I've written a new article on bitcoin. Feedback appreciated!
http://astrohacker.com/ahc/central-banks-are-the-scam-not-bitcoin/People regularly argue that bitcoin is a “scam” (e.g., 1, 2) because early adopters got a lot of bitcoins for cheap, and they can now sell their bitcoins to new adopters for a profit. Thus it sounds vaguely like a pyramid scheme or Ponzi scheme, because adopters from one generation only profit at the expense of the next generation. Except, it’s not. Adopters from later generations are not losing to the early adopters; they, too, are profiting. In this sense, bitcoin is not fundamentally different than any appreciating asset, like stock in Google. No one argues that Google is a scam because early investors profited. Thus, bitcoin is not a scam either, because people profit through exactly the same mechanism.
Further, not only is bitcoin not a scam, it is actually relief from the giant scam that is central banking and fiat currencies. With bitcoin, your money appreciates in value and no central organization can confiscate your wealth by printing more money and giving it to themselves. But with fiat currencies and their associated central banks, central organizations actually do print more money, constantly, and give it to themselves, and to organizations that are well-connected (in particular, other banks), which has the effect of confiscating wealth from everyone who uses the currency and who is not well-connected enough to get the new money. Bitcoin is not a scam—central banks, and their associated inflating fiat currencies which redistribute wealth to a well-connected elite, are the scam.
Fractional Reserve Banks
Fractional reserve banks (FRBs) are such a common, established kind of institution that it might be hard to believe, at first, they are actually scams that do not create wealth but actually steal it. However, it’s true. They do this by writing down that they have more money than they actually have. If their reserves are 20%, what that means is that they actually have, say, $20 million, but they have created an additional $80 million by editing the number “20” in their computer and changing it to “100”. Of course, the reality is a little more complicated, because they do not create all this new money at once. But the end effect is the same; they have counterfeited 80% of the money supply, and given it to themselves. They then loan this new money out, and charge interest for it. In effect, they have stolen 80% of the money, and charge a toll for anyone who wants to use it.
Fortunately, FRBs are voluntary, so you do not have to use them if you don’t want to. But the most devious of bankers fixed this flaw in their scheme by creating central banks that people are forced to use. You cannot legally opt-out of central banking.
Central Banks
Central banks, like the Federal Reserve in the United States, are banking cartels and/or monopolies that print fiat currencies that everyone is legally required to accept for payments and legally required to pay their taxes with. Anyone who attempts to create a competing currency is jailed. There are limits to the amount of money that FRBs can create out of thin air, because if they try to create too much, fluctuations in daily withdrawals would reveal them to be insolvent, and they would collapse. Thus, FRBs keep a certain amount of “reserves” to prevent that from happening. Central banks, however, have no such limit, because they can create new reserves by literally printing money (or having the Treasury print it for them). Like FRBs, central banks declare themselves owner of most of the money and charge a toll (interest) for using it. But central banks are even worse than FRBs because they constantly inflate the money supply with no end, so that its value asymptotically approaches zero while they get all the new money, which has the effect of constantly channeling wealth from everyone else to them. Central banks will also literally put you in jail for attempting to compete with them, which non-monopoly FRBs can’t do.
The fact that the US dollar has lost 95% or so of its value since the invention of the Federal Reserve shows that 95% of the people’s wealth has been irrevocably snatched and given to bankers. To call this a scam is a understatement. It is the greatest theft in the history of the world.
Bitcoin—Finally, Relief
There are only 21 million bitcoins, and it is impossible for greedy bankers to make more and give it to themselves. The only way to get bitcoins is to ensure the security of the network by mining, or by doing something else productive for them.* This is a tremendous, revolutionary advance in the technology of money. Finally, wealth created by productive hard work cannot simply be confiscated by the people who control the money supply. There is no understating how important this development is. Hard work and savings will actually be rewarded! Productive people everywhere should literally let out a sigh of relief upon realizing this fantastic fact.
The only people who should be worried are bankers. They will not be able to continue snatching wealth from everyone by printing more money. Their giant scam now has a time limit—as bitcoin grows, they will shrink. They will have to learn how to actually produce wealth rather than steal it if they want to survive.
Conclusion
Bitcoin is not a scam. Bitcoin is a solution to the giant scam that is central banking. The sooner you realize this, the sooner you can be freed from banking tyranny.
* Of course you can also steal bitcoins, but assuming people take proper security precautions with their money, that is much harder and less effective than the printing of new money that central banks do.
