Friday, February 21, 2014

Many Dogecoin, much funny, wow

I'm learning about Bitcoin for two reasons - my day job involves anti-money laundering, and Bitcoin is an innovative new way to launder money. And because I'm studying Ayn Rand and her Libertarian admirers and they love Bitcoin because it is not "fiat money."

Fiat money, or as most people call it, "money", is:
  • any money declared by a government to be legal tender.[1]
  • state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.[2]
  • money without intrinsic value that is used as money because of government decree.[3][4]
  • The term derives from the Latin fiat ("let it become", "let it be done", "it shall be").[5]
You'll notice that each of these definitions has a reference to the gubmint, and gubmints is what Randroids and Libertarians hate the most.

Bitcoin has no truck with gubmints. Krugman reliably mocks this line of thought:
The real track record of fiat currencies is that most of them are run responsibly except in the aftermath of political chaos. If you look at the actual facts, you discover that episodes of high inflation have become quite rare, even though nobody is on the gold standard or (except in the euro area) anything like it. 
So, again, the notion that governments can’t be trusted with the printing press sounds cynical and realistic, but it’s actually a fantasy, probably brought on by reading Ayn Rand instead of Tolkien.
And he also points to this piece in the Atlantic which makes a reference to what started out as a parody of Bitcoin, called Dogecoin. This is where I first encountered doge-speak, which is as amusing and distinctive as lolcat. The entire piece is written in dogespeak and it's hysterical:
BUT I HAVE UTMOST CONFIDENCE THAT YOU ARE EVEN SMARTER THAN EVEN SMARTER INVESTORS. YOU DON'T NEED TO DIVERSIFY. YOUR SAGE SAGACITY AND KNOWLEDGE OF LUDWIG VON MISES(REDUNDANT I KNOW) WILL LET YOU PICK OUT THE BEST "ALTCOIN." 
WHAT IS THE BEST ALTCOIN IS THE QUESTION I AM SURE YOU ARE ASKING AND NOW I WILL TELL YOU ... IF YOU MAKE FOUR EASY PAYMENTS OF $19.99. JUST KIDDING THAT IS A HUMOROUS "JOKE." THIS IS NOT A SCAM. THE BEST ALTCOIN IS THE ONE WITH THE MOST LIMITED SUPPLY SO IT GOES UP THE MOST. THAT IS THE GREAT LESSON OF THE GREAT DOGECOIN CRASH OF 2013.
DOGECOIN IS A JOKE CRYPTOCURRENCY THAT WENT BOOM AND THEN BUST AND WAS THEN STOLEN. IT IS AN INSPIRATION AND A CAUTIONARY TALE THAT HAS INSPIRED AND CAUTIONED ME. IT BEGAN AS A FARCICAL COMBINATION OF THE INTERWEB MEME DOGE AND BITCOIN. THAT MEME INVOLVES "COMICAL" PICTURES OF SHIBA INUS DOGS WITH CANINE THOUGHT BUBBLES IN COMIC SANS FONT. SO DOGECOIN IS A VIRTUAL CURRENCY REPRESENTED BY DOG PICTURES WITH CUTESY CAPTIONS. WOW SUCH INNOVATE.




BUT THE INTERNET IS LIKE 10,000 DOLLARS WHEN ALL YOU NEED IS A BITCOIN. SUCH IRONIC. SO THE DOGECOIN SPOOF QUICKLY BECAME REAL. DENIZENS OF REDDIT BEGAN USING THEM TO TIP ONE ANOTHER FOR "WITTY" COMMENTS AND "GOOD" DEEDS. THEN DOGECOIN'S PRICE WENT UP 400 PERCENT IN A SINGLE DAY TO BE WORTH $10 MILLION IN TOTAL. 
BUT IT HAD A FLAW OF THE FATAL VARIETY. IT WAS TOO EASY TO "MINE" NEW DOGECOINS. NOBODY DID WHEN THE PRICE WAS SO LOW BUT EVERYBODY DID WHEN THE PRICE WAS SO HIGH. NEW ONES FLOODED THE INTERWEBS AND DOGECOIN'S PRICE COLLAPSED 80 PERCENT OVERNIGHT. BUT IT HAD ANOTHER FLAW OF THE EVEN MORE FATAL VARIETY. IT WAS TOO EASY TO STEAL DOGECOINS. DAYS AFTER THE CRASH HACKERS LOOTED 30 MILLION DOGECOINS FROM DIGITAL WALLETS. THESE WERE WORTH $6,000 IN WORTHLESS DOLLARS. 
I HAVE USED MY DEEP UNDERSTANDING OF AUSTRIAN ECONOMICS TO INVENT THE BEST OF ALL POSSIBLE CRYPTOCURRENCIES. IT IS CALLED PONZICOIN. WHAT MAKES IT BETTER THAN BITCOIN OR DOGECOIN OR ANY OTHER COIN IS THE QUESTION YOU ARE WONDERING AND NOW I WILL TELL YOU FREE OF CHARGE. PONZICOIN HAS THE MOST LIMITED SUPPLY POSSIBLE AND THE MOST SECURE LOCATION POSSIBLE. AT ANY TIME THERE IS AT MOST ONE PONZICOIN AND IT ALWAYS STAYS WITH ME. BUT IT IS INFINITELY DIVISIBLE SO YOU CAN BUY AS SMALL A PART AS YOU LIKE AND I WILL SEND YOU A CODE TO VERIFY YOUR HOLDING. PONZICOIN HAS LITERALLY UNLIMITED USES BUT THE PRIMARY ONES ARE SELLING IT TO THE GREATER FOOL AND BUYING STAMPS.
This piece is equal parts funny, informative and a perfect mockery of Libertarians and their get-rich-quick dreams. I love the antiquated yet still amusing reference to Alanis Morrisette's "Ironic" just as much as I love the reference to Ludwin von Mises, a right-wing economist who is worshipped by Libertarians and was an admirer, and personal acquaintance of Ayn Rand. And in spite of the doge-speak, the piece does give an accurate history of the Dogecoin phenomenon as well as an education about Ponzi schemes.

I find it fascinating that Dogecoin started out as an Internet meme. I was also amused to learn the origins of Mt. Gox, which I had assumed was a kind of Iron Mountain of digital currency, but it's a Bitcoin exchange. The interesting part is that the name has nothing to do with mountains of data as I thought, but rather is an initialism that derives from "Magic: The Gathering Online Exchange." Magic: The Gathering is a Dungeons and Dragons-inspired card game, and Mt. Gox was originally an online Magic: The Gathering trading card exchange.

There are many other crypto-currencies besides Bitcoin and Dogecoin, which you can see here.

In spite of the fact that Dogecoin is basically a mockery of Bitcoin, they actually do real-world good - like fund the poor Jamaican bobsled team.

Dogecoin founder disses Bitcoin.