Cryptic Currency

Before I launch into this, I was wondering, Dear Reader, if you would be interested in transferring, say, a thousand bucks to my account.

In exchange, I will create five digital “coins,” which I like to call Cryptic Currency, and will send you a PDF file with five tokens.  You can store them on a jump drive which I will call your “Cryptic Wallet.”

They will look like digital coins when you view them, but instead of being minted at the U.S. mint  and being backed by the full faith and credit of the U.S. Treasury, you will be able to exchange them in the future for some amount of what we regular folks call money.  But money in the sense of U.S. currency.

I may exchange your five Cryptic Currency tokens for the thousand dollars that you originally send me.  Should it become popular enough that millions of people mine them via computer algorithms “solving complex math problems,” I may send you two grand of U.S. currency in exchange.  Perhaps ten grand.

More likely zero.

                                                                                                                                                                   

My fascination with cryptocurrency began two summers ago as I read some publication, most likely a newspaper article, in my back yard on a lovely summer day.

It was one of those rare days that I get a few times per year when I could lounge about, do some reading, drink a cold beer and perhaps putter around in the garden for a while.

I do not recall what my wife and kids were doing at the time, but I clearly recall getting cranked up about Bitcoin as I read about it and thoughts of becoming wealthy for doing basically nothing filled my head.

Bitcoin was trading for about eight hundred bucks per coin at the time, and I spent a lot of time reading up on it and then researching how to open an account, since it was not available via my normal trading accounts at the time.

I got really excited about it and came into the house to tell my wife about my new discovery of how we were to become wealthy, or at least wealthier than we were and still are.

Of course, had I purchased twelve Bitcoins at the time (there is no way that I would ever invest more than ten grand into something so risky and unknown) and them sold them at their peak one year ago, last December 17th, when they hit $19,783, I would have come out ahead by over $220,000 and would, indeed, have vastly enhanced the lives of my family.

Not that I would be driving a super flashy car, although I most likely would have indulged in purchasing a Volvo sedan for myself.  German cars are great, but my mother and brother would never stomach seeing a nice Jewish mensch like myself driving one.  I, myself, would prefer not to.

I do not harp about it, but many Germans and Poles sure would have not had a problem forcing me and my family into a concentration camp, abusing us to the very depths of human depravity and then ending our lives by forcing us into incinerators had we lived in a different place and a different time.

For my Polish readers, I hereby declare that there were most definitely concentration camps in Poland and that many Polish citizens relished in their harsh treatment of Jews during those years.

From a recent Washington Post (a real news organization) article referring to an asinine law that Poland adopted forbidding the mention of Polish atrocities in the Holocaust:

The bill’s international critics had long argued that it violates freedom of expression by essentially banning accusations that some Poles were complicit in Nazi crimes committed on Polish soil, including in the Auschwitz-Birkenau extermination camp, where more than 1.1 million people died. Germany operated six camps in Poland where Jews and others whom the Nazis considered enemies were killed.

But I digress.

After I could not quite describe the utility of these Bitcoins to my wife, who happens to have some German blood in her, as my own children do, she urged me to at least understand them better if I was going to buy any and said that perhaps I should just buy one or two instead of ten or twenty.

Well, I would’ve could’ve and should’ve.

I did not buy any Bitcoins or other cryptocurrencies and have observed their meteoric rise and fall  from afar and with curiosity.

That is until two things.

The first thing was a few long discussions with a millennial who impressed me, including telling me about his mining efforts with Ethereum.  What he told me was that he has basically broken even so far.  He spends about three hundred per month in higher electric bills in his new condominium and, in turn, has mined about three hundred dollars’ worth of the cryptocurrency during those same months.

An even trade or a waste of electricity and computing power?

After all, the laptop that he purchased to run 24/7, making noise and sucking up electric, was not free.  I did not ask the cost, but he indicated that he has dedicated a high-end gaming laptop to his mining endeavor.

My first thought was: Cool!

I’m the type of dude who most likely would not mind trading extra electric costs for something new, interesting and, most importantly, of value. 

Or does it have value?  Will it five years from now?  Two years from now?  Next June?

He has been doing it for the past seven or eight months at this time.  Might his two grand worth of Ethereum be worth twenty grand next year, thus more than justifying his two grand of extra electric costs?

Maybe he will spend an extra four grand over two years on electric costs, plus the two grand or so on his high-end laptop, only to have his laptop burn itself out, fry whatever Nvidia graphics card that he runs it on, and have Ethereum worth no more than the change found in my car?

Perhaps someone will steal his laptop or perhaps a savvy hacker will steal the cryptocurrency right out of it.

I do not know and you surely do not either.

That does not mean that there are not strong opinions on both sides of the crypto coin.

                                                                                                                                                                   

A few Sundays ago, my interest was piqued once more as I read the Chicago Tribune, which had a story by Sam Dean titled “For $799 and a jump in the electric bill, anyone can mine cryptocurrency" detailing a new plug-n-play product by Coinmine for the masses to enter the cryptocurrency realm.

I clipped the article, which sat among hundreds if not thousands of others that interested me to the point that I wanted to comment on them in this blog.

As my workload continued to increase along with the stress that comes along with it, I would sometimes think about the concept of mining cryptocurrency.  How great would it be to purchase ten Etherium? Coins now for two hundred each and then sell those same ten for five grand each in a year or two?

That is the stuff that dreams are made of.

I do believe in the long-term viability of Blockchain technology.  Bitcoin, not so much.

Cryptocurrencies in general, not so much.

As their values have plummeted over the past months due to a number of factors, one of which is that they have not taken off whatsoever and have basically just become an investment vehicle that can be used to exchange for real money, many writers and financial experts have turned against the digital currency.

