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Tags: bitcoin | blockchain | investors | currency

Paul Ford: Bitcoin Is Ridiculous; Blockchain Is Dangerous

Paul Ford: Bitcoin Is Ridiculous; Blockchain Is Dangerous
(Colicaranica/Dreamstime)

Friday, 16 March 2018 07:55 AM EDT

The recent investment craze of digital currency bitcoin is much safer to view as a spectator sport instead of letting your hard-earned money ride on the instability of a virtual monetary system.

“Bitcoin is at some level just a set of rules, defined by software, that has become one of the world’s weirdest games. And people who invest in an unmanageable abstraction, then panic when it underperforms, are very entertaining,” Paul Ford writes for Bloomberg BusinessWeek.

“Watching the world of initial coin offerings over the past few years has been like watching popcorn pop. Everything rattled around in the hot air for what seemed like forever and then pop! Mastercoin! Ethereum! Bancor! Tezos! Then other kernels started popping, and now we’re eating popcorn for breakfast, lunch, and dinner. Blockchain startups visit our software agency and promise to pay in dollars, then add, “There are, however, other ways to get paid.” Everyone is smart and well-funded. And, yes, some blockchain startups (but never, ever the ones that visit us) seem comical—so many graphs! Some are even deliberately so, like Useless Ethereum Token, whose logo is a raised middle finger. “There will be no expectation of gains,” says the UET website. Naturally, buyers have taken on about $300,000 worth,” Bloomberg Businessweek reported.

“The people tossed around by the cryptocurrency tempest—their only sin is belief. (Well, and greed.) But here I can only smile warmly and sigh. I know what it’s like to believe,” Ford explained.

“There’s no easy way to explain Bitcoin, but let me wave my hands and try: When you go to the ATM at a store and get money to buy a six-pack, you put in your bank card. The transaction processor verifies it somewhere in the ether, takes a fee, and spits out cash. It’s all powered by software. OK, deep breath. Acquiring Bitcoin is like using an ATM, except instead of government-backed money you get proof that a computer somewhere solved an automated puzzle faster than other computers, and instead of using an ATM card you’re using an auto-generated token that only you have, and instead of connecting to a bank you’re connecting to a decentralized network of computers that collectively maintain and update copies of a massive historical database of transactions—and that also collectively validate transactions, using, well, math, and spit out new Bitcoins from time to time, to reward the puzzle solvers," Ford explained.

"Slow exhale. Almost there. And instead of buying a six-pack from someone behind a counter, you’re transferring some amount of Bitcoin to another anonymous token. Over time, all the transactions that people make get lumped into blocks and validated, and they get a special code that takes into account all the codes in the blocks that came before, and thus you have it: a blockchain. According to Bitcoin.org, the Bitcoin blockchain is about 145 gigabytes, though it will be bigger by the time you read this. You can download the whole thing, the entire portrait of the Bitcoin economy, onto a USB drive,” Blomberg reported.

“That all of this adds up to money is ridiculous, and we should probably mock it more than we do. Consider Bitcoin a grand middle finger. It’s a prank, almost a parody of the global financial system, that turned into a bubble,” Bloomberg explained.

To be sure, there are many other skeptics of bitcoin amid the many hurdles the digital currency faces.

Alphabet Inc.’s Google this week said it was banning advertisements for cryptocurrencies and initial coin offerings, the latest internet company to clamp down on the sector amid growing concerns about scams.

Google’s action, which takes effect in June and follows a similar move by Facebook earlier this year, sent the price of the best-known cryptocurrency, bitcoin, down more than 10 percent to its lowest in a month, Reuters explained.

Interest in cryptocurrencies has surged in the last year as their prices rocketed.

That growth has spawned online advertising used by hundreds of companies trying to raise funds by launching new coins or encouraging people to trade the virtual currencies.

“Improving the ads experience across the web, whether that’s removing harmful ads or intrusive ads, will continue to be a top priority for us,” said Scott Spencer, director of sustainable ads at Google, on the company’s official blog, The Keyword.

Under the new policy, Google said it would ban ads for cryptocurrencies and related content such as initial coin offerings, crypto exchanges and cryptocurrency wallets and advertisements providing trading advice.

In January, Facebook Inc (FB.O) said it would ban ads promoting financial products and services tied to cryptocurrencies and initial coin offerings because of the risks to users.

Regulators across the globe have warned consumers about the risks of investing in crypto markets, but internet companies are introducing outright bans because they worry there is not currently sufficient protection for consumers.

© 2024 Newsmax Finance. All rights reserved.


InvestingAnalysis
The true believers won’t stop until they’ve remade the world. Some of it will be thrilling. Some of it will keep us up at night.
bitcoin, blockchain, investors, currency
806
2018-55-16
Friday, 16 March 2018 07:55 AM
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