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Money for nothing and your bitcoins for free

April 14, 2013
By Wes Burns , Times-Republican

Over the years I've spent a lot of money on nothing.

And not just the regular kind of wasted money, like expensive coffee or superfluous Blu Rays. I'm talking about infomercial kitchen utensils used once, then boxed away, only to be used after someone asks "Hey, didn't spend $90 on a rotisserie from that late night sweater guy? Whatever happened to that thing?"

1: It wasn't $90. It was three easy payments of $29.99, which is much less.

2: Now I have to drag that thing back out and make another dry, flavorless chicken. Thank you for that.

But what if you could buy nothing and then turn around and sell all that nothing for real, paper money?

Such is the claim from the latest in bizarre technological innovations, the Bitcoin.

Bitcoin, according to the irrefutable records of Wikipedia, is a decentralized digital currency based on a peer-to-peer Internet protocol.

Which means what, exactly?

Bitcoins are digital currency, they exist as incredibly long strings of numbers stored in your hard drive or online wallet, and you can use them at retailers that accept bitcoins, or, perhaps more appealing, you can sell them at an exchange center for real money.

Yes, much to the delight of your favorite Ron Paul worshiping friend, this is a currency that has no national backing whatsoever. No Federal Reserve, no Treasury Department, nothing backing it up more than just the implied value that given to it by users.

You can even make your own bitcoins by a process called "mining."

Essentially your computer is given an extremely complex encryption, and if it can solve it, then you get a block of 50 bitcoins. The network adjusts how difficult the encryption is so that 50 bitcoins are made about every 10 minutes. They call it "mining" because there are only so many bitcoins available in the network, 21 million to be exact. Currently there are about 10 million bitcoins that have been mined.

So where do I sign up? All I need to do is let my computer sit and crunch numbers and I can reap the rewards of free digital money? What could possibly go wrong?

Yeah, pretty much everything can go wrong.

For starters, who do you think was the first group to embrace an unregulated, untraceable currency developed online? Nerds, obviously. But quickly following the nerds was, you guessed it, the mob.

And not just the regular, suit and tie mafia. International gangsters of all sorts, involved in just about every kind of criminal enterprise imaginable, LOVE the bitcoin, using the network as a giant money-laundering scheme.

OK, we all know that every bitcoin user can't be in the mob; since when has the mob ever been known for their programming expertise. They must just be a few bad apples ruining it for everyone else; this couldn't possibly be what the inventor of bitcoins had in mind, right?

Well, your guess is as good as mine since no one knows who invented bitcoins.

As if lifted from the pages of a second tier, made for the SyFy Channel original movie, the inventor of bitcoin is a man named Satoshi Nakamoto. We know this because Satoshi says he is the inventor of bitcoin ... and that's it. There are no other records of Satoshi existing. Nothing. Just an neigh incalculable algorithm and the name Bitcoin.

OK, so a mysterious programmer emerges from the depths of the Internet, drops the source code for this groundbreaking program, then disappears? AND he doesn't keep a massive pile of bitcoins to sit on?

So what's really happening? Well, the more users try and mine bitcoins the harder it is to mine bitcoins. By the time the public really got interested in bitcoins in 2010 there were already 6 million bitcoins that had been mined, mined by very few people.

OK, so bitcoins were created out of nothing by a small group of people who now say they are worth millions? But how do you get people to invest in something that simply doesn't exist?

Cyprus.

When the small nation of Cyprus went super broke last month (super broke is a very precise financial term) the government had the brilliant idea of threatening to just take money from people's personal bank accounts. And when fearful Cypriots looked for somewhere to store their money away from the hands of the Cypriot or any other government, they turned to bitcoin.

Millions of real dollars poured into bitcoin exchange houses, pushing the value of a single bitcoin to increase 41 percent in a month, closing at $87.

Anybody else thinking "classic Ponzi scheme?" Get a few people at the top, generate a bunch of interest, recruit a few million suckers to give you their money with promises of great returns, all the while making yourselves rich?

Wrong!

That would be WAY to normal of a solution to any problem that involves ghost-programmers, the mafia and Jim Cramer. I'm thinking: Satoshi is a cover name for an alien. This alien has a huge, encrypted file that he needs to decrypt before going home/blowing up the Earth. The alien figures out the only way to decrypt the file is to get a bunch of unsuspecting Earthlings to do the work for him, and the only thing Earthlings really like is money. Satoshi-Alien pays people to decrypt the file, until Jeff Goldblum and his rag tag group of hackers figure out the code and stop the alien menace, thereby saving the Earth and traditional financial institutions for everyone.

Yep, aliens. In light of all the other information it seems like the only logical solution. And I'm sure it will make a great, made-for-SyFy original movie; I just hope they don't pay me in bitcoins.

---

Copy Editor Wes Burns is a Sunday columnist. The views expressed in this column are personal views of the writer and don't necessarily reflect the views of the T-R. Contact Wes Burns at 641-753-6611 or wburns@timesrepublican.com.

 
 

 

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