# Last edited on 2014-07-30 17:37:52 by stolfilocal # Posted at the Wikipedia Village Pump As a longtime contributor of contents to Wikipedia, I was quite displeased reading today that the Foundation has chosen to accept donations "in bitcoins".
I understand that the Foundation is actually accepting dollars from Coinbase, that come from the sale of bitcoins that people send them. Still, this highly visible decision helps lend an undeserved credibility to bitcoin, that may induce unwary people to put their money into an investment of extremely high risk (to put it very mildly), in a market that is infested with scammers and incompentent entrepreneurs. Just at MtGOX, over than half a billion dollars were stolen from people who had trusted bitcoin, sometimes with all their life savings; and that was only one of hundreds of thefts and scams that have been reported.
Bitcoin was ostensibly desigedn to provide a method for e-payment that would be cheap, safe, convenient etc. It has yet to prove that it can do that, and the more it is examined and used, the more elusive that goal seems to be. But many of the most ardent "believers" liked it because they thought that it would allow them to evade bank and government controls, and thus be a safe way to pay for drugs and other illegal services, evade taxes, launder criminal money, and so on. Having realized that bitcoin is not at all "safe" in that sense, that segment of the community is quietly abandoning bitcoin and betting on other (hopefully) "truly anonymous" crypto-coins.
Another unstated but widely assumed promise of bitcoin was that, as a currency with no central managing authority, it would free the world from the oppressive oligopoly of big international banks and government monetary agencies. But the "mining" of bitcoin, which is the ostensibly volunteer and uncoordinated activity that keeps the system running, is already dominated by two or three large enterprises; so that the evetual success of bitcoin would merely exchange a few dozen poorly regulated international banks for a much smaller clique of totally unregulated "mining" corporations, whose owners are largely unnown.
Another class of early adopters hoped to pull the "private fiat money" scam: namely, create a currency that is not backed by any asset, convince some people to use it for trade, and, when it has become sufficiently well-accepted, take out of their closets a large stock of that currency that they saved for themselves, and use it to buy a fortune worth of other property. About 90% of all existing bitcoins are currently hoarded, perhaps more than half of them acquired by their current owners for pennies. For those early investors, the scam could payoff handsomely today, whether they sell their bitcoins or use them to buy goods through Coinbase and other processors. Their profit will come from the pockets of those who buy those coins, from them or from Coinbase; unless they too can find "greater fools" who will take over their loss by buyin their coins at a higher price.
It bear reminding people that the price of bitcoin is not pegegd to anything, and no one can honestly predict what it will be next year, or even next week. Since last year, it has been determined almost entirely by speculative trading in the Chinese bitcoin-yuan exchanges. Since the all-time high of 1200$ last November, brought about by the opening of the Chinese market, the price has crashed to 400$, then recovered to 800$, then tumbled to 450$, then rallied to 600$, and is now again on its way down. All these swings were due to the Chinese day traders reacting to policies and events in China, that had no relevance to the world's or Chinese economy except to the Chinese bitcoin market. And its price is not connected to its potential utility as a currency of commerce, since such use has been prohibited in China.
For all that, and more, I hope that the Wikipedia Foundation will reconsider their decision and distantiate again themselves from such highly dubious enterprise.
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