ROI on my rig was 15 days(mid dec). @ Malcolm, do you even know the diff between Sha-256 and Scrypt??

          • Malcolm Reynolds

            Good for you. I think you’ve discovered the sole use of crypto currency. Create it out of thin air (HELLO FIAT) and immediately get rid of it.
            The difference between the two crypto algos is irrelevant.
            I think you’re trying to imply crypto superiority and/or invincibility, but if you think “large amounts of memory” is going to prevent infiltration you’re a fool. You should look into your crystal ball at the past when 4096-bit RSA (one of the worlds TOUGHEST algos, BTW) was cracked by listening to SOUNDS on the computer.

          • mijj

            lol .. you used the word “fiat” again without understanding what it means. You should look it up before using it.

            Try wikipedia.

    • Camarena

      If the internet was taking down, we’d have bigger problems than worrying about money. This would affect banks as well.

      • Douglas M. Green

        This is why you should have cash and PMs as well, along with food, water, guns and lead. One cannot objectively peel back history, then look at our current debt/ponzi scheme situation and not get prepared for a high possibility of very bad times ahead.

        • Camarena

          I’m sorry, but cash would be worthless as well in times like those. I’d be more worried about food, water, weapons, than paper.

    • Steve Taylor

      Chuck is correct – definitely not fiat currency or a Ponzi scheme for that matter. There will never be more than 21-million Bitcoins. What is the limit on US$ in circulation? And no, we don’t want the dead hand of government “regulation” – the Bitcoin community can regulate itself.

      • Malcolm Reynolds

        Never say never. What’s your proof that the bitcoin limit wont be modified? Someone’s guarantee?
        Well gee, Ben Bernanke stood in front of congress and guaranteed the money printing fed/treasury scam would never happen too.
        It’s Ponzi fiat that has the additional benefit of being used almost nowhere and existing only in an environment that can and already has been hacked.

        • mijj

          ahem .. the limit is part of the definition of bitcoin. It’s encoded into the bitcoin protocol itself. If someone twiddles with the code of a transaction to change the limit then it isn’t bitcoin and isn’t accepted as a bitcoin transactions.

          The limit can only be changed if the majority of all Bitcoin processors all agree simultaneously to change the limit.

          There’s the extra added bonus that, if you don’t like the way things are going, you can abandon it – it’s not forced on you at authoritarian gunpoint. Don’t think this point is insignificant.

          • Malcolm Reynolds

            ahem… you’re under the impression that the code cant change?

          • mijj

            me > “The limit can only be changed if the majority of all Bitcoin processors all agree simultaneously to change the limit. (…etc)”

            you > “you’re under the impression that the code cant change?”

            me > “you’re not paying attention”

            my guess is, you know what i said, but you’re playing at not understanding. .. am i right? 8-)

          • Malcolm Reynolds

            No, You’re delusional and trying to avoid the point. .

            I’m right, you’re not.

          • mijj

            lol .. ok, i get it. You don’t understand what’s going on.

          • Stock

            Malcom, You’re wrong. Do some research. The supply of Bitcoins is fixed.

          • Malcolm Reynolds

            Ok, thanks for taking the time to share.
            LIke I didn’t know that ‘its fixed’ Now do your own research.
            What’s preventing that limit from changing?
            What’s the value behind it?
            Why do bitcoin insiders call it nothing but a mechanism for exchange?
            Sorry, you’re wrong.

          • mijj

            lol .. you’re putting a lot of energy into talking down bitcoin, aren’t you. How’s it working out?

            > “Why do bitcoin insiders call it nothing but a mechanism for exchange?”

            lol (again 8-) .. really? .. and where have they been saying that it’s nothing but a mechanism for exchange?

            Oh .. but you failed to notice: if Bitcoin is nothing but a mechanism for exchange .. then .. !! .. fiat is nothing!

            keep up with those long lonely hours of talking down Bitcoin. I’m sure someone will thank you for it.

          • Malcolm Reynolds

            Just read Zero Hedge.
            Maybe someday you’ll catch up or even catch on…

    • btceezy

      It could not be farther from digitized fiat currency (fiat already is digitized! what do you think happens when you use a bank card? Your funds move from one fiat bank computer to another). Please do some research.

      And if the Internet is taken down somehow, the world will have far bigger problems than retrieving your money. Fiat money doesn’t work without the Internet either.

  • Chuck

    If the largest bank in Europe went down taking all the money on deposit with it, would the Euro be as resilient as the bit coin has been? I think not. In your story you incorrectly identified $1200 as a recent high, when it was $1163 (which is close but no cigar…do some due diligence). Also, you failed to mention that just last September bit coin was trading between $100 and $200. As I am writing this, bitcoin is trading close to $540. I will allow that it may have traded at the price you quoted as it is very volatile in nature, but the long term outlook is still for higher and higher values as it becomes used by more and more people. You are correct that gold and silver are also good ways to store wealth, but you may encounter problems exchanging precious metals in the future police state here in the USSA. Bitcoin isn’t perfect as Mt. Gox collap[se showed, but the problem was with Mt. Gox not bitcoin, as the remaining exchanges are still operating smoothly after encountering the same kind of attack as Mt. Gox received. If you need to find some reliable information concerning this matter for future articles, I suggest you contact Eric Voorhies or Andreas Antonpoulos. Both of these men are experts on bitcoin.

    • Drud

      So, in this “future police state here in the USSA” people will have full, unfettered access to the internet in order to conduct their Bitcoin transactions?

      • Chuck

        Should this come to be, you may want to be located outside the jurisdiction of the USSA when TSHTF. When that happens, wealth stored in bitcoins will be your life jacket.

        • Malcolm Reynolds

          oohhhhh. That’s how you survive when TSHTF.
          You have to be outside the US, the internet cannot be hindered so that you can get to your wallet and the exchanges, and bitcoin has to not collapse.
          Sounds like a recipe for success to me.

  • A Dodgy Bloke

    I’ve never really got Bitcoin, the more I found out about it the less I liked it. I think the money blown in Bitcoin would have been better spent investing in Beans, Band aids, and bullets and gold and silver. What’s that about a sucker born every minute?

    • Camarena

      It hasn’t collapsed. Don’t you think we should invest all the money used in banks for vaults, security trucks into food, bullets etc? I don’t think so. If you have anything you’re not sure about bitcoin, I’ll be happy to answer any questions you may have.

    • Chuck

      What was it that you didn’t like? Was it that you didn’t understand it? Could you not see the ease with which you could make international transfers without any cost? Didn’t you see that the government has no clue as to what you do with your bitcoins? At present the government is demanding that one report all transactions on their tax returns, but how would they know if you didn’t? And, if you are living abroad, your income is still taxable by the USSA, which I find to be reprehensible. This is a way to keep that money and live a life of an expatriated American. While this may sound unpatriotic, I think the 16th Amendment, the Federal Reserve Act and all these endless wars that are sucking the lifeblood from our economy are much more unpatriotic than my wishing to keep what I earn with my brains and my two hands for myself.

