A lawsuit known as the BitCoinica suit has been filed. It is my view that the lawsuit should be thrown out of court because BitCoin has based its existence on a slew of false premises and representations. Only if those false premises, errors and representations are removed should a lawsuit be allowed to go forward.
- The most fundamental problem is that while claiming to protect its users from debasement of national currency fron creating more currency, BitCoin consists of exactly that – newly created currency. It was declared by its founders. That it is created is its value to the originators of BitCoin. The fact that the lawsuit claims loss is proof that their motivation is to get value from their creation that they explicitly state has zero intrinsic value. And yet, if the money was created by them, a kind of monopoly game money, how can they claim to have lost what they declared into existence?
- BitCoin claims that both the dollar and BitCoin have an intrinsic value of zero. That proposition is nonsense. The value of a fiat currency is inextricable from that government – that is why government can issue fiat money. Government is composed of the ability of the government to enforce laws, defend the nation, collect taxes to pay debts, etc. To claim that the intrinsic value of a dollar is zero is like claiming that the intrinsic power of the courts is zero because laws are abstract rules on paper. And yet, while claiming that government is the problem, BitCoin is presuming that the resources of government should be given to its non-state currency. BitCoin is expecting that tax money be spent to hear their case – the courts depend on taxes to operate. Excuse me? BitCoin believes that the state should back its currency with its power while explicitly stating that BitCoin aids tax evasion and that government is the problem?
- BitCoin states that hoarding is not a problem and that hoarding is the same as savings. Savings, in the capitalist world, means money saved in a bank. That saved money becomes usable by other members of society as loans. This increases the money supply. Hoarding is removal of money from circulation. Nobody can make use of it then. It is dead to the economy. Everything grinds to a halt. Look around you. Almost everything you see, touch, eat, etc, from the computer you are using to read this, to the salary that pays you and the food you buy at the grocery store is there because of debt. Debt is what loans are. Loans originate from banking. Money-lending is not banking and does not support a significant economy.
- BitCoin does not allow banking to exist unless it starts treating BitCoins like governments used to treat gold when currency was gold-backed. The number of BitCoins will be fixed, but loans from its banks will have to be given as virtual BitCoin-backed currency. But that won’t be BitCoin anymore. That will be almost full-circle.