I’ve been involved in Bitcoin for a very long time. These days, when normies and all those social media pumper, overnight crypto experts hear that, they think “oh, like back when it was $3000.” No. Like back when it was $2.50. Back when you’d tell normies about it and they’d (correctly) identify it as a scam or totally unworkable, for all the same reasons it’s still a scam and totally unworkable: the inherent insecurity of money that only exists on a hard drive, the recourse-less nature of transactions, the lack of regulations, the inability to scale over time, and the fact that the biggest real-world users are drug cartels, hackers, gun runners, and child traffickers. I was involved back before MTGox (the original Coinbase) just up and disappeared with tens of millions of dollars of people’s real money and fake money (Bitcoin). Oh… you haven’t heard about that? The pumpers didn’t tell you? You might want to look that up.
Before you make a run on Coinbase to remove all your real money, finish reading this post I put so much effort into – then run.
So back in the earlier days of Bitcoin, anyone with enthusiast/gamer level computer hardware could easily “mine” several Bitcoin a week (even a day, if you go far enough back). Mining was how you originally got Bitcoin, not by giving up your hard earned US Dollars. I was part of a mining pool – a large group of folks that all worked as a collective and then distributed the Bitcoin to members. This helped members get more regular payouts than mining on their own. None of that is actually important though. What is important is that I found myself sitting on quite a few Bitcoin that were rising in price (to a whopping ~$20, still nearly a 10x increase), yet I had no way to turn them into the real dollars they were supposedly worth. I didn’t trust MTGox (and look at how that turned out) and other scam exchanges. Plus, even if you trusted those Chinese teenagers running these rigged “exchanges” in their mom’s basements, selling your Bitcoin to someone for USD wasn’t the end of your hassle. You still had to deal with giving boat loads of personal information to ultra-sketchy “banks” and wire transaction outfits to finally, after many fees and much time, get USD in your hand, or so you hoped. I opted for the easier, but equally sketchy, route of simply sending some guy that had a website that looked like it was designed in 1991 large chunks of my Bitcoin stash, and he’d eventually mail me Visa gift cards full of real dollars. Totally legit. But I do still like that guy. Never once screwed me. Hopefully he’s a fake millionaire now.
Fast forward many years and Bitcoin had its first major run – up to $1000. This caught the attention of normies and the media. The media coverage caught my attention, because I remembered that buried on an old hard drive somewhere was my wallet file that still contained several bitcoin (Visa guy didn’t accept less than 10 at a time, so I had residual when I stopped mining). I checked around the ‘net and the cashing out issues remained the same. After getting proven right about MTGox, I certainly wasn’t going the exchange route. Sketchy Visa guy was long gone, probably dead from a cocaine and hooker fueled rager to celebrate his new billionaire status. The only option seemed to be to spend it. Since the early days when only illicit sites like Silk Road accepted direct Bitcoin payment, it seemed a few more had caught on to the fad, most notably Overstock.com. This isn’t terribly surprising as Patrick Byrne has always been a goofy dude that loves to be anti-mainstream, so being the first major retailer to accept Bitcoin seemed natural for him.
SIDEBAR FOR NORMIES: Do not be confused. Retailers that “accept” Bitcoin don’t really accept Bitcoin. They use payment systems powered by Coinbase or another exchange which immediately converts Bitcoin back to their native, real currency. They never handle a cent of Bitcoin. This isn’t acceptance. This isn’t a new paradigm. This is a front.
So what did I do? With Bitcoin already losing 20% of its value just since I started my research on how to spend it, I went on an Overstock.com shopping spree… and what a glorious one it was. Thanks Patrick. I still had some fractional Bitcoin left over after, which I once again decided to hold onto, just in case.
Bitcoin got decimated after that and traded at a few hundred dollars for years afterward. Everyone but the die-hard pumpers forgot it existed.
Now, here it is again, shooting towards the sky. Again, it caught the attention of the normies and the media – thus also catching my attention. I still had some left. Surely the cashing out situation had improved. Once again I began the internet research to see how I get real dollars with Bitcoin in 2017. Guess what? Not much has changed.
Coinbase is semi-legitimized these days and requires no where near the personal information of an actual online broker/exchange (yay fake trading scam!!), so I did sign up for an account. But with MTGox still in the back of my mind, I decided to see what options existed beyond scam exchanges. Looks like good old Patty is still taking Bitcoin… oh… and so is Newegg! I love Newegg! Alright, time for another shopping spree! This will be a case study in Bitcoin’s real-world effectiveness and usefulness in 2017. Where to begin?
I need to find my wallet.dat file. No problem, I know exactly where I kept that.
Wallet resurrected. Now I need to download the original Bitcoin client program. Easy download and… wait, what? 8 days to download the entire 9 years worth of blockchain??? I don’t have 8 days to wait!
Frantically scour the internet looking for a solution. Turns out a million and one other Bitcoin wallet programs have been created since I was last involved. Some of them let you spend money without downloading the entire blockchain. Cool. That’s what I need. They’re “less secure”. Whatever, this whole thing is insecure.
