If, for some reason, you missed it, Forbes blogger Kashmir Hill spent a week using nothing but bitcoins as cash in what I can only assume was an experiment to prove that it can be done and to demonstrate the viability of Bitcoin as a currency. The true believers will inevitably point to this experience as an example of Bitcoin working in the real world, but their bias blinds them to the truth: it is not possible to survive using nothing but bitcoins. As a publication is totally unbiased and entirely honest with regard to bitcoins, we’re here to point out the things that bitcoiners ignored or glossed over.
Our heroine (or victim, depending on your viewpoint) began with a sum of five bitcoins (when they were selling for roughly $142.00,) purchased through Coinbase, since the Magic: the Gathering Online eXchange†is awful and legitimate banks won’t allow funds to be transferred to a shady Japanese “business.” She immediately discovered that you can’t buy food with bitcoins unless you’re willing to buy questionable preserves from strangers or stock up on end-of-the-world survivalist rations. Someone eventually pointed her to a service which acts as a middleman, ordering things from local restaurants and then delivering them, adding a service fee for the convenience. For some reason, they accept bitcoins. She immediately handed over an entire bitcoin, giving them around $130.00 at the time for orders yet to be made.
We focus primarily on Bitcoin here because it’s the most prevalent, the most awful, and the most hilarious, but since it was released as an open source project, other developers were free to use its source and create their own versions of the cryptocurrency, offering what they considered to be improvements or extra features. Most of them are more or less pump and dump schemes and don’t actually provide anything useful or act as a viable alternative.
The general lifecycle of one of these altcoins is as follows (thanks to SA forums poster eames for the easily digestible info):
1. Copy-paste bitcoin-, litecoin- or similar code from github and slightly modify it, maybe even hire a coder to add an actual feature. The latter is optional because but it may make the marketing in step 4 easier.
2. Hire a professional web and logo designer… to make the whole deal look “trustworthy” to buttcoin investors. (MS Paint would likely suffice)
3. Start mining the new currency privately with a few… buddies until you all have a couple hundred thousand or whatever. This is called “premining”.*
4. When you have a large enough headstart, publicly release the coin, telling everybody that now is the time to become an early adopter. Your new coins are the future! Marketing! Hype! Since the community is full of people with more Buttcoins than brains, you’ll have no problem finding adopters who will gladly buy your useless coins. **
5. Once the coin has gained some momentum, tell btc-e.com you may accidentally send them hundred thousand of your coins if they start trading the coins on their site in return.
6. Very slowly dump your hundred thousands of coins after the IPO on btc-e.com, trading them into hundreds or thousands of BTC which you can sell for actual money.
7. Weeks later, by the time people realize that it is all a huge pump and dump, you have hopefully sold off a good chunk of your coins for BTC.
8. btc-e.com removes your new coin because the trading volume is too low and nobody is interested in it anymore. People forget about it and move on. You convert your BTC to USD and buy a nice house and car. A very nice house and a very nice car.
* Step 3 may not work anymore because the buttcoin community has realized that premining is not cool. You could still rent mining power for the very rewarding period right after the launch and/or DDoS any mining pools that may pop up during the first “land rush” to make sure the currency is not evenly distributed and you get all the initial coins.
Now that we’ve established how to make your own *coin, let’s take a look at a few of the notable failures.
Yesterday Amazon.com announced the “Amazon Coin,” a virtual currency to be used to make in-app purchases and more on their Kindle Fire platform. Bitcoiners, of course, are seething with jealousy, since Amazon is a name that’s actually trusted and isn’t involved with shady black markets that are facing increased attention from police.
One Bitcoiner almost gets it:
So, it’s just like paying with your credit card the way you do now, except more complicated, involves you paying more than what you actually need to buy, forces you to trust someone else to hold on to your money, and gives you coins that you can’t sell back, which are completely useless outside of Amazon. Is it just me, or does this seem like a totally useless idea that misses all the points of having a virtual currency?
They are so close to understanding…
Some doofus on the Steam forums wants to pay with fake internet crypto-butts to buy special hats on TF2.
It’s a good thing he mentioned that it’s a “high risk currency” or else some mod might have been forced to wade through the Bitcoin forums to figure out what this asshat is blabbering on about.
Another Steam member offered a better solution
At least bottle caps are of more use than a crypto-currency no one wants to use.