Читать книгу Profiting from Weekly Options - Seifert Robert J. - Страница 14

The last bubble we will examine is one that is current, and the final results are not in. Proponents claim that this is the techno-currency of the future; detractors claim it is a way for criminals to hide transactions and is most likely a Ponzi scheme.

Look at the results thus far and you can be the judge.

Bitcoin first appeared in a scientific paper and is credited to the name Satoshi Nakamoto. Since no one has come forward to claim its authorship, it is difficult to determine if it is a pen name or simply an individual or a group that wants to remain anonymous.

Bitcoin is a digital currency that doesn't have any ties to a central bank. The point-to-point payment system allows for transactions to be made in complete anonymity. The coin is created by a complex set of computer codes that create the currency through a process called mining. Unlike central bank–issued currency, which can expand and contract the money supply, bitcoins have a finite number, and once the final coin is mined, it is a closed environment. In addition to being untraceable, the value of the currency is not being manipulated by a central bank. Proponents claim that in the long run, it will allow for a stable market and that supply and demand will establish its value. Opponents claim the opposite – that this trait gives it all of the features that promote extreme price manipulation and can give seeds to a massive Ponzi scheme.

The price history of Bitcoin suggests that the opponents' view is hard to argue.

In 2011, the price of a single Bitcoin fluctuated from a low of 30 cents per US dollar to as high of $32 before crashing back to $2. If this is supposed to be a way to put stability in a currency system the initial result seems to indicate the opposite. In March 2013, the Bitcoin exchange known as Mt. Gox had a software meltdown and triggered another massive selloff in the crypto-currency, as prices plunged by 70 percent in less than three hours. The market recovered and rallied back to over $1,100 a Bitcoin before a selloff in January of 2014 saw the price go down to $500 in less than a month. A rally in February of 2014 took the price back to $1,000 until money laundering and Internet scandals involving one of its strongest proponents rocked the currency. Later in February, Mt. Gox was again the victim of a computer glitch and suspended withdrawals. This time, the exchange closed and admitted that $350 million worth of Bitcoin was missing from its vaults. The victims of the loss are currently looking for a legal jurisdiction to pursue criminal action. The irony of this is that the traders who are searching for their money ($) were using the Bitcoin to avoid legal detection, and were manipulating the crypto-currency for profit; they are now complaining that they were scammed!

Isn't this the same defense that Bernie Madoff's minions used to defend the millions that they helped to steal off of investors? They also claimed that they were the victims because they took the stolen money and invested it with Mr. Madoff!

As of this writing, the Bitcoin is trading around $350, a drawdown of over 70 percent from its peak value during the height of the mania in December of 2013. Whether it will turn out to be a highly speculative investment or just another Ponzi scheme can't be determined at this point, but one thing is certain – it has not proven to be anywhere near as effective as advertised in combating the weakness of central bank–issued currency. In fact, it has multiplied any of their shortcomings many times over!