The scam of the century

September
7, 2018

6 min read

Opinions expressed by Contractor the contributors are theirs.

The frenzy around Bitcoin is at its height and the reasons are obvious. Its value has exploded over the past year, making millionaires early adopters. In its wake, thousands of potential investors and coin creators are embarking on the action.

Related: 6 Cryptocurrencies that you need to know (and none of them is Bitcoin)

A quick introduction for the uninitiated: Bitcoin is the most well-known and well-known digital asset known as cryptocurrency. It is presented as an alternative to traditional paper money, with speculative investors buying and selling Bitcoin fractions (which, at the time of writing, are worth more than $ 6,000 per coin, compared with $ 19,783 in December). will increase. Its blockchain anonymity and rising ratings have inspired a mass of imitators, each hoping to be the one who really takes the traditional money and replaces it.

For such a recent phenomenon, it may be surprising to learn that Bitcoin has existed since January 2009, created by a Japanese (perhaps fake) developer named Satoshi Nakamoto. The dubious reality of its creator is appropriate for the reasons that I will address later. That Nakamoto is a real person, it is quite true that "his" creation has dictated the conversation about the future of money and investment in the post-2009 crisis era.

Perhaps the most impressive thing about crypto is how big banks, accounting firms and even consumer companies have burst in the last decade. These well-known confessions certainly make Bitcoin and other cryptocurrencies appear as a sure bet, but a superficial overview reveals many false promises and hype, with the need to dig a little deeper to see the true benefit of crypto craze.

Related: Why you can not afford to ignore Crypto-Currency and Blockchain Anymore

The Bitcoin BS

This is not just the idea that Bitcoin will replace the existing monetary system, which is extremely debatable. The very idea of ​​investing in cryptocurrency is where the real scam occurs.

Investors, probably more than any other group of people, are passionate about getting involved in the next big adventure. This is not the latest news: it's how our money is made. Whether it is venture capital or private investors, the idea is to buy when prices are low and sell when they are high. So, it is quite natural that an unregulated and complex domain, like crypto, elicits a lot of enthusiasm from a certain type of investor, maybe someone who does not Is not very wise but who has seized the transformative power of the Internet. The appearance online only makes it more democratizing: when someone can buy, anyone can benefit from it.

It's there that things get disturbing. At the heart of this, the cryptocurrency is a fraud. We have all been sold on Bitcoin as the future official currency of the Internet, its evangelists sketching a picture of a world where our expenses are anonymous and are no longer subject to the whims of bankers and international governments. A number of retailers have also bought, which means that Bitcoin can buy you anything from a hotel room to pizza delivery. It sounds good, certainly, but basically, crypto has turned out to be something else.

This is not a real means of exchange, unlike government-backed paper money. Bitcoin is an asset, and particularly dangerous, to give up any amount of investment. While it is possible to trade them for property, these transactions boil down to barter transactions with opportunistic retailers who are likely more inclined to the advertising that comes with the announcement of their acceptance of Bitcoin. You do not have to take my word for it: no less authority than JP Morgan CEO Jamie Dimon has identified crypto as a bubble that only needs to explode. When that happens, good luck paying for your pizza with everything else.

Even outside the volatility of the currencies themselves, this Wild West atmosphere has proven to be fertile ground for fraudsters. Old-fashioned Ponzi schemes have experienced a 21st century facelift thanks to criminals who have taken advantage of the Bitcoin craze, raising money for initial coin offerings (ICOs) that never materialize. Unscrupulous operators have flocked to Bitcoin, their last means of diverting the uninitiated. Consider yourself as warned.

Related: How digital portfolios and mobile payments are changing and what it means to you

The real advantage

While Bitcoin as an investment is radioactive and it should not be touched, it's not true that all the cryptocurrency movement has not generated anything of real. The dangerous part of Bitcoin lies in the unpredictability of the human element in the form of deceptive labeling and scams. The technology behind all this, free from hype and disappointment, is surprisingly reliable.

"Crypto" in cryptocurrency comes from cryptography: the encryption technology that secures bitcoin transactions. In addition, all secure online activities are secured through the use of encrypted lines of code that can not be broken by third parties. The Bitcoin encrypted transaction log, called the blockchain, is the safest data transfer medium ever created online. Burying your gold coins in the yard has never been so safe.

The block chain works because it is not stored on a central server: changing its code would mean compromising a number of machines on a wide area network, a task almost impossible even for the most astute hackers. This level of transaction security makes the blockchain useful not only for ethereal assets such as cryptocurrencies, but also for the movement of real money by both banks and individuals.

Once the craze for Bitcoin is gone, we will end up with a truly transformative tool: a new sure way to do business online. The evangelists were not completely wrong, they were misguided. Bitcoins themselves will not change our world, but the blockchain built to house them absolutely will do it.