The vast majority of Bitcoin and other crypto faucets are completely fraudulent. Even more disturbing is that while the group is still rather small, the number of people who are funding their retirement accounts with Bitcoin is growing rapidly. The majority of the population of America still has little or no perception of Bitcoin. Still other questions are raised by Bitcoin. Stories are now circulating of people purchasing Bitcoin with credit cards, not for convenience but because they do not have the cash to do otherwise. However, what I find most disturbing about Bitcoin today is that what started out as possibly some sort of novelty to give techies and libertarians great dreams for the future may now have developed into something far more sinister and without most people actually becoming aware of it. Should there be a total collapse of Bitcoin, it is likely to take down the other cryptocurrencies with it, and one has to wonder what happens to the financial situation of this country if a large number of people wake up one morning and discover that their financial accounts are now worth zero or close to it.
They often advertise themselves as Bitcoin miners, but you are not mining anything. Currently Bitcoin mining in a single day uses more electric power than the entire country of Denmark. Given the nature of Bitcoin and the needed mining techniques, that amount can only increase in the future. A bitcoin faucet is supposed to give you a small amount of Satoshi (100 million Satoshi equal one Bitcoin) for performing a simple task, such as watching an advertisement. Created as a parody, its inventor supposedly was in dismay that it at one time it had reached a total value of one billion dollars. It was supposedly created to avoid outside regulation. There is of course nothing backing or regulating this token. Although with the few legitimate ones it can take weeks, more likely months, just to earn the equivalent of a couple of dollars, the fraudulent ones pay nothing. However, the current practice of changing names of companies with little or no revenue, and which never had anything to do with technology, to include the term “blockchain” is yet more evidence that there is some sort of mania going on, as people pay outrageous prices for these near worthless stocks.
However, Ripple brags that it will be useful for banks. Obviously I was too optimistic about Mt. Gox, but I will stand by nearly all the rest of what I wrote, including the conclusion that the Somali shilling has more intrinsic value than Bitcoin, or for that matter any other cryptocurrency. Should you think I am too negative about Bitcoin, then you can watch James Altucher. It has been several years since I wrote my original analysis of Bitcoin, entitled “Ayn Rand’s Dollar,” for the Financial Seminary. Further I did predict that we might see an explosion of Bitcoin clones, and that has indeed happened with today some 800 to 1000 cryptocurrencies competing with the original. Today the number of retail outlets that take it is shrinking, except possibly on the dark web. They got paid in currency and the buyer took all the risk of bitcoin price fluctuation, which could be considerable, as it might take several days in some instances for a transaction to clear. He is all over the Internet these days and makes occasional television appearances. There is also the possibility that the herd mentality could spill over and severely impact the price of more traditional investments, at least temporarily.
There will be far more bankruptcies. These are really not much more than ad farms. Sadly many of the victims are from India and other developing countries, where numerous people are desperate to make even an extra dollar or two. Although I am certain the true believers will dispute it, this would seem to make claims that Bitcoin is inflation proof rather nonsensical. But you can make up your own mind. If we need any evidence of the excess in cryptocurrencies, Dashcoin can provide it. Go to the Google Play Store and you can find plenty of them you can download for free. Another factor I find disturbing is the ethics, or more correctly the lack of ethics, operating among some bitcoin users. Nowhere is this more apparent that with the so called Bitcoin faucets. There is a fear of missing out and probably at the same time the feeling that there will always be a greater fool to buy my Bitcoin at a higher price than I paid.