About that article in the Sydney Morning Herald; Bitcoin’s not a fraud – but don’t risk it… I read it, checked you out, and discovered you’re “Director of Research” at The Motley Fool Investment Services.
Interesting website; I see one of your services is “Everlasting Income.” Seems I’ve been selling myself short by shooting for everlasting love. Guess I watched too many Hollywood movies. Anyway, back to your article.
As CCO at Bitcoin Trader, I read a lot of mainstream “news” There’s plenty of misinformation about Bitcoin, but I usually skim over it and read the real reports (from The Coin Telegraph). But Scott, I feel you took your folly just a little too far; not just when you made the movie analogy. Even that I could have forgiven. It was when you quoted Screenwriting structure – and got it completely wrong, I just couldn’t let that go.
Now I’m no Screenwriting Guru, (that’s Robert McKee‘s title) I’ve simply studied Screenwriting, reviewed films for FILMINK and interviewed great filmmakers from around the world. So forgive me for feeling I have a moral obligation to defend the craft.
Since I’m going to highlight your mistakes, I might as well list them all. I’ll get to Story structure later; let’s begin with Bitcoin.
“Take the aforementioned “inventor” of Bitcoin, who may or may not be one of the half-dozen people suspected of being behind the pseudonym Satoshi Nakamoto… But rather than 007 or Jason Bourne, could our hero be a mega rich, perfectly coiffed bank CEO? After all, it was JP Morgan chief executive Jamie Dimon who recently said Bitcoin was a fraud.”
You got something right. Bitcoin is not a fraud. It’s a store of wealth and system of exchange based purely on an agreed value. I’m no economist, but I heard the current economic system is based on “fractional reserve banking.” I asked Google to explain it and found this article:
“When bankers lend more funds than they actually possess they are ‘lending’ what does not even exist… actually ‘fractional-reserve banking’ (is) the ultimate euphemism of banking and fraud.”
I still found it all so hard to understand – maybe because it does sound like a really bad Bond film – but I finally understood it when the writer used layman’s terms:
“By its very definition; it (fractional banking) transforms the banking sector of an economy into a leveraged Ponzi-scheme, and as with all Ponzi-schemes, there is no possible “happy ending.”
That must be why we keep going through these GFC’s.
Funny, the writer also commented on your banker friends:
“J.P. Morgan Chase was chosen by the Coalition Provisional Authority [CPA] to ‘set up’ the NEW Central Bank of Iraq [specifically, the Trade Bank of Ira ]… Morgan was charged with developing the framework of collateralizing movable and immovable property for the nation of Iraq…plus it is also well-known that J.P. Morgan has a direct connection to the Rothschild banking dynasty – a trend that is to be seen in virtually every central and major bank in existence across the planet.”
But then again, this guy’s article wasn’t in mainstream media; he’s probably a fraud.
2) The limited supply of Bitcoins
“The strongest bull case on valuation I’ve heard rests on the fact that the number of available Bitcoins is limited, therefore the more people who want one, the higher the price should naturally go. Which is true if the number is truly limited.”
What you’ve heard is true Andrew. Truly. You’d know that if you’d read Satoshi’s white paper. Heck – even if you just Googled “Bitcoin.”
Here’s an example that might help you understand Bitcoin and the Blockchain:
- $21 million exists in the world – you own $2
- A global, public ledger is maintained
- You spend $2 and update your ledger
- Everyone updates their ledger.
That’s from the book, “Bitcoin for the Beffudled”. You might want to check it out. Perhaps tackle Satoshi’s white paper later.
“I’ve lost count of the number of times I’ve been asked about Bitcoin as an investment. And it’s no wonder – if the crypto-currency hadn’t been invented by a shadowy tech guru, it could have been the stuff of a movie director’s wildest imagination.”
Shadowy? I love your use of language Scott. Bitcoin uses SHA-256 – a “256-bit version of an algorithm used to encrypt messages sent over the internet.” It was originally created by the National Security Agency (NSA) and we know they’ve never done anything shadowy – nor the US Government; just ask Julian Assange. I guess Satoshi chose to stay anonymous for the same reason Julian Assange should have.
4) Bitcoin and Crime
“Then, add in the fact that his invention came to prominence on the eBay-for-criminals website Silk Road…”
Scott, did you see American Made or Narco’s or any movie about organised crime in the past 20 years? They all used US dollars. That’s why I never touch them. Do you use US dollars to trade stocks?
Plus – worse news! I heard these terrible terrorists also use Bitcoin. And mobile phones and cars – we should definitely use trains instead. Wait, didn’t they bomb the subway in London? I’m out of ideas. What do you recommend Scott?
“…and that the libertarians love it (Bitcoin) because there’s no role for government and you can’t be identified.”
At last – something factual. Yes we do! Because we don’t want our bank accounts / Super / Gold bullion frozen or seized by the Government– like they have already have in Australia.
Hang on. You said in your Newsletter:
“We’re of the firm belief that YOU are the best person to manage YOUR own money as YOU are the only person who can truly put YOUR best financial interests first.”
Sounds like YOU should buy some Bitcoin you Libertarian, you.
6) The good old Bitcoin Pizza Story
“Then there’s the legion of supercomputers “mining” new coins in China and Eastern Europe, and reports of people who threw out hard drives with Bitcoins saved on them, or who paid for two pizzas with Bitcoins that are now worth $20 million.”
That would be Florida miner, Hanyecz who exchanged 10,000 bitcoin for 2 pizzas in 2010 – which would actually be worth $40 million Aussie these days. I know, it’s hard to keep up, Bitcoin keeps skyrocketing.
And now, for the Third Act…
7) Screenwriting Structure
“And, as we come to the halfway point in the movie, the price of a Bitcoin is again in the ascendancy.”
Scott, the halfway point in a movie with an “Idealistic Controlling Idea” is a down point – not an ascension. Read McKee’s Story (page 123). You might not understand story structure from one read – I had to read the book 14 times and I still don’t consider myself an expert. You probably don’t even know what a “mid-act climax” is – or as you call it “the halfway point in the movie.” I recommend you don’t write about stuff you don’t understand Scott. Please. Leave it to McKee.
But at least you’re honest:
“I’m also the first to admit that not all my picks have been winners. When it comes to investing, no one bats at 100%. Anyone who claims to, is flat out lying.”
I’ll be honest – I don’t know anything about the stock market or shares. I still don’t even know what a “bid-ask spread” is. Both the CEO and COO have tried explaining it to me. But it doesn’t seem to matter – because I’ve doubled my money on Bitcoin! Weird isn’t it? I thought only smart people got rich. Isn’t that the point of capitalism?
8) Bitcoin is a currency
“I use the word “speculators” deliberately, here. The world can’t decide whether Bitcoin is a currency – a replacement for the Australian dollar, Japanese yen…”
Oh My Scott. The Japanese government did decide; they declared Bitcoin a currency back in April. Even I know that!
I couldn’t work out why you would publish an article that was so inaccurate. It worried me; I always tell my daughter; “If it’s in the news – it’s true.” Then I found this from your web site:
“…email ScottTheFool@gmail.com… The Motley Fool’s purpose is to educate, amuse and enrich investors”.
Oh! You were just joking! Good one Scott!