      • Kent Harris

        Chuck I totally agree with you. The days of this country and the central bank and income tax are unraveling. The Ponzi scheme is coming to a close.

      • Douglas M. Green

        Bitcoin, or something like it has value. Transactions can be completed instantaneously across the planet, which you can’t do with gold. However, the fact that virtual currencies keep taxes from the gubment’s grubby hands is a super incentive for the gubment to create a virus or otherwise do whatever is humanly possible to destroy it. That is my fear. So yes, bitcoin has value, but also carries risk.

        • Chuck

          You are correct that government is far more likely to be a problem for us all than bitcoin. And, while governments may be able to scuttle bitcoin in the future, I think it is far more likely that a superior form of virtual currency will emerge. In the meantime, I trust bitcoin far more than I trust banks. A government evil enough to destroy bitcoin is certainly evil enough to continue to steal your money through inflation or outright theft as they did with gold confiscation in 1933.

      • guido

        Well, one thing not to like was the possibility of losing all your bitcoins… How much did you lose?

        • Chuck

          None. I was alert to problems at Mt Gox and did not use their services.

      • A Dodgy Bloke

        Chuck the problems I have with Bitcoin are practical. As a prepper I when I look at an item I always as the question “where is this mess going, and how can this help”. If you subscribe to the collapse narrative, (and I don’t) then Bitcoin makes no sense, no power, no computer, no Bitcoin. I see more stupid government desperate for money they are going to go after low hanging fruit. Bitcoin falls into category. I don’t think Mt. Gox is going to sink Bitcoin, government is going to sink Bitcoin, you have to think every government on the planet that is hard up for money is looking at Bitcoin, as a future revenue source. Gold and silver on the other had is easy to hide no body knows you have it. Granted it’s a pain to convert, but in any currency collapse you will have vendors who will deal in gold and silver no questions asked. You may or may not be able to do that with Bitcoin.

        • mijj

          .. and if the earth is hit by a giant meteorite, then what’s the point of agonizing about Bitcoins v. $?

          But really, there’s a whole range of possiblities between perfect world domination of the $ and total collapse of all civilization.

          Being prepared means more than preparing only for total collapse.

        • Chuck

          If you look at previous collapses, you will find that people didn’t revert back to the stone age each time. Perhaps a little investigation into what the collapse looked like would help you to see possible futures a little more clearly. Gold and silver maybe easy to hide (better dig a deep hole to avoid metal detectors), but are they easy to flee with? Maybe in small amounts, but $100,000 worth of gold for instance might be a little hard to leave a country with. Check with anybody who left an Eastern European country during the days of Communism. They sewed paper money into their clothing and shoes. Gold and silver would have been detected. Bitcoin is accessible anywhere you can get internet. You don’t need to smuggle it.

          Just for an experiment try taking in excess of $10,000 in gold across the U.S. border and see what happens…

    • Drud

      Bitcoin has some wonderful basic ideas, but some major practical failures that will prevent it from ever being in widespread use. It is not a matter of having no value, however. and the key distinction is not between fiat currencies and backed currencies; it is between debt-based and debt-free currencies. Currently , all the major currencies in the world are printed by central banks and LOANED into existence to governments. So, essentially, not only is debt immediately and inevitably created with the issuance of currency, the paradigm becomes that the government/central banks own the money and the people are allowed to use it. This paradigm is what must change. People must realize that money belongs to US and we allow our government to use it.
      Oh, and also, one other failing of Bitcoin in internet/grid dependence. If the government wants it gone when SHTF, it will be gone.

      • A Dodgy Bloke

        Drud you make some great points.

      • indigopete

        I really don’t understand this objection of Bitcoin’s dependence on the internet. That is its whole **strength** FFS. Cryptocurrencies are not intended as a “doomsday” currency for when the internet disappears – they are intended for use when it’s ON. Thats what gives them their value. Gold was the bitcoin of the pre-internet age but it has a slight issue with travelling through wires so something else with similar non-counterfeitable qualities needed to be found. Crypto-currencies are it and they won’t be disappearing anytime soon.

        • Drud

          A valid point about the grid/internet, I suppose, but all the major debt-based currencies still work fine as well. I pay bills and buy real stuff with dollars and plastic representations of “real” dollars borrowed against some future promise every day. Ultimately, every currency is about confidence and acceptance. Bitcoin is inferior to virtually any BS debt-based fiat in that respect, again that may change, but also, Bitcoin MAY go to its intrinsic value (zero) as well. As far as Bitcoin being a replacement for gold, that is absurd. Even though gold has little true intrinsic value and, as so many repeatedly point out, it cannot be eaten, it can be forged into rings, necklaces, images of goats, and all manner of other monuments to human ego. Ego will never go away and therefore neither will the value of gold.

          • indigopete

            Blubberblubberblubber :) Things do not have an “intrinsic” value. They have either a utility value or an exchange (monetary) value. If something works as money (as gold did in the physical economy- before the internet arrived) then it will have a monetary value. It’s not a question of “inferior” or “superior” money, it’s a question of unlevered base money (which gold and bitcoin are) vs proxy money (which fiat money is).

    • Bid Tiddes

      checkout coinwarz , 30 seconds looking at that site give you more info then this article on what is happening, notice the difficulty for starters lol

  • Sack man

    There was always something about Bitcoin that I did not like but was unable to put it into words. You just did. Pretty good article I must say. While I do not love silver or gold rather buy the metals than bitcoin.

    • Chuck

      But he didn’t give you all the facts, just the ones that served his article. Half truths we call them…

  • retardnation

    If you bought $500 worth of bitcoin 365 days ago, you can cash out today for $5,000. At the peak, $10,000 +. I agree you can lose it all, that’s why you take profits and stay diversified. I’m glad I was able to make some money off of it, but I would have made thousands more if I hadn’t listened to all the doom and bloomers who thought this thing collapsed 11 months ago. Oh and it also collapsed several times after that. This is only the most recent collapse. Collapse again it will, of this I am certain.

    • guido

      Just because people latched onto it for a while does not prove it’s a long-term concern. Tulips and cigarettes have both had their day, as well. Metal has survived the test of time, while many forms of currency have come and gone. Bitcoin is a fascinating idea, but it is fundamentally dependent on 2 things: electricity and a global internet. With governments’ growing control and surveillance of the internet, it’s hard to believe they won’t kill or subvert bitcoin in the future.
      With the threat of peak oil and global economic collapse, among other things, there is no reason to believe the internet or even the juice will always be there, rendering your bitcoins useless. Go ahead and speculate on them, maybe you’ll luck out-but it’s hard to know when to dump your bitcoins before a MT Gox crashes or someone just steals your coins. My personal preference is in physical things I can touch and use and consume.

  • PK

    I’d like to sell you some Phred Coins. Please send me dollars. Heck, I’ll give you 2 for 1.