Download new wallet program… doesn’t read old wallet. Download Wallet Spender XYZ… doesn’t read old wallet. Download Bitcoin Fucking Rocks Wallet…. doesn’t read old wallet. Download Crypto Child Trafficker Plus… doesn’t read old wallet.
This is a problem. Do some more research… OHHHH, now it makes sense. Even though I have this super awesome, currency of the future that’s going to make the dollar obsolete, because the wallet that contains it was made with program A, I can’t actually get any of this awesome currency of the future out of the wallet with programs B-Z. Think about that for a second and ponder that level of real-world practicality. You have dollars in a wallet that’s made by Ralph Lauren (because you’re fancy). Those dollars can only be spent if pulled from that exact wallet or another wallet made only by Ralph Lauren. If Ralph Lauren ever discontinues that exact model of wallet, you’re up shit creek and your money might as well not exist. Very practical. Very usable.
So what to do?
I guess I need to call Comcast and get a lot more bandwidth, then I just use the original Bitcoin Core program and download the entire blockchain onto my laptop so I can access my wallet.
18 hours later I have an error and a full laptop hard drive. Apparently the full blockchain is over 200GB of data.
Time to start over, on the desktop with a completely empty 320GB harddrive.
32 more hours later I have the entire blockchain downloaded and the ability to FINALLY (a total of three days later) spend my currency of the future that’s going to make the dollar obsolete. SHOPPING SPREE TIME!! I want a camera, let’s look at Newegg.
Newegg doesn’t accept Bitcoin for marketplace transactions, only for items sold by Newegg itself. Bummer. Newegg only sells computer hardware and the only computer hardware I need is more RAM, but DDR4 is laughably overpriced these days. No worries, Patty has me covered.
Overstock.com cart full, time to check out. Select Bitcoin as payment method (this is cool!), receive wallet address to send money to… oh that’s fancy, it links right to Bitcoin Core now. Nice upgrade after eight years. Patty gives me 15 minutes to send him the money before he cancels my order.
Ok, so now I just send this… wait a minute. “Transaction fee”? I do remember those. Like 0.000001 bitcoin. Used to be fractions of a penny. It’s a fee that ensures your transaction gets processed by the network in a timely manner. But why is the Core program recommending a transaction fee equivalent to $55 on my $141 order? That’s absurd.
Back to the internet I go.
Turns out the Bitcoin network doesn’t scale well (who could have seen that coming? *eyeroll*) and transaction fees and processing times have gone through the roof. Even if I spend the $55, my estimated transaction approval time is 60 minutes. I have only 15 minutes to get Patty his money – same story on Newegg and any other site that accepts Bitcoin. This 15 minute window is in place because Bitcoin’s value is so comically unstable. In 20 minutes the vendor could be getting stiffed if the value drops or you could be getting stiffed if the value rises. But alas, back to the problem… spending $55 to get a transaction approved in an hour that MUST be approved in 15 minutes. This makes actually spending Bitcoin at these sites an impossibility. Do I chance it anyway with the recommended transaction fee? Maybe I get lucky and it gets filled early? If it doesn’t and Patty cancels my order, I’ve lost that $55 and still have no products.
I don’t want to risk $55. I guess I’ll just send it through with the default 0.000001 transaction fee and hope I get lottery-win lucky.
Not a chance. Of course I missed the 15 minute window and now have no new goodies. But 15 hours later the transaction still isn’t confirmed. I now have $141 floating out in the ether for days, weeks, months, only Bitcoin god knows how long before it finally (if it ever does) make its way to Patty so that he can then issue me a refund (maybe), probably less the recommended transaction fee on his end and I’m out $55 with nothing to show for it… or maybe the default transaction fee and I wait another six months to get my currency of the future that’s going to replace the dollar back.
So here’s the fun part. The part that the normies, who are so demanding and impatient, are really going to love. While my $141 floats through network space, there’s nothing I can do. I can’t call Bitcoin customer service. I can’t start a live chat. I can’t write them an email. They don’t exist. I can’t file a dispute. I can’t put a stop payment on it. All transactions are final. You have zero recourse. That money is gone forever – or until Patty receives it in six months and refunds it to me six months after that. Who knows what it’ll be worth then (likely nothing at all).
This is only $141 of fake “currency” I never really had – because I never actually spent a penny to acquire my Bitcoin. Multiply this by many times and imagine you acquired it with your hard earned US dollars. What do you do?
You want to get rich quick and “invest” real money in these scam exchanges and this scam product? You think this hilariously unusable and unstable “currency” is viable to replace the dollar or even be useful as a payment system for anything but child sex slaves? Just image this same scenario with larger amounts of your own money. Go do some real research and talk to people with no vested interest in Bitcoin before spending a penny on this scam.
This public frenzy pump and dump strategy is as old as markets themselves. These parabolic chart patterns have repeated tens of thousands of times with the same end results. Bitcoin isn’t practical. It isn’t the currency of the future. It’s a totally unworkable joke and these parabolic price rises are nothing but a classic pump and dump.
You know what the currency of the future is? Plastic – credit cards. They’re portable, fast, easily tracked, full of recourse options, secure, sustainable, offer cool rewards points, they’re accepted nearly everywhere, and you don’t need to invest a week of internet research and jumping through hoops to spend your money.