# Thread: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

1. ## John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

"Natural News) In a recent CNBC interview that’s being widely touted by self-deluded Bitcoin promoters as some kind of “smack down” of JP Morgan CEO Jamie Dimon, Bitcoin advocate John McAfee accidentally admitted why Bitcoin is a total fraud that’s doomed to fail.

In answering Jamie Dimon’s recent declaration that Bitcoin is a fraud, McAfee replied: (see the video at The Daily Sheeple)

"However, sir… you called Bitcoin ‘a fraud.’ I’m a Bitcoin miner. We create Bitcoins. It costs over one thousand dollars per coin to create a Bitcoin. What does it cost to create a U.S. dollar? Which one is the fraud? Because [the dollar] costs whatever the paper costs, but it costs me and other miners over a thousand dollars per coin – it’s called ‘proof of work.’

Behold the logic of artificial work: How John McAfee just embraced Paul Krugman’s ditch digging fable

The problem with John McAfee’s explanation, of course, is that it admits Bitcoins can only be created through the practice of computational wheel spinning operations where the difficulty and duration of such wheel spinning is artificially made needlessly complex by the Bitcoin algorithm. In a world where Bitcoins used to be created for less than one penny’s worth of computational work, a single Bitcoin now requires over US\$1,000 worth of “artificial work” to be achieved. A rational person must ask McAfee, “Why did Bitcoins used to cost just a penny to create, and now they cost a thousand dollars?” The 100,000 X increase in complexity for generating a Bitcoin, it turns out, is an artificial work algorithm known as “computational difficulty” in mining.

This admission should be shocking to all Bitcoin holders for the simple reason that if Bitcoin drops below \$1,000, mining now becomes unprofitable, rendering a very large part of the entire Bitcoin mining infrastructure instantly obsolete. The only thing keeping Bitcoin mining profitable right now is the bubble pricing of Bitcoin itself, and because all bubbles eventually burst, Bitcoin mining will sooner or later reach a point where it’s not worth the investment of hardware, electricity and time. (There’s also the 21 million coin limit that’s rapidly approaching, by the way, which will spell the end of Bitcoin mining as it is conducted today.)

Furthermore, the “artificial work” aspect of Bitcoin mining and its artificial computational complexity is the digital equivalent of paying people to dig ditches and fill them in again while claiming the activity boosts economic output. This idea, believe it or not, is the classic economic paradox routinely pushed by left-leaning economic myth-meisters like Paul Krugman. Those of you who follow economic news know that Krugman openly and wholeheartedly believes that government could boost the economy by literally paying millions of people to dig ditches and fill them in again. This artificial work generates real-world abundance, according to economic fools like Krugman. That’s why Zero Hedge rightly posts an article entitled, “Why Paul Krugman Should Go Back To 5th Grade.”

And yet Paul Krugman’s ditch-digging artificial work is actually no different than John McAfee’s Bitcoin mining artificial work. In both cases, McAfee and Krugman ridiculously claims that work along has intrinsic value, even if little or nothing is actually accomplished in the real world. According to McAfee, computational expenditure automatically equals value, even when the notion is patently absurd to any rational person. If CPU cycles equaled wealth, then no one in the world would ever have to work again because people could just run computers all day and let the CPUs create wealth.

Any belief in such a system is, of course, irrational and absurd. There is no such thing as a perpetual wealth-generating machine unless you own the money supply itself and can hoodwink others into trading their effort for your currency. That’s what the Federal Reserve does, of course, and that’s the entire con of the Bitcoin Ponzi scheme: To recruit as many people as possible into the Bitcoin scheme so that they pay you cash in exchange for your CPU cycles.

To produce artificial work, Bitcoin consumes enormous resources

Bitcoin’s “proof of work,” in other words, is nothing more than artificial work. Yet what is the real world result of such artificial work? While generating absolutely nothing that’s real in the real world — remember as Steve Quayle says, “If you can’t touch it, you don’t own it” — the Bitcoin mining process consumes enormous amounts of electricity, computing hardware and time. Yet in the end, there’s nothing to show for all that work except for carbon dioxide emissions and mercury pollution from the Chinese coal plants that power nearly a third of global Bitcoin mining. Bitcoin, in fact, has become one of the key vectors of environmental pollution that’s causing hazardous air in California’s cities.