    • Camarena

      People always say this. The thing with Phred coins is that no one puts any value in them but YOU. Why would they? They don’t exist to anyone else, and you have no proper exchange to trade. Do you have a framework that prevents people from counterfeiting Phred Coins? Can your coin be send across the internet in seconds to anyone in the world with a low fee? There’s your value. Now read up about how bitcoin works and what it brings to the table before spouting this nonsense.

      • PK

        Camarena, lighten up. Did you think I was serious? If you have Bit Coins I hope you do well. I’ll keep investing in more tangible things, like back up inventory for my retail business.

        • Camarena

          Sorry. There are people that actually use this argument and are seriously not kidding. You can also accept bitcoin and use a company like coinbase or bitpay to automatically covert it to cash into your bank account everyday. There’s no risk on your end and the fees are less than if people came in and used credit cards..

  • retardnation

    How about the collapse of silver? $22 now, down from the high of $50 less than two years ago. That’s over a 50% nosedive. Oh right, that’s not a collapse because you can hold it and touch it and kiss it.

    • Guest

      The prices of gold and silver are manipulated through naked shorting on the COMEX. If it weren’t for the manipulation, the prices of both metals would be much higher. The manipulation will eventually end, and those holding physical gold and silver will be in great shape.

      You can keep your bitcoins and your fiat, paper currencies. I’ll stick with real money.

      • Camarena

        It is real money. Bitcoin is manipulated too. Everything is. So by your logic when bitcoin manipulation ends it will skyrocket? Oh and you can buy gold or silver with bitcoin and vice versa if you think that legitimizes it at all.

        • Guest

          I’d rather have something that I have in my possession and that will always have value. Physical gold and silver meet those two criteria beautifully!

          • Camarena

            Always have value? So when space mining becomes cheap and we mine gold from Asteroids it will still have the same value or hold it even when the supply has increased? It’ll come sooner than you think.

          • Guest

            Physical gold and silver have intrinsic value and therefore will always have value.

          • AWV

            Asteroids? Do you think you’ll actually be around.LOL!

          • Camarena

            You’re just like the old generation before astronauts. I imagine they felt the same way you did when they said humans would land on the moon.

          • pg

            Camarena, you almost had me…..was getting ready to give bit coin a serious look, until you mentioned space mining asteroids, and being here sooner than we think. Wow.

          • Camarena

            Sure it may not happen in a few years, but in 20 to 30 years I can see it happening? It’s still in its early stages. “The new company Planetary Resources, Inc., is backed by a team of billionaire investors and luminaries like filmmaker/explorer James Cameron with a single goal: to mine near-Earth asteroids for precious resources like rare metals and water ice. “

          • Camarena

            Do you think this is crazy too? :P “Launching humans to an asteroid has been mentioned by NASA in recent years as a possible goal.”

  • K

    Agree with Rodster. Never made any sense to me. In case of trouble the first thing most Governments do, is crash the internet. I will go with the old adage. In bad times, if you can not hold it, you do not own it.

    • seth

      Bankers have subverted national governments for decades, including the US and UK. The top bankers never got prosecuted after the financial crisis – the real ‘hidden hand’ that runs the world, killing abroad and at home. They are the wickedness that is killing the planet. Google UN Agenda 21 (SPONSORED BY OBAMA) and the Gerogia guidestones to find out about their evil plans for depopulation.

  • retardnation

    Mt. Gox does not equal all of bitcoin. Just because one exchange collapsed does not mean the entire currency is now bunk. What a gigantic leap of logic with no supporting evidence whatsoever.

  • rentslave

    Clif High was recommending bitcoins in the fall of 2012 when they were at $13.00.Sad to say,I didn’t bite.Story of my life.I could have made 100 times my money.

    • Camarena

      Think about it. Ask any random person if they have bought any or heard of bitcoin. We’re still in the early days. Just don’t ever invest more than you can afford to lose. That’s the number 1 rule!

      • Jim Davis

        Well therein lies the problem. Money, even gold, is not an “investment”. If bitcoin is going to be a medium of exchange it needs to more stable and not a speculative play. I wish I would have bought some for pennies when I first heard of it, though!

  • PolitiJim

    Just shocked at the Bitcoin hatred despite it still being up nearly 200% from a little over a year ago. Agree Mt. Gox can’t kill it.

  • Abingdon

    History shows gold and silver are always worth something. The government probably messed up bitcoin and they most likely will confiscate gold when the economy collapses again. I think I’ll stick to silver.

    • Abingdon

      Btw zerohedge was in love with bitcoin . I wonder what their saying now. lol

      • Camarena

        Bitcoin is still up a lot from where it was in the beginning 2013. Not dead. :)

        • bitcoinwillcrash

          It just seams logical that the government hates bitcoin and will see it as a threat. Do you people seriously believe the government won’t figure a way to crash
          It? You bitcoin supporters act as if government officials are stupid and don’t have access to hackers.

          • Camarena

            Right now we’ve seen all the oppressive countries come out against it. China, Russia. So far the U.S.and other more free countries compared to China has been supportive of it in the senate hearings they had a few months back. Where have you heard that the government hates it?

          • bitcoinwillcrash

            Our leaders are not much different than China and Russia anymore. They are just better at deceiving people. US is not able to audit bitcoin profits. Do you think they support it? Really? Bitcoin is a threat to US dollar and the government knows this.

          • Bitcoinwillcrash

            I just read Chucks comments who is obviously a supporter of bitcoin . He praises it because there is no way America can truly find your earnings. This is common sense. What our government can’t control they will destroy. Here is a hint for all the bitcoin defenders, if the main media hates it than so does the government .

      • Mike Smithy

        I spend a couple hours a day bantering back and forth with the Zerohedge minions. Trust me, just about the only person bullish on Bitcoin is Fonestar. The vast majority of Zerohedge minions are not Bitcoin enthusiasts. If you are looking for a time tested alternative to fiat, stack gold & silver bitchez.

      • BenguluruHuduga

        Are you dumb ? If Argentina / Greece issues govt bonds of 100 euros which can be bought @ 15 euros : Does this mean Euro has lost its value ? or does this mean Argentina is going bust ?

        Apply the same logic to Bitcoin and Mt Gox.

        • Nhood

          Are they bust? Why don’t you Google about their economy . That’s just hilarious.

          • BenguluruHuduga

            Goodness gracious. The whole point of analogy was people still invest in such countries taking risk. Mt Gox issues are not Bitcoin issues just like how Argentina’s issues is not Euro issues !!

  • 2Gary2

    People should have sold this when it was worth a lot. What dumb MF’s

    • Camarena

      Come back in 12 months and we’ll see where the price is then. Then we’ll see who the dumb MF’s are.

  • 2Gary2

    I think the folks who own bit coin need to pray harder. Everything will be fixed if they just pray harder.

