My mother (financially astute, has been a tax preparer and so forth) knows I'm into bitcoins (whereas she knows little about it), so she pointed out the following article to me:
http://usat.ly/QcwsizHere was my response:
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Here's a list of errors/misleading statements:
Slide 1 - The article implies that some people have made up their own bitcoins when it says "some have been privately minted." I think this is an extremely muddle-headed attempt to say that bitcoins, as data, can have that data transferred onto hardcopy (printing your private key onto a sheet of paper or even inscribing it on a coin), and then deleting the digital record of the private key. But that's very misleading because they make it sound like people can just make bitcoins outside the system. They cannot.
Slide 2 - the fiat Dollar we have today is NOT the dollar of gold from 1792. There is no relation between the two (which is why the price of gold fluctuates), any more than there is between bitcoins and dollars. The current dollar is about a century old.
Slide 3 - With no mention of the fixed, invariant release of bitcoins (regardless of the number of miners), they make it sound like bitcoin mining is based on luck and is variable. But from the perspective of the bitcoin supply as a whole, it is absolutely fixed (except in the sense that bitcoins can be permanently lost by losing the key to an account).
Slide 4 - Instead of comparing the VALUE of each form of currency, they compare apples and oranges. The value of the Bitcoins in circulation today is around $6 Billion (was $7 Billion this morning, it's been a rotten day), compared to the $1.23 Trillion figure.
Slide 5 - Bitcoin is deflationary, whereas they falsely claim the Federal Reserve "keeps inflation in check." How is the destruction of 97% of the dollar's value since inception "keeping" inflation in check? A more honest statement would be that they manage the supply to enable stealth taxation through government overspending, covering the government budget deficits.
Slide 6 - Is actually accurate.
Slide 7 - Let's assume most people know about normal wallets without the article having to explain it to them. But the explanation for Bitcoins is largely false. In addition to personal wallets many people use online exchanges for their bitcoins. But it is far more accurate and helpful to explain that Bitcoin exists in a giant, distributed ledger (shared by thousands of computers) which records how much bitcoin is in every account and all transactions between accounts. Your wallet or exchange account is simply a tool for updating the ledger. Your bitcoins, in the most accurate sense never leave the ledger, they are just transferred within it.
Slide 8 - You can lose or have your password stolen allowing access (or loss of access) to your private key, but the article fails to note that the private key security level is absolute - if the entire universe were a computer it would not have enough firepower to crack your key. On the flip side, they merely mention bank failures without mentioning that people lose dollars all the time without being recompensed. Not to mention theft of dollars. It does happen occasionally, as is daily reported in the pages of USA Today!
Slide 9 - There are tools to simplify bitcoin payments so you don't need their public key, merely something easier like an email address. On the flip side, they fail to mention that bitcoin transfers are extremely cheap/efficient and much, much faster than dollar transfers, which often cost 1-3% in expenses and take days to process, despite the speed of digital transfer.
Slide 10 - Not too bad, though I would point out you can now get 3% cash back on bitcoin purchases of Walmart gift cards and just about anything else. It's getting to the point where it is really the exception rather than the rule where you cannot find a way to use bitcoin to pay for something.
PS: The article following those slides makes it sound like the IRS is trying to kill bitcoin. Perhaps it is trying, but since the IRS doesn't know what account in the bitcoin ledger connects to a given taxpayer, it is going to have a miserable time taxing bitcoins. Especially since more and more use of bitcoins is for direct payments for goods and services which means there will never be a record of a fiat current transaction that results in normal IRS reporting. The chief result of this is that the IRS regs will incentivize bitcoin users to not cash out and to keep growing the bitcoin ecosystem, to the detriment of government efforts at tax collection.
Just my 2 satoshis,
[ebliever]
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Comments? Did I get anything wrong?
