The Bitcoin Phenomenon part 1

If you have watched the news recently you may have heard about tremendous gains in bitcoin. You may have thought about investing in this cryptocurrency. If everyone is getting rich off of this investment why not invest and make money too? It seems like a sure thing, right? People are dumping all kinds of money into this with the hope of getting rich quick. No one is being informed of the risks involved, and after investing in the dinar I am getting feelings of déjà vu. So allow me to give a brief overview and history of bitcoin. and let me explain some of the risks involved with this investment.

First it should be noted that unlike the dinar, investors have made money with bitcoin. Investors have also lost money. People have made money by mining bitcoin, which is also known as “earning”. This cryptocurrency has even been used in commerce. Now let’s discuss the history and the risks.

The History

The domain name “bitcoin.org” was registered on August 18th, 2008. In November of that same year a link to a paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” was posted to a cryptography mailing list. This paper was authored by Satoshi Nakamoto. The identity of Nakamoto remains unknown, but he implemented the bitcoin software as open-source code and released it in January of 2009.

A cryptocurrency is designed to work as a medium of exchange. It is a digital asset that uses cryptography to secure its transactions. Cryptography is also used to control the creation of additional units, and to verify the transfer of these digital assets. Cryptocurrencies are mainly classified as a subset of real digital currencies. They can also be classified as a subset of alternative currencies, and are often referred to as “virtual currencies.”

In January 2009, the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain also known as “the genesis block”. A reward of 50 bitcoins was included on this genesis block. Embedded in the coinbase of this block was the following text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This text has been interpreted as both a timestamp of the genesis date and a cynical comment on the instability caused by fractional-reserve banking. Its launch was close to the 2008 meltdown.

For this reason bitcoin is the first decentralized cryptocurrency. The decentralized control is directly related to the use of bitcoin’s blockchain transaction database in the role of a distributed ledger. Cryptocurrencies use various timestamping schemes to avoid the need for a trusted third-party to timestamp transactions. These timestamps are added to the blockchain ledger. Bitcoin and currencies like it use decentralized control as opposed to centralized electronic money or central banking systems.

One of the first supporters of bitcoin was a guy by the name of Hal Finney. He was the receiver of the first bitcoin transaction. He was also a programmer and a contributor to bitcoin. Finney downloaded the bitcoin software the day it was released and he also received 10 bitcoins from Nakamoto in the world’s first bitcoin transaction. Some websites list other early supporters as well. They include Wei Dai, who was a creator of the bitcoin predecessor b-money, and Nick Szabo. He was the creator of the bitcoin predecessor bit gold.

In the early days, Nakamoto is estimated to have mined approximately 1 million bitcoins. In 2010, Nakamoto handed the network alert key and the control of the Bitcoin Core code repository over to Gavin Andresen. This man became the lead developer at the Bitcoin Foundation. Nakamoto removed himself from any involvement with bitcoin. Gavin Andresen stated that he wanted to decentralize control, saying: “As soon as Satoshi stepped back and threw the project onto my shoulders, one of the first things I did was trying to decentralize that. So, if I get hit by a bus, it would be clear that the project would go on.” This statement allowed speculation and controversy over the future development of bitcoin.

The value of the first bitcoin transactions were negotiated by individuals on the Bitcoin Talk forums with one notable transaction of 10,000 BTC used to indirectly purchase two pizzas delivered by Papa John’s. Since then bitcoin has gained in value and popularity worldwide.

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store a person’s bitcoins, because of the design of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is a digital system that will store the digital credentials for your bitcoin holdings. This wallet will allow you to access your bitcoin in order to spend them.

Jordan Kelley is the founder of Robocoin. On February 20th, 2014 Kelly launched the first bitcoin ATM in the United States. The kiosk was installed in Austin, Texas. It is similar to a bank ATM, but it also has scanners installed in order to read government-issued identification. This kiosk will scan a driver’s license or a passport. This is done in order to confirm a users’ identity. By September 2017 1,574 bitcoin ATMs have been installed around the world with an average fee of 9.05% per transaction.

In 2015, the number of merchants accepting bitcoin exceeded 100,000. Instead of 2–3% typically imposed by credit card processors, merchants accepting bitcoins often pay fees between 0% to 2%. Firms that accepted payments in bitcoin as of December 2014 included Dell, Newegg, PayPal, and Microsoft. More local businesses also started excepting bitcoin.