  • Camarena

    Bitcoin is sound.. The crappy exchange that has been going downhill for months is what was the problem.

  • Seen2013

    “So what do you think about bitcoin?”

    Globalist false trade for inalienable rights meaning by opt in or mandate can be alienable by terms of service and user agreement. IE, Everquest Online Adventure’s TOS makes court justification regardless of residency in a specific California court regardless of other state laws.
    If it advocates cashless, cashless-paperles, it inevitably takes a big step towards cementing Authoritarianism for the simple fact the other mechanisms of control center around the eventuality of developing a cashless-paperless society.
    It’s almost like watching the parallel rise of the Greenback over the other paper backs.

    … Based on a previous public forum debate in late 2008 to early 2009, I wonder what the Rothschild’s think of a parallel to the local alternative currency??? LAC was their baby after all they funded its development, its introduction, and even peer-reviewed it. Greece was also offered it as an alternative, which is how the debate started.

  • Bernard Madoff

    Sounds like a great idea to me!

  • mijj

    i’ve got news for you .. *no* money has intrinsic value. The perceived value of any money is entirely down to implicit social agreement. (Ie. “value” isn’t a property of the money, it’s a subjective projection based entirely on how it’s imagined other people perceive value. If you’re the only person who recognises the money, it’s worthless.)

    On the other hand, unlike fiat, Bitcoin has a foothold in reality via the concrete utility of the blockchain. So, despite emotion based price fluctuations, the undeniable utility of Bitcoin will keep Bitcoin sound and persistant.

    • Chuck

      Excellent analysis. You are exactly correct.

  • Jimbo

    Bitcoin is a means of exchange only. Fiat is a means of exchange only. The only true monies are time and energy.
    To obtain a means of exchange we expend time and energy (we work for our dollars or we exchange goods made from energy).
    Whenever we exchange time and energy for currency, we have no guarantee that we can exchange that currency back for an equal amount of time and energy. We have to place our faith in the means of exchange.
    If that faith is lost, the currency loses value.
    To protect the value of your time and energy, it is better to hold items that took time and energy to create.
    Food, clothing, tangible assets.
    Anything else is purely speculative and relies on the faith of others for its worth.

  • John

    Michael: please investigate the growing move around the U.S. to make it illegal to live off-the-grid – in CA, FL, etc. Just do a search on “illegal to live off grid” and look what pops up. Thanks! This is part of Agenda 21.

    • davidmpark

      Yes! We got nailed for reducing our reliance on the grid (backups for the backups). It’s a major problem.

  • mikeshaw

    It’s still waaaay too early to make any conclusions about Bitcoin, esp bold words like “collapse”. All that’s really happened with Gox is a website folded and took a bunch of money (both BTC and $$$). Sure that’s a blow to trust but trust is a psychological thing and could turn around tomorrow.

    The number of transactions is staying very strong. The price (while way off it’s high) is still pretty solid. The protocol is still reliable. In reality not much has changed.

    Bitcoin is not an investment. It’s a long term hedge. And it still looks very good for that.

  • Eric Quintero

    I have a friend investing in Dogecoin. Its a currency based on that popular internet dog that appears in the most random pictures ever. Its super low right now. So if you want to get in while the iron is hot, check out Dogecoin for some lolz and possibly a lot of $ if this thing ever takes off.

  • Captain Canuck

    But I thought the Tea Party was against regulation…

    • Frank Bell

      The original Boston Tea Party was against tax breaks for the East India Company.

      In other words, the original Boston Tea Party was against corporatism and more wealth for the wealthy.

      That’s what it is all about!

      • Shawn Schaitel

        e tea party was hijacked by the koch bros

    • Shawn Schaitel

      the tea party was hijacked by the koch bros

  • Steve Taylor

    “faith has been shattered” – nonsense. I think you are confusing Bitcoin with a Bitcoin Exchange (MtGox). Today, the value of Bitcoin at CoinDesk index is $587, hardly changed from before the crash of MtGox. Sure I’m mad with the total management incompetence at MtGox since I have an account with them, but my faith in the Bitcoin protocol itself is not affected at all. It’s a great way to send funds around the world quickly and at a very small cost, unlike the banks.

  • pulltheweeds

    LMFAO

  • XSANDIEGOCA

    Back it with Precious Metals. Provide quarterly audits by a respected accounting firm. Offer deposit insurance via Lloyds of London and we are ready for Bitcoin II!

  • disqus_CuLmTyTMQo

    What are you talking about? First of all, it’s Mtgox crash, not a bitcoin crash. Secondly, itś affecting people who don’t want to take care of what is their responsability: guard their wallets with them, rather than trusting a third party to keep their assets for them. Nobody who has a local wallet is being affected by Mtgox issues. I have earned 600% in 8 months with bitcoin even with this mess. In Brazil, the same thing happened to a local exchanger and they were able to find an investor and honor their agreements. I hope Mtgox can do the same. If they can’t, life goes on…

  • Selaretus

    If you replace “Bitcoin” with “US dollar” in this post, the parallels are interesting: “The US dollar is a currency with no intrinsic value.”

  • QuietBearCoin

    Bitcoin has survived every attack, every problem, every time…
    It’s already back near $600 as I type these words…
    The bitcoin community is stable & strong…
    This writer obviously doesn’t do his homework…
    Bitcoin is here to stay whether the banksters and their mouthpieces like it or not…
    The banksters can’t manipulate bitcoin like they’re doing with silver & gold…

    • jamesrav

      Haven’t all failed banks, investment firms, etc put on a brave face and said “this is a temporary problem, but we will emerge stronger” … and then poof, gone. I admit to knowing little about bitcoin, but it does appear it was ‘rushed to market’ before being certified as non-exploitable (I understand the losses suffered are simply thefts??) – if it can’t be made 100% safe, people will lose faith, and like it or not, the “full faith and …” statement ingrained in everyone’s brain is comforting, even if it’s basically illusory.

  • Jackie Milton

    Although i would love to see a currency developed other than the fiat dollar i do not believe bitcoin is it.

  • John

    What about gold? If you purchased in 2011, you are down about 20 percent.

  • Destractions

    24hrs later the price has fully rebounded. Your article is silly and based on a clear lack of understanding of the bitcoin protocol. Further, calling BTC a “sort of ponzi” shows a lack of understanding of what a ponzi even is, there is no Central authority collecting magical profits at the top.

  • gerry d welder

    Governments won’t allow their tax revenue and regulatory structure to be by-passed… think tax evasion and money laundering just for starters, every transaction is recorded forever, so there is no rush, the government will slaughter this cash cow.

    Think your getting away with stuff in a system you don’t even understand or who really is at the controls or what predator is burrowing it’s way toward you?

  • gerry d welder

    ,,,couldn’t have imagined that Bitcoin would come along to redirect all the muppet speculator’s and working people’s savings out of physical gold and silver and into their waiting coffers!

