John McAfee accidentally just revealed why Bitcoin is total fraud: Behold logic

[BADecker]

John McAfee accidentally just revealed why Bitcoin is total fraud: Behold logic of "artificial work"

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."

Read more and click the links at https://www.naturalnews.com/2017-09-17-john-mcafee-accidentally-revealed-why-bitcoin-is-a-total-fraud-behold-the-logic-of-artificial-work.html.

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[KaranRaut]

John McAfee accidentally just revealed why Bitcoin is total fraud: Behold logic of "artificial work"

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."

Read more and click the links at https://www.naturalnews.com/2017-09-17-john-mcafee-accidentally-revealed-why-bitcoin-is-a-total-fraud-behold-the-logic-of-artificial-work.html.

I despise the article.. Its one sided article by someone who is sad that his years of economic studies is going to have smaller ROI than novice miners and traders.. The author is a hater.. Maybe I hate him too
An I hate MLMs

[leonair]

"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.' "  This statement of whoever this miner is, he totally nailed it, this people who is spreading a FUD in bitcoin in able to bring down its price is most are bankers and we all know that bankers hate cryptocurrencies because it is the future of currency and they are scared that it will kill the future of banks.

[BADecker]

Read the comments at https://www.naturalnews.com/2017-06-11-bitcoin-bubble-seven-simple-self-evident-questions-that-will-cause-you-to-steer-clear.html and http://www.freedomsphoenix.com/News/225598-2017-09-18-john-mcafee-accidentally-just-revealed-why-bitcoin-is-total-fraud.htm. Most of them show that Ranger Mike hasn't thought out what Bitcoin is all about.

If the system crashed big time, we might lose Bitcoin. But we would lose most of the fiat system, as well. And, we would lose most of the luxuries we have, and even the ability to buy groceries.

The biggest thing that Bitcoin offers, and I didn't see it in the comments, is freedom. We don't have to be ruled by inflating dollars anymore. Holding dollars is automatic loss of value. Gold and silver were supposed to be gaining value with regard to fiat, on a regular basis. But, now these are controlled, as well.

Bitcoin is free. Look at the strength it commands in less than 10 years from the time it was introduced.

Look at the 4 or 5 main potential fail points in the comments at  http://www.freedomsphoenix.com/News/225598-2017-09-18-john-mcafee-accidentally-just-revealed-why-bitcoin-is-total-fraud.htm. These fail points are essentially the same for fiat.

The article takes what John McAfee says, and twists it around to mean the opposite of what he was trying to get across.

[BADecker]

"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.' "  This statement of whoever this miner is, he totally nailed it, this people who is spreading a FUD in bitcoin in able to bring down its price is most are bankers and we all know that bankers hate cryptocurrencies because it is the future of currency and they are scared that it will kill the future of banks.

This is part of the John McAfee quote ^^^. And the thing he was trying to get across is, there is value in Bitcoin. But there isn't any in fiat.

Gold and silver have value in industry. But if not for this, their value lies in the fact that people like them... for artistic purposes, and for rarity. Same said Bitcoin, and more.

[emuLOAD]

21 million "rapidly approaching" and "if price crashes mining disappears".
it's not even an half-assed attempt at a hit piece.

[Carlton Banks]

Is it just me, or is John McAfee not misrepresenting the facts also? I don't think he is a Bitcoin miner, he supposedly (or at least according to him) is on the run from Belizean government assassins? Maybe he changed his story, but this guy is full of questionable stories.

Also, isn't he a part of the whole Bitcoin Cash thing, being close to Bitmain et al? He seems like a spurious defender of Bitcoin, or questionably good example of it's human capital, looked at several different ways.

[KaranRaut]

Read the comments at https://www.naturalnews.com/2017-06-11-bitcoin-bubble-seven-simple-self-evident-questions-that-will-cause-you-to-steer-clear.html

I like Jay Tes responses: All of them... excerpt for the bitcointalkers ...


Again, I start from the FACT that bitcoin is a currency and clearly meets the classic definition of a currency (i.e. anything which passes from person to person and is commonly acceptable as a medium of exchange or money). That being said, let's respond to Mr. Adam's questions:
1. Apple produces iPhones. Amazon produces fulfillment services for millions of products. What does Bitcoin produce? It's a currency. It's not supposed to produce anything same as the US dollar or British pound.
2. Bitcoin’s “value” has increased by 350% in the last 12 months. What has Bitcoin introduced in that time period that would justify a 350% increase in its value? What does Mike mean when he says that it has increased in value? He means that compared to the useless US dollar that is printed ad infinitum that relative to the US dollar is has increased in value. It's a relative comparison that only has meaning if you are holding dollars assets.

