Posted on 02/09/2015 8:26:35 PM PST by CutePuppy
Hong Kong-based bitcoin exchange MyCoin has allegedly shut its doors and stolen HKD 3 billion ($386.9 million) in the process.
The South China Morning Post reported Monday that 30 MyCoin clients approached a local lawmaker with complaints that the company had fled with funds from up to 3,000 investors.
The reports coming out of Hong Kong would seem to indicate that there may have been a Ponzi scheme at play.
"No one seems to know who is behind this," a woman surnamed Lau, who said she lost HKD 1.3 million, told the paper. "Everyone says they, too, are victims ... but we were told by those at higher tiers [of the scheme] that we can get our money back if we find more new clients."
One warning sign of a pending collapse could have been that when the company changed its trading rules to bar people from exchanging all of their bitcoins unless they solicited new investors for the firm. ..... < snip >
..... According to the SCMP, MyCoin had hosted events at luxury hotels and a roadshow in Macau in 2014. .....
This one seems like a double-whammy! Apparently, these people were thinking that they were going to "invest" in a new Bitcoin exchange ("hip, sexy" topic as late as a year ago), which was to be financed via a MLM (Multi-Level Marketing, most of which are nothing more than a pyramid/Ponzi scheme with some "vertical" twist) and their income stream and/or exist strategy was going to be recruiting people for lower level.
Really, what could go wrong with this one?
For $1,000, I will teach you how to get your own Caribbean island.
Just like the US dollar?
Chump change—a rounding error—to the fraud that goes on with the People’s money in D.C.
Good point.
What indeed?
“I’ve been assured by Bitcoin enthusiasts on FreeRepublic that the cyber currency is essentially immune to fraud and theft!”
Don’t forget the “virtue” of the completely unregulated bitcoin “exchanges”; you know, the beauty of a so-called “digital” currency operated by “institutions” whose trustworthiness makes Egyptian camel dung bazaars look as virtuous as FDIC insured banks.
“such claims will likely see bitcoin struggle to gain traction beyond a tech-savvy and libertarian demographic.”
Uh, tech-savvy and/or libertarians as a class know better than to get within 100 miles of BS like bitcoin.
Really, I think the struggle will be to gain traction beyond the demographic of fools, you know, that group which is soon parted from their money.
Leaving aside the arguments about characterization of the US dollar (or Swiss franc, British pound, Japanese yen, or most other more or less sound currencies on this planet which are "backed by nothing"), are you then saying that there are no advantages to using bitcoin, compared to US dollar? What's the point of using it, then?
The few that I know that fit the descriptions above and have some bitcoins in their possession, only got a small number of them early, at a minimal cost, for hands-on (not purely theoretical) research of the system.
I think the struggle will be to gain traction beyond the demographic of fools, you know, that group which is soon parted from their money.
The lyrics of the Beatles song I put in my first post end with "A fool and his money..." :~)
$1,000 in bitcoin?
Nope, not at all. Rather I believe there are tremendous advantages to using Bitcoin. After all, are we not headed towards a cashless global economy where everything is based upon electronic transfers of “credits” instead of dollars, pounds, euros, etc.?
No kidding. Who was the guy apologizing to the Japanese for “losing” $400 million dollars? Mt. Golux?
If you replace "instead of" with "denominated / valued in", then yes, pretty much, but not limited to.
And could do, and have been doing this well before bitcoin's ecosystem and its expensive hi-tech magic and wizardry of "mining" the final e-product which was supposed to appreciate simply because of artificially limited quantity (The Number) "mined", which was bestowed to us by some superior yet unknown being / body.
So again, where is any advantage of Bitcoin over what already has long been done cheaply and efficiently with various forms of EFT (Electronic Funds Transfer)?/em
Pretty fair description of the US Dollar.
There's something to that. I could consider my bitcoins like an account that I would voluntarily report and get taxed on transactions that result in actual dollar gains. OTOH, the beauty of the voluntary reporting is that when I send money that should be considered a business expense (e.g. a tip or microservice payment) then I don't worry about declaring the expense to offset any potential gain. No govt paperwork as it should be.
I get business payment benefits in a currency that is accepted worldwide and doesn't have a government mucking with it. But as for pure banking secrecy, I think that blockchain analysis makes that impossible. I am not looking for a secret Swiss account (before they were blackmailed into giving up the names), although it could function as one.
Do you keep your private keys or leave them with someone else. If the former, then no risk. If the latter then the risk that they fold or abscond with your funds.
No.
No reason to use a bitcoin exchange ever. You can earn them in the bitcoin network, spend them in the network and never go through an exchange. An exchange makes them easy to buy and you can quickly transfer them to the network with basically zero risk.
The risk comes from leaving them in an exchange to try to sell the peaks, buy the dips and cash in to dollars. That kind of greed is penalized severely by the obvious risks in the exchanges.
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