Tech Writer Warns The Uninitiated: Don’t Own Bitcoin
David Pogue, the founder of Yahoo Tech and a writer for Yahoo Finance, advises viewers that bitcoin is worthy of study but not ownership in a recently posted video. The video is directed at people not familiar with bitcoin. He says it does not make a good investment because of its volatility.
He also says it’s not good for retail purchases since many retailers don’t accept it. He notes that merchants that accept bitcoin like Subway and Xbox are delighted to take it since they don’t lose 3% of the transaction in credit-card fees.
“Bitcoin is fascinating, it’s just not very useful,” he says.
Bitcoin’s Advantages
Pogue points out what he considers bitcoin’s advantages over traditional currency or credit cards. There is no intermediary such as a bank or credit-card company that can charge fees on transactions.
This is especially advantageous when buying something from someone in another country since there’s no wait to convert currencies—and no fees.
Because transactions are mostly anonymous, bitcoin is especially convenient for those engaged in illegal commerce, such as arms and drug dealers, he notes.
He also notes there’s a cool but complicated math involved in bitcoin that is designed to keep it secure and to prevent inflation.
Pogue gives historical background on bitcoin and reviews the way the currency is created through mining.
Don’t Expect To Get Rich Quick
While anyone can create new bitcoins through mining, Pogue advises viewers not to think they can get rich that way since it requires expensive, high-horsepower computers. The complexity of the math involved is adjusted so that it’s just barely profitable to mine bitcoins.
He advises viewers they can buy bitcoin at online exchanges like Coinbase and Bitstamp.
The good news, he says, is that the currency’s value has gone up since its inception from under a penny to more than $1,000 per bitcoin today.
The bad news, however, is that the value is highly volatile.
The bottom line for Pogue is that bitcoin is fascinating, but not very useful to most people. Those who love it include investors with a taste for risk, technically-minded libertarians, tech-savvy early adopters and criminals.
Also read: Bitcoin value: An unsafe haven
Buyers Beware
He warns viewers that it’s possible to lose all their bitcoins. This can happen if a computer hard drive crashes without a backup or if an account holder loses their private key. It is also possible to get a bitcoin virus, of which he says there are now many.
Another liability is when a bitcoin exchange goes out of business, which he says happened to 18 of the first 40 exchanges as of 2013, taking all their clients’ money along.
Pogue warns people bitcoin is largely unregulated, unlike credit cards.
Featured image from Shutterstock.
