Money Metals News Service
August 24, 2016
… Bitcoin, has had quite a run.
Starting out as a “virtual penny stock” it rose in 2014 to the elevated height of $1,150, before crashing back to earth. This “electronic currency” is created and stored in a computerized “wallet.” Purchases and sales are made via a “blockchain” which keeps a memory of every transaction conducted. Private keys (supposedly) provide assurance that a Bitcoin holder’s account is safe. …
(In 2012) Nadeem Walayat, Editor of The Market Oracle, stated … “… what bitcoin holders are going to be increasingly exposed to, is ever more sophisticated malware that are aimed at the theft of their bitcoin holdings at every stage of the process … .”
In February, 2014, the Tokyo-based bitcoin exchange, Mt. Gox, which at the time handled 70% of all bitcoin transactions, suspended trading and filed for bankruptcy after 850,000 bitcoins went missing. Then in early August 2016, 119,000 bitcoin worth $70 million were stolen from a Hong Kong exchange – one of the world’s largest. …
The exchange decided … that account users who bore no responsibility for the loss, would still be subject to a 35% “bail-in” (exchange-approved theft) to make up for it. … If this kind of risk appeals to you, why not just continue to keep all your liquid assets in bank CDs, non-interest bearing savings accounts, or money market funds? … Eventually if/when your bank gets into trouble – even through no fault of your own, you may be “volunteered” to give up 20-30% of your account in a “bail in” to help cover their mismanagement. …
It’s likely Bitcoin will go through more “jury trials” – efforts at sustaining public acceptance – before it is either fully approved of, or tossed into history’s waste bin. But while we wait to find out, I’d say that, in some very important ways compared to gold, Bitcoin has so far proven itself to be nothing more than a two-bit interloper.
(So, is the new OneCoin cryptocurrency, which is centrally managed and so possibly less susceptible to being hacked, any better? Largely that boils down to the question, can the owners of the company be trusted? Read The OneCoin is a Scam Theory to find out!)
Read the whole article: Bitcoin Is Just a Bit Player