Are Digital Currencies a Pyramid Scheme or our Future?

on Jan6

5 January 2018 | 5:39 pm

The number of cryptocurrencies available online boomed in 2017 and new types of digital and virtual monies are constantly being presented to the public. Investopedia defines cryptocurrency as “a digital or virtual currency that uses cryptography for security.” Cryptocurrencies are particularly attractive because it allows two parties to easily transfer funds. Of all the cryptocurrencies unveiled, Bitcoin is the most prominent one currently offered.

Bitcoin, also used as a global payment system, is an unregulated and decentralized form of digital currency that was released in January 2009 by an anonymous individual or group using the alias “Satoshi Nakamoto.” Over nearly a decade, and despite ample concerns and controversies, Bitcoin’s value has skyrocketed. In fact, according to an article published by Kenneth Rapoza of Forbes on January 2, “In 2012, one Bitcoin was about $15. It’s worth over $15,000 now.” Tyler and Cameron Winklevoss, identical twins who once unsuccessfully tried to sue Facebook co-founder Mark Zuckerberg for copyright infringement, reportedly became billionaires by amassing Bitcoins. Hailed as the first “Bitcoin billionaires,” the Winklevosses bought 100,000 Bitcoins for $11 million in 2013. The investment proved to be extremely profitable and the brothers are two of the world’s approximately 1,500 billionaires.

While countless people have gained wealth by purchasing Bitcoins, economists and financial bigwigs frequently criticize cryptocurrencies. The primary criticisms of Bitcoins are its susceptibility to hacking, theft and dramatic price fluctuations. Moreover, Bitcoins are ideal for shadowy figures who partake in criminal activities like money laundering and tax evasion. Its potential drawbacks notwithstanding, Bitcoins remain popular and new competitors continually emerge. Bitcoins’ chief rivals in its market are Ripple, Ethereum, Cardano, Litecoin, Zcash, Dash and Monero. Additionally, a digital currency technology called CloudCoin has gained recognition since its launch in March 2017.

CloudCoin, created by its founder Sean Worthington, is determined to differentiate itself from Bitcoin. In contrast to Bitcoin, CloudCoin shuns cryptography in favor of cloud technologies. CloudCoin also purportedly provides its customers with advanced security measures to combat counterfeiters, complete anonymity and much faster transaction times. Worthington discussed his invention, offered a historical overview of private money, and explained why it’s so hard to surveil illicit monetary practices.

“Humans have used private money for the past 3,000 years,” says Worthington, a tenured computer science instructor at Butte College in Oroville, California. “Only recently has it been possible to track people’s expenditures. Digital currencies will return privacy to money. The digital currencies of the future will be so private that no one will be able to track anything. As I have discovered, money is data and can be stored in the mind. CloudCoin has already been used in Venezuela to prove that it can be stored in mind and transferred by whisper. With these currencies, there is no way to monitor criminal activity or any activity for that matter.”

The Winklevoss twins

Renowned investors Warren Buffett and Alan Greenspan have denounced cryptocurrencies and labeled them glorified Ponzi schemes. Worthington refuted this notion and claimed that digital currencies are essentially a standard investment.

“Digital currencies are no more investments that other currencies,” says Worthington.

“However, if the currency that you are using is destroying itself by printing up huge amounts of new notes, using a digital currency with a fixed amount will appear to go up in value as the other goes down. Understand that digital currencies have a fundamental value. Why would you spend $17,000 for a Bitcoin when other currencies spend better and only cost a few cents? It is because you see other people getting rich and you want to get rich too. Unfortunately, this is a bubble and nothing more than a lie. Get CloudCoin if you want to buy and sell things all over the world at any time without bank fees or tariffs.”

Worthington is exceedingly confident that digital currencies are beneficial and will soon be used for everyday purchases. Still, Worthington predicts that some authorities will seek to ban digital currencies and he contends that such a move could cause a global financial crisis.

“As before, law enforcement will be forced to go after the criminals and not the money,” Worthington said. “Some countries will attempt to reduce crime by outlawing digital currencies. This will be a grave mistake because it will cause great economic harm. Imagine trying to reduce crime by getting rid of the dollar? Digital currency will dominate the future. Be ready.”

Executives at Bitcoin did not respond to interview requests for this story.

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