On Friday March 7th, 2014 at 8:29am. Steve Goss, a news announcer for Atlanta's WABE NPR public radio affiliate, stated "Stay with us! In a few minutes we will hear about the Collapse of Bitcoin" as a prelude to an NPR article discussing the possible identification of the Psuedoanonymous creator of Bitcoin, Satoshi Nakamoto. (related AP Article)
Ostensibly, Goss' statement could mislead a WABE listener to believe Bitcoin has completely and irrevocably collapsed, and possesses little or no current value, that Bitcoin is now a financial smoldering ruin like a Lehman Brothers. Nothing could be further from the truth.
The also failed to mention the largest business event of the Cryptocurrency market, "Texas Bitcoin Conference", has been in full swing for the past two days including a Hackathon event designed to strengthen the currency in terms of the tools and security necessary for it's existence.
Far from without value or total collapse, at of the time of this writing the Coinbase.com Bitcoin index value is $635.21/BTC trading volume down for the day to 31,900 BTC ($20,256,500), with a historical average around 60,000BTC. If you had bought on the news of Mt Gox collapse at $430/BTC, 18 hours later you could have sold for a 20-25% return. Bitcoin recovered THAT quickly from a major market event. A few days later, the value was as high as $700/BTC, a 62.7% profit over the bottom of the market at $430/BTC.
Certainly, Bitcoin market value has wide and often abrupt swings (Bitcoin Charts). In November 2013 Bitcoin's value was $125, then meteorically rose to $1100 in December, crashed to the $500's when China forced the closure of a large Chinese based Bitcoin exchange. Then a month later, bounced up to $900, then down again. One could write an entire article to summarize the market moves of the currency for the last three months.
For a speculative investor, one needs waves in order to surf and Bitcoin has yielded an amazing set of waves! For the average investor, this is nothing short of gambling, but then one can make the same arguments of the stock, bond, derivative, currency, and commodities markets.
Mt Gox, one of the major cryptocurrency exchanges, (related articles) did collapse. Furthermore, Mt Gox appears to have been running a Ponzi-like scheme whereby 770,000 BTC, were literally stolen from the exchange members. This theft represents approximately 6% of the total amount of Bitcoins in circulation or nearly US$500 million at ~$635/BTC, . Even if the investigation proves that Mt Gox was not responsible for the theft, their lax security standards were also to blame for this event.
However, Bitcoin ("BTC") as a currency has NOT collapsed. It would be like saying a company stock traded on NASDAQ has collapsed if NASDAQ went out of business.
Rather than collapsed, Bitcoin has demonstrated amazing resilience, even "anti-fragility", in spite of the scale of this major market event, . Literally, one of the major exchanges appears to have been criminally and intentionally manipulated to rob it's members or a large share of the Bitcoin Market Cap, yet, the next day, the market value restabilized as if the event never happened. Two other exchanges were affected by this same exploit that ruined Mt. Gox, BTC-E and Bitstamp. Both were offline for a few days while they corrected the problem. Both are now back online, and the exchange members have not lost their holdings. Coinbase, the US based exchange company, was never down to begin with, since they had proactively corrected for the problem. As a result, the exchange value of Bitcoin on Coinbase is at a slight premium to the other exchanges, owing to the perception of reliable management Coinbase now enjoys.
As volume of of Bitcoin use for day to transactions increases, the market value with continue to stabilize. When we see the Bitcoin logo next to the Paypal logo at OfficeDepot check outs, the roaring days of speculative trading for small time players will be over. Even still, it is possible today for businesses to begin accepting Bitcoins by immediately selling the Bitcoins as the transactions occur so that the US$ value is locked in for the products or services the business sold at that point in time. To convert Bitcoin into US$ on Coinbase it costs 1% much lot cheaper than merchant card service fees had a buyer used a credit card for the same purchase.
The Newsweek article is merely a distraction media article which lacks in substance and research.
To this day, the Bitcoin community has no idea who or what "Satoshi Nakamoto" actually is. The Pseudonym"Satoshi Nakamoto"could be a person or a group of persons who did actually draft the White Paper that is the basis of the Bitcoin Currency, which also spawned several similar, and perhaps related, currencies, generally referred to as "CryptoCurrencies".
"If unfounded, Newsweek’s scoop could very quickly turn into a PR nightmare, as the magazine ran the report in its re-launched print edition. Perhaps Newsweek was simply too eager to get a scoop for the big day?" One Does Not Simply Find Satoshi Nakamoto by Nermin Hajdarbegovic, article on CoinDesk.com
Given the implications of this type of currency and it's corrosive effects it could have on banking profits, central bank's monetary policies and political controls, if Newsweek has actually outed the real "Satoshi Nakamoto", they have done nothing exposed them to a wide range of dangers, perhaps even endangering their life.
This sort of article is one of those typically unfortunate articles in that it is somewhat misleading, lacks any practical use, and appears to have done only the minimum of research on a topic that is easy to read about given it is an Open Source project with White Paper freely available for use by anyone, and all the resources related to the entire topic of Bitcoin systematically tracked and archived on the Bitcoin Wiki.
The general consensus is that there is NO Satoshi Nakamoto, at least not a human being with that name who created the Bitcoin framework and shared it with the world.
However, articles such as these are no surprise. They are merely thinly veiled efforts to mislead the public so that a game changer such as globally democractized currency immune to control by politicians and the banking industry will hopefully be marginalized to the point of failure. In doing so, they undermine their own credibility and draw even more attention to the potential advantages of this new currency model. And as with any change, some people get hurt along the way.
"During the last few weeks, we’ve seen how far a player is prepared to go to prevent loss of control. We saw the constitution being violated. We saw young MIT students pressured with government subpoenas merely for creating a proof of concept. I saw my personal freedom lost when I was arrested off the plane, stripped naked, searched and my body violated, handcuffed, and escorted out of JFK airport while returning home from a trip with my girlfriend. We saw how forced measures and restrictions of personal integrity were used by the police, not for fighting crime, but for the obvious purpose of harassing the ones involved and everyone who has been anywhere near them. During the last few weeks, we’ve seen how far a player is prepared to go to prevent loss of control. We saw the constitution being violated. We saw young MIT students pressured with government subpoenas merely for creating a proof of concept. I saw my personal freedom lost when I was arrested off the plane, stripped naked, searched and my body violated, handcuffed, and escorted out of JFK airport while returning home from a trip with my girlfriend. We saw how forced measures and restrictions of personal integrity were used by the police, not for fighting crime, but for the obvious purpose of harassing the ones involved and everyone who has been anywhere near them. - Charlie Shrem"
Arrested Bitcoin Mogul Charlie Shrem Defiant In First Public Appearance Since Criminal Charges by Andy Greenberg Forbes Magazine 3/05/2014
Shem was CEO of BitInstant, a US based CryptoCurrency Exchange site. US Based Users of the Silk Road would buy Bitcoins on BitInstant, since it was one of the few places anyone in the US could do so. After Silk Road was busted, the FBI was able to trace the actual Bitcoins, owing to how they are traded and created, to the exchange from where they were purchased. The fact that this is even possible should squelch any and all claims that Bitcoin is useful for money laundering. It is not. Every block or portion of a Bitcoin can be traced through every single wallet, and thereby every owner of the block, back to the time the block was first created, or "mined". How could that ever be good for Money Laundering? Right.
This would be similar to the CEO of NASDAQ being arrested because the shares traded on his exchange were later used, withoout his knowledge or control, for illegal purposes. Or more directly, it would be like the owner of the currency exchange booth at the airport being arrested because a tourist exchanged money and then the money was used in illicit transactions.