  • gerry d welder

    Here’s some interesting tweets:

    Jim Rickards @maureenmfarrell Fighting US w/ #Bitcoin is like fighting the #IDF w/ a BB gun. US Cyber Command can crash it in a heartbeat. #SoNaive

    Jim Rickards‏ @maureenmfarrell The naivete of #Bitcoin groupies is really touching. If you think you’ve not being watched, guess again.

  • Malcolm Reynolds

    Bitcoin supporters are akin to Global Warming supporters. EVERYTHING reinforced the value of the product/theory.
    Anyone that peruses Zero Hedge can check out their poster ‘fonestar’ for an indication of the dementia. No matter what happens, “it’s time to buy more”.
    You’re a fool if you put your money in bitcoin.

    • Malcolm Reynolds

      Nothing like checking out the bullcoin trolls on this thread to be proven right.

      • davidmpark

        How come we haven’t been accused of being “bitcophobes” or something like that yet? I need that distinction to get advantage on my Leftist Label Bingo Card. After that, all I need is pedophobe to win the jackpot.

        • Malcolm Reynolds

          lol, It’s coming. Keep the discussion going.

    • Ian Orcutt

      I’m not investing in Bitcoins simply because they’re so expensive. But I wouldn’t call it “foolish” to invest in them. As long as you don’t stash all your coins in an exchange, you’re fine -_-

      They’re still worth hundreds of times the US dollar.

  • jakartaman

    DAH!

  • Mikki2051

    One thing about physical gold and silver coins is they can’t vanish in a push of a computer button. I’ll keep my real coins. They can have the virtual coins.

  • JonRhys

    “When you have an imaginary currency that has no intrinsic worth that is being managed and traded by organizations that have very little regulation or accountability, bad things can happen”. Sounds like the fiat currency in my wallet. What’s the difference between Bitcoin and the Central Banksters? Bitcoin was a threat so they were squashed. No private organization that can’t be controlled will ever be allowed to be successful at creating a type of anonymous money, not just currency.

  • Hans Stuedalpie

    (I’m not sure this got posted, so I’m posting it again)…. I didn’t have the funds, expertise, or luck …
    for investing in gold, silver, stocks, bonds, etc. … so over the past 10
    years, periodically .. I invested instead in lots of bulk toilet paper,
    paper towels, cloth towels, sheets, blankets, 22 bullets, a gun, knives, lots
    of brown rice (buckets, bags, sacks, etc, dwarf and
    semi-dwarf fruit trees, blueberry and other berry bushes (and acidifying medium
    for soil to grow them in … blueberries won’t grow in my soil otherwise),
    strawberries, lots of 12-12-12 sacks of fertilizer (was cheapest I could find),
    an old used but very good garden tiller, lots of plastic ground cover, lots of
    durable plastic food grade plastic buckets as containers for storage and
    growing things in…. and so forth. My return on investment over this
    period is about 200% on average compared to their current prices. I intend to
    keep “investing” along these lines… as well as gradually acquiring
    solar power devices, improved insulation for the house, and other sustainable
    and highly durable long term useful items. My fruit trees, which I bought
    at end of season at lowest mark downs 1, 2 and 5 years ago…. (which my wife
    thought I was nuts for investing so much time and effort into back when apples
    were 50 cents per pound… I have 20 trees now) should yield greater than 1
    bushel per tree soon or about $40 dollars or more of fruit each annually. Each
    year they will produce more as I get better at this growing fruit. Each year
    apples, peaches, etc will increase in grocery store cost. Eventually, I should
    get an annual return on my initial fruit tree investment of over 1000% as
    compared to store prices. On the downside, it was a lot of work. (A lot
    of work!!!).. plus a lot of people told me I was nuts. On the upside, I’m
    64 and these foods/things allow me to be VERY healthy and NO medications or
    diseases or pain at all. It’s my choice, that’s all. If I had bought
    gold, silver, stocks, bonds, etc….instead of instead of all the above healthy
    edibles, perhaps the precious metals could be sold to pay for medical bills…
    HA HA!!. Oh yes, I exercise regularly and am very physically and
    mentally active. Healthy Food alone isn’t enough. By the way,,,, GREAT site.. thanks for the opportunity to read and post comments!!

    • jakartaman

      Good for you and great post
      Just one thing – you can do both (PM’s) to buy things you will need

  • BenguluruHuduga

    Err. There are two parts to Bitcoin

    1) Digital currency like bitcoin issued by Mt Gox and others

    2) Bitcoin crypto algorithm which allows manufacturing / mining of currency. This is where difference lies. If one gets a service such as makeups or haircuts @ saloon. Assume payment is 10$. If you don’t like the haircut, you still have to pay 10$ and probably not go back next time. The stylist would be free to spend 10$ how ever he / she wants. With bitcoin or whatever the name of cryptocurrency is , payment of 10$ is made in cryptocurrency but stylist can spend it or use it for other services only when both parties are in agreement of the service rendered. Other words, if one is not happy, 10$ payment in cryptocurrency is useless unless agreed to.

  • bugler1

    This article is crap. Will you eat your words when bitcoin is worth 2000$?

    • Shawn Schaitel

      bitcoin is another bubble in fact the only thing keeping is the chinese buying and hording all of it

  • MtRottenAppleGox

    Check again and you might notice that after the close of MtGox the other exchanges went up. Closing MtGox what the best thing that could happen to Bitcoin at the moment. Even though feel sorry for those who have lost their savings at MtGox.

    MtGox was the rotten Apple

  • davidmpark

    Meh! It ain’t real; I don’t care. Can be wiped out with an EMP just like the official federal banking dollars (most of that is not represented in physical dollars either.)

    Gold, silver, nickel, copper.

    • Shawn Schaitel

      GOLD IS A SCAM invest in silver, nickel and copper as its much less likely to confiscated

  • DJohn1

    There have been many attempts to dethrone the United States as the maker of the World’s currency exchange.
    The true international currency for those in the know is probably the Swiss Currency. Even the Swiss bow out when they have turned financial records of U.S. Citizens over to the IRS. So people with money(not me, I am poor) are looking for a legitimate currency that will survive the coming economic disaster.
    In order for the Swiss Currency to survive the coming fall of the U.S. Dollar, the wealthy must take Swiss Citizenship and leave the U.S. to its fate.
    I have seen huge currency devaluations. Britain once held the title to International Currency. From the beginning of World War II until its end the currency lost over half its value. In the 70s, it again lost over half its value, then recovered. I think the low was a $1.05 per pound. I do not keep up with it. No need. I suggest it might fluctuate between a $1.80 to $2.15 a pound.
    Swiss currency has basically stayed stable. It has increased in value since the 1950s. I think it stays artificially low right now. That is the only way to have international trade feasible for this small country.
    When not if but when the SHTF for the dollar, that is probably the only place that will maintain value. The real problem is they are too small to defend themselves against massive countries like China, Russia, and the United States. So the best option is not an option at all for the rest of the world.
    I also suggest that we watch food futures. I suggest there is not enough to go around.
    Real Estate is not a good option though long term it might be. The real problem is people in the marketplace are not capable of owning their own home when they have no jobs to back it up. So like a lot of markets, the Real Estate is losing value to the tune of at least 10% per year right now.
    There is too much baggage to owning Real Estate including outrageous taxes and government bureaucracy including zoning rules that make it unacceptable as an investment.
    When owning a home means a monthly fee of at least $300 to maintain taxes and insurance then the baggage is too much.
    I suggest precious metals will be destroyed by the same factors that destroyed the silver market for the Hunts.
    And I look to see the governments steal all the gold like they did in the 30s. So exactly what is left for people with money to invest in that isn’t going down in value?
    I see why bitcoin exchange might be attractive. It is a shame that it didn’t work out.

