When one finds oneself in a hole, one ought to stop digging. The esteemed Gary North has put in an order for more shovels. In his most recent article on bitcoins, he nearly pulls a muscle patting himself on the back for predicting the demise of bitcoin. With the recent disappearance of the folks at MtGox, Mr. North along with many other detractors that he told us that this house of cards was going to come crashing down.
Mt. Gox operated just as a Ponzi scheme does. You put your money in, which could not be pulled out. This has been visible for almost a year, but nobody mentioned it in the bitcoins media world. It was considered too embarrassing. “No problem.” I labeled this thing a Ponzi scheme, and that is exactly what turned it out to be for a million investors in Mt. Gox. [links in original]
Mr. North must be hoping that no one actually clicks on the links he provides, because if you actually go back to the article he wrote in November, (and which I responded to), you’ll see the he didn’t identify MtGox as a Ponzi scheme, but the entire bitcoin enterprise. Of course, we know that Mr. North can tell the difference between personal possession of assets versus depositing your assets with a broker. His understanding is so great that he has consistently been a strong proponent of direct bailment of gold and opposed the e-Gold/e-Bullion proxies.
So, either he’s feigning ignorance or deliberately trying to deceive his readership. He even equivocates on the idea of “trust”, comparing trust in the bitcoin protocol (which is strong and stable) with trust in shady brokers like MtGox. Also, his statement that no one was pointing out the problems with MtGox except him is clearly false. The bitcoin community has been complaining about MtGox since before North even heard of bitcoin.
My consolation in this whole process is that Gary North’s audience is shrinking, and he’s encouraging this by hiding his articles behind a paywall. He’s still out there encouraging people to buy gold and silver, though, even though the value of silver has halved in the last two years. Hypocrisy much?