McAfee claims that “artificial work” is actually “proof of work.” In reality, it’s proof of nothing more than the incredible stupidity of the mining infrastructure which is now burning more electricity than a city of one million people just to keep the Bitcoin blockchain from collapsing.

“Surely there’s some value in the work that we did to create the coin,” McAfee stated. But actually, there isn’t any real-world value in it at all. Bitcoin is a digital fiat currency backed by nothing, and all the “work” used to create Bitcoins is actually “artificial work” that’s made artificially complex for no logical reason other than a crude mechanism for artificial scarcity. Yet even that scarcity is a complete failure, since any person can create and launch their own cryptocurrency alongside Bitcoin, instantly creating a massive new supply of crypto coins that flood the marketplace. (And many newer cryptos are vastly superior in design to Bitcoin. For example, Z-cash…)

On top of all that, Bitcoin is clearly not a store of value, and recent research by Princeton scientists found that Bitcoin isn’t anonymous, either. Bitcoin is also highly subject to government regulation, as the recent market plunges clearly demonstrated, following the announcement of China’s largest Bitcoin exchanges closing their doors. Liquidations of Bitcoin by Chinese investors are already underway and will continue through September 30th.

One by one, all the promises we were told about Bitcoin have unraveled: It isn’t anonymous, transactions aren’t “instant,” transactions aren’t “free,” Bitcoin isn’t a reliable store of value, it isn’t immune to government regulations and so on. Yet John McAfee, in his self-deluded cluelessness, points to artificial work and says, essentially, “See? We’re expending CPU cycles for all this! Doesn’t that have value?”

Actually, it doesn’t, Mr. McAfee. It has no more value than the GPU calculations of a nine-year-old kid playing a first person shooter on a Saturday afternoon. Yeah, his rig is running all sorts of complex calculations, but at the end of the day, there’s nothing to show for it other than Cheetos crumbs that fell between the cushions of the couch.

Computation does not automatically equal value

Computation alone does not equal real-world value. John McAfee’s attempt to conflate the two ideas only shows how deeply he has deluded himself about the future of Bitcoin. And those who falsely believe that computation equals value are only allowing themselves to be fooled by this non-logic for the simple reason that they all own Bitcoin — i.e. Bix Weir and others — and can’t come to grip with reality without admitting they were wrong all along.

The bottom line? Bitcoin is headed for failure, but cryptocurrency is here to stay. The most likely long-term scenario in all this is that we’ll see a cryptocurrency backed by JP Morgan and the government — a blockchain with built-in NSA snooping and an identity layer so that all transactions can be tracked by the IRS to enable government confiscation and criminalization as deemed “appropriate” by the crooks in Washington.

Once this “approved” blockchain is rolled out, it won’t be long before government finds a way to criminalize all “unapproved” blockchains such as Bitcoin, Ethereum, etc.

And how hard is it for government to criminalize Bitcoin? Not hard at all: It’s a simple matter to run a false flag dirty bomb operation — the FBI already masterminds and executes terrorist plots every day across America — then make sure the “bad guys” who are recruited into the sting operation are fully funded by Bitcoin.

A few hours later, the fake news New York Times will declare, “CHICAGO DIRTY BOMB TERROR PLOT FUNDED BY BITCOIN.” And the house of cards falls like dominoes. The entire media will be directed by the CIA to describe Bitcoin as a “currency for terrorists, murderers and drug dealers,” and Bitcoin will be targeted in exactly the same way the Silk Road was taken down. A few Bitcoin promoters will be imprisoned, the government will claim it’s “fighting terrorism,” and the clueless sheeple of society will applaud the news that they are being “protected” by authorities.

Seeing all this play out is as clear as day. And why is this so obvious? Because we are all living as slaves in a totalitarian society run by fake news, fake terrorism and fake authority.

