Publishing a commentary about Bitcoin by an institutional economics professor is as responsible as letting a village witch doctor give lectures on the merits of proton radiation therapy to treat cancer ("The Bitcoin myth," March 3). Peter Morici is not qualified to explain Bitcoin because he cannot understand it technically nor can he accept it ideologically. Crypto-currencies like Bitcoin fly in direct opposition to his indoctrination. His commentary is not mere schadenfreude — his ego needs to be right about Bitcoin or else he has dedicated his life to perpetuating a lie.
Mr. Morici writes, "The virtual currency was supposed to provide a safer, more private and less costly alternative to money issued by governments. But lacking the imprimatur of a sovereign, it is failing."
For a writer who uses the fancy term, "imprimatur," he is inaccurate with his application of the more basic terms of "money," "legal tender" and "currency." I had to Google imprimatur to realize he was trying to describe FIAT Federal Reserve Notes without explaining FIAT cash and credit is created by the Federal Reserve from nothing and then lent to the government and public while hijacking their "full faith and credit" at interest.
He further writes, "However, inflation is hardly a problem in the United States, Europe and Japan."
This is blatantly false, and The Sun should seriously confirm that the author is actually teaching economics at the University of Maryland. If money is fundamentally purposed to store wealth, our FIAT U.S. dollars fail the test for money.
How much did a McDonald's hamburger cost in 1970 vs. 2010? How has the value of Bitcoin held up against the U.S. dollar? In January 2013, 1 BTC equaled $13. Today, that same Bitcoin's market value is $650.
The Bitcoins themselves are secure stores of value. The Bitcoin exchange that was hacked was the victim of high-tech identity fraud, where spoofed Mt. Gox withdrawals were designed to register in Gox Systems as if they did not complete the transaction. Because Mt. Gox was using unsophisticated programming, their programs were fooled into sending out more money (Bitcoins). Mt. Gox also did not catch the drain on their Bitcoins anywhere near fast enough to prevent catastrophe. This is possibly criminally negligent business conduct of Mt. Gox, and users will be filing in class action lawsuits. Other crypto exchanges have secured themselves against this glitch. They have improved and progressed. Meanwhile, banks continue to lose more than $10 billion every year due to online credit and debit fraud. Credit cards were not designed for the Internet.
"It is no place for your children's college fund or retirement savings," Mr. Morici continues.
Bitcoin was the top investment in 2013. The price is indeed turbulent, but always trending significantly upward as a long-term investment. Fluctuations in Bitcoin rates are greater than other foreign exchange rates and require much less leverage for traders.
"There is no 'Bitland' where a government has declared it legal tender to buy goods and services and pay taxes," he also observes.
The presumption here is that Bitcoin needs a government mandate for people to value and utilize the benefits of decentralized deflationary Crypto-currency.
"Detractors of paper money have always been fixated by the absence of gold to back it up, but they fail to recognize what really makes a currency accepted and secure — the government guarantee and the good sense of the sovereign not to abuse its franchise."
Tricky Mr. Morici does not identify the sovereign whose good sense is required for continued currency acceptance and security. He is talking about the Federal Reserve, its infinite prudence and its license to print money. Bitcoin does not require society to enrich spoiled oligarchs at the expense of national sovereignty and personal freedom.
"It's not the gold but the face of Caesar — the promise his image carries — that makes a coin money."
Competition is essential to a free market economy including money. Bitcoin proponents are not trying to force consumers to engage in Bitcoin-related commerce. Bitcoin is optional and voluntary. Some will give unto Caesar that which is his — his imaginary money and fraudulent debt.
Thomas P Schmidt, Saint Peters, Pa.
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