Why Bitcoin true believers are still delusional even after the collapse of MtGox

Saturday, March 01, 2014 by Mike Adams, the Health Ranger Editor of NaturalNews.com (See all articles...) Tags: bitcoin collapse, MtGox, harsh lessons

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(NaturalNews) To all those who are still swooned by Bitcoin's false hope, I offer you this letter of compassionate but stern wisdom. My aim is to help you learn from the harsh lessons that have now undeniably unfolded with the bankruptcy of MtGox and help save you from being harmed by similar mistakes in the years ahead.

As we all know by now, nearly half a billion dollars worth of Bitcoins vanished last week as MtGox declared bankruptcy. Currency holdings simply vaporized for 750,000 customers, reports the Wall Street Journal.

I'm the guy who warned all of you a year ago about the Bitcoin crash and looming implosion. In fact, I was the first person to publicly call Bitcoin a "cult" in 2013 due to the bizarre zealot-like behavior exhibited by some of Bitcoin's most irrationally exuberant proponents. I'm also the only person who accurately predicted the massive 2013 Bitcoin collapse just days before it took place. In fact, two days before the crash, I published an article entitled The Bitcoin bubble: Why speculative Bitcoin buy-ins now point to a disastrous Bitcoin crash. The very next day, I went on national radio and called Bitcoin a "cult" that was about to collapse. Within 24 hours, the crash unfolded.

After the crash, I specifically warned that MtGox could be shuttered at a moment's notice, writing, "You are a fool if you believe anything now coming out of the "Bitcoin cult." (Original article here.

Why I nevertheless support the continued exploration of crypto currency

For the record, I actually love the concept of a peer-to-peer crypto currency. I'm well aware of the criminality of the central banks and the reality of the U.S. financial police state under which we all suffer today, complete with the government tracking our financial transactions as if we were suspected terrorists. I strongly oppose the Fed's bailout of the corrupt, criminally-operated cabal of Wall Street banks and investment houses. If our world is ever truly going to be free, it needs a free currency that can't be manipulated by central banks and corrupt governments.

In this context, Bitcoin was promising, and I was an early promoter of its core concepts. But Bitcoin has some fatal flaws which have now caused the collapse of one of the currency's largest exchange house, plus the theft of nearly $500 million worth of Bitcoins.

I am very confident this theft was orchestrated and planned either by MtGox insiders or by the U.S. federal government. Keep in mind that the NSA already has quantum computer decryption prototypes which can easily crack 128-bit encryptions in mere seconds. This is not yet publicly acknowledged, but it is real. Your crypto currency is not as "crypto" as you think.

The global money changers have every incentive to discredit Bitcoin by staging a massive theft and crashing a major exchange house. In fact, the very same attacks that brought down MtGox have been replicated across all other major Bitcoin exchanges. A coordinated, massive attack is under way against the virtual currency, and all the power of the establishment is being brought to bear against it. Or, perhaps more accurately stated, brought to "Bear Stearns" against it.

Why Bitcoin believers were fools (and still are)

None of this excuses the incredible arrogance and naivete of irrational Bitcoin believers, however. Early Bitcoin adopters fell for all the typical seductions: they told each other they were all smarter and more innovative than everybody else. They would all get rich without effort. Bitcoin was going to "explode to $100,000!" and revolutionize the world economy, they claimed.

People who used "old school money" (i.e. dollars) were about to become irrelevant, the Bitcoin believers proclaimed. And the brilliant innovators who jumped into Bitcoins early were all going to become millionaires and live in luxury homes without ever having to work a day in their lives.

Spurred by this sort of delusional thinking, Bitcoin became the new dot-com bubble... the same bubble that crashed in 2001 and which I began warning people about in 1998. Through 1999 and 2000, I publicly urged everyone to sell their dot-com stocks and save themselves from the looking crash. Then, just as now, I was called a "party pooper" or "doom and gloomer" by the delusional masses who all stupidly convinced themselves they were all going to create massive wealth from nothing by trading stock shares with each other that were denominated in larger and larger numbers.

The dot-com bubble crashed in 2001 and destroyed 99% of the market value of many companies. Tens of billions of dollars vanished virtually overnight. Many people learned harsh lessons and those people became very skeptical, a decade later, of the Bitcoin boom.

But a new generation of suckers is born every decade or so, and Bitcoin was the same old dot-com scam repackaged as a crypto currency that would accomplish the same thing: you could get rich without effort if you just bought in.

History repeats itself, of course. The Bitcoin bubble shattered just like the dot-com bubble before it; and the stock market bubble a couple of decades before that, and so on and so forth all the way back to the tulip bubble craze from centuries ago.

How Bitcoin believers got conned

If you bought into Bitcoins and lost a lot of money in the recent collapse of MtGox, the first lesson in this is to realize you got conned. Do you still not understand that the massive theft from MtGox was deliberately planned and engineered from the start? Do you still not realize that nearly everything in our modern economy involving money is a deceptive theft scheme? Are you really so naive that you thought a bunch of anonymous people you don't even know would protect your investments when it is clearly in their own interests to rip you off?

