Friday, February 28, 2014

Bitcoin Hyperventilation

I think that somebody needs to stage an intervention because Gary North reads like he's about to stroke out over Bitcoin. The first warning is that a libertarian is approvingly mentioning Pete Seeger. That's never a good sign. But it gets worse:
Here is the #1 fact about bitcoins: there are no bitcoins independent of unknown, underfunded "exchanges." 
This is just false. There are no bitcoins independent of mining operations. They are the only source of bitcoins. Unless an exchange is also using its computers to mine, they can't make bitcoins. They can only buy them just like everybody else. You can trade for your bitcoins or you can mine them. Usually libertarians care about facts more than this. For somebody who advertises himself as Ron Paul's first staff economist this is just embarrassing.

But wait, there's more.
Then there is this: for as long as its defenders do capitalize it, it is not currency. We do not capitalize dollar, yen, or euro, because they are money.
We don't capitalize bitcoins either. We mine them. Seignorage is controlled by the number of people solving the math problems that make bitcoins.

Any and all good points that he's making are drowned by these elementary errors of fact. If you don't know how these coins are created how can you be trusted on the issue at all.

The title and theme of North's screed is trying to associate Bitcoin the currency with its biggest failure, the bankruptcy of Mt. Gox. But we don't associate the dollar with Ponzi, Corzine, or Madoff and they ruined more and stole more. So why Bitcoin?