Will that totalitarian regime allow all their central banks and government currencies to be made obsolete by a libertarian cryptocurrency they don’t completely control? Of course not. And anyone who believes Bitcoin will overthrow the globalist money / debt cartels is naive and stupid. Trust me when I say a bunch of geeks aren’t going to overthrow centuries of globalist money domination that now rules our corrupt world."

http://www.naturalnews.com/2017-09-1...zen.yandex.com

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3. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Warren Buffett's view on Bitcoin was blunt and to the point (and he ought to know a thing or two about money)

"Stay away from it. It's a mirage, basically...The idea that it has some huge intrinsic value is a joke in my view."

"It's a method of transmitting money. It's a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? Are money orders? You can transmit money by money orders. People do it. I hope bitcoin becomes a better way of doing it, but you can replicate it a bunch of different ways and it will be. The idea that it has some huge intrinsic value is just a joke in my view."

https://www.cnbc.com/2014/03/14/buff...stay-away.html

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5. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

What a piece of clueless drivel.

There've been some desperate accusations levelled at bitcoin over the years but that one's kind of scraping the barrel.

What is it with Mike Adams that he has such a hang up over bitcoin ? He was calling it a bubble at \$200 over 4 years ago. He's generally an interesting author but when it comes to bitcoin his powers of analytical appraisal seem to evaporate in a cloud of malevolent resentment. There's almost nothing factually correct with that article, never mind qualitatively.

It's being appropriately berated on his own site at the moment.

Here's a slightly more informative commentary on events of last week

https://hackernoon.com/the-empire-st...o-bdd84fd2f854

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7. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

I'm no expert on Bitcoin, but I'm fairly certain I have a better grip on understanding how it works than Mike Adams does. First, I'm fairly sure the "difficulty" level decreases/ increases in direct correlation with its market value, so he's misinformed on that point. The reason being as the price decreases, profit margin decreases, which drives miners out of the market, and with less players in the market, there is more market share per miner, or something like that. So, no, if the price drops below \$1000.00 it will no longer cost \$1,000.00 to mine one bitcoin. It will cost considerably less. Second, anyone who cannot understand the intrinsic value of Bitcoin doesn't fully understand how Bitcoin works. (I'm fairly certain Warren Buffet and Jaimie Diamond do understand the intrinsic value of Bitcoin, but neither want anything to do with promoting it, for obvious reasons)...

The problem with Bitcoin isn't that it has no intrinsic value. However, Mike Adams is correct in his analysis about inevitable government regulation and/or a false flag demonization that could potentially send the price crashing. Once Bitcoin becomes a big enough thorn in the side of the banking cabal, or perhaps even a legitimate competitor or bonafide threat to their monopoly, it would be very easy, in my view, to extinguish the threat. Right now it's just a fly on the horse's butt, so to speak (and also a good beta test for their own crypto currency monopoly ambitions), so they will tolerate Bitcoin and study the sociological ramifications of the beta version...for now.

One last observation: Adams claims the banksters are eventually going to create their own crypto currency with built in NSA and IRS spying that will render Bitcoin obsolete... I concur they will eventually create their own blockchain/ crypto currency. I concur they can also severely damage the market value of Bitcoin. But why will this point alone be the demise of Bitcoin? Why in the hell would I use their currency if I could use a Bitcoin? Just saying'.... The very beauty of Bitcoin is its free association and the liberation from bankster/ government control, usurpation, and taxation. As long as there are two sides of a transaction that agree on its intrinsic value who are able and willing to bypass their oppressors, who cares what the government says? So it's banished or illegal. Technically barter is illegal, too. Save for an complete totalitarian Orwellian system capable of effectively monitoring and cracking down on such a system, it will be very difficult to stamp out Bitcoin transactions entirely if enough people understand exactly why the government is shackling the peoples freedom to use it in the first place.

My .002 bitcoins...

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9. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

The largest hedge fund operator Ray Dallio (who wishes to freeze his head upon his death) thinks bitcoin is a farce.

So with that level of reason I guess it's case closed.

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11. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by indigopete (here)
What a piece of clueless drivel. There have been some desperate accusations leveled at bitcoin over the years but that one's kind of scraping the barrel. What is it with Mike Adams that he has such a hang up over bitcoin ? He was calling it a bubble at \$200 over 4 years ago. He's generally an interesting author but when it comes to bitcoin his powers of analytical appraisal seem to evaporate in a cloud of malevolent resentment. There's almost nothing factually correct with that article, never mind qualitatively. It's being appropriately berated on his own site at the moment. Here's a slightly more informative commentary on events of last week https://hackernoon.com/the-empire-st...o-bdd84fd2f854
Yes, much prefer the Hackernoon analysis of cryptocurrency than the McAfee point of view. True, mining has a pseudo productivity element to it but no less than the labour used to print the paper used for money orders and cheques, or currency notes.

