Bitcoin is going to teach you a lesson. A costly one

Summary:Bitcoin is a really bad idea. Promoting digital currency is like promoting digital food; it will leave you empty and you'll wonder why you ever thought it was a good idea.

There's nothing like watching someone trying to create a fake currency to make my day complete. Bitcoin is the silliest of ideas, even when explained in video format from the website. I registered a new account on the site just for fun. The crazy thing is that when I logged in, I discovered that I can buy one Bitcoin for $199.95. Really? Sign me up for that! In fact, put me down for a whole pocketful of them. Oh, wait, sorry, digital pocketful, since, you know, they don't really exist.

If you pay $200 for a single fake digital coin, you have something seriously wrong with you. And if you have $200 to blow on something stupid, you can donate it to the Ken Hess Party Fund. In fact, I'll accept Hesscoin exchanges in $5.00 increments. So, you can get 40 Hesscoins for the price of one Bitcoin. And Hesscoins have real value because I'll turn them into party supplies for me and 100 of my closest friends, which could include you. Maybe more if the donations...er...crowdsourced funds...er...purchases pile up to a level sufficient to support the guests.

That sounds like a really good plan. I'll call it the world's first crowdsourced party. I'll rent a place, supply the refreshments, entertainment, and a place for you to stay. Of course, the purchases have to support that. What I'll do is from all the purchases, is draw the names of 100 buyers of Hesscoin and they'll attend the party. Sound like a deal?

If I don't get 100 buyers, then what I'll do is randomly select 20 percent of the buyers to attend the party. OK, we're set. And I've digressed.

At least with Hesscoin, you have a chance of getting some value for the real money that you spend on the fake money that has no value.

The whole Bitcoin thing reminds me of a movement that I tried to get going a few years ago here in Tulsa, that I called Tulsa Dollars (based on the Ithaca Hour bartering plan). The concept was to create a barter currency that people could trade with each other for goods, services, and whatever. It never caught on.

Here's the problem with fake currencies. Aside from having no actual value, they have no tangible exchange rate. The theory behind barter dollars was that you have to set a standard value on labor, which at the time, it was suggested that we use $40/hour. Well, I charged $55/hour for computer consulting services, lawyers charge $100/hour to $200/hour for lawyering, and so on. You see, there's no way to standardize on something like labor because everyone views his labor as more valuable than yours.

When dollars had gold backing, there was actual value in our money too. Once the brilliant Franklin D. Roosevelt took us off the gold standard, our money dropped significantly in value.

You see, for a currency to work, it has to have some external value. Digital currency, no matter how cute it is, or how you spin it, it has no value. It's a silly concept but someone always tries it.

And here's the other thing. Just because some doofus creates something like this, doesn't mean you have to participate in the silliness. Things like Bitcoin only have value because you give it value. There's no external value in a digital coin.

The other reason why fake currencies fail is that you create a false sub economy with them. The good and services exchanged don't get taxed and while you might think that's a good thing, let me tell you that it's not. Taxes are how we pay for roads, electric lines, phone lines, Internet lines, and other necessities. And you should be aware that just because you're using a fake currency doesn't mean that you're necessarily excluded from owing taxes on your transactions. Even the Bitcoin FAQ tells you that.

Underground economies don't give back anything to the common good. Plus, someone, at some point, is going to have to use real money and have a real job to support all these alternative types who want to undermine the evil government overlords. 

Another thing that's really dumb about Bitcoin, or Bitcon, as I like to call it, is that the evil Bitcoin overlords are limiting the number of Bitcoins to 21 million. Weird. 

FYI: There's an unlimited number of Hesscoins available.

I think that Bitcoin is a cute but annoying experiment in human folly. It proves that people will do dumb things for no apparent reason.

The whole Bitcoin thing still boggles my mind. It's hard to believe there's any attention at all given to it. It's even harder to believe that I'm spending time on it as well. The writers of the Bitcoin FAQ are a little off on what they believe to be a currency's value but at least they do understand some basic economic principles, though tainted by the downright silly factor of this whole Bitcoin thing.

My advice is to not spend time, effort, or actual dollars on Bitcoin. It's ridiculous and a 100 percent waste of time. So, stop mining, and focus on making real dollars. Underground economies don't work. Focus on something productive like viral videos, Gangnam style dancing, flash mobs, or taking up a new hobby. Quatloos, on the other hand, are real currency. You can buy people with them.

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Topics: E-Commerce, Banking

About

Kenneth 'Ken' Hess is a full-time Windows and Linux system administrator with 20 years of experience with Mac, Linux, UNIX, and Windows systems in large multi-data center environments.

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