Bitcoin is Not a Scam

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JT Fox with Jacques Sassin
February 28, 2018
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It’s time for South African’s to start looking at Bitcoin
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Why bitcoin is not a scam

 

A scam, by definition, is a dishonest scheme or a fraud. Bitcoin is neither because it is not a scheme.

Bitcoin is built on blockchain technology, which, by design, cannot be manipulated. Blockchain is software that is designed as a digital ledger that can be used to record transactions across an unlimited number of computers. Central to its design is the fact that it cannot be altered retroactively.

So, blockchain technology is designed to make it impossible to change an entry into the digital ledger, unless all subsequent blocks (on all participating computers) are changed. All subsequent blocks can only be changed if the whole network of computers on which the blocks or ledgers are stored, participate by making exactly the same change. If there is any deviation, however small, from the existing block, it creates a new block but cannot be recorded as a change to an existing block.

Because the underlying technology is not manipulable, Bitcoin as  “electronic money”  is as safe as traditional money.

Bitcoin can. however, be used in scams, just like traditional money, and there are already many such scams in operation.

All these scams play on the two motivating emotions that direct all human activity, namely

greed –  usually the urge to make easy money because people believe that the “system” are cheating them, and

fear – usually the fear of missing out (FOMO).

Bitcoin is nothing more than a payment tool that derives its value from the fact that people attach value to it and use it to transfer value to each other.

The best way anyone can ascertain whether they may be a victim of a scam, is to evaluate whether the scheme they are invited into, represents Bitcoin or a scheme based on Bitcoin. Anything based on Bitcoin or blockchain technology are not the real thing but something based on its value

 

But something that is based on Bitcoin is not necessarily illegal or bad.

Derivative financial instruments derive their value from an underlying asset (such as Bitcoin). Derivatives include futures and options.

Futures and options do not involve the transfer of physical Bitcoin, but is a market place for trading in an instrument that was created for speculators. In futures, the speculator buys the “obligation” to buy or sell Bitcoin at a future date, and is obliged to buy or sell the asset when the date arrives. In options, the speculator buys the “right” to buy the underlying asset, but need not exercise that right.

It is important for any amateur investor to make sure what he/she is buying, because any instrument such as an option or a future, is not the Bitcoin itself.

Bitcoins are mined or bought from Bitcoin exchanges or other individuals. a good website is https://www.luno.com/en/za

 

 

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