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13. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by T Smith (here)
The very beauty of Bitcoin is its free association and the liberation from bankster/ government control, usurpation, and taxation. As long as there are two sides of a transaction that agree on its intrinsic value who are able and willing to bypass their oppressors, who cares what the government says? So it's banished or illegal. Technically barter is illegal, too.
I could also exchange Dungeons and Dragons cards with my cousin, without government intervention. I'm pretty sure he still has some in his closet, from when it was his favorite game, a long time ago.

That is not sufficient to be an exchange of value.

For something to have value in an exchange, which it must have if you want something of value in return (and you're engaged in honest trade, not in gifting or stealing), then either:
1. that something must have intrinsic value of its own (like bread, booze, tobacco, or petro, if the person you're trading with wants such an item for immediate use or for storage), or
2. that something must be in itself promise to be exchangeable for items they might value in the future (like US Dollars in many places for many decades now.)
The above two items and comment are the important part of this post - I hope they make sense to the reader.

The government apparently won't be attacking the free exchange of crypto-currencies between two competent traders, each running their own wallet, so much as the government will be attacking the exchanges that allow for converting into and out of "real" (whatever really works on the street at the moment) money, and attacking anyone who makes too much money or otherwise pisses off a too powerful person or institution and can be accused of tax evasion or money laundering.

Most people using smartphones depend entirely on exchanges not only to move "real" money in and out of crypo-turrencies, but also to store their crypto-currencies and to trade between various crypto-currencies.

Those exchanges are highly vulnerable to government intervention, as for example is happening in China right now, which is in the process of shutting Chinese crypto exchanges down.

This is much the same problem as with the Internet:
Two competent geeks, say myself and Ilie, could exchange secret messages all day long over the Internet, between Texas and Romania, without government surveillance or intrustion, unless we got "on the radar" of one of their NSA teams who have more geeks, bigger computers and a bigger budget. In that sense, the Internet was, is, and will remain "Free!".

But if you start running a holocaust denial site in Germany, or start revealing real cancer cures in the US, or start revealing practical "free energy" technology, or start wide spread distribution of copyright Walt Disney films, or any other number of such "sins", and you start reaching any significant audience ... you will be shut down, without doubt.

Meanwhile the main institutions now on the Internet, such as Alibaba, Google, Amazon, Facebook, Twitter, Netflix, Microsoft, Youtube, Baidu, Wikipedia, Yahoo, Mozilla, and Apple are very much not reliable supporters of individual human freedom.
The Future of Bitcoin, as I see it:
Any monetary system has a number of moving parts that connect together. Just because one core part of Bitcoin and similar cryptocurrencies is "free" does not mean that there is any (risk/chance) of Bitcoin and such becoming important components of our civilization's monetary system.

The future of distributed blockchain ledger technology is, in my estimation, looking bright.

The future of the currently popular crypto-currencies such as Bitcoin is, also in my estimation, time limited.

In my view, Bitcoin was in a bubble at \$200, and it's still in a bubble at \$4000. When I say something is in a bubble I don't mean it's going to pop tomorrow afternoon. Rather I mean that it will pop, at some point, once the hype-period is over. I say it will pop because both its intrinsic value (essentially zero) and its trade value (once governments clamp down on exchanges, initial coin offerings and other such) will also be very close to whatever those governments want it to be (which, sooner or later, I expect to be essentially zero.)

