A Collection of Bitcoin Misinformation from the Past Week

February 17, 2014 10:00 UTC
Photo via Lord Jim.

I’m not sure if I’ll be able to turn this into a weekly feature for CryptoCoinsNews, but it definitely seems that most of the media still haven’t done their research on Bitcoin. Having the Wall Street Journal add the daily BitBeat blog to their online publication is definitely a move in the right direction, but most of the people at mainstream media outlets still seem confused when it comes to Bitcoin. Let’s take a look at a small collection of the misinformation that has been out there in just the past week.

New York Post Says Bitcoin Price is $350

In an article that focuses on Bitcoin as a ponzi scheme, Jonathon M. Trugman cites the current price of a single bitcoin at $350. The only problem here is he’s citing the MtGox price. As pretty much all bitcoiners know at this point, the MtGox price is rather useless. This is why pretty much all bitcoin price indexes no longer include MtGox in their price feeds. The general point of the article is also to point out that Bitcoin is nothing more than a ponzi scheme. Ignoring the fact that the technology behind Bitcoin is much more important than the currency, it’s also important to remember that literally everyone who bought bitcoins before the November price is up at least 200%. Most of these individuals are up more than 600%. Saying something is a ponzi scheme because the price dropped by 50% from its peak ignores the growth from less than a penny to $600. A ponzi scheme also requires new investors to come in for the fraudulent operation to continue. There’s no game of musical chairs in Bitcoin, and new money is not needed to pay early adopters.

CNNMoney Says Bitcoin Glitch Wiped Out Silk Road Accounts

The real problem with this article from CNNMoney is that it doesn’t mention that the Silk Road 2.0 hack could have easily been an inside job until the second to last paragraph. To be fair, MarketWatch didn’t even mention the fact that this hack was probably not a hack at all. This story also claims the “hack” shook confidence in Bitcoin as a whole, when there’s really no proof of that. Although the writer mentions the possibility of an “inside job” near the end of the article, the real damage is done with using “Drug site Silk Road wiped out by Bitcoin glitch” as the title.

The LA Times Says Transaction Malleability Allows for Counterfeiting

Here’s the problematic part of a recent article in the LA Times:

In simple terms, transaction malleability could allow someone to spend bitcoins twice, which is tantamount to counterfeiting the virtual currency. That’s an eventuality that bitcoin aficionados always have suggested is impossible in the algorithm-driven bitcoin system, because every transfer ostensibly has to be validated before it’s completed.

Transaction malleability is not the same thing as double-spending. First of all, the issues with checking transactions is a problem with MtGox’s implementation of the Bitcoin software. Other exchanges, such as Kraken, did not have any problems with transaction malleability. As Bitcoin Core Developer Jeff Garzik explained on Twitter, this is really more of a social engineering attack on MtGox rather than a technical flaw with Bitcoin.

Last modified: February 17, 2014 04:31 UTC

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Kyle is a freelance Bitcoin writer and the Marketing Director for Bitcloud. His work has been featured on Business Insider, VICE Motherboard, Let's Talk Bitcoin, and RT's Keiser Report . You can follow him on Twitter (@kyletorpey) or send him an email.