I decided to pen this after reading Bitcoin: Revolutionary Game-Changer Or Trojan Horse? over at ZeroHedge. The piece offers two sides of the Bitcoin argument, but the “con” side was an interesting if not rather fantastically fictional read. Here are some key excerpts followed by my responses…
Backed by … the Big Banks?
On the other hand, a lot of major mainstream players are backing Bitcoin and other digital payment systems.
Wells Fargo wants to get into Bitcoin in a big way.
That is truly interesting, but it is also a smart move by way of management. The reason why the record industry was decimated by the MP3 tech wave was because they fought the inevitable technology innovation versus embracing it. Does this simply mean that these bankers learned a lesson from the record execs incompetance?
JP Morgan Chase has filed a patent for a Bitcoin-like payment system. And Russia’s largest bank is working on a Bitcoin alternative as well.
No, it’s not really “Bitcoin-like”, its centralized, which is the antithesis of Bitcoin’s decentralized architecture. It’s more JPM-like, riding on top of the good ideas found in the Bitcoin open source code.
Ben Bernanke and the Department of Justice have both cautiously blessed Bitcoin.
Because Bernanke and particularly the DOJ have learned that you cannot force legistlation upon a P2P network. It’s like making volcano eruptions illegal and then standing at the base of one expecting not to get burned. As I stated above, it’s best to embrace inevitable innovation in lieu of fighting a losing battle. Ask those record and movie company proponents who swore to take down Bittorrent, which by some counts accounts for over 30% of download traffic across the web. Don’t try to ice skate uphill.
John Browne theorizes:
While crypto-currencies remain insulated from central bank manipulation, governments have thus far been tolerant, perhaps because their capability to track transactions is more advanced than Bitcoin believers admit.
Indeed, Bitcoin is not really that anonymous, as the NSA can track Bitcoin trades.
The ability to track transactions may be more advanced than many believe, but it is a hell of a lot less advanced than the ability to track cash, wires, credit cards and bank accounts. In addition, Bitcoin is a pseudonymous network, not an anonymous network. It’s about privacy, not explicitly attempting to break the law.
I find the premise behind this Central bank/NSA thing to be true garbage. For one, the code is open sourced and can be changed and modified at will. If there is something you don’t like, change it or remove it. This is only negative for those who are either not skilled enough or too lazy read and understand the code.
Second, central banks require central control. The entire draw behind Bitcoin is that it is Decentralized!!!! That’s why they are called Central banks, and not decentralized banks, which is what will happen as Bitcoin gains traction.
Next up, the central banks are literally owned by the money center banks, who are literally equity stake holders. It’s nonsense to belive that the Central banks will work to the detriment of their only shareholders, not matter how inefficient and.or incompetent they have proven themselves to be.
The head of Signature Bank – Scott Shay – raised these same issues last month on CNBC:
It is the opposite of what the CNBC guy said. I know for a fact that a lot of the guys who talk their book on CNBC are not really all that knoweldgeable and it would be quite unwise to take them all at face value.
Here’s and example of my proving two of these “experts” wrong live on air…
The NSA can apparently also hack Bitcoin. And see this. Given that the NSA may bechanging the amount in people’s accounts, it would be child’s play for them to change the amount in your Bitcoin wallet.
As for the NSA being able to hack into Bitcoin, hey it may be possible. The NSA is likely to be the most competent hacking organization in the world. Let’s put this into perspective though. If they can hack bitcoin, they can hack your bank account, medical records, cell phone, home security cameras, and likely bribe your aunt and grandma too. You’re still safer in BTC than you are in those other venues. Why doesn’t the NSA’s ability to change you bank account balances deter you? Well, if it doesn’t deter you with you much less secure bank account, you should be A OK with Bitcoin!
And Yves Smith argues that Bitcoin actually plays into the hands of the central bankers
:Many [Bitcoin enthusiasts] clearly relish the idea of launching a currency outside the control of central banks (plus this beats Cryptonomicon in geekery).
If you believe the hype, you’ve been had. As Izabella Kaminska of the Financial Times tells us, you all are really just doing free/underpaid R&D for central banks, since you are debugging and building legitimacy for one of their fond projects, making currencies digital and getting rid of cash altogether.
But, this ignores the counterpoint made above. Bitcoin is DECENTRALIZED currency, which flies directly in the face of CENTRAL banks attempt at global CENTRAL planning. The code is OPEN SOURCED and decisions are made by NETWORK CONSENSUS! CENTRAL banks make decisions behindCLOSED doors among a SMALL GROUP of empowered individuals, the antithesis of OPEN and NETWORK and CONSENSUS!
Lastly, bitcoin values are fungible as physical currency. You have paper wallets, metal coins, etc. Thus this digital money still lives and prospers in the physical world, it’s just that it can disappear into the digital sphere when it needs to, but it doesn’t have to…
There are several ways to skin that cat. These physical coins and papers can be traded by hand and spent just like paper dollar bills. Now, the digital becomes physical.
And finally, for those who feel it’s so easy to hack into Bitcoin, I’ll post a full BTC right here, copied from my own private wallet. Whoever feels they are as capable as that CNBC dude professes can have it. I’ll sit back and hold my breath as you guys get busy…
While you guys are busy attempting to hack this wallet because you have been listening to too many NSA conspiracy theories, prepare for my next post on this topic as I teach the BTC rich how to use UltraCoin to bailout out the EU periphery and emergency-laden emerging markets faster, cheaper, profitably, and more reliably than the troika every could. Prepare for the http://ultra-coin.com/ client launch.
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via Zero Hedge http://ift.tt/1kTtJ7l Reggie Middleton