CovOps
 Location : Ether-Sphere
Job/hobbies : Irrationality Exterminator
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 |  Subject: LOL: ‘Money is just paper with dead criminals painted on it’  Sat Apr 13, 2013 8:09 pm | |
| JEFF Berwick has been a regular on the TV talk-show circuit in the US ever since revealing three weeks ago plans to install the first bitcoin ATMs in Cyprus and Los Angeles. The 42-year-old entrepreneur is looking to shift bitcoin to the next gear.
Bitcoin is digital or virtual currency. Unlike typical currencies, it has no central bank or central organisation. Instead, it relies on an Internet-based peer-to-peer network. So far bitcoins could be traded over the Web and used to buy stuff online or even at certain retail outlets.
Bitcoins are stored in anonymous “electronic wallets,” or code, and can travel from one wallet to another by means of an online peer-to-peer network transaction.
The techie jargon may sound daunting, but getting started is pretty straightforward: download the free client (software) and install it on your computer. The software automatically creates a wallet or account for you. Once your wallet is set up, you'll get your first bitcoin address (like an email), which means you're ready to receive bitcoins.
The system has been set up so the global money supply is automated and finite. The number of bitcoins in existence will never exceed 21 million. There are currently around 11m bitcoins in circulation, giving a market value of around $2bn. Twenty-five new bitcoins are “mined”, or produced, by servers every 10 minutes, and they are traded through online exchanges. Also, the more bitcoins are produced, the more complex the mathematical calculations used to render them, requiring ever greater processing power and electricity. So there’s a cost, and the price has previously moved in relation to that. Most users buy them.
Previously, individuals who wanted to purchase bitcoin privately without revealing personal details had to arrange face-to-face meetings through real-life exchanges; visit online marketplaces where participants take counterparty risk and rely on user reputations measured by an e-Bay-like ratings system; or make a cash deposit at a bank or retail location, under the watchful eye of security cameras.
That’s where the ATMs come in. They operate similarly to vending machines; you punch in a code or insert or swipe a card. Now, with a device that directly converts paper cash to bitcoin anonymously, the interaction is between human and machine.
What makes Berwick’s product hot is that his machines will be bi-directional. Instead of connecting to your bank account, the software he and his team has developed is installed on an ATM and converts cash to bitcoins stored in a bitcoin ‘wallet’ or extracts cash based on what's stored in your personal bitcoin account.
Conventional digital payment systems (credit cards etc) don’t offer this degree of anonymity. It’s this privacy that’s got advocates excited. “Bitcoin is freedom,” declares Berwick, a self-styled anarcho-capitalist and libertarian.
Though bitcoin has been around since 2009, it has gained a lot of traction over the last few weeks. Analysts attribute this to waning faith in banks, especially in the wake of the unprecedented raid on Cypriot savers. But the e-currency has its fair share of critics: some say the system is all too vulnerable to hackers who deliberately seek to cause panic-selling and thus manipulate prices; others dismiss it as no more than a speculative bubble. Mid-week, the currency hit a new high of $255 (€(203) before falling to $105 and then bouncing back to $130. Two months ago, a bitcoin was worth $20.
The Mail got in touch with Berwick who took time to answer questions by email:
Q: Was the Cyprus crisis really the trigger for your idea?
A: No, we had completed the world’s first bi-directional ATM and we wanted to announce it. At the same time, every bank and ATM was closed in Cyprus so we decided to announce that we’d put the first one there as a humanitarian effort against the oppression of the governments and central banks.
Q: How are your plans going for installing ATMs in Cyprus (and elsewhere)? Have you reached out to anyone here yet, and who, and what was the response?
A: Our plans are going well. There are a number of logistical items we are dealing with but we should have our first bitcoin ATM machine live in the next 1-2 weeks. We are, however, thinking of putting the first one in Los Angeles just because of the proximity to our operations. We are in contact with numerous people in Cyprus about getting an ATM over there as soon as possible but we’ve been inundated with orders for machines from over 200 people in over 30 different countries and are scaling up to meet that demand.
Q: What's the deal with the ATMs: is there a working prototype yet?
A: Yes, we’ve had a working prototype for about a month but we’ve just recently decided to upgrade it dramatically because of the demand. We’re now working with some of the most high-tech ATM machine companies on earth to provide an even better product. That has been the slight delay. We happily misjudged the interest of the market and are now scaling up to meet demand. We expect we will have the first fully operational, upgraded machine working in the market within two weeks from today.
Q: Won't the ATMs run out of bitcoins at some stage?
A: There is constantly a market for bitcoins. All we do is act as a transferring agent from the market to consumers and from consumers to the bitcoin market. At the market price there is always liquidity in bitcoins and local fiat currency. We are just a transfer agent or market maker for bitcoins for fiat currency or fiat currency for bitcoins. We have nothing to do with mining.
Q: I’m guessing that ATM operators will charge a fee for using the ATMs, and you'll be making a percentage off that fee, is that how it works?
A: Yes, of course. We aren’t doing this for free. We aren’t capital-destroying communists. We’re producing wealth to willing, voluntary customers who desire our product. We are still working through the profitability but our aim is to make the transactions as cheap as possible while still creating a profit for our organisation.
Q: What about arguments that bitcoin has no intrinsic value, and could end up just another bubble?
A: Fiat currencies have zero intrinsic value. They are just pieces of green paper with dead criminals painted on them… and a pyramid with an all-seeing eye…which no one seems to notice. Gold, too, has no intrinsic value. Everything is subjective and bitcoin has value because of its decentralized, unregulatable, untaxable nature.
Q: I watched you on the ‘Santelli Exchange’ on CNBC, and you sort of dodged a question as to what happens when/if something goes wrong with bitcoin, since there's no one you can call.
A: As a Cypriot, you should know there is never anyone you can call in government or central banks. That is a facade. I don’t dodge questions, I answered honestly that the private enterprise market can come up with better solutions than any thieving, confiscatory government or central bank.
Q: What’s your broader take on bitcoin; would you advise people to put a lot of money into this or just part of their savings as a backup?
A: I personally don’t “invest” in bitcoin. I don’t invest in any money. Money is not meant to be invested in as it does not have an investment return. But I do recommend that all people take a look at bitcoin as a way to transact. You can open a Bitcoin account in about three seconds. You can then receive bitcoins from someone in another few seconds. And you can buy something with those bitcoins in another few seconds. That total time, if you were to do it through the fascist western monetary system would take weeks if not months and a number of charges and people asking you what you are doing and why. Bitcoin is freedom.
http://www.cyprus-mail.com/bitcoin/money-just-paper-dead-criminals-painted-it/20130413 |
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