Since the introduction of bitcoin many other cryptocurrencies have been released. The success of bitcoin has created a whole bunch of bitcoin wannabes.  Everyone seems to believe that if Satoshi Nakamoto can do it, they can too. Numerous cryptocurrencies have been created. These are frequently called alt-coins. They serve as a blend of bitcoin alternatives. Today there are hundreds of cryptocurrencies out there and they are all trying to be the next bitcoin.

Most cryptocurrencies are designed to gradually decrease production of currency as more is mined. The purpose of this is to place an ultimate cap on the total amount of currency that will ever be in circulation, thus mimicking precious metals. However, people still mine for bitcoin today.

The Risks and Dangers With Cryptocurrencies

Now that you have a brief history on bitcoin and other cryptocurrencies let’s discuss some of the risks and problems associated with them. There is a lot of hype involved and as a result, there is a currency out there for almost everything. There is even a Ron Paul cryptocurrency.

Consider all the variables to make this work. A tremendous amount of effort must be expended to create an alt-coin.  There is the cryptocurrency itself and the electronic wallet that all possessors of a coin must have on whatever electronic device they may be using. This also means that the program must work on a wide range of computers and smart-phone platforms. There is also a marketing expense to get some people to start speculating in it. There is the process of setting up the mining operation so that the virtual miners of the world can start “earning” the coin so that they can sell it on an exchange. There are literally hundreds of these currencies out there and one estimate has the number of alt-coins around 1,100.

These alt-currencies are all attempting to duplicate bitcoin’s success. The majority of bitcoin users are acquiring bitcoins not in order to buy goods and services but to speculate. The main usage of bitcoin and similar cryptocurrencies is that they are seen as an investment.

From our experience as dinar investors we should know that’s a bad investment decision, and it also hurts bitcoin’s prospects. The problem with having the bitcoin economy dominated by speculators is that it gives people an incentive to hoard their bitcoins rather than spend them. This happens to be the opposite of what you need people to do in order to make a currency successful. Successful currencies are used to transact day-to-day business and lubricate commerce. But if your reason for buying bitcoins is hoping that their value will skyrocket, as any investor would, you’re not going to be interested in exchanging those bitcoins for goods, This is because you will lose when the value of bitcoin rises. Instead, you’re going to hold on to them and wait until you can cash out.

Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant and then converts it to the local currency! These bitcoin services will send the obtained amount to the merchant’s bank account. They charge a fee in return for the service. We are led to believe that merchants accept bitcoin and then later on use it in other transactions, but this is not the case! Merchants around the world who accept bitcoin will get a government currency immediately deposited in their account during the course of the transaction.

There are pump and dump schemes that artificially drive the price up on cryptocurrencies for a short period of time. Pump and dump schemes are where people collude to buy a small cryptocurrency at the same time, and thus push up the price by artificially inflating demand. Those involved collect a quick profit by selling to new investors who are attracted by the rising price. People involved in this make up large groups that will pour millions of dollars into a cryptocurrency at one time. These people view the currency like a stock. Once new investors are in they sell off the currency for a huge profit. (check the link below)

Pump and Dump Schemes 

The big question then is this. Has bitcoin ever been involved with pump and dump schemes? There are wild price swings in bitcoin’s history. The price of bitcoin has gone through many cycles of appreciation and depreciation. Many people refer to this as bubbles and busts. Here are a few notable examples. In 2011, the value of one bitcoin rapidly rose from $0.30  USD to $32.00 USD and then it fell to $2.00 USD.  In the second half of 2012 , the bitcoin price began to soar once again on April 10th, 2013 it reached a high of $266.00 USD. Then it came crashing down to around $50.00 USD. This event is known as the 2012–13 Cypriot Financial Crisis. On November 29th, 2013, the cost of one bitcoin rose to a peak of $1,242.00 USD. Then in 2014, the price sharply fell creating heavy loses with investors. As of April of that same year the price of bitcoin remained depressed. It was little more than half of 2013 prices. As of August 2014 it was under $600.00 USD

As of 2014, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the US dollar. This is the analysis of Mark T. Williams. However, Forbes claims that there are some uses where volatility does not matter, such as online gambling, tipping, and international remittances.

According to an article in The Wall Street Journal, as of April 19th, 2016, bitcoin had been more stable than gold for the preceding 24 days. The article seemed to suggest that its value might be more stable in the future. On March 3rd, 2017, the price of a bitcoin surpassed the market value of an ounce of gold for the first time in history as its price surged to an all-time high of $1,268.00 USD.

Metcalfe’s law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system. A study in Electronic Commerce Research and Applications, going back through the network’s historical data, revealed the value of the bitcoin network as measured by the price of bitcoins, to be roughly proportional to the square of the number of daily unique users participating on the network. In other words, the bitcoin network is well modeled by the Metcalfe’s law.

