Bitcoins completely fail.

I realize with the dramatic runup on bitcoins I’m supposed to follow the herd and promote the hell out of them. If you’re not sure what a bitcoin is, read this tongue-in-cheek explanation first…go ahead, I’ll wait. Once you have the background, come back and let me tell you why they are an abject failure.

  • They will never be a successful currency. Face it, they are a commodity. Like pork belly futures, they are being used in dramatic wagers so their “value” (cost per bitcoin) undergoes dramatic and consistent swings. It’s impossible to actually depend on them to buy anything, though, since in the hours between when you send the coins from your wallet and they arrive at someone else’s wallet (yes, again regardless of what you’ve heard, it takes hours to get bitcoins from one wallet to another, longer now that the blockchain is becoming so d*mned huge with all the speculation going on), they will have changed in value. And not a little…one heckuva lot. Bitcoins routinely change $50-100 per hour in the exchange rates. Bitcoin “value” is purely speculative.

  • Bitcoins are not “peer-to-peer.” I know that’s one of the talking-points used to describe them, but it’s not true. Bitcoins are actually “peer-pays-miner.” A “miner” is a “super-peer” who solves useless complex calculations to bring these silly things into existence…and miners are the only ones who can validate a transaction in the blockchain. Since fewer and fewer bitcoins can be mined as time goes on, and miners have spent money on their mining equipment and they want to make a profit no matter who they get it from (sound like real-world bankers yet?), it’s been decided (yeah, by miners) that every transaction now requires a transaction fee. So now to move your bitcoins from one wallet to another requires paying tribute to these “super-peers” to pay them to continue hanging around validating the blockchain. This is the functional equivalent of paying a real-world banker to move cash money from one pocket to another.

    And they say bitcoin frees us from unnecessary financial institution fees? Nope, it’s no better than the real-world, and in some ways even more oppressive and less fair.

  • Too many clones. Seems like everyone and their dog is “creating” a new cryptocurrency lately, all hoping to cash in on the insane speculation of the bitcoin market. Almost all of them are clones of bitcoin, with a few trying some slight variation or another, and one supposedly designed as an “envelope” for bitcoin where the company that designed it owns all of the existing “envelopes” (yeah, no way to profit there, right?). It’s a quick grab for scraps, but it adds confusion to everything, and creates speculators who are almost guaranteed to lose money buying and selling these silly things. (I once had a guy so desperate to speculate on virtual money he made an offer to buy a bunch of my free play game tokens on GSN’s website. Nope, not making this up, he wanted to buy game tokens I won by playing Deal of No Deal. Now that’s the definition of dementedly obsessed…)

The bottom line is, if you bought hundreds or thousands of bitcoins when they were worth $12, congratulations, you’re now a millionaire – please feel free to flip a coin or two our way with the QR code over in the sidebar. Everyone else should probably avoid these things like the plague…

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