I am not against investing in bubbles. I made money in the Silicon Valley Dot-Com boom. I made money in the US Real Estate market bubble. I have made money in the cryto bubble (enough to purchase a cup of coffee anyway.)
But you're dealing in a house of cards when you play such games. Behold some Dungeons and Dragons cards:

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15. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Thanks Paul. you sum it up very nicely. Money is a promise to return something of the same value you have taken now. doing the deal over the internet which is controlled by someone else doesn't look like a very logical idea, unless someone is as knowledgeable as you and wants to simply get more for less. I will spend my time on things that produce real values like gardening and making cheap and effective cures for illnesses. There is nothing that could be fairer exchange. Perhaps this is the reason Mike Adams despise any form of monetary exchange. Its simply prone to hoarding manipulation and corruption. I have little understanding of bitcoin but if it is an electronic money, anyone who says its better than paper money is naive IMO. The fact that you are storing (promising) it on the electronic memory and you are dealing over the infrastructure that we don't have control should be sufficient.

16. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

One of the main reasons the world is running short of goods and food is because more and more people simply wants to make money without making something of real value while less and less people make money from producing goods.

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18. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

It's easy to dismiss the likes of wealthy octogenarians like Buffet as out-of-touch fuddy duddies.

Quite frankly, I'd rather listen to someone who has lived through the Great Depression and has seen every scam-artist con trick in the book, than a bunch of technologists berating others for their lack of knowledge.

This is EXACTLY what Bitcoin is, in my opinion, a scam. Not only are they intrinsically worthless, they are a scam that should be blindingly obvious to Avalonions, who are wary of any entity or thing supposedly on the way
to come and rescue all of us. It should be as obvious as the technology bubble of 2000, pets.com and the like.We've had many bubbles in the past and Bitcoin has all the indicators of yet another bubble. These guys like Buffet might not know anything about blockchain algorithms, but from decades of hard-won experience they know value and non-value when they see them.

Commodities like gold have at least some value as a currency because they have certain desirable properties - durability, portability, divisibility and so on. Even if it it had none of these properties, it derives its value from its useful physical traits, such as filling teeth, conducting electricity and so on. Bitcoins have no such traits.

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20. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Arguing what does and does not contain intrinsic value is more a matter of semantics, in my view. Certainly, a dollar bill has no intrinsic value whatsoever, save for its government's good faith and credit (which is far more suspect than the open-source blockchain technology as far as I'm concerned). Paper money is definitely a scam. Yet it is used as a trusted means of exchange. Even gold and silver have no "intrinsic value" save for what humans have ascribed to it over time. One could argue that humans have always ascribed value to gold, over a span of thousands of years, hence gold has intrinsic value, but that still doesn't translate to actual value. That just provides a track record of how humans have ascribed value to something without an actual value, thus a greater trust in an illusion. In this vein, Bitcoin has no intrinsic value either (and there is literally no track record with Bitcoin, hence no trust in Bitcoin), which is the crux of the matter, in my view. But Bitcoin does have value in the sense that people ascribe some degree of worth to the technology and process underlying the means to secure, verify, and trust a digital means of exchange. Its supply is limited, thus it has a supply and demand dynamic (assuming no manipulation) which further ascribes a "measurement" to that value. I personally don't get too hung up on the "no intrinsic value" angle of the Bitcoin critics; to me it seems like this is a splitting of hairs.

What I do concern myself with is the degree of trust in this value and its measurement, and more specifically, how easily and vulnerable that trust is given its obvious enemies, i.e., the banking cabal and their blood-sucking government thugs. I agree, Bitcoin probably won't end too well, but it's not because it's a scam and it's not because it has no intrinsic value.... It's because the banking cabal will likely drive that intrinsic value to "zero" relative to the value of their monopoly scam.

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22. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

We all know that JPM bought the dip they helped induce, to the tune of 3 million Euros last week, right?

Similar tactic as Rothschild after Waterloo: scare, destabilize and buy the stock at a fraction of the cost:

.....According to public records of Nordnet trading logs, the two associated firms JP Morgan Securities Ltd., and Morgan Stanley bought roughly 3M euro worth of XBT note shares. Interestingly after the recent regulatory crackdown in China, and the statements from JP Morgan’s senior executive Jamie Dimon talking trash about bitcoin, his firm bought the dip on September 15. In fact, out of all the companies on the list, like Goldman Sachs and Barclays, the JP Morgan team of buyers purchased the most XBT notes.....(full article here)
When rich bankers advise you to go left, I know which direction I'm going.

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24. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

No one creates U. S. Dollars (as per McAfee's statement). They create Federal Reserve Notes, which are sold for debt, Treasuries, an at-interest bond. So it's a shackle on the future just to place those in circulation.

