“The Great Bitcoin Scam” – Forbes | $16,064.44

What you need to know about Bitcoin is that distilled to its technological essence, each Bitcoin is simply a number. That’s it: A number. It is simply a series of digits, with each number being assigned to each Bitcoin.

The only difference between Bitcoin No. ABC123 and $1 Bill No. L88793293J is that at the end of the day, the $1 bill physically exists and has a face value that is worth something, i.e., Fred could take the $1 bill and buy something off the $1 menu at McDonalds….By contrast, Bitcoin has no intrinsic value — it is just a number. The number may have an agreed value between two parties, but the number itself has no value.

Here, the technological difference with cybercurrencies, or crypocurrencies if you prefer, is that they don’t require a middleman such a clearing bank. Value, whatever it is, goes directly from A to B, with nobody in the middle. That has some value, but how much? The value, it would seem, would be the difference in the cost of the wire-transfer fees less transaction cost of the cybercurrency unit, which isn’t that much — and in some cases, the wire-transfer could actually be less expensive, although more cumbersome.

But here is where the fundamental flaw in Bitcoin’s value lies: It is simply a number, and numbers are infinite — there will never be a shortage of numbers… So, Bitcoin may be limited to 21 million numbers, but that doesn’t mean that somebody else can’t come up with a similar algorithm and thereby create their own unique set of numbers, i.e., their own cybercurrency.

Herein lies the problem with cybercurrency, which is that there are an infinite number of cybercurrency units available. Divide anything by infinity, and you get a number that is almost zero — not quite zero — but as close as you can get to it as possible. This is true even if we assign a current aggregate value of all the existing cybercurrency units at $500 billion. Because it is not quite zero, we can assign it a value of 1¢, not because it is necessarily worth 1¢, but simply because that is the smallest unit by which we can designate value in our currency.

Eulogy made by Jay Adkisson


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