  • BenguluruHuduga

    To bitcoin bashers :

    1) If stock of a specific firm goes to 0 or crashes 90%, does this mean the currency in which stock is valued is 0 or the company is bust ?

    2) If Argentina or Greece issue bonds which is worth 100 euros and can be bought @ say 20 euros , does this mean euro has lost value or countries are bust ?

    If response to both above is company or country has gone bust why is different to Bitcoin and Mt Gox ? Put simply, Mt Gox has gone bust.

    • Erin Tarn

      Everyone makes the occassional bad investment. The difference here is you’re defending it.

      • BenguluruHuduga

        I am defending Bitcoin, not Mt Gox !

  • John3:16

    Wooden nickels and even stamped metal coins were issued by merchant groups and individual businesses in this area 100-150 years ago. Apparently it helped trade.

    A cryptocurrency that can’t be counterfeited used locally and even backed by local govt assets and local goodwill could be useful. As a national or world currency, it would take a long time to be workable I believe.

  • FirstGarden

    “Lay not up for yourselves treasures upon earth, where moth and rust do corrupt, and where thieves break through and steal:

    But lay up for yourselves treasures in heaven, where neither moth nor rust corrupt, and where thieves do not break through nor steal:

    For where your treasure is, there will your heart be also.”
    – Messiah

    • Ian Orcutt

      You’re right, but that doesn’t make investing bad either.

      • FirstGarden

        Well, I believe Messiah is right.
        However, I’m not opposed to wise, careful investment. And I mean really careful. It never ceases to amaze how things just up & vanish when the chips are down.

        Pensions will take a major haircut. 401k’s? Wherever the cookie jar is, the big boys can’t seem to keep their hands out for very long.
        I guess I don’t have much trust in institutions, especially these days.
        Just be careful, bro.

  • John

    What if you purchased gold in 2011 — you’d be down 20% of value. True gold will always have value, but essentially you lost money, no?

    • Shawn Schaitel

      GOLD IS A SCAM invest in silver as its much less likely to confiscated

      • Ian Orcutt

        If you can hold it in your hand and it’s shiny, it’s NOT a scam…

        • Shawn Schaitel

          its a scam because it will the first thing confiscated and sadly the gold bugs have a tendency to forget or don’t know that the first “central bankers” were in fact the goldsmiths the ? also remains can you eat your gold

          • Ian Orcutt

            Who will be confiscating it?

          • Shawn Schaitel

            the government FDR did this during the 30s

          • goober

            you can eat food, you can’t eat gold. instead of spending all your money on gold, why not just buy more preps ?

          • Shawn Schaitel

            that was joke but t see your point and its also what mine was suppose to be

        • Shawn Schaitel

          the very first central bankers were the gold smiths of england and like anything else it can be easily manipulated

  • Frank Bell

    That’s funny:

    Bitcoin collapses, but the Dow Jones is strong despite all crash predictions.

    • Bubba Johnson

      The crash should happen after the federal reserve stops its nonsense

  • http://www.FounderChurch.Blogspot.Com/ “FounderChurch”

    THE ONLY TRUE VALUE, is Children, God, and Country, and everyone should invest in those things that endure over the eons. Even if you scratched out God, your Children and your Country are the best investments anyone can make come hell or high water. Search “FounderChurch” on the Internet.

    • GSOB

      The Gospel of God is by far, ….nothing even comes close to it, the most important thing to receive. All else is dung compared to being filled with God, loving Him and ever so thankful to Him…. to be like Jesus.

      • http://www.FounderChurch.Blogspot.Com/ “FounderChurch”

        Our problems are all spiritual first and foremost. Amen

  • http://www.FounderChurch.Blogspot.Com/ “FounderChurch”

    Money Isn’t Everything by FounderChurch

    Money can’t buy love, and it can’t buy anything else of real value either.

    Money, Money, Money, and Credit, and all such paper and digital negotiable instruments are NEVER the real assets or losing it the real problem for any individual or any society.

    These “MEDIUMS OF EXCHANGE” are just that, fictitious things, nothing more. They are not real, and at root do not represent anything real, or necessarily anything of value.

    So undue worrying about them, or about their gaining or losing value, takes our eye off the real ball, composed of real things that have real value.

    This is why two countries, that are just two of many such examples, have become great by being totally destroyed. They are Germany and Japan. Both of these countries lost EVERYTHING.

    Their currency overnight became worthless, all their homes and factories, roads, railroads, planes,electric power grids, and you name it, were totally destroyed. They were left naked, homeless, and hopeless, and then this amazing miracle happened, and almost overnight they became the richest, most powerful nations on earth.

    How could this possibly happen? No, America did not give them much of anything, that is a gratuitous myth of self congratulation on America’s part.

    What happened was they were relieved by losing the war of all of the garbage that composed their society. All institutions were swept away, and everyone had a fresh start in front of a clean slate. Nothing on earth is more powerful than that.

    Slavery in Egypt was the best thing that ever happened to the Israelites, and the holocaust was the next best thing. Look at Israel today and thank the holocaust.

    What truly matters, and is of truly of lasting value, is LIFE ITSELF, SKILLS, ATTITUDE, (humility) HARD WORK, FAMILY, GOD, (God’s Word) TRADITION, CULTURE, LANGUAGE, CHILDREN, AND SO FORTH.

    Everything else is flotsam, and jetsam.

    Love of Money is not only the ROOT OF ALL EVIL, it is also the seeds of our own. and our societies, destruction.

    FounderChurch is a non-profit public interest tax deductible religious organization. Volunteer, donate, or bequeath your support to further the causes and ministerial work of these non-denominational teachings that are dedicated to serving God and Country.

    A Google search of “FounderChurch” (one word) will bring up 3000 hits representing some of our teachings. Nothing is perfect, and we are not, but at core, be assured, we advocate on behalf of Godly families, children, and life more abundantly, worldwide.

