A new ‘currency’ was launched last week. The Coinye coin is named for hip-hop artist Kanye West, which right there would be grounds enough for giving the thing the widest possible berth.
No more than 133,333,333,333 Coinye coins will be available, the website says. (Unless more are made available, of course.)
I’ve been a chartered accountant for just over 40 years, and I’m not ashamed to say that I cannot for the life of me understand what a Bitcoin is, or how it works. I’ve had it explained to me by people who know all about such things, and I still don’t begin to get it.
A Bitcoin is a computer algorithm or something, locked in an electronic wallet on your computer. Its value goes up and down like Kanye West’s records in the charts. One fellow bought a pile of Bitcoins for 24 cents and they were magically worth four million dollars, but he lost his computer, or his password, or his cool, or something, and now he’s lost his shirt.
That’s everything I know about Bitcoins, except this: it has to be a bit of a con, and one that will undoubtedly cost you money if you become even remotely involved.
All currencies are an act of faith. No country has the reserves necessary to back up its currency, but commerce proceeds on the basis that no one will ever have to. The gold standard, by which you could take your tatty dollar bill into the Federal Reserve and be given a dollar’s worth of gold, is but a memory.
As badly managed as they might be, countries are physical entities. They have streets and houses and shops and so forth. The pound or the dollar may not be worth what once they were, but then what is?
Bitcoins exist in limited numbers, which is why their value can increase. Whoever wrote the code to invent Bitcoins, however, could always write some more and hey presto, your savings would evaporate in a heartbeat. Plus, try buying fish with a Bitcoin. They’d laugh you right out of Sainsbury’s.
Bitcoins cannot be seen or held or touched. The code in which they’re written is uncrackable, which is what the Germans thought they had going on in the Second World War, and look how that worked out for them.
My advice, which you didn’t ask for and probably don’t want, is to steer clear of Bitcoins and Kanye coins or whatever comes next. Life is already difficult enough without having your computer stolen (as happened to me a year ago) and then becoming a pauper (which didn’t). The dollar bill in your pocket will be worth abut 98 cents a year from now, which isn’t great, but it’s something. Some electronic concept that no one really understands, that can be stolen or, presumably, cancelled, has about the same chance of moving your finances forward as does an e-mail from Nigeria, telling you that millions of dollars can be yours if you just give up your bank account details and passwords.
If you must waste your money, send it to me and I’ll waste it for you. You wouldn’t dream of doing that, would you? Why, then, give it some geezer who says he can make you rich with a computer algorithm?
I know, I know: Algorithm, who could ask for anything more? But the hell with that malarkey.