So what is driving up the cost of bitcoin now? It is really a number of things. First, as the price continues to go up more speculators are jumping on board, and driving up demand. Second, the same Global Currency Reset nonsense that is used to sell precious metals and foreign currencies from third world countries is being used to hype the bitcoin as a viable investment, and the GCR propaganda is also attracting new investors. Third, Cboe, the options and derivatives exchange, is launching the first-ever regulated futures exchange for bitcoins on Sunday December 10, at 6 p.m. CME Group is scheduled to launch its exchange on Dec. 17, and Nasdaq will start trading the futures in 2018. This has caused wild speculation for the cryptocurrency. The coming futures exchanges have caused the price to skyrocket, but some investors jumped out on Friday. (See link below)

Bitcoin Sell Off

Conclusion

Yes there are people making money with bitcoin, but there are many people who had big losses in the past. As of this writing, bitcoin remains super volatile. Many more long term investors may jump ship before the exchanges take place. This investment is an extremely high risk gamble. You need to be careful with the amount you are willing to invest because it must also be an amount you are willing to lose.

Dinar Update 2

Welcome to the latest dinar update. As gurus give updates about a potential fictional revalue, I will give updates about an imminent redenomination. I know it has been a while since the last update. I really don’t follow the dinar as close as I use to. Since I have been free from this scam I have been busy doing other things.

As most people know I have another blog that deals with world economics. The Blog is known as BVAWE. I started a new series on the blog called The Real Battle. It deals with the rise of the New World Order. It talks about these people using oil and the banking structure to come to power. While I was working on this new series I came across this.

Suspicious Activity Involving the Iraqi Dinar

“Over the last year, the circumstances of the war in Iraq have created the phenomenon of businesses trading in new Iraqi dinars. Many of these businesses advertise or conduct business over the Internet, and suggest that the Iraqi dinar, much like the Kuwaiti dinar following Operation Desert Storm, will increase in value exponentially following United States military involvement in Iraq. Most investors purchase dinars from websites established particularly for selling dinars or from major auction websites.

FinCEN has been receiving inquiries regarding the legitimacy of websites offering Iraqi dinar sales. While it is not necessarily illegal to buy or sell Iraqi currency, there are a number of risks and compliance concerns for the financial community. For example, Iraqi officials state that it is illegal under Iraqi law to export dinars. Therefore, in addition to questions about the source of the currency, and the potential for investment or securities fraud, businesses offering to sell dinars may also pose the risk of being used to fund terrorism or as a vehicle for money laundering. FinCEN also has a particular interest in these businesses because they may be money services businesses required to comply with the Bank Secrecy Act.

Any United States entity that buys or sells currency, including Iraqi dinars, in amounts of more than $1,000 U.S. to any one person in one day may be a money services business under FinCEN’s regulations at 31 C.F.R. Section 103.11(uu). [Note: there have been questions about the old dinar with Hussein’s picture on it. That dinar ceased to be legal tender around January 15, 2004 and thus ceased to be currency for purposes of the Bank Secrecy Act.]”

I found this part interesting

“Moreover, even if the business is registered with FinCEN, that registration does not guarantee that the business is in compliance with other Bank Secrecy Act requirements or with applicable state law.”

This is excerpted from SAR Activity Review Issue 8, page 41

http://www.bankersonline.com/security/sar/dinarsar.html

Years ago when I invested in the dinar I did a search to see if the dinar was a scam. Back then it was hard to find out any information on the currency outside of the dinar forums. Now it seems that there are independent articles all over the internet warning people about this. Well better late than never I guess. Here are a few examples.

“The hype about the investment in Iraqi Dinars has been going around for a while. Sellers explain that as democracy comes to Iraq, the economy will flourish and the value of the Dinar will grow.”

http://scam-detector.com/financial-scams/iraqi-dinars

“Live Wire: Iraqi dinar scam is still out there”

http://fayobserver.com/articles/2013/03/19/1243823

“Beware ‘amazing investment opportunity’ in Iraqi dinars, experts say”

http://www.ksl.com/?nid=148&sid=25004930

“Three Currency Scams to Avoid at All Costs”

“Going on 10 years, this scam hasn’t turned anyone into a millionaire, or even a thousand-aire. In fact, since the fall of Saddam Hussein’s regime, one note has been worth less than a tenth of a U.S. penny.

Word of warning today: Expect a flare-up in dinar marketing. Sellers often refer to the government of Iraq revaluing its currency to make it appear stronger and more attractive.