    FACT: The Best and Brightest of our young couples are averaging 1.1 children average, when under the best circumstances, it takes 2.2 children for any human population just to barely reproduce themselves. This rate represents national suicide, and a genocidal holocaust of our people and nation, which is designed to serve certain narrow Special Interests that have an agenda based on hate for America. Thank You for visiting this teaching. Contact: FounderChurch@Gmail.Com

    • GSOB

      “So undue worrying about them, or about their gaining or losing value, takes our eye off the real ball, composed of real things that have real value.”

      From that point on…. you are soliciting for charitable contributions while on this site.

      Please practice what you preach.

      We have the bible.

  • PK

    When Bitcoins are made from something with real value, I’ll purchase some. Cyber money is too easy to manipulate.

    • Ian Orcutt

      Well, not to start big argument here, but paper currency is worthless too. The only reason it is worth anything is because we say it has value, and accept it as payment. In reality, it’s just colored paper with a seal on it. Same with Bitcoins. Just glorified code. But if people want it and say it has value, it does.

      Garbage could be worth hundreds of dollars some day if a bunch of hipsters started giving it value.

      Also, Bitcoin is VERY secure. The system is too complex to describe here. It’s how people handle it that is the issue :)

  • Priszilla

    It depends on how you got the bitcoins. If you bought them with cash, then you lost that cash. If you got them via computer operations, then you just lost the price you paid for the electricity.

    • Erin Tarn

      When bank runs become common, good luck exchanging that BC for dollars that you can hold in your hand.

      • Priszilla

        In my computer games I also have some gold. Still looking for a way to make that into real money. At least, I just invested time, no cash.

  • Malcolm Reynolds

    Sure, Utility is what FRNs have over gold.
    I thought you said bitcoin wasn’t fiat. Utility as value = fiat.

    • Chuck

      Finite number of coins that will ever be produced does not equal fiat.

      • Malcolm Reynolds

        No, but it’s lack of intrinsic value and nothing backing it makes it fiat.

        • Guy

          What’s your point? Just like the $ and every other currency

          • Malcolm Reynolds

            To laugh at fools who think bitcoin is the second coming, or that it’s invincible, or it’s NOT a Ponzi scam, or it’s secure, or it cant be changed.

          • mijj

            lol at those who believe the only impovement on fiat is perfection

            8-)

          • Malcolm Reynolds

            lol at those that think an improvement on fiat is virtual fiat.

          • mijj

            i don’t think you know what “fiat” means. You should look it up.

            Here’s a clue: Bitcoin isn’t fiat. The dollar is fiat. Ie. Bitcoin doesn’t come into existence on the whim of a central authority. the $ does. That’s what makes the $ fiat, and Bitcoin real.

          • Malcolm Reynolds

            Um, sounds like you don’t know what’s going on.

        • Chuck

          What makes gold have an intrinsic value? It is scarce, as bit coin will be. It has always had purchasing power, as bit coin will have. It was adopted as a medium of exchange because of it’s consistent value over time, which in a few years, bit coin will also have as demand becomes more stable. Of course it is always possible that a superior product will emerge to lessen the demand for bit coin, but until that happens I think it is entirely safe. And you can carry your wallet in your phone or laptop computer, so it isn’t like it is completely virtual.

  • Priszilla

    And here you are: Pentagon chief proposes to raise military spending by 23% over the next 5 years.

    Want to make any bet as to where he will work after he leaves government?

  • Mondobeyondo

    The general concept of Bitcoin may be appealing on the nsurface – but I wouldn’t invest in it, for exactly the same reasons in the story above. Better to invest in something more stable and secure, like gold and silver.

    Not to say precious metals can’t be confiscated either (FDR… 1933…) – but you can always get a few coffee cans, and hide your stash in the back yard. Just remember where you put it! Or someone like that couple in California who recently found $10 million worth in gold coins, will find it 100 years from now.

  • Doc Lem

    All “money” created from nothing is faith based….

  • abinico

    Said it from the beginning – bitcoin is a fake, fraud, and a scam – feels real good to be right, and vindicated. Anyways, all you former bitcoiners listen up – I got these tulips; they are very special and available now at a special introductory price – ha, ha, ha…

  • oldtoady

    VirWox is still there. As long as it is convertible to a real currency, it wil be there. Some exchanges will make it, some will not.

  • Joe Smith

    If you cant hold it you don’t own it!

  • Mikey

    I don’t feel sorry at all for anyone involved with the bitcoin scam. They got involved because of greed, all the talk about it being worth up to $1200. Currency should NEVER be treated as an investment and to make money off a currency. Those who got involved were blinded by greed and didn’t even think about what it was about, how NOTHING was guaranteed, wasn’t regulated, etc. etc. Only a fool would buy into this scam and now are paying the consequences. Don’t expect others to bail you out for your stupidity

    • Erin Tarn

      I’ve been saying this since day one. Currency is not a valid investment instrument. As long as Bitcoin are being exchanged for other ‘real’ money, it will always be a liability.

  • patrick

    bitcoin was always only a silly derivative. It was valued in another unit of measure – I.e. – US federal dollars. billed as a secure means to transfer “dollars” without any scrutiny – it relied upon an exaggerated “use value” that translated into an “exchange value” – only subsequently. a perfect formula for the most untracable pump and dump ever. it is history. all protest aside – its finished.

    • mijj

      if it’s history/finished .. why are you wasting time here? Is it because you would *like* it to be finished?

      Unlike fiat, Bitcoin isn’t reliant on emotion for perceived value – it has rock-solid utility that no form of fiat has. It is transmitted without intervention by puffed up, authoritarian 3rd party censors or parasites.

      As long as Fiat persists, Bitcoin (or blockchain alternatives) will never be finished.

  • http://www.FounderChurch.Blogspot.Com/ “FounderChurch”

    The Golden Rule is said,by fools to be, whomever has the Gold makes the Rules, but that is not true. The fact is whomever makes the Rules makes the Gold have whatever value he decides it should have.

    In other words, the value of any medium of exchange grows out of the barrel of he who wields the biggest gun.

    The only thing proven throughout history to be more powerful than any “gun” is religion. So power is in this order,

    1. The Church, however construed.
    2. The State, which by definition is always he who has the biggest gun.
    3. He who possesses the most Gold, or whatever substance he who has the biggest gun has decided is to be the “medium of exchange.”

  • http://dtschmitz.com/blog Dietrich

    Michael, I read every one of your stories. This one is simply wrong. Bitcoin will not collapse; it declined a bit on confidence, but has since risen back and will stabilize. It’s not about the Bitcoin technology — Mt. Gox lost money and didn’t know it (over a year ago). We need to get the full story. Not there yet.

  • Nicknakthetruthspeaker

    Love it or hate it, the bitcoin is here to stay!

  • Lygeia

    I think you nailed it.

    “Bitcoin is a virtual currency that has no intrinsic value. The only thing giving bitcoin value is the faith that people have in it…”

    • mijj

      ahem .. that’s true of all money.

      No money has intrinsic value. “Value” isn’t a property of money. The “value” is percieved. The perceived value of money is really a preception of how willing other people are to accept the money. If noone else recognises your piece of pretty paper or lump of metal, then it’s not money.

