Canadian Lawyer Magazine: "Bitcoin has jumped the shark."

Canadian Lawyer Magazine's IT Girl has Bitcoin on her Christmas wish list, but I think she's being sarcastic:

"This nifty technology looks to have jumped the shark, but it sparked a lot of interest, not to mention controversy, and the future may yet be in virtual e-currency. I wouldn’t go spending a lot of time or money trying to mine Bitcoin any time soon though; you would probably be better off alongside the stock brokers of late, selling Bre-X shares on Bay Street for $1 apiece as novelty items. Actually, that might not be such a bad idea."

Ms. Harris, you do realize that your words are now immortalized on the Internet, don't you? I think you may have just joined the rarefied company of the Slashdot commenter that dismissed the iPod in 2001. Don't worry, you also get to hang out with Forbes and Wired. I hear they throw awesome parties.

Speaking of being immortalized on the Internet, let's see what you had to say about Bitcoin back in August:

"In the case of Bitcoin, its value appears to be based upon scarcity in much the same way that commodities like oil and coal might be."

I'm not sure where to start with that one. Personally, I think oil and coal get their value from being sources of stored energy that we can convert to useful work and heat, but that's just me. Please, go on...

"Scarcity in the case of Bitcoin exists because the process of mining becomes exponentially more onerous as doing so becomes more popular. At the same time, it is said that there’s an intention for there to be a cap on the number of Bitcoins in circulation."

Yes, you could say there is an intention to cap the number of Bitcoins in circulation. In fact, it is hard-coded, and the number is 21 million, in case you're wondering.

"In some ways, the notion of scarcity makes sense given that the more Bitcoins that are in circulation, the lower its value will be assuming that the law of supply and demand applies. If there is a low ceiling on how many Bitcoins can be created and they have value based on scarcity and demand, its existence as a form of currency — except in very limited circumstances — may ultimately be extinguished."

I think that paragraph just jumped the shark, or maybe a dog ate some of it, because it cannot be deciphered.

"Do you remember the days when you could go to the corner store and pay 25 cents for a pack of sports cards that came with a cheap piece of gum? I’m sure if my brother dug around, he could probably mine some really valuable hockey and baseball cards. O-Pee-Chee, for instance, issued Wayne Gretzky cards in 1979 that are now worth about $50,000. So at the risk of antagonizing a number of people, are Bitcoins really that different from the situation of trading cards where only a limited number are issued, they’re accessible only to a narrowly defined market, and they’re very much subject to trends?"

Gahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhaaaaaaaaaaaahhhhhhhhhhhhhhhhhhhhhhhhhhaaaaaaaaaaaa!!!!!!!!!!!!!!!!!!!!!

Okay, I'm better now. I'm going to focus on the part of your statement that I've highlighted in bold.

Let's stop for a second and discuss how Bitcoins are different from trading cards.

Actually, nevermind, I will leave that to the reader as an exercise.

Ms. Harris, my Christmas wish list consists of two things: 1) a lump of scarce coal; and 2) that you stop writing IT articles for Canadian Lawyer Magazine. Thanks.

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Flooz | Beenz | Bitcoin

	Flooz	Beenz	Bitcoin
Owner	Flooz.com	Beenz.com	No One
Launched	Feb 1999	1998	Jan 2009
Bankrupt	Aug 2001	2001	Not Possible
Lifespan	30 Months	36 Months	Ongoing
Venture Captial	$35-$50 Million	$100 Million	$0

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Forbes Flops Part II

How does a magazine like Forbes allow such poorly researched articles to be published to their website?

From Tim Worstall:

"Bitcoin isn’t secure as the thefts have shown, it’s not liquid, as the various price crashes have shown when one single large order goes through an exchange, it’s not widely accepted so it’s not all that good as a medium of exchange and as we’re now finding out, it’s not a good store of value either."

For most of you, I'm going to be preaching to the choir, but for the sake of the Bitcoin novice who might take Tim at his word, let's break down this paragraph:

"Bitcoin isn’t secure as the thefts have shown..."

That is analogous to saying, "the dollar isn't secure, as the bank thefts have shown." I'm not going to bother elaborating any further on that one.

"...It’s not liquid, as the various price crashes have shown when one single large order goes through an exchange..."

Bitcoin is the most liquid currency that has ever existed. Any quantity of Bitcoin can be moved instantly around the world, by anyone. You can't do that with cash, you can't even do that with digital representations of cash. You definitely can't do that with gold or silver. Your proof is a non-sequitur.

"...it’s not widely accepted so it’s not all that good as a medium of exchange..."

In 2004 you could have said, "Facebook is not widely used so it's not all that good as a social network." You would have been right... at the time. Was October 18th, 2011 the deadline for Bitcoin? Was that written down somewhere?

"...it’s not a good store of value either."

Neither was Apple stock... in March of 2000.

Regardless, this is not your parents' currency, and doesn't necessarily have to possess the properties of a traditional currency in order to succeed. Bitcoin doesn't have to store value to exist as a medium of exchange. Any ability to do so is merely icing on the cake.

Tim Worstall, your proof of "The End of Bitcoin" is only proof of your lack of foresight and inability to appreciate the most important development that the Internet has seen since email. I'd like to see a follow-up to your article this time next year, but I have a feeling you're not going to want to write about the taste of crow. I hear it's good with mint-sauce.

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