Wouldn’t you know, just as the dinar’s value plunges further, Iraq parliament is considering just that.

Last week, Al-Monitor (The Pulse of the Middle East), reported that a member of the Iraqi parliament’s Economic Committee said, “Reforming the management of the Iraqi currency now requires the deletion of three zeros. The Iraqi currency is weak, and the money supply has amounted to multi-trillions because of the existence of these useless zeros. The country will witness a significant increase in oil revenues, financial earnings and high budgets. Thus, we need to print new banknotes, as estimated by the Central Bank.”

http://www.wallstreetdaily.com/2013/07/30/egyptian-pound-currency-scams/

This is redenomination language. When they talk about printing new notes because their currency has become weak they are talking about printing a new series of dinar and that is a redenomination. And that is what this scam is all about. It seems to me that these days there are all kinds of scam warnings about the dinar.

Wait a minute…The Iraqi dinar is a scam? Maybe this video will help explain one of the scam aspects.

When I decided to post another dinar update I did a quick search and found this Warning from Washington State about the dinar.

“The Washington State Department of Financial Institutions is warning consumers about potential scams regarding Iraqi Dinar currency exchange services. While foreign exchange scams are not new, the sudden popularity with the Dinar and resulting consumer complaints to our banking partners is concerning.

Several websites have recently begun advertising investment opportunities in Iraqi Dinars, the currency of Iraq. These websites are asking the consumers to send a check, wire, money order, or pay cash upon delivery of the Dinars. What consumers are not told is that the Dinars can be redeemed only in Iraq, as most of the established currency exchange houses and banking institutions cannot convert the Dinar to US dollars. Since no exchange exists for the Iraqi Dinar, dealers can charge whatever they want to sell and buy back the Dinars”

http://www.dfi.wa.gov/consumers/alerts/iraqi-dinar-scams.htm

Even though this warning is from 2011 this is the first time I saw it. So as you can see the Iraqi dealers are the only ones providing liquidity for the currency they are selling. Talk about a conflict of interest. When the Redenomination goes down how many dealers will there be left to provide the liquidity needed to exchange the investment?

Contact Me

I have included a contact form on the home page of this blog. Anything that is put there is kept confidential and will not be posted on this blog without your permission. From time to time I get requests to contact people but keep in mind I am not interested in debating anyone about this investment. My time is limited.

And Then There Is This

There are people who got into this investment because they believe that this fictional revalue is prophetic. They believe it can be found in biblical prophecy. As far as these people are concerned no amount of reason will convince them. Even if you explain the logic of why it won’t happen they won’t believe it because to them it is a matter of faith. I would like to personally address these people now.

1. First you should know that Kim Clement is a false prophet. He has said a number of things that have not come to pass. I observed him when he first came to TBN. I marked the things he said at that time and waited to see if they would come to pass. The time of the prediction came and went and what he predicted did not come true. Here is an extensive list of some of the many wrong predictions this man has made.

http://www.forgottenword.org/clement.html

The Bible says,

Deu 18:20 But the prophet, which shall presume to speak a word in my name, which I have not commanded him to speak, or that shall speak in the name of other gods, even that prophet shall die.
Deu 18:21 And if thou say in thine heart, How shall we know the word which the LORD hath not spoken?
Deu 18:22 When a prophet speaketh in the name of the LORD, if the thing follow not, nor come to pass, that is the thing which the LORD hath not spoken, but the prophet hath spoken it presumptuously: thou shalt not be afraid of him.

Mat 24:24 For there shall arise false Christs, and false prophets, and shall shew great signs and wonders; insomuch that, if it were possible, they shall deceive the very elect.

So do you really want to trust this guy for dinar analysis? When I first invested in the dinar I wondered if the dinar was part of biblical prophecy. I am a long time student of the bible and I began to see if I could make a connection. The more I studied the more I saw that the dinar has nothing to do with biblical prophecy.

The other blog I have which I mentioned earlier is called Biblical Views and World Economics or BVAWE. It contains the prophecy research. It also explains world economics and how it relates to what is on the horizon. Although I will be quick to say it is based on my opinion and independent study. Right now the new series (The Real Battle) is taking all my writing and research time, but if anything interesting happens in the dinar world I will be sure to put it on this blog. If you want to see the other blog click the link below and see what a trillion dollars looks like.

http://bvawe.wordpress.com/

here is the new series. There are 4 parts so far. Part 5 is coming

http://bvawe.wordpress.com/2013/06/22/the-real-battle/