Bitcoin Just a Clever Ruse?

BitcoinBitcoin, for all of its potential, could easily be a clever, risky, and lucrative ruse simply designed to seed the public mind for the inevitable future of money. In recent developments, the notable Mt. Gox exchange has been experience serious problems which culminated Monday in the exchange’s website being taken offline. The famous bitcoin exchange had initially halted trading, explaining to its users that it had discovered “security issues” which had gone unnoticed for years.

Concrete information regarding the goings on within the popular Tokyo-based Mt. Gox has been nearly impossible to attain. All information available to the public regarding the recent disappearance of the exchange’s website, come from a letter believed to have been leaked by a Mt. Gox insider. The letter, thought to be part of the company’s internal strategy sessions, claims that nearly 750,000 bitcoin have gone missing as a result of “malleability-related theft…over the course of several years.”

The document further asserts that the popular bitcoin exchange, Mt. Gox, could fall into bankruptcy at any time and that the repercussions of the entire fiasco are likely to be widely felt. The validity of the “leaked document” is somewhat questionable at the moment, however the entire origination and rapid growth of bitcoin is quite hazy itself, so concrete corroboration does not appear to be something being currently sought by “bitlievers” (passionate proponents of bitcoin) around the world. Since the circulation of the document outlining the Mt. Gox troubles, there has been no comment by CEO Mark Karpeles. Many in the online virtual currency community believe the document has some validity, but without corroboration or comment from the exchange’s leadership, its authenticity remains a mystery.

Bitcoin is no stranger to mystery however. In fact, for all of the fanfare that the crypto-cash has received from wide-eyed libertarians and net-junkies, how the whole thing originated remains a complete and utter mystery. The entirety of the available information regarding how the bitcoin craze began, is that a person or group of people known only as “Satoshi Nakamoto” started the crypto-currency. The “bitcoin Samurai” however quickly disappeared into thin air as bitcoin began to attract significant attention. Since that time in 2009, no one has been able to ascertain who or whom began the phenomenon known as bitcoin, but “bitlievers” say that this little fact just doesn’t matter. Proponents simple harp on the fact that the system has a “self-correcting” mechanism that “follows its own internal logic.” While it is an attractive belief, this does not explain the origin of what has become a bitcoin revolution. It could just as easily be that bitcoin is just a clever, risky, and lucrative ruse designed to seed the public mind for an inevitable future shift in the world’s currency system.

It has been long said, by small-government proponents, fiscal conservatives, and off-the-wall right-wingers that fiat currency is simply unsustainable. The only argument in opposition to this premise appears to be the success (until now at least) of the US and other leading nations which use paper fiat. The essence of the argument being, “look, it works, so it must be good and sustainable.” The growing sophistication and reach of technology however, which has revolutionized nearly every industry on earth, is inevitably going to head into the area of money and currency. In fact, bitcoin proves that the move has already been made. The lingering question is whether it will be adopted by major governments and used as something to transition to as the unsustainable future of fiat becomes more and more apparent.

When looking at the shady origins of the amazing crypto-currency, which possesses revolutionary potential, it looks like it could easily be a complex, clever, risky, and lucrative ruse. One that was not necessarily designed to revolutionize the global monetary system so much as it was meant to seed the public mind on the usefulness of virtual money. With the recent news that there may be another major bitcoin exchange being set up with the possible support of the world’s leading banks, this possibility seems more and more plausible. This new exchange is being setup by SecondMarket and its chief executive Barry Silbert. Whether he will indeed launch with the support of the big banks will soon be seen. Silbert says he hopes the proposed exchange will be operational by the time summer arrives.

For now, the truth behind the events taking place with the Mt. Gox exchange remains unknown. In addition, the future of bitcoin also hangs in the balance. It looks more and more plausible however, that the future of money is virtual, totally digital currency. Whether this will change human nature, civilization, or answer any of the major existential questions of man however, still has yet to be seen. If it is uncoupled with a change in human nature however, totally digital currency, along with the accompanying technological infrastructure it will need, may provide for a level of economic and political control never before exercised in the known history of civilization. Interesting times appear to lay ahead in the world of bitcoin, banking, finance, and economics.

Editorial By Daniel Worku

Reuters

NY Times

Businessweek

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