Jim Holtz column – A little bit about bitcoins

Regular Gazette columnist Jim Holtz talks about the trend of electronic currency called bitcoins.

So Bitcoin is having a little problem. Now there is a surprise. Let’s see, hmmm, some guys whom we can’t identify invented a currency that doesn’t exist which is traded somewhere in the Cloud. Well, that’s clear. And to buy this non-existent currency you have to give to these persons whom you don’t know real money on the promise that the value of Bitcoin will continue to rise as it gains more use and more people buy into it, so your purchase is really an investment. Right. Like the real estate lot on the lava slopes of Mauna Loa that my Great Aunt Carrie once bought. And now a Tokyo company called MtGox, a Bitcoin currency exchange, has gone bankrupt saying that something like 750,000 Bitcoins have been stolen from their digital vault. Yes, their digital vault! And all this is being reported in the international media with a straight face. Are you kidding me?  P.T. Barnum must be chuckling; even Bernie Madoff is probably cracking a smile.

MtGox founder, a French guy named Mark Karpeles reportedly said to his Japanese customers, “We have lost Bitcoins due to weaknesses in the system. We are really sorry for causing trouble to all the people concerned.”  He’s blaming it on hackers who stole the cyber Bitcoins from the digital vault. So I guess that’s it. He’s sorry; the Bitcoins are gone, whisked away into someone else’s digital vault. It’s all over. Nothing else to clear up. Oh, wait a minute! Those Bitcoins were originally purchased for something like $477,000 real dollars. Now where could that money be? It’s too bulky for the digital vault. Hmmm, another mystery!

The best thing about this story and what will eventually reverberate throughout the media – at least on John Stewart’s Daily Show – is the smugness of the young digital proselytes who proudly proclaimed that Bitcoin would usher in a new age of simple, user-friendly international monetary exchange that would put an end to the monopoly and profiteering of the Big Banks and the corporate theft of the credit card companies. The pronouncements were usually accompanied by explanations of how Bitcoin worked that indicated the speaker really didn’t have a clue. You can baffle yourself too if you look it up on Wikipedia.

The computer savvy inventors of Bitcoin may have had good intentions, who knows?  But after the examples of financial malfeasance that we have witnessed over the last six years, people – and institutions – should be wary of investments they don’t understand, whether it is the baffling algorithms of Goldman Sachs apologists or the allegorical bafflegab of Bitcoin advocates.  And a note to those representing the major media:  Remember, if you don’t see any clothes on the emperor, it’s your duty to point out that he’s naked.



Grand Forks Gazette