Welcome to adulthood. Welcome to the real world, where there are no do-overs. You've probably noticed at this point that there is no government bailout for lost Bitcoins. There is no FDIC insurance. There is no extra credit where you can stay after class for a few days and turn your "F" into a passing "C" grade.

If you lost big in this, you also didn't do your homework. If you had, you would know that investment schemes are incapable of creating wealth from nothing. The rising value of Bitcoins only created the false appearance of wealth, not real wealth. And mathematically speaking, it is impossible for all Bitcoin holders to ever cash in on the wealth found in Bitcoin prices because selling them causes their value to plummet. Thus, any large-scale effort to cash in on Bitcoins would have automatically caused the apparent value they held to evaporate literally overnight.

Bitcoin "market value" was always an illusion, from the very start. The current Bitcoin "price" was only descriptive of the last price somebody paid for it, not the prices everybody would actually receive if they all began to sell.

You probably also failed to understand the real risks of what you were buying. While there are risks in every asset, including gold, land, U.S. dollar bank accounts or even stored ammo, there are far greater risks in virtual currencies for precisely the reasons you are now coming to grips with. Virtual currencies can be stolen. They can disappear. And yes, you can be screwed in an instant. That's what I was trying to warn you about a year ago.

I hope you also realize the likelihood that this whole MtGox crash was very likely engineered by MtGox insiders who walked off with nearly half a billion dollars in Bitcoins. If you bought Bitcoins, you probably already know not to trust the Federal Reserve (which is its own debt scheme on a longer timeline, by the way); so why did you trust Bitcoin, then? The Fed is run by humans, and so is Bitcoin. Are humans really any different when it comes to greed and power? Sure, the Fed is a criminal cabal. But criminals can also steal your Bitcoins, not just your greenbacks. Crypto currency is not immune to unscrupulous behavior.

The No. 1 lesson you need to learn and remember for life

Truth be told, we've all learned hard lessons about being ripped off by unscrupulous financial operators, but the big lesson you need to learn right now is simply this: There is nothing new under the Sun, and no, you haven't reinvented money.

And, yes, you are sooner or later going to have to contribute to the economy in a REAL way if you hope to pay your rent and put food on your table. Buying Bitcoins low and selling them high is not a sustainable income source in the long run because every bubble eventually implodes, without exception.

Now hear my predictions for the coming collapse of the U.S. dollar

Finally, if you are ready to hear some real lessons in money and finance, here's what's really going to happen in the long run:

* The U.S. dollar will continue to be debased with each passing month as U.S. debt spirals out of control. Eventually, the U.S. Treasury will have no choice but to abandon the dollar and announce a "mandatory exchange" for a new currency. Everyone holding dollars on this surprise day will lose 90 - 99% of their life savings. (Study the economic history of Argentina, or Ecuador, or Weimar Germany...)

* The financial collapse of the USA is inevitable. The economy is based almost entirely on debt spending and resource extraction, neither of which can be continued indefinitely. Mathematically speaking, if a sequence cannot continue indefinitely, then it must come to an end. Most Americans are too mathematically impaired to grasp this simple concept, and it will ultimately spell their doom.

* If you wish to survive the coming financial collapse, you must diversity your assets into real things that hold real value: farm land, clean water sources, physical gold and silver, ammo, storable food, medicine, garden seeds and so on. Importantly, you must be able to physically defend those assets against thieves, looters and even criminal government organizations like FEMA which routinely engaged in the wholesale theft of private property from private citizens.

* When the collapse arrives, U.S. cities will become "death zones" as the government attempts to lock them down in a state of martial law. All food, medicine, money, water and electricity will be strictly controlled by the government, meaning you will likely die at the hands of FEMA's incompetence.

* To have any real hope for freedom and survival, you must position yourself in a rural setting before any of this comes down. In the country, you have greater access to resources like food and water, as well as the benefits of close-knit communities which will organize common systems of barter (commerce) and self defense (against looters, economic refugees, and illegal border-crossing gangs trying to exploit the chaos).

* Most of your computer skills are totally worthless in a collapse scenario. If you don't have real-world skills or assets, you will have very little to trade for food, shelter or other essentials. In a collapse scenario, nobody needs your postgreSQL relational database design expertise, and the fact that you think you are an amazingly skilled sniper on your video game console has absolutely nothing to do with sniping or shooting in the real world. None of your video games ever account for wind, humidity, air temperature, elevation angle, spin drift or cold hands, for starters.

* Like most Americans today who are pampered and living off a global debt shift that subsidizes consumer wealth in the USA through greenback currency manipulations, you very likely vastly over-rate your skills and value to the global society. In a truly global free market, you would most likely be worth far less than an Indian programmer, or a Chinese electrical engineer, or a German engine builder. If you truly believe in a "free market," be careful what you ask for. You may find out you're vastly out-educated and out-skilled.