Ponzis, Scams, Theft and The Price Of Bitcoin

Christmas 2014 will go down in history as a time when hackers, thieves and ponzis changed everything. As I write this post BTC has sunk to $186 (and was considerably lower earlier in the day), major cloud mining operations have powered down their farms (cex.io and hashnest) and unless the price recovers the whole BTC landscape will irreversibly change.

What has caused the current issues?

Around Christmas Eve several cloud mining operations including PB Mining, Hashie, Hashprofit and LTC Gear suffered hacks or operational issues with a net effect of halting payments to customers. The circumstances and validity of each issue no doubt vary but the consensus seems to be that PB mining could well have been a ponzi although the operators claim the closure was a result of blackmail and personal threats. Hashie claimed a hack although the way they dealt with the aftermath screamed incompetance or ponzi. Hashprofit claimed a db breach although in hindsight this looks like a solid ponzi and finally LTC Gear more believably claimed a hack but the jury is still out as the website has still to recover and they are several weeks behind with payments.

To compound matters, the large exchange Bitstamp had a major breach/hack involving the theft of $5 million worth of Bitcoin. Clearly evoking memories of the Mt. Gox situation, the markets reacted badly to an already depressed value.

So what next?

Some are predicting a crash of epic proportions and the death of bitcoin (many of these doommongers are from traditional financial institutions who are threatened in the extreme by cryptocurrency). Their insecurity is manifesting itself into unprecedented attacks during the ongoing slump. Witness this Guardian article (very naive in it’s assumption that Bitcoin has no use)

Our View

Cryptocurrency is in an embryonic stage similar to the birth of the internet. Such great ideas will always prosper even though the naysayers will do their utmost to put a ‘spanner in the works’. Our philosophy is to sit tight, buy bitcoin and ride out the slump.