Bitcoin at least admits to being a "fiat" currency, i. e. something not directly convertible to a physical gold or silver coin, so, I don't yet see an instance of fraud, and I don't see them pressuring governments to sell the future prosperity of populations, who are largely uninformed of the situation.

This article certainly led with some strong bias (self-deluded, total fraud, etc.), doesn't include Mr. Dimon's original point, and includes Mr. Quayle's point about tangibility, which I would have to say, the number of people thinking they own something that can't be touched, is well beyond the scope of the article.

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26. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by T Smith (here)
Arguing what does and does not contain intrinsic value is more a matter of semantics, in my view. Certainly, a dollar bill has no intrinsic value whatsoever, save for its government's good faith and credit (which is far more suspect than the open-source blockchain technology as far as I'm concerned). Paper money is definitely a scam. Yet it is used as a trusted means of exchange. Even gold and silver have no "intrinsic value" save for what humans have ascribed to it over time. One could argue that humans have always ascribed value to gold, over a span of thousands of years, hence gold has intrinsic value, but that still doesn't translate to actual value. That just provides a track record of how humans have ascribed value to something without an actual value, thus a greater trust in an illusion. In this vein, Bitcoin has no intrinsic value either (and there is literally no track record with Bitcoin, hence no trust in Bitcoin), which is the crux of the matter, in my view. But Bitcoin does have value in the sense that people ascribe some degree of worth to the technology and process underlying the means to secure, verify, and trust a digital means of exchange. Its supply is limited, thus it has a supply and demand dynamic (assuming no manipulation) which further ascribes a "measurement" to that value. I personally don't get too hung up on the "no intrinsic value" angle of the Bitcoin critics; to me it seems like this is a splitting of hairs.

What I do concern myself with is the degree of trust in this value and its measurement, and more specifically, how easily and vulnerable that trust is given its obvious enemies, i.e., the banking cabal and their blood-sucking government thugs. I agree, Bitcoin probably won't end too well, but it's not because it's a scam and it's not because it has no intrinsic value.... It's because the banking cabal will likely drive that intrinsic value to "zero" relative to the value of their monopoly scam.
Ascribing value to something more than its actual value is definitely a scam. that being said, Bitcoin has a higher degree of scam than coins or golds. Besides I dont see the rationale in going from one scam to another scam. Not to far from mainstream scam to alternative scam.

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28. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by Akasha (here)
When rich bankers advise you to go left, I know which direction I'm going.[/QUOTE]

Yep thats why its always good to observe where the sheeples go. Naturally they will aim for the bulk catch. But beware when they address you singly. Be a step ahead on the mind game.

29. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by Bubu (here)
Ascribing value to something more than its actual value is definitely a scam.
Well by that definition, ANY monetary medium is a scam because anything that stays in circulation and isn't consumed, by definition represents a monetary premium over its utility cost. There's almost no monetary example where this isn't the case so I'd say you have to either re-appraise your analysis or spend all your money immediately before its value goes straight to zero.

In fact, if you actually apply systems analysis to properties of monetary media, it turns out that the most optimal and efficient forms of money are things which have ZERO utility value and OPTIMAL monetary properties (i.e. they’re no use for anything other than serving as monetary tokens).

As a mundane anecdotal illustration of that point, take those plastic tokens that are used to pay for rides at a funfair. You go to the kiosk and purchase ride tokens at, say \$3 each. Those plastic tokens probably cost around 10 cents each in a hardware shop. So you’re paying a whopping 97% over cost for the token ! Where is the extra cost coming from ?

Answer: the monetary premium carried by the tokens due to being in a monetary role as opposed to a utility role.

That’s why you’re seeing bitcoin putting on value year on year. It isn’t coming from ‘utility’, ‘instrinsic’ or any other kind of value. It’s coming from a monetary premium due to being “in use” as a store of value. Just as the worthless plastic token was capable of storing the value of the ride due to having sufficiently robust monetary properties (fungible, portable, non-counterfeitable within reason, etc), so bitcoin is capable of storing value of almost anything.

