Beware of the baneful Bitcoin bug

Bitcoin is no joke. Baidu now supports the market. There are ATM dispensers of real cash in exchange for Bitcoins transferred from your cyber "wallet". What drives the seriousness of the mechanism is that an increased number of "believers" can "mint" new Bitcoins. Those with the will and ability to maintain the mechanism are said to "mine" new wealth and this is clearly addictive to certain kinds of people. It is an interest that pays.

Over the past week or so, a person could earn about 0.0001 Bitcoins (maybe 1 yuan at the current exchange rate) in one hour of expert "mining". But given that addicts spend their waking hours at this and that speculation is driving value up, it beats unemployment.

The individual launching Bitcoin is unknown, except through the thorough planning of the venture and a pseudonym, "Satoshi Nakamoto". The prime guess is that the individual is an expert cyber geek in Finland or an American infatuated with Japanese culture. The individual made a fortune cashing in Bitcoins for dollars in 2010 and left a cryptic note about "moving on".

That single fact spells out in large fonts that Bitcoin is a Ponzi scheme in which the first wave of players makes money and leaves the base of the pyramid to collapse. Clinton Dines, one of China's expatriate community's respected business leaders who has been in China for 34 years, merely mutters the previous testimonies to human greed and folly: the Dutch "tulip mania" of four centuries ago when a single tulip bulb from Turkey promised wealth such that it was equal to years of income, and the English "South Sea Bubble" of three centuries ago, pretending England would colonize South America.

John Gruetzner, principal and founder of Intercedent Limited, believes that Bitcoin is potentially a device, which, if not regulated, will ultimately become a tool for the Tea Party to circumvent government and create a currency for the 1 percent class, and that it will collapse eventually.

The father of economics, Adam Smith, in his Wealth of Nations explained the value of money representing hunters, acknowledging that one beaver was worth two deer. Primitive hunters would trade based on reality. Bitcoin has no physical equivalent. It depends on people pretending the emperor has clothes. Individual perception or group deception. Just take an "i" out of Bitcoin. Bitcon.

The author is an Australian researcher collaborating with Chinese academic and commercial institutions.

(China Daily 11/29/2013 page9)