The Why, What, How, When and Where of Bitcoins: (Pt3)

Cybercurrency and bad news.

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Bitcoin trading is volatile with huge swings in value but this is a new concept and will most probably follow other past and similar introductions; eventually settling down to acceptance. Of course at that stage all the early promise of making huge gains by risky trading will have been ironed out.

At such an interim phase it is expected that there will be more bad news than good. Bad news always sold newspapers, it excites the emotions. Also there will be bad news stories being out of real proportion and spreading misconceptions, diverting public opinion. Such forces are represented by those organisations that fear alternative currency acceptance. You know who they are; Bitcoins are direct transactions cutting out of the picture the middleman the credit card processors, the bankers.

Recent news items regarding frauds, and the collapse of the biggest Bitcoin exchange Mt Gox grabbed world-wide headlines and TV news: sound bits and headlines hit the spot as attention deficit disorder is a plague that humans have these days and the media know it. So also do the folks pushing stories to the media. Bad news stories without any depth of understanding. The message the public get is: Hmmm Bitcoins bad, very bad. Its propaganda.

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Such news is often initiated and encouraged in the media with a possible hidden agenda? An attempt to diminish the real value to the ordinary citizen? Scare tactics surrounding Bitcoins? The real issues  are not presented or are distorted. For example the recent collapse of the trading exchange Mt Gox, a Japanese enterprise that allegedly failed due a common fraud well known in ‘real’ money and gold & silver related frauds. Mt Gox was holding more Bitcoins on their clients behalf than they actually had in stock. A scam. But one that virtually all national banks do; holding fractional reserves (hardly any gold) and trading in paper gold receipts! A Pyramid type Ponzy scheme. They just don’t get exposed!  Paper money currency fraud happens almost daily and nobody attributes the blame to money itself!  Money or gold is not put in clink! Fraud is a human initiated crime.  Its not possible for the currency itself to do it. But this is exactly how the media interpret and portray any Bitcoin related fraud!

Bitcoins don’t enable fraud nor does any currency, we don’t ban the use of Dollars or Pounds to tackle fraud, but this is what is inclined in bad news articles; how ridiculous. If such journalists said we must ban money to stop banking fraud their stupidity and lack of understanding would be exposed!

Another item they don’t mention, probably they have no idea what it means: the  Blockchain the inherent ledger of Bitcoining currency can trace every Bitcoin!  Its not possible to do this with printed money.

Mt Gox Bitcoins may have been stolen, if they ever existed. An exchange holding paper receipted Bitcoins on behalf of clients is not the way to hold them. Such a practice is just the same as holding gold with an exchange and getting a paper receipt; you don’t own real physical gold. This was the modus operandi of Mt Gox; supposedly mimicking a gold trading exchange. But it ran fowl with a run on its holdings, demanded by clients, following a so called insider robbery. Nobody got their Bitcoins. This is not the fault of the Bitcoins! Its the risk of dealing with exchanges controlled by people and should there be a run on major gold exchanges you can expect the same results: maybe the national government would have to pay out in printed (QE) money thus short-changing paper gold investors.

Its also not fully appreciated by fraudsters: that alt-currency can ultimately be traced to the current holder. This fact alone will avoid fraud on digital currency; this is tracing through the blockchain: however it does require time and skill to do it.

Security note: repeated often –   Bitcoins (a cryptographic alphanumeric code) should be stored offline onto a computer, a disc, an SD memory card or USB making it fully secure personal money in a ‘digital wallet’ you can take and use anywhere in the world that has an Internet connection. But keep it off your mobile only plugging in your separately stored SD card at the time of use.

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