4 Reasons Bitcoin Hoarders Are Screwed

In the last several months, you might have heard stories about people striking it rich and losing big by speculating on virtual money -- or cryptocurrency, if you want to sound all fancy-pants cyberpunk and shit -- known as Bitcoin.

Despite Bitcoin's volatile busts and booms (one bitcoin cost $13 in January 2013 and is valued at roughly $900 now) and the fact that governments around the world are giving it the legal stink eye, some of you may still be curious about it. After all, who wouldn't want to invest in a magical pinata that seemingly explodes into a geyser of fine topaz every few days?

Well, before you get too giddy, know that Bitcoin isn't wizard money and has some pretty significant downsides, namely ...

#4. Bitcoins Are Easy to Lose

Being a virtual currency, Bitcoin doesn't exist in the real world. The reason why Bitcoin and other cryptocurrencies like Dogecoin (no, seriously, this is a thing) are so popular is because users transfer the currency directly between each other and don't require a middleman like PayPal or a bank. (This also explains why Internet drug dealers are oh so fond of cryptocurrencies.)

Other people required a little more convincing.

So what's the problem? A systemic lack of safeguards against fraud. In other words, you have basically zero recourse if an 11-year-old in Turkmenistan decides to hack you and caper off with all of your bitcoins. Anecdotally, users have been hoodwinked out of millions upon millions of dollars' worth of bitcoins, and one news anchor even got ripped off when he accidentally flashed his info on live TV.

Bloomberg TV
"Up next: weather, our Social Security Numbers, and the cameraman's wife's bra size. Stay tuned!"

Sure, you can store your bitcoins offline, but that presents its own set of challenges. Just ask this poor bastard in Wales, who procured 7,500 then-worthless bitcoins in 2009, stored his account information on an old hard drive, forgot about it, and accidentally threw it out this past summer, leaving a few million dollars stuck under a landfill.

#3. A Few Really Devoted People Could Tank Bitcoin

Unlike real-world currencies, Bitcoin isn't regulated by a central bank or government. So where do bitcoins come from? Here's an extremely pared-down explanation: When Bitcoin was programmed into existence, a massive "mine" of bitcoins popped into the virtual world that is the Internet. Bitcoin miners obtain new bitcoins using incredibly powerful computers that consume insane amounts of electricity.

But now let's imagine that one group of miners all band together and suddenly take the majority of the mining power, or 51 percent. If that were ever to occur, it would allow them to essentially crash the currency, rendering the value of Bitcoin worthless. But no one could ever accomplish that, right?


Well, earlier in January, a group of miners known as Ghash.io reached 45 percent mining power. Ghash.io later claimed that they would never knowingly crash Bitcoin, but what they've proved now is that it is possible. So if James Bond's rogues' gallery were real, you'd all have made the jump to Dogecoin right now.

More Quick Fixes:

See More

Recommended For Your Pleasure

To turn on reply notifications, click here


Choosing to "Like" Cracked has no side effects, so what's the worst that could happen?

The Weekly Hit List

Sit back... Relax... We'll do all the work.
Get a weekly update on the best at Cracked. Subscribe now!