One of my readers sent me this email, and I asked him permission to post it, which he kindly gave:
I’ve read a few times that your bloggers/commenters do not understand how bitcoin works but they will trade it anyway. I know pretty extensively how bitcoin and other cryptocurrencies work. Being a bitcoin/litecoin miner and promoter from years ago I thought I’d let you know a few things. If you want me to elaborate let me know but I felt compelled to email you a few things.
1. Most of the trading exchanges I used in the past have disappeared or have class action lawsuits against them. This is due to the unregulated nature of bitcoin exchanges. coinbase, cryptsy, wemineltc are among them.. I lost a few coins but nothing near what others have lost. MtGox bitcoins biggest exchange had a multi-year hold on all withdrawals. So you could put money in and buy coins but they didn’t have USD to pay out.
2. The way bitcoins were originally dispersed was that the majority of the coins were given to the early adopting miners, then over time the blocks were halved and the payout was less. At the same time bitcoin began catching on and more miners jumped on board so instead of getting a few bitcoins per day you got super small fractions of a bitcoin for mining. The original miners own most of the bitcoins, still! Then the FBI owns a large portion as well due to the seizure of silk road.
Finnish entrepreneur Risto Pieti, an active member of on Bitcointalk.org, has offered an estimate of just how …….
3. The price of bitcoin adjust based on miners payout. There is a lot of money invested in ASIC mining and in order to be profitable, the cost of a bitcoin needs to be more than the cost of power to run these ASICS. So IMO the price is controlled by the big players in bitcoin. Its definitely not a free open market.
I wont keep on ranting. Just thought Id say something.. everyone should do their own due diligence when investing in anything. Bitcoin has a very useful technology in the blockchain but its still beta and its not without flaws. Most other cryptocurrencies have failed as well. It was/is too easy to create a fork/version of your own currency, promote it and dump it.
This might be a good link to post on your blog for your readers who want to have a high level understanding of what it is. It explains it very simplistically.