Monday , 23 October 2017


Bitcoin Is Not the Future of Money – It’s Just Wild Speculation! Here’s Why

All the hype surrounding Bitcoin is a dead giveaway that you should be suspicious. Forget all the economicbitcoin-435cs061112 arguments against the currency, though. The biggest risk is a technological one. Add in the neck-snapping volatility, and you’re telling me this is the future of money? Keep dreaming! It’s little more than a wild speculation. One with a fatal flaw, at that, so please, whatever you do, refrain from converting your life savings – or any meaningful amount of money – into Bitcoins. At least until you read this article.

So says Louis Basenese (wallstreetdaily.com) in edited excerpts from his original article* entitled Bitcoin’s Fatal Flaw.

 [The following is presented by Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Basenese goes on to say in further edited excerpts:

Back in May, 2013 I labelled Bitcoinsas an “insidious currency scam” asserting that, outside of being a curiosity and a speculation, there was no future, whatsoever, for the crypto-currency and tried to convince anyone who would listen of Bitcoin’s laughable potential by focusing on the digital currency’s weak economic underpinnings but I’ve learned my lesson. It turns out that the currency’s real Achilles’ heel is a technological flaw – and on January 9, at precisely 3:00 AM, it was officially exposed (see below).

The Key to Bitcoins

Ever wonder how to spend a Bitcoin or how you keep people from stealing them? After all, they’re completely digital and can’t be stored under the mattress for safekeeping. Well, the way Bitcoin was set up to work is for all the accounting to be handled online (and publicly) with cryptography keys. Every time someone tries to spend a Bitcoin, a network of peer-to-peer computers – known as Bitcoin miners – must verify the authenticity of each transaction. They do so by completing a series of complex calculations.

Why in the world would these miners be interested in providing such verification services? Because there’s money in it, of course. The reward for a miner completing the calculations before anyone else is about 25 Bitcoins. At current prices, that works out to roughly $23,000. Not bad…huh?

At first, completing these mining calculations was pretty easy. A standard desktop or laptop computer could handle the task. With the way Bitcoin is set up, though, the calculations get progressively more difficult. Nowadays, specialized computers, designed to do nothing but mine Bitcoins, are required to do the work…These computers pack some serious power...but such computing muscle comes with a price – upwards of $15,000 per unit (and counting), in some cases – and therein lies the key to Bitcoin’s fatal flaw.

A Doomsday Scenario Approaches

Bitcoin’s original inventor had a specific reason for spreading the work across so many computers. With thousands upon thousands of “independent” miners handling all the verifications, it made manipulation or fraudulent activities impossible. After all, with no government oversight or central database, preventing fraud is an absolute must for Bitcoin. However, as the cost of Bitcoin mining goes up, along with the complexity of the calculations, miners are pooling their resources. They’re banding together to create virtual supercomputers, and then sharing in the spoils, and this unexpected development for the cryptocurrency just led to a serious problem…

At 3:00 AM on January 9, a mining collective known as GHash.IO accounted for 45% of all Bitcoin computing power. A mere six percentage points more, and the collective would have controlled a majority of the computing power – effectively hijacking Bitcoin as a result. With more than 50% control, they’d have the ability to confirm all Bitcoin transactions on their own and, suddenly, the potential for manipulation and fraud would immediately exist...Double spending. False confirmations. Reversing transactions. They all become possible in the hands of a nefarious collective.

Close Enough

Of course, Bitcoin fanatics swear that a collective would never be able to obtain a majority and thereby (technologically) break Bitcoin. Didn’t their mommas ever tell them, “Never say ‘never’”? GHash.IO got shockingly close to a majority. Close enough to prove that it’s a distinct possibility, not a remote one. By no means was this an anomaly, unlikely to ever occur again, either. In fact, last spring, the BTC Guild pulled off a similar feat. Heck, research out of Cornell suggests that hijacking Bitcoin with as little as 33% of the global computational power could be possible.

Still think an unknown group would never be able to take control of the entire network? Maybe a confession from an insider will finally change your mind…

Bottom line:

All the hype surrounding Bitcoin is a dead giveaway that you should be suspicious. Forget all the economic arguments against the currency, though. The biggest risk is a technological one. Add in the neck-snapping volatility, and you’re telling me this is the future of money? Keep dreaming! It’s little more than a wild speculation. One with a fatal flaw, at that.

Trade it at your own risk. But definitely don’t treat it as an up-and-coming alternative to the almighty dollar.

Ahead of the tape,

Louis Basenese

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

*http://www.wallstreetdaily.com/2014/01/15/bitcoin/ (© 2014 Wall Street Daily, LLC. All rights reserved.)

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One comment

  1. Ultimately, the only reason both of these coins have so much acceptance right now is due to exchanges that support them,
    and name recognition. This time the Danish Internet Payment Systedm
    site, Coindesk, states that 1,295 bitcois have been hacked which iis aabout $1 million.
    One of the coolest thingbs about Bitcoin is that it gets its value not from real-world items, but
    from codes.