So it isn’t a scam as long as 2 significant conditions prevail:

A. it has suitable monetary properties for the job it’s required to do (store and transmit value, unbacked, on an electronic platform)
B. the market arbitrates in its favour as such

Clearly, the second of those two takes time and carries risk during the early phase of adoption. But note, it only needs to be adopted to *store* value, it doesn’t actually have to become a currency in a price denomination context because we have all kinds of gateways now with which to interface with diverse commercial environments where trades are denominated in national currencies. These include online gateways such as Bitsquare & Bitpay and bitcoin backed debit cards which work transparently over the Visa network and so on.

Bottom line: any monetary medium exposes itself to the “scam” accusation simply by virtue of garnering a monetary premium over utility if it works as money. But bitcoin and its descendent digital assets are about the least “scammy” you’ll ever come across in my opinion. Their monetary properties are almost perfect, at least far more so than any precious metal.

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31. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by indigopete (here)
Posted by Bubu (here)
Ascribing value to something more than its actual value is definitely a scam.
Well by that definition, ANY monetary medium is a scam
Yes it is and as I have said going from one scam to another is senseless. Everyone on Avalon agrees that money is use to control people. This is of course a signal to restore peoples faith in money. Thus bitcoin is born. to say that bitcoin wont be use to control people is beyond understatement. As pointed out by Paul and T Smith and myself its even more prone to manipulation. And besides China and Russia and other countries have learned the art of controlling their money. which is another signal to create something more controllable. Is this the reason why China shuns bitcoin in its latest move.
The world need to invent a way with dealing without money not invent new money, that being said every new money system introduce is a new scam. Money has been there for as long as we can remember perhaps by now we can be aware that it absolutely brings nothing good.

32. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by Bubu (here)
Posted by indigopete (here)
Posted by Bubu (here)
Ascribing value to something more than its actual value is definitely a scam.
Well by that definition, ANY monetary medium is a scam
Yes it is and as I have said going from one scam to another is senseless. Everyone on Avalon agrees that money is use to control people. This is of course a signal to restore peoples faith in money. Thus bitcoin is born. to say that bitcoin wont be use to control people is beyond understatement. As pointed out by Paul and T Smith and myself its even more prone to manipulation. And besides China and Russia and other countries have learned the art of controlling their money. which is another signal to create something more controllable. Is this the reason why China shuns bitcoin in its latest move.
The world need to invent a way with dealing without money not invent new money, that being said every new money system introduce is a new scam. Money has been there for as long as we can remember perhaps by now we can be aware that it absolutely brings nothing good.
Are you Bubu saying we should go back to barter economy or start mailing bags of gold and silver to each other? That would be very inefficient. I'm also quite confident that even though gold has intrinsic value for technology uses and jewellery, I think big part of golds value comes from perceived value. Before it was used in any technology it had a great value in many parts of the world as a shiny metal which was useful for making pretty jewellery. Because gold has been around for so long people take golds value as granted. It has always had value and it always will. I know you believe it and I know you believe everyone else believes too. Thus there will be a demand and supply. Precious metal are useful asset for a store of wealth because keeping all your wealth in high inflation fiat currencies is just plain stupid.

In essence ideal money is a tool for transfer of value. Sure money has been and is used to control people but to say all money is just a tool of control is in my opinion absurd. Old world fiat money is a definite pyramid scheme. There is a centralized entity with the power to create money out of thin air and charge interest out of it. If that's not scam, I don't know what is. Bitcoin and other cryptocurrencies however aim to be more or less decentralized money which is created in a such away that no one entity can control it.

Cryptocurrencies are here to stay and bitcoin is the father of all cryptos. Therefore it has the most universally accepted confidence. For a proof of work currency it dwarfs all other PoW tokens. Bitcoins massive network hashrate makes it very hard to be taken over by malicious entity. There is also utility value. If you have ever traded altcoins, you would know that most likely you need first buy bitcoins with fiat. Altcointrade is made 99% with bitcoin. Bitcoin is in essence the reserve currency of cryptocurrency world. This is why I don't think bitcoin will crash to nothing anytime soon.

