Monday, December 2, 2013

Bitcoin libel from the Tea Party Economist

Normally I like Gary North and try to make the time to read his tea party economist piece every time it hits my email box. Not this time though as he has a bit of a bait and switch article about bitcoins. Titled "Bitcoins: The Second Biggest Ponzi Scheme in History", he alleges a number of facts that simply aren't true. And of the facts he uses that are true, none of them make bitcoin a ponzi scheme.

Bitcoin has a known dynamic. There were a few coins at the beginning, mining commenced and as new coins are discovered, whoever registers the discovery to the network first gets the coins. There is a known, maximum number of coins. BTC is divided down to 8 decimal places. There is nothing preventing redenomination to even further levels of divisions so that BTC remains a practical solution for microtransaction payments. It's actually not that hard or expensive to switch over though it is certainly not necessary today.

My opinion is that BTC will form part of a stable of different alternative money forms that each fulfill different roles and that we're going to end up managing our cash as we manage our investments. Eventually BTC will die, but I see a death that is more like the Deutsche Mark than one like the Zimbabwean Dollar.