[anon4250158]

Mining will be obsolete if the price drops below $1000?  That's funny.  If mining costs more than the bitcoin you get out, people WILL stop mining... until the difficulty drops again and it costs less to mine.  This problem is self-fixing, and bitcoin does not rely on an ever-increasing price to work.

[ivrynx]

I think the one that he should be speaking to is satoshi nakamoto, if he or they are willing to talk to him, why would he say that bitcoin is a fraud, yet he is claiming to be part of it, i think he loss a lot of bitcoins during the dip, it might be, that he was one of those who panic, and now is trying to buy back his losses, well i guess its too bad for him, he should' just hodl and believe that bitcoin can still rise back. All i can say from his interview is that, he is ttying his best to convince the general public not to acknowledge bitcoin, however, at this time, he is already failing, those who bad mouthed bitcoin, in turn bought their own and some even made their own ICOs. If he believes that bitcoin costs nothing, what about taxes, fees and interest when you use fiat, for example, you went to a restaurant, you paid using your card, there will become a fee like service fee or even parking on your bill, then you will also see the government tax on top of what you bought, then if you didn't immediately pay your card, there will be an interest on top of your bill again, that is making money out of thin air,  and since they put it into law, noe it is not considered a fraud nor scam. I think what needs do, is to check more on how money works, and how can you say bitcoin doesn't have any value, since at this time, even air is being sold by bottles. We don't know if he just loss a lot of bitcoins during the dip, well probably he did, that's why he came out, right after bitcoin's price began to rise.

[Hydrogen]

There's a significant amount of politics intertwined in all of the topics McAfee addresses which complicates things.

Paul Krugman's idea about paying people to dig ditches and fill them in, rather than render real or lasting service to society for one. There's a tremendous demand for upkeep of infrastructure, maintenance of mass transit and public utilities. A big demand for homegrown organic food provided by farmer's markets.

Its possible Krugman supports useless ditch digging as his underlying political slant involves destroying the wealth, innovation and productivity of nations. Hence useless dig ditching rather than programs which benefit or raise the standard of living.

[monkfishy]

The idea that digging a ditch and filling it back up increases economic activity comes from Keynes' multiplicative effect. That income-generating activities ripple through an economy since those earning it will use it. It's a macroeconomic idea about economies that in the short term is below it's potential activity.

The idea that a currency, regardless whether it's gold, shells, stones or bitcoins, must be scarce is a completely different economic idea. Money cannot be obtainable ad infinitum by anyone, it simply must have a limited supply. Now that supply can be limited by "real" difficulty, such as gold or diamonds or shells at the bottom of the ocean, or by "artifical" difficulty such as a central bank deciding how much to print or an algorithm adjusting difficulty. The main point is that there is difficulty involved. You'll never see pebbles or dirt used as money for that reason.

One can argue all day long about both these ideas, but the opinion that they are intertwined somehow is completely off. Perhaps the article writer needs to revisit some basics himself.

[algaidaman]

So 100 years away == rapidly approaching now?

[iamTom123]

Read the comments at https://www.naturalnews.com/2017-06-11-bitcoin-bubble-seven-simple-self-evident-questions-that-will-cause-you-to-steer-clear.html and http://www.freedomsphoenix.com/News/225598-2017-09-18-john-mcafee-accidentally-just-revealed-why-bitcoin-is-total-fraud.htm. Most of them show that Ranger Mike hasn't thought out what Bitcoin is all about.

If the system crashed big time, we might lose Bitcoin. But we would lose most of the fiat system, as well. And, we would lose most of the luxuries we have, and even the ability to buy groceries. The biggest thing that Bitcoin offers, and I didn't see it in the comments, is freedom. We don't have to be ruled by inflating dollars anymore. Holding dollars is automatic loss of value. Gold and silver were supposed to be gaining value with regard to fiat, on a regular basis. But, now these are controlled, as well. Bitcoin is free. Look at the strength it commands in less than 10 years from the time it was introduced.

Look at the 4 or 5 main potential fail points in the comments at  http://www.freedomsphoenix.com/News/225598-2017-09-18-john-mcafee-accidentally-just-revealed-why-bitcoin-is-total-fraud.htm. These fail points are essentially the same for fiat. The article takes what John McAfee says, and twists it around to mean the opposite of what he was trying to get across.

That article is really funny...it is a trying hard attempt to bash Bitcoin by just quoting a single person and make the man as the representative of the whole industry. Now, it is sad that people kept on bashing Bitcoin but then looking at it from another angle we should be expecting this and there can be more, obviously. Well, at least we live in a democratic world where people have the choice to be a part of or stay away from...that is the only thing I can say to the author. Nobody knows exactly what can happen in the future but am more inclined to believe that Bitcoin is here to stay and that recent debacle caused by China news is just an example of how resilient and a fighter our Bitcoin is.