Sure bitcoin is not perfect with high transaction fees, slow times and inadequate privacy. That is why bitcoin will never bee used as an everyday currency. However it doesn't need to be since there are hundred of altcoins that have improved in many areas: privacy, speed, fees, smart contracts etc. I'm not even a big fan of PoW tokens. I feel proof of stake and especially delegated proof as stake they have in ARK is many ways superior. No need for mining, fast speeds, very low fees. There's also IOTA which doesn't use blockchain at all but a tangle ledger, where by making a transaction you automatically confirm two other transactions so there is NO fees, very fast transactions and unlimited scalability. IOTA is being created as a backbone of internet of things of future where for example your car can automatically pay for charging batteries, parking fees and road tolls.

Bitcoin at the moment is the king of the cryptoworld but this can change in the future when we see a rise of altcoins offering superior technology. It is well known that banks and governments are in a process of creating their own cryptos but I feel it is a victim mentality to just think that in the end we can't do anything and all decentralized cryptos will be outlawed and all we will be left with is the government and bank regulated ones. If that is the case, why try to change this world at all? It's not going to be easy. There is an economic war going on in the cryptoworld. They will start regulating the exchanges more and more like has happened in China. However soon we have decentralized exchanges (atleast ARK, Blocknet and OMG) which as far as I know will be impossible to regulate because you can change between currencies straight from your virtual wallet. I'm more worried if there will be regulations that outlaw businesses from accepting crypto tokens as a payment of services. That is a whole different thing.

I see cryptocurrencies as a huge possibility take back the control of money. Banks and governments are not going to like it and they will fight back. This is our biggest weapon to tip the scales if we manage to pull it off. The future is not certain but I know where I'm standing.

33. ## The Following 3 Users Say Thank You to vortexpoint For This Post:

Antagenet (23rd September 2017), Callista (22nd September 2017), neutronstar (22nd September 2017)

34. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

Posted by Bubu (here)
Everyone on Avalon agrees that money is use to control people.
Really ?

I think you’re making too much drama out of what is a simple human tool that has probably liberated at least as many as it’s controlled. It’s just that when we sit here with our technology discussing philosophical niceties with food on our tables and our children’s tables we tend not to attribute any of it to the invention of generic “money”.

The problem with the current fiat money system is simply this: the debt generated from the liquidity creation process is owned by the liquidity providers exclusively instead of the economy as a whole. That one “fault” is what results in enormous flows of capital into the hands of a few.

But it would, in my opinion, be wrong to slander the whole concept of money just because of that one corruption of our current banking system. Bitcoin, for example, does not have this problem because the liquidity providers generate the tokens as an asset, not a debt, at enormous cost to themselves.

Also, any scarce resource can and has been used to “control people”. It’s not the resource that deserves the blame (if it’s not faulty) it’s the politics surrounding its use and how it gets into the hands of a few.

In that regard bitcoin is a whole lot less manipulable than central bank money and a whole lot more use. Sure, mining resources are subject to politics and centralisation, but there are also substantial mitigations to those issues. For a start, no amount of centralised mining power can increase your yield beyond a certain point. Secondly, markets are reasonably free and un-manipulated save for the odd whale driven pump & dump or rogue exchange trading ‘fake coins’.

There are also plenty of alternatives to hedge into that exhibit strength where bitcoin may have weaknesses. Just pick your favourite concern - whether it be centralised mining, counterparty risk from exchanges, co-opting by governments etc. There are solutions which address all of these directly in one blockchain or another.

35. ## The Following 3 Users Say Thank You to indigopete For This Post:

Antagenet (23rd September 2017), Callista (22nd September 2017), vortexpoint (22nd September 2017)

36. ## Re: John McAfee accidentally just revealed why Bitcoin is a total fraud: Behold the logic of “artificial work”

[QUOTE=vortexpoint;1181453]
Posted by Bubu (here)
[

Are you Bubu saying we should go back to barter economy or start mailing bags of gold and silver to each other?
The world is essentially doing barter. I send you my veggies I pay for it you send me clothes I pay for it. If you remove the money its a barter of veggie for clothes. We just put money in the equation as a form to store the value.
And if you say mail gold and silver which is essentially money you simply are contradicting yourself. Bartering of money... never heard of that.

37. ## The Following User Says Thank You to Bubu For This Post:

Antagenet (23rd September 2017)

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