For a non-tech guy like me, it seems as if we could begin “mining” Ethereum easier than Bitcoin and simply by purchasing a mining rig.

A cryptocurrency mining rig.

Upon reading many articles on the topic, it also seems as if the “mining” equipment becomes obsolete very rapidly, as newer gadgets with more powerful processing power can compute and create cryptocurrency much faster and better than last year’s or even last month’s technology.

You and I are not going to become wealthy cryptocurrency miners by purchasing some eight hundred dollar gadget and then plugging it into the wall.

All we would get is a huge electric bill, a few dollars’ worth of digital currency that will likely become worthless in the coming years, and extra space in your home or garage with some gadget whirring away and overheating.

Whether it would really become worthless is subject to much debate.

Since I was seriously considering purchasing one of these rigs, plugging it into the wall in our utility room, garage or wherever, and then posting next year or a few years from now about how much actual money I made by mining virtual coins, I researched it further.

When it comes to this topic, for every seemingly reasonable and thoughtful person who posts the reasons why the entire thing is a worthless sham, there is a true believer who call U.S. currency a sham and brag about how well they are doing with the virtual mining.

For example:

Blockchain technology works but bitcoins could become worthless if no one uses them in commerce. 

its tulips i tell ya, tulips!!! 

Craptocurrencies have ZERO backing, ZERO tradability and and are backed by ZERO government insurance or regulatory agencies. My dog makes craptocurrencies in my yard and its called $hitcoin. 

The belief in the value of Bitcoin is no different than belief in the value of gold. Produces nothing, no earnings. Even more bizarre is the belief in the value of a piece of paper. the more zeros added the more value it is perceived to have. All intrinsically worthless. 

This guy has no idea how blockchain technology works, who owns what is on a ledger on the Internet AND IT IS NOT POSSIBLE TO COUNTERFEIT IT. It started out as worth nothing and is worth 3800 today. 

Bitcoin is already worthless. Made out of thin air, with nothing physical or even liquid to back up its value, attributing a value to anything above a few dollars for innovative tech is just ridiculous. 

Virtual currency is in its infancy. Predictions of its demise are premature, in my opinion. Blockchain technology is hear to stay. It has applications in nearly every industry. As the technology becomes more widely adopted I suspect a natural consequence will be using a currency based on the same technology. It only makes sense. It may not be Bitcoin but it will be a virtual currency of some sort, in my opinion. 

Bitcoin is worthless, but I have shares for sale in my new electronic currency BitCon for $1100 per share. Reply if you want to buy some shares. 

Over 300 times people have declared BitCoin dead. And yet, it lives still and has returned thousands of times more profit than your pitiful little stocks. That's fact, baby. Sorry if it hurts. 

Roubini said the same thing when Bitcoin was 80 bucks. Where is it now? Read the code..... 

The old way of valuing labour doesn't work and has always been a scam. Investor firms are paying 4-5 grand in the OTC market. The greatest money transfer of wealth, since oil, is coming. This guy will be either getting a UBI check or working as a greeter at WalMart. 

Maybe the greatest con of this decades hands down. The real value is block chain & was never cryptocurrencies. This is why you never get investment advice from random people on the internet. The sad part is there are some people out there that took on 2nd mortgages for these garbage. 

Bitcoin was never intended as an investment. It was started to move money around without the government seeing it. Then the "educated" idiots got involved and we see what happened. Funny.

Bitcoin _is_ worthless. And always has been. 

Bitcoin IS worthless. Only suckers bought it. 

The biggest problem with the "greater fool" theory is that eventually you run out of greater fools. 

lmao!!! Virtually WORTHLESS!! YOU THINK!! One of the MAJOR SCAMS OF THE CENTURY!! And IDIOTS fell for this SCAM!! 

A fool and his money are soon parted....
Only idiots do/did believe in bitcoin , it has NO value whatsoever.

Of course, those same people who extol the virtues of cryptocurrency continue to pay their rent or mortgage, pay for their cars, pay for the gas for their cars, pay for their groceries, beer and clothes with actual currency.  They pay for everything with real currency.  They do today, just as they most likely will years from now.

Don’t get me wrong.

I am not a naysayer on new things and new technology.  Quite the opposite.

Although I, myself, am not at all what you would consider tech-savvy, I closely follow new technology as it affects things in my professional field (economic development) and nearly everything else from education to production of goods to artificial intelligence and robots replacing us humans in the workforce.

I often tell my children and anybody else who will listen to me or read my words that it is far better to be on top of and to control new technology than it is to be below it and controlled by it.  Better to start a self-driving vehicle delivery company than to become a delivery driver. 

Thus, I will never write the words that cryptocurrency will not become a viable means of exchanging one’s energy and wealth for goods and services from others.

If I can pay you for a shirt with cash, a check, a credit card, a debit card or Apple Pay, then why not via a transfer of some Ethereum or Bitcoin?

I just do not think that it is going to be huge and replace the means of exchange that are employed today.  I do think that it will remain a fringe method of storing value, trading it for other stores of value, and perhaps even using it for something of tangible value.  It may become more popular than it is now, just being created and used by tecchies who dream of riches and some of whom have become rich from it.

Speaking of becoming rich from it, could I interest you in five Cryptic Coins?  If you send a grand to my wife’s PayPal account, I will get to work right away on creating them.  And you do not even have to waste valuable computing energy and electric in creating them.

Two years from now, you can contact me again to cash them out for real money.  You know; the kind that you can use to pay for goods and services.

Maybe I will transfer twenty grand to you in exchange for those same five Cryptic Coins.

Perhaps I will transfer the thousand real dollars back to you.  No harm, no foul.  Just two years without some money, although I will collect 2% interest on it in the form of a CD with real money.

Possibly the Cryptic Coins will lose all value and I will not even send a dollar back.

God only knows.