[haroldtee]

OK!  We have heard him. Another hypocrite on the loose. What baffles me is how these guys do not understand how irrelevant their wacko thoughts are regarding bitcoin. I am sure he didn't understand how ridiculous he sounded cause from his speech it was obvious he contradicted himself and that is what happens when someone is confused.

[Ucy]

Article doesn't make much sense.  Seems the writer is assuming that mining Bitcoin isn't profitable? If yes, then I think he misunderstood McAfee.

[ebliever]

I think a reason people are struggling here is because both McAfee and the author of this article make serious mistakes, and you need to disentangle the errors to get straightened out.

1. The author is correct to criticize McAfee for arguing that bitcoin has value because it costs something to make bitcoins. McAfee has it exactly backwards: It costs something to create a bitcoin BECAUSE bitcoin has value. Back when bitcoin was just getting started it cost virtually nothing (in terms of hardware and electricity) to get bitcoins from mining. As bitcoins became more valuable competition for them increased so that it costs quite a bit to create one now. But the cost to create a bitcoin floats relative to the value of bitcoin established by the free market - not the other way around.

2. The author is entirely wrong to imagine that there is a relationship between the cost to create a bitcoin and whether it is a fraud or not. Let's say a tooth fairy showed up at the US Mint and offered to pay the cost of printing USD. Would that make USD a fraud because they are now free for the government to create? Not at all. Nor are they a fraud because they do in fact cost something to create.

What makes a currency a fraud or not is its scarcity, and whether that scarcity is maintained into the future. If people buy into bitcoin on the belief that there will ever only be 21 million bitcoins, and then the devs and miners collude next year to flood the market with a billion new bitcoins, destroying the investment of earlier buyers, then THAT would be fraud.

Likewise, when people place their trust in USD or other government issued currency, and then said governments inflate away their debts by flooding the market with new currency, destroying the value of that currency, then THAT is defrauding the savers who hold their currency.

So the Natural News author is precisely wrong. So long as Bitcoins total supply and mining schedule remain untouched Bitcoin is NOT a fraud. But so long as governments inflate their fiat money supply, particularly in unpredictable ways or to reduce the stress on their budgets, then those fiat currencies ARE frauds.

[pooya87]

this is such a weird article. and the choice of words in it are pretty interesting. it shows the purpose of it which is in fact mostly FUDing bitcoin. words such as "computational wheel spinning operations" and "artificial work" are what stand out to me.

... and they keep bashing bitcoin for years and years to come. but bitcoin is going on strong and disregards all the B.S. of the media. the real panic comes from those who are bashing it.

[barabut]

Read the comments at https://www.naturalnews.com/2017-06-11-bitcoin-bubble-seven-simple-self-evident-questions-that-will-cause-you-to-steer-clear.html and http://www.freedomsphoenix.com/News/225598-2017-09-18-john-mcafee-accidentally-just-revealed-why-bitcoin-is-total-fraud.htm. Most of them show that Ranger Mike hasn't thought out what Bitcoin is all about.

If the system crashed big time, we might lose Bitcoin. But we would lose most of the fiat system, as well. And, we would lose most of the luxuries we have, and even the ability to buy groceries.

The biggest thing that Bitcoin offers, and I didn't see it in the comments, is freedom. We don't have to be ruled by inflating dollars anymore. Holding dollars is automatic loss of value. Gold and silver were supposed to be gaining value with regard to fiat, on a regular basis. But, now these are controlled, as well.

Bitcoin is free. Look at the strength it commands in less than 10 years from the time it was introduced.

Look at the 4 or 5 main potential fail points in the comments at  http://www.freedomsphoenix.com/News/225598-2017-09-18-john-mcafee-accidentally-just-revealed-why-bitcoin-is-total-fraud.htm. These fail points are essentially the same for fiat.

The article takes what John McAfee says, and twists it around to mean the opposite of what he was trying to get across.

All points are ok for sure, as I was believing btc will improve itself like a never ending before its move down to 2k levels, each downward movement the deeper and deeper, next time we might see lower levels. Becomes like a wheel spinning, trying to reach 5k then something happens and drop down immidiately to 2k levels. Do you think that it is a fake movements? Is this movements created?

[ROT13]

1-The author does not understand difficulty and it's ability to dynamically adjust.

2-Yes, bitcoin mining is exactly analogous to digging ditches, this is why it is infact a more honest form of money. Proof of work is based on expending financial resources that contribute to the security of the network to recieve a reward.

The more people that expend resources, the more that agree that is valuable and therefore the more it costs to be rewarded and the more it is likely to be worth. Less people expend resources, less agree that is have value and you will see a cheaper price. When this resource is scarce and secured by maths and cryptography it's harder to imagine a more honest form of valuation for an asset.