DONT SHOOT THE MESSENGER!
By Gary North
I told you so.
There. I’ve said it.
The biggest Bitcoins exchange has gone bye-bye. It took with it the money that the investors thought was safe.
Reuters reports: “Mt. Gox had $174 million in liabilities against $32.75 million in assets. It was not possible to verify the document or the exchange’s financial situation.”
I say: “A fool and his digital money are soon parted.”
How will the investors prove in a Japanese bankruptcy court that they deserve a part of the supposed $32.75 million? After all, the transactions are all secret.
They wanted secrecy, and they got it, good and hard!
I have said it from the beginning. Bitcoins are not money. They are a crap-shoot. Those who invested in Mt. Gox have lost all of their money. Real money. Dollars.
The programmers (with little money then and less now) said Bitcoins will replace dollars. They said Bitcoins are safe. They said, “this is the wave of the future.” Yes, it was. A tsunami. Think of Mt. Gox as Fukushima.
You go to your bank. You take digital money out. Real digital money. Dollars. This leaves a record. You buy Bitcoins on an exchange. You lose control of your money. It’s not money any more. It’s Bitcoin digits. These digits are not money. They are promises to pay issued by some outfit you know nothing about.
Then it goes belly-up. Goodbye money. Goodbye dreams. Goodbye hype. “Sorry about that. Better luck next time.”
The programmers will say, “Well, it’s only one case! Accidents happen.” I say: “Don’t invest in accidents that are clearly waiting to happen.”
It will happen again. Who’s next? I don’t know. Neither do the programmers.
Bitcoins are no threat to central banks. They are a major threat to programmers who think Bitcoins are money.
Programmers bought Bitcoins from Mt. Gox. They could have bought gold. They were going to get rich with Bitcoins. Now they cannot find the head of Mt. Gox.
Read it and weep. The key words: “8 hours, 47 minutes ago.”
Six leading Bitcoin exchanges – which allow users to trade Bitcoins for U.S. dollars and other currencies – distanced themselves from the Tokyo-based exchange.
“This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of Bitcoin and the digital currency industry,” the companies – Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle – said in the statement. “As with any new industry, there are certain bad actors that need to be weeded out, and that is what we’re seeing today.”
Certain bad actors? Give me a break! This was the largest Bitcoins exchange on earth. This was Bitcoins in the minds of most Americans who knew about Bitcoins.
If you think Bitcoins are a threat to the Federal Reserve System, I’ve got a bridge to sell you in New York. A digital bridge. But I want payment in dollars, not Bitcoins.
Continue Reading on www.reuters.com