      Now, the interesting thing about Bitcoin is its utility (that it shares with other blockchain money) – ie. it can be transmitted anywhere without authoritarian censorship and without 3rd party parasites. Knowing that other people value this utility means that Bitcoin will always be perceived as having value.

    • Erin Tarn

      Careful, you’ll upset the loons who invested in this junk and who still think it will be a wide-spread currency.
      For being labelled a “cryptocurrency” it sure does get jacked a lot.
      And to mijj below. Dollar bills can wipe ur bum and be used as kindling in the event that others no longer value it. Bitcoins vanish like farts.

  • IOdel

    Let’s leave the Hegelian dialectics behind and coin some truth around here. Bitcoin is NOT, I repeat, is NOT a threat to the central banking cartel. It is the central bankers’ market research project for their global, and of course digital, currency.

    They will bring bitcoin and every other crypto currency down before they implement the ONE. But please don’t be fooled. Digital currency is THE ONLY REASON they rolled out the Internet in the first place. It’s all about phasing you in.

    The question is: Will you continue to play Daddy Warbucks on the fancy global exchanges or will you look around your community and transact with your neighbor?

  • marnob

    Your are an idiot..there are many companies that have gone and will go broke taking hundreds of contractors, distributors and other peoples money for a lot more than mtgox company has in the real world that don’t get this much publicity..
    most of the losses are because people stupidly kept there coins in the unstable place! Its no different than a bank going broke but we don’t hear too much about that as the media keep that quiet.
    Check out the price of Bitcoin today..its up and will go back up again..stick with your gold & silver..its not exactly going up either is it~!?..being manipulated as normal..

    • mijj

      > “most of the losses are because people stupidly kept there coins in the unstable place”

      you’re absolutely right. There still needs to be a big shift in world-view about blockchain money and how it exists. No-one should see a need to put faith in a 3rd party to hold Bitcoins. That kind of nonsense belongs in the Fiat world.

      • marnob

        Exactly..
        In Feb last year I had an online wallet “instrawallet”..some may remember them. I had 320 coins in it, not worth as much as they are now, but the site got hacked! They suspended all accounts until you could prove the coins were yours. He says you can’t do that. Rubbish!
        I had proof of purchase and passwords to my account and showed them they were mine. I had to wait 6 months but I got all my coins back as my account was not hacked.
        LESSON learned!! Don’t store your coins on a website!

  • Dimitrios Kirkos

    “Mt. Gox had $174 million in liabilities against $32.75 million in assets.”

    Seems more solvent than most of the big banks. Just imagine what would happen to deposits in said big banks if the “print baby, print” and “borrow baby, borrow” that funds the bailouts ends (hint: Cyprus)

  • Steve Taylor

    The average cost of my Bitcoins is $89, when the current price is about $565. That’s including writing down my MtGox holding to zero. In my view the cryptocurrency idea is both fascinating and practical. To the naysayers, if you have an open mind, try to educate yourselves about Bitcoin – you might be pleasantly surprised.

  • Bid Tiddes

    I mine mostly Doge and RPC now, but still over 100$ a day, love how he makes no mention of scrypt at all, lol. Just shows how far behind the mainstream still is. I also love when people like this say its a Ponzi or other scam. And BTW, i trade my Doge and RPC to BTC then buy silver with it, i wonder how much silver mr. snyders computer made him today lol.

    • Bid Tiddes

      and another thg

      “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
      — Thomas Jefferson

  • Papani

    you are on the bit , I mean on the money. I knew this was a scam from day 1, the clever got out early.Only real money is Silver n Gold! And Max Keiser was harping its greatness just a few weeks back! Bit coin will Fail just as paper money is going to. Dead banksters lead the charge!

  • indigopete

    Wow. It’s amazing how people’s true colours emerge when bitcoin is involved.

    Michael Snyder’s blog article is beyond belief in sheer brutal ignorance and stupidity. He’s basically citing a bank robbery as the basis for money not having any value.

    I like the Economic Collapse blog – it usually has insightful material, albeit a bit dramatic. But that really takes the biscuit. He’s clueless and has never grasped the idea that the value of something is derived from the role it plays in the economy, not the other way around.

    Gold does not have “intrinsic value”. Its value derives from the role it has as a monetary medium. Cryptocurrencies are the first ever electronic phenomena which work as a monetary medium without a counterperty. That fact alone makes them of immense potential value in an electronic economy.

    I hope someone puts Michael Synyder right on this because he must be surrounded by at least a handful of cryptocurrency aficionados given the perspectives he writes about.

    • invisiblehand85

      Agree. Good blog overall. This article is misguided. There’s a generational gap when it comes to technology.

  • Cranky

    The ‘faith’ required to make bitcoin work is no different to the ‘faith’ in any other currency. Really ask yourself what is the US dollar backed by? Gold, no. Silver, no. Food, no. It is backed by a faith that the US government can repay what it borrows. An assessment of ‘faith’ is what gives a country its economic rating such as AAA or D-. Given the spirraling demise of the US dollar and falling levels of ‘faith’, I believe that the fiat financial system feels threaten by a currency that they cannot manipulate as easily as the country economics they currently twist to their own ends, ruining millions of lives in the process.

  • timematrix

    If Russia banned it. China blocked all banks from doing business with it. If MtGox failed. If SilkRoad shutdown. If shady characters arrested. And bitcoin is still running. Still thriving. Overstock still taking orders. TigerDirect still taking orders. VirginGalactics still taking orders. Then it’s not a collapse. It’s an adjustment. To take out the bad, so the good can learn and make it even more secured. What value does it have? Among them, encryption, decentralization and a concept of a blockchain (transparency). Encryption is like a bank vault. No one can break in to a blockchain and just steal it. However stealing your wallet is a different issue. Even in the real world wallets can be lost or stolen (like cash, none reversible). So it is your responsiblity how you secure your wallet. Research the different ways. Decentralization is like having that money in tact but still dispersed all over the world. Not scattered, but in tact as a whole. Blockchain is your ownership into this system.

    I’m not saying to move your assets out of gold/silver or dollars. But diversifying into a secured wallet/exchange is not a bad idea. If a dollar collapse occurs, you can’t buy food and fuel with gold and silver. But as more merchants accept bitcoin, then you still have a reliable medium of exchange to continue everyday commerce. Gold, silver, platinum, diamonds are always stores of value and energy that will continue into human existence. But not very good mediums of exchange in a digital world.

  • Erin Tarn

    BitCoin is a scam. It is not possible to be both an investment instrument and a currency simultaneously. The value of investment must drop to make it widespread enough to be a currency however people keep dumping their money into it. Your down votes will not change this fact.

  • Futuroscope

    Bitcoin, 10days after this post is almost the double of the price here posted (720USD as today) and gaining momentum. I would